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ATE Insurance and Funding is driving UK Insolvency Litigation

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A recent study conducted by Wolverhampton University has shed light on the growing level of claims and commercial activity around insolvency litigation in the UK. The report shows that there has been a 50% increase in the value of insolvency claims in the past five years. This large increase can mainly be attributed to 2012’s Legal Aid, Sentencing and Punishment of Offenders ACT (also referred to as the LASPO act), after which lawyers success fees under a conditional fee arrangement and any after the event (ATE) insurance premiums were no longer recoverable from the defendant.

The study shows that the insolvency litigation sector is now worth in excess of £1.5bn a year, with the total value of claims being pursued topping £720m a year, with increases in claims being driven by a combination of no-win, no-fee agreements and third party litigation funding. The research, which included surveys of UK law firms active in the burgeoning insolvency sector, found that 50% of professionals felt that third-party funding is the most effective way to resolve an insolvency claim. In addition, over 60% of insolvency practitioners are using third-party funders or are using them more frequently than before.In commenting on the findings, a spokesperson for the Insolvency Practitioners Association, said:

Half of professionals surveyed agreed that third-party funding is the most effective in bringing about a swift, commercial resolution to an insolvency claim. They acknowledged that it is a far quicker resolution to a dispute, therefore keeping costs down and proportionate, resulting in a higher recovery for creditors. HMRC is often the largest creditor in many insolvency cases and benefits most from successful insolvency claims…The report cites Lord Justice Jackson’s observations on how CFAs operated, prior to legal changes in April 2016, which had caused disproportionate costs to be incurred by successful insolvency claimants. He found that claimant costs in CFA cases had ranged from between 158% and 203% of the damages awarded.”

 

Insolvency Litigation Funding

If you are thinking about taking legal action against another individual or company but are worried about the costs involved, Advantage Litigation Services have the skills and expertise to help you find a way of funding commercial litigation without risking your personal finances or those of your business. Click here to contact us today or call 0800 160 1298 to see how we can help.

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