Lawyer Monthly - February 2022

21 FEB 2022 | WWW.LAWYER-MONTHLY.COM HOW CAN LITIGATION FUNDING LEVEL THE PLAYING FIELD FOR JUSTICE? portfolio of cases and underwriting expertise and, as a result, is in a far better position to carry on these risks in the first place. Nonrecourse litigation funding allows claimants to pursue valuable claims without risking their own balance sheets. A funder performs a thorough due diligence for each case by assessing many different factors (e.g. legal merits, case economics and enforceability, among others). Thus, by agreeing to provide funding, a litigation funder directly signals to the defendant that an independent party also considers the merits of the claim to be strong. Once there is a credible threat, the defendant is typically much more willing to engage in settlement discussions. According to data from Solomonic, around 80-90% of such cases settle pre-trial. Even if a litigation funder chooses not to fund a case, the claimant and their legal team may well gain some useful feedback regarding the weaknesses of the claim. Litigation funders might also be able to assist the lawyers and claimants in managing the litigation, including assisting in strategic and tactical decisions by bringing a highly commercial and objective perspective to assessing a claim. The funder’s role can assist in the efficient management of a claim by ensuring that the focus is kept on the real issues in dispute and by seeking to avoid time and costs being spent on the pursuit of capital and are thus forced to adhere to strict investment criteria, platform-centric litigation funders (such as Lexshares and AxiaFunder) source capital from a large pool of professional, high-net-worth retail investors and are thus able to offer a more flexible low-cost funding solutions to both claimants and solicitors. This is possible since platforms offer more risk-sharing across a wider number of investors – just as the valuation of a company on the stock market will tend to increase as the investor base becomes more diversified. Platform funders can also be more flexible claims that are weak or unnecessary. Litigation funding and the rule of law Effective rule of law creates many benefits to a society – it helps to tackle corruption, poverty, and helps to protect people from various injustices. Without