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A group of Claimants, instructing Hugh James, has recently been successful in recovering the cost of their disbursement funding arrangement from the Defendant in the High Court.

The Claimants, primarily being former employees of a phurnacite plant in South Wales, instructed Hugh James to pursue their Mesothelioma claims against the Secretary of State for Energy and Climate Change and Coal Products Limited. The Claimants successfully alleged that exposure to dust and harmful fumes at the plant caused the illnesses.

Hugh James, which of course has a reputation for being ahead of the curve when it comes to litigation funding options, agreed with the Claimants to fund disbursements in the region of £787,500 under a credit agreement which charged an interest rate of 4% above base. This fee was payable from the damages if the claim was successful and litigation insurance was in place to cover off the downside risk.

The Defendant argued that disbursements should be considered as an overhead of the firm, where the firm has taken on payment of the same, and the liability for interest under the credit agreement fell to the Claimants. However, Mrs Justice Swift found that ‘Hugh James fulfilled the role of a bank, but on terms more advantageous to the claimants than those which would have been offered by any bank’ and allowed the Claimants’ claim for interest, saying that 4% above base was ‘not excessive or unreasonable’.

Recent changes, including of course the LASPO Act 2012, have led commentators to suggest that the costs pendulum has swung back to the Defendant’s favour however, perhaps this decision shows that novel and creative litigation funding structures might be welcomed by the Courts.

Gareth Morgan, who ran the case at Hugh James, comments: ‘What is means is that if a claimant enters into a funding arrangement and incurs interest on disbursements, then in appropriate circumstances, that is a cost which can be charged against the defendant in the event of a successful claim. This switches the burden of funding disbursements from claimant to defendant.’

Morgan goes on to say: ‘It is a small movement in favour of the claimant, because up to now the tide has been going very strongly against the claimant. Up to now they’ve had the possibility of losing up to 25% of the damages. But at least that’s all they are going to have to fund, because the cost of disbursements – an essential part of a large case – can be transferred to the defendant.’

Whilst it would be too optimistic to suggest that the cost of any disbursement funding arrangement would be recoverable in any piece of litigation, what this case demonstrates is that innovative law firms are becoming more and more creative with the litigation funding structures they are offering clients.

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