What is Litigation Funding?

If you’re someone who’s currently in need of legal funding or just curious about it, this piece is for you.

What is litigation funding and how does it work?

Litigation funding is a legal practice that allows a third party that is unrelated to the lawsuit to provide capital to a plaintiff in return for a portion of any financial recovery from the same lawsuit. It’s also called legal financing or third-party litigation funding.

This practice levels the playing field in the legal system in Australia as it enables those who lack funding to litigate a claim.

The capital provided by a litigation funding firm is often used to pay for legal expenses like attorney’s fees, expert witness fees, and other court expenses.

It’s also often structured as a non-recourse investment, not as a loan. Meaning, that even if the funded lawsuit does not result in a financial recovery, the plaintiff still won’t owe anything.

Other Types of Litigation Funding

Litigation funding is not a one-size-fits-all type of set-up. The way things work will depend on the arrangement of the plaintiff, attorneys/law firms, investors, and the regulations that cover the practice.

Third-party funding

This is when a party not involved with the case pays for the legal fees and expenses of the lawsuit in exchange for an agreed return.

No win, no fee funding

This is one of the most common types of funding as it allows you to make a compensation claim with no financial risks involved. You only pay your lawyers if your claim is successful.

After the event insurance

These are insurance policies that normally cover the legal costs of a claimant or a defendant when the case is either lost at trial, abandoned, or settled.

These insurance policies are often purchased at the point when the solicitor begins a claim.

Adverse cost-insurance

This is a type of insurance that covers the costs of the insured party if the case is unsuccessful, and he or she is ordered to pay the other party’s costs.

On the other hand, if the case is successful, the cost of the insurance will be deducted from the compensation.

Damages-based agreement

This set-up is also called a contingency fee agreement. It means that the fee of the litigator will depend on the success of the claim, instead of an hourly rate. The litigator is often given a percentage of the damages that are awarded to the client.

Disbursement-only funding

This kind of agreement is often used in personal injury cases. And you may get this set up from only a handful of selected and approved law firms in Australia that have a guaranteed agreement with Legal Funding Australia.

Litigation Funding Regulations

Any litigation funding company should hold an Australian Financial Services License and the funding scheme that they operate must be registered as a management investment scheme as well.

Aside from these, the funding company must also:

  • Have adequate professional indemnity insurance
  • Hold sufficient financial resources
  • Assign responsible managers to maintain high standards
  • Pay annual ASIC fees
  • Be a member of the Australian Financial Complaints Authority

The Association of Litigation Funders of Australia also provided non-mandatory Best Practices Guidelines to the members of its association.

This guideline lays out the best things to do when developing standards, policies, and procedures.

Areas of Concern in Litigation Funding

According to a Parliamentary Joint Committee on Corporations and Financial Services report, these are only some of the key areas of concern in the said practice.

  • the participation of foreign litigation funders, which are not incorporated in Australia and so are subject to less domestic scrutiny (recommending the restriction of litigation funders to Australian law and jurisdiction).
  • the Federal Court’s constrained ability to regulate litigation funding (recommending litigation funding agreements be approved by the Federal Court, with the court to have the power to alter, vary or amend an agreement).
  • the lack of transparency about settlement agreements (recommending the mandatory publishing of specific information when a settlement is approved); and
  • solicitors, barristers and law firms having a financial interest in a litigation funder that is funding the same matters in which the solicitor, barrister or law firm is acting (recommending the uniform solicitors conduct rules be amended to prohibit this).

Seek legal advice from experienced litigation lawyers

If you need some help to fund your claims, it’s best to discuss legal funding matters with lawyers who are well-versed in litigation funding. This way, you can make the best decisions that will help win your case.

Sandler, Travis & Rosenberg Adds Senior DOJ Trial Attorney

Sandler, Travis & Rosenberg is pleased to announce that Jason Kenner joined the firm on September 27, 2021, to head its litigation practice.

Over the last fourteen years Jason served in the Department of Justice as a Trial Attorney and then Senior Trial Counsel handling federal trial and appellate international trade litigation.

Jason Kenner

Jason Kenner

“Jason’s first-hand experience as a well-respected, seasoned litigator will allow the firm to build on our nearly half-century of successful international trade litigation,” said ST&R Operating Committee member Lenny Feldman.

