How to Fund Litigation — Practical insights series (Part One: What will it cost?)

In the first of a new series, litigation funding expert Jack Bradley-Seddon offers advice on answering a client's inevitable first question: "what will this cost?"

This is often the first question a client will ask. Whilst it is not possible to answer precisely, a ballpark can be given, which is capital back plus a multiple of up to 3x that amount.

It is not possible to answer precisely. Why?

There are at least a couple of reasons for this. First, litigation funding is an inherently opaque market – prices charged by individual funders are not publicly published. There is, unfortunately, no “compare the market” in litigation funding.

Second, in the main, pricing information is provided as part of an offer of terms to fund a particular case – and is bespoke to that case. That is, the funder will formulate a particular price that they feel reflects the risk of the individual case in front of them that they are looking to fund. The price does not therefore lend itself to “pre-publication” – without the funder first having had sight of the case and assessing the risk.

A ballpark can be given

That said, individual funders will usually have a reasonable sense of the broad parameters within which their firm tends to work for a particular type of case. They may, therefore, be willing to provide a “ballpark” to you – particularly in response to a specific enquiry about funding a particular case.

Whilst noting that pricing varies by litigation funder, typically a ballpark is capital back plus a multiple of up to 3x that amount.

In addition, please note the following.

• First, usually (and ideally for the client) “capital back” would be deployed capital back (as distinct from committed capital back). For example, if a funding commitment to a case of £500,000 was made, and the case settled after £100,000 of costs had been incurred, ideally the funding multiple would bite on the £100,000 deployed (and not the £500,000 committed).  
• Second, the multiple would usually be “up to” 3x capital back. That is, the multiple would start off at a lower figure than 3x, and then “build up” to 3x gradually, usually based on stages, which are themselves usually based on time (broadly, the longer the case takes to resolve and proceeds to be received, the more a funder will expect to charge, to reflect the time cost of money and also increased risk, particularly if a case moves to trial).

Jack Bradley-Seddon is a Partner at Thaxted Capital and a former litigator in the London office of the US law firm Akin Gump Strauss Hauer & Feld.