Is litigation funding the answer to improving your finances?


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With stretched resources meaning that investigating and pursuing significant litigation can often take a back seat, Lucy James and Charlotte Clayson discuss how litigation funding can resolve some of those issues, and allow you take an active role in returning a significant share of damages to the balance sheet.

What's the issue?

Those working in the sector often struggle to access the necessary up-front investment in terms of financial and practical resources needed to bring damages claims, particularly against well-resourced defendants. Whilst many organisations have potential litigation that they could pursue, investigating and pursuing those claims can often be put to the bottom of the 'to-do' list whilst other, more urgent, matters are prioritised and resourced.

However, this approach often sees organisations missing out on significant potential damages that can be returned to the balance sheet in a successful claim: limited resources should not be the sole reason that you decide not to pursue litigation that has merit and that might generate significant income.

What is the potential solution?

Litigation funding is a financing arrangement where a funder agrees to pay your legal fees in bringing a claim to settlement or trial in accordance with an agreed budget. The funders can often also assist with 'seed funding' in the first instance to allow you to properly investigate the claim and test the merits before committing to pursuing litigation.

Generally, the funding works on the basis that if the claim is unsuccessful, you will not have to pay anything, and the funder will lose the money it has invested in the case. If successful, the funder will be entitled to a return on its investment from the damages that are received at the end of the case, with the balance being released to you for reinvestment.

Funding therefore provides organisations within the sector with the finances to pursue litigation, and to pay external advisors and experts to manage, resource and advise on the case, whilst matching the resources of defendants with deep pockets.

How is it relevant to the housing sector?

Organisations in the housing sector often have significant damages claims that merit further investigation and pursuing through litigation. For example, potential claims against commercial partners for breach of significant contracts and failure to meet KPIs, claims against contractors for works undertaken, cladding and health and safety related issues, or claims in negligence.

It's a misconception that litigation funding cannot be used successfully in this sector. We have been actively involved in engaging with both the private and public sector, alongside litigation funders, to discuss how funding can be unlocked, and have advised on navigating the governance and reputational issues associated with using litigation funding along with the necessary decision making procedures to put it in place.

With careful consideration and the right team, litigation funding can and should be a key tool in your toolbox to give you the finances and resource to actively consider and pursue significant claims and return a share of damages to the business. 

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