“As federal agencies more aggressively enforce international trade laws, litigation has become an increasingly important and necessary tool in protecting our clients’ interests.”

At the Department of Justice, Jason served in the Civil Division, International Trade Field Office, and more recently on its Trade Fraud Task Force. As lead attorney in the trial and appeal of trade cases, he was responsible for formulating and executing litigation strategies, representing officials from, and decisions by, United States Customs and Border Protection, the Commerce Department, and other federal agencies.

He was responsible for all aspects of litigation in customs and trade-related matters, and for supervising the work of junior trial attorneys.

Jason holds a J.D. from St. Johns University School of Law and a B.A. in public justice from Oswego State University.

He has been admitted to the bar in New York state, the Court of International Trade, and the Court of Appeals for the Federal Circuit. He can be contacted by phone at (212) 549-0137 or via email at jkenner@strtrade.com.

Sandler, Travis & Rosenberg is a leading international trade, customs, export and trade policy firm with over sixty professionals and nine offices and fourteen additional locations.

The firm’s practice focuses on cross-border movement of goods: minimising risks, reducing and eliminating liabilities, decreasing cycle time, and anticipating and addressing problems in corporations, government agencies and courts of law.

Byron Pacheco Joins Litigation Practice Group

Kirkland & Ellis law firm is pleased to announce that Byron Pacheco has joined the Firm as a partner in the Litigation Practice Group. He is based in the New York office.

Kirkland’s New York office includes approximately 650 attorneys, making it one of the largest law firms in New York and a destination practice for the world’s brightest legal talent.

Byron has experience representing clients in complex disputes, both at the trial court level and on appeal, in a variety of substantive areas, including antitrust, breach of contract, class actions, fraud, labour and employment and securities.

He also has experience handling government and internal investigations and has maintained a strong pro bono practice.

Earlier in his career, Byron clerked for judges in the Southern District of New York and the Northern District of California. Prior to law school, he was a researcher at Harvard’s Kennedy School of Government.

Byron is a member of the Puerto Rican Bar Association, and was a New York City Bar Association Associate Leadership Institute Fellow and a Leadership Council on Legal Diversity Pathfinder. He was also recently appointed to the Board of Directors of the Stonewall Community Foundation.

Byron Pacheco is an alumnus of Stanford Law School and earned bachelor’s and master’s degrees from Hamilton College and Harvard University, respectively. He was previously an associate with Boies Schiller Flexner.

Kirkland & Ellis is an American law firm. Founded in 1909 in Chicago, Illinois, Kirkland & Ellis is the largest law firm in the world by revenue and the seventh-largest by number of attorneys, and was the first law firm in the world to reach US$4 billion in revenue.

Kirkland aim to make a difference in their clients’ businesses and also in our community.

Brown Rudnick Grows Litigation Practice in NYC

NYC comprises 5 boroughs sitting where the Hudson River meets the Atlantic Ocean. At its core is Manhattan, a densely populated borough that’s among the world’s major commercial, financial and cultural centres. Its iconic sites include skyscrapers such as the Empire State Building and sprawling Central Park. Broadway theatre is staged in neon-lit Times Square. 

Brown Rudnick added Michael Winograd as a partner in the firm’s New York City office. He joins as a member of the firm’s Commercial Litigation Practice Group.

With over two decades of experience at leading international law firms, Winograd represents large corporations, private equity firms and financial institutions in high stakes litigation.

His practice is focused on a broad range of commercial, securities, bankruptcy, and other complex civil litigation, as well as regulatory proceedings and internal investigations.

Winograd has litigated in federal and state courts throughout the United States and before domestic and foreign arbitration panels and regulatory agencies.

He has successfully litigated matters through judgment, negotiated settlements, and represented clients on both sides of expedited applications for emergency relief.

He also routinely counsels entities and their boards on strategy and risks in connection with potential disputes and transactions.

Winograd is an adjunct professor at the Fordham University School of Law and co-founder of the Harlem Education Advancement Fund Legal Mentoring Program, where he was a recipient of the HEAF Long-term Volunteer Service Award.

After playing professional soccer in Israel and coaching men’s soccer at the University of Richmond, Winograd co-started a second division professional A-League soccer franchise. In 2018, he was a second-ballot candidate for President of United States Soccer.

Winograd earned his J.D. from University of Pennsylvania Law School, cum laude, Order of the Coif, and his B.A. from Lafayette College.