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All lawyers recognise that no case is perfect, and each has its own peculiar quirks. On the basis that it is providing non-recourse funding, it is critical to a funder that the fundamental legal merits of a claim are good. Cases which are heavily fact-based disputes, which contain novel points of law, or there has been a serious delay in deciding to bring an action – without good reason – are potential “red flags” for funders.

 

Whilst every third-party funder will have a unique approach to international arbitration and commercial litigation cases, through this ‘litigation funder’s checklist’ series, Augusta equips potential claimants, and those who already access TPF, with an insight into the main decision drivers, ensuring a successful claim with as little mitigation as possible.

 

Legal merits

Invariably, to enable us to properly consider a case, we require a counsel’s opinion (in certain circumstances, a detailed legal memo will also be appropriate) which addresses the following;

  1. the counsel’s understanding of the relevant facts and the evidential sources;
  2. liability, causation, measure of loss and quantum (including reference to the applicable tests that apply and discussions as to the potential applicable defences and arguments to counter such defences) with reference to the available evidence and authorities supporting their opinion;
  3. any limitation, applicable law and/or jurisdictional issues if relevant and, again, expresses their views on succeeding on any of these points;
  4. if a substantive interlocutory application/hearing is anticipated, details of the relevant application should be set out and counsel should provide their views on the prospects of success; and
  5. views on the prospects of success at trial on the whole claim (expressed by way of single overall percentage – Augusta require at least 60% prospects for cases it seeks to fund).

It is always better if risks are addressed upfront, as the funder can work with the legal team to see how such issues can best be mitigated. In this situation, we will engage with the client’s legal team over the legal arguments and the available evidence. As part of our due diligence process, we will also seek an independent legal review, to verify the case.

 

Legal merits checklist:
  • Detailed counsel’s opinion confirming 60% prospects of success
  • Risks or areas of concern considered upfront
  • Ensure sufficient evidence to support legal arguments
  • Undertake independent legal review

 

As the range of funding products and structures that funders can provide continues to broaden, it’s clear that litigation funding is no longer solely about single case funding; portfolio funding, the funding of law firms, case assignments or acquisitions are now also being offered. When applying for litigation funding, consider our checklist to enable you to be even more confident that your claim will be successful.

Next in our ‘Litigation funder’s checklist’ series, we’ll be touching upon economics and how there needs to be sufficient “headroom” on the damages:legal costs ratio.

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If you are considering litigation funding and have a case which broadly meets the above criteria, please do not hesitate to contact Glyn Rees or a member of our team of litigation funding experts to discuss the process in further detail.

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