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Funding Options for Commercial and Business Litigation

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Funding your commercial claim, be it for professional negligence, a contract dispute, insolvency or a shareholder dispute, is often a crucial part of you being able to pursue your case. Below is a list of the main factors in funding a claim:

• Third Party Funding – this is when a third party, usually a specialist provider, funds the legal (and other) costs should the claimant lack the funds or doesn’t want to fund the legal action themselves. In return, they expect to receive a portion of the damages or compensation recovered when the claim successfully concludes.

ATE (After The Event) Insurance – a type of legal expenses insurance taken out when pursuing a claim to cover the claimant against the defendants costs should the case fail.

• Getting Third Party Funding – access to third party funding is becoming easier and it is more common now to get funding in place at an early stage in the claim, rather than waiting until there is a large amount of evidence such as specialist reports, counsels opinion, etc, already in place. Also, third party funding is not a loan – if the case fails, the funder will lose their investment. Consequently, the costs of such funding are higher than a secured loan (or even other high-risk investments). Funding costs are usually higher the longer the case runs, particularly if the case goes to trial. Depending on the stage that the case settles at, a funder will typically seek a return of between 20% and 150% of their total funding.

• Paying for ATE Insurance – similar to third party funding, ATE (After The Event) premiums are usually payable upon successful case conclusion, and the premium is usually self insured (ie: no premium will be due) should the case fail. In a winning case, the ATE premium is paid out of the recovered funds. ATE premiums are lowest in the early stages of a claim, rising should the case progress and become more complex (and hence involve more risk to the insurer), especially should the case progresses to a court trial. Premiums vary depending upon the type of case, risk factors and stage the claim settles, with premiums typically starting at around 10% of the insured costs, rising to 60% (or more) at trial.

• What’s the difference; Funding vs ATE Insurance - third party funding is used to fund ongoing costs of litigation, whilst ATE insurance is used to cover the other sides costs (the defendants costs) should the claim fail.

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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