A Thomas Miller Company
The right choice may make your in-house team a profit center
by Adam Greaves and James Delaney
While many companies have yet to discover the benefits of “off balance sheet” litigation funding arrangements, others are beginning to embrace them, particularly in jurisdictions such as the United Kingdom where cost-shifting occurs between the parties.
General counsel have long sought the objective of knowing “what you are in for” in dispute work, but hitherto they have not often successfully achieved it. The lack of predictability in keeping to a budget in litigation or arbitration can be attributed to a number of factors, including:
- The fact that the client retains control or certainty over how the case is run including how many issues are pleaded and the way in which they are pleaded, which applications or motions to pursue and how to respond to those which the client is opposing
- The extent and volume of the documentary evidence (electronic or otherwise) that needs to be reviewed
- The number of witness interviews, witness statements, depositions and witnesses that need to be called at trial
- Defendants (there can be many in a complex case) naturally have their own strategies, one of which is often to make claimants spend lots of time and money on a case in the hope that they will quit, or to soften up the claimant for settlement discussions. An estimated cost for such counter-strategies can be factored in, but ultimately it’s a “guesstimate” and can increase the cost of the funding unnecessarily.
It’s difficult to accurately predict many of these factors at the outset of the case which is when funding arrangements are usually negotiated.
If the client’s portfolio of cases involves many jurisdictions and/or is international in its scope, it will need to ensure that the funding and insurance arrangements satisfy local regulatory requirements, which are different in each jurisdiction. The alternative funding arrangements that exist in the U.S. do not, unfortunately, work in the U.K., not yet anyway.
English courts have been slow to embrace or even accept the concept of modern third party litigation funding arrangements. Recently, English jurisprudence has demonstrated that the judiciary has not fully understood that the economic climate has changed and that clients and the legal industry must adjust, in order to find other ways of funding legal cases, generating opportunities for both clients and lawyers.
It may well be that clients and law firms alike are waiting for the promised contingency funding arrangements which have been outlined in Lord Justice Jackson’s Review of Civil Litigation Costs and for which legislation is promised in the next year or so.
Such a move will certainly assist international law firms’ ability to deliver greater certainty to in-house legal teams over the billing and retainer arrangements for cross-border disputes. It can be frustrating for in-house departments when they have to grapple with the different retainer models deployed in different jurisdictions due to variances in domestic laws. Should the U.K. permit the introduction of contingency fee models, similar to those available in the U.S., it will greatly simplify the retainer options for clients engaging in both the U.K. and U.S. litigation.
