What Is Litigation Funding?
A Memo from our Founding Director
There is a growing number of well-established litigation funding lenders operating in the Australian market, and the size of the industry is growing rapidly.
The market lender IMF Bentham Ltd started out in 1998 as a $3 million fund called Insolvency Management Fund (IMF). It has grown to be a public company listed on the Australian Securities Exchange with a market capitalisation that exceeds $200 million. Other funders such as Litigation Lending Services have been in the funding business for more than 15 years. An increasing number of new funders are entering the market. Some of these funders are from overseas offering funding for larger claims such as class actions, or claims exceeding $20 million in size.
One of major difficulties faced by a claimant who needs litigation funding is that they commonly have insufficient resources to even prepare their cases to a point suitable for assessment by a funder. This is particularly so with Liquidators and Trustees in Bankruptcy who are appointed to asset less administrations with good potential legal actions but no funds available immediately to cover the expense of a legal assessment and basic case evaluation.
In this situation good claims are not being pursued because of the initial expense required to determine whether or not an action is eligible for funding, and if suitable, which of the funders is the best to approach according to their own funding criteria and case interest.
My own interest in litigation funding started in 1999 when I took over the legal practice of John Walker, the founder of IMF. For years I worked with IMF running legal cases funded by them and occasionally assessing claims for funding.
In 2010 I was involved in the establishment of a litigation fund called Litigation Fighting Fund Pty Ltd which funded a number of successful Liquidator legal actions.
Litigation funders fund commercial cases where damages or compensation is claimed from defendants who have the capacity to pay a successful judgment or settlement.
The features of aÂ suitable case for funding are:
â€¢ The case is a commercial recovery claim;
â€¢ The case has good prospects of success;
â€¢ The claim is profitable, or of sufficient size to justify funding;
â€¢ The defendant is able to pay; and
â€¢ The claim may have leverage to pressure early settlement.
Litigation Funding Solutions has been established as a business that will assist claimants to properly assess whether their legal actions qualify for litigation funding. We can help claimants with good commercial cases secure funding to best enable them to go forward.
In many instances we are able at first consultation to provide feedback on whether an action is suitable for funding assistance or not. At the end of this preliminary assessment process we can adviseÂ the steps needed to be taken to secure funding. This service is also relevant to legal actions that are underway and need additional funding to go to trial in the case of defended actions.
There is no doubt that high cost of litigation is a barrier to securing justice and enabling good claims to be vigorously pursued to judgment or settlement. Litigation funding is a finance product now available in Australia to facilitate these outcomes. Â However, good case assessment and selection is a key factor.
Litigation Funding Solution has the necessary case selection skills and experience, and close relationships with leading litigation funders operating in Australia and overseas, to assist and add value to this process.
Please call David Purcell on 0403 382 072 or Douglas Whelan on 0414 881 739 or contact us by email to discuss the attributes of any legal action you want to proceed with but do not have sufficient funds to cover the legal costs required to investigate whether the claim can be prosecuted.
Litigation Funding Solutions