February 11, 2013

How Can a Business Take a Case to Court Without Breaking the Bank?

Funding a case and going to court can be a very expensive endeavour. The process is complex, lengthy and time-consuming. Some cases can last as long as five-years, therefore the financial costs for businesses can be extremely damaging.

Should firms lie back and not pursue justice, simply because it is so pricey to resolve a legal grievance? Or is there a way to take a case to court, without breaking the bank?

It’s entirely possible to make sure your hard earned cash is safe, as well as initiate a litigation process. Here’s how:

Businesses have five options available and these include:

• Pay by the hour
• No win, no fee
• Partial or discounted CFA
• Damages-Based Agreements (DBAs)
• Third party funding

What is ‘pay by the hour’?

This used to be the common way in which lawyers were paid. You paid the professional by the hour, and simply took a hit if you lost the case.

Now you can still do this but there are other options for you that are much more financially-savvy.

What is ‘no win, no fee’?

Alternatively referred to as a conditional fee arrangement (CFA), this funding route is an option but under no circumstances is it free. There will be other costs to pay, like the witness or court fees, but these can be insured by the ATE insurance and repaid by the insurer if the case is lost.

If you win the case, the losing party has to foot the bill however, if your solicitor doesn’t get everything back that they are owed, you will have to subsidise the deficit.

What is partial or discounted CFA?

There may be circumstances when it is simply not feasible for your solicitor to carry the weight of all the overheads. For lengthy cases, it would be unreasonable to ask your solicitor to work for you, for years, and not get paid a penny. This is a huge risk to take.

So with this option, you will have to contribute and pay part of the costs. The law is changing from April 2013 and it means that if you win a case, you will have to pay a lawyer’s success fee and insurance premium. If you are contemplating using this funding route, it’s recommended to do it now rather than later.

What are ‘Damages-Based Agreements’ (DBAs)?

This is a very new route which is still not in place but will be, later this year. It works with the company paying the solicitor a portion of the damages, if the case is won. However, how much the lawyer takes, is still under debate.

What is ‘third party litigation funding’?

This is becoming extremely popular as a very viable funding route. A third party, unconnected to the case or the parties involved, provides all the finances. Even if the claim is unsuccessful, the funder still pays the entire legal bill; and if the case is won, they take a share of the takings. On average, they charge around 25-45% of the damages.

If you lose the case, you don’t need to pay anything as it is the funder or ATE insurance that covers the other party’s expenses. So as you can see, it is a very appealing option.

Please note however, because it is such an attractive option, third party funders are selective when it comes to taking cases on. In order to make a profit, they can only invest in risk-free cases, with a good defence.

Did you know that up to 85% of applications are rejected? Therefore if your case is accepted, you are in for a good chance of winning.

There you have your five funding options explained; which one is appealing to you? Lawyers do have a professional obligation to discuss all routes to you, and failure to do so is breaching the Solicitors’ Code of Conduct.

This article was written by Lauren Grice on behalf of Vannin Capital, the third-party litigation funding experts. If you have a good case, or a good defence, and you need financial assistance to bring or defend your case, speak to the specialist litigation funding provider today.

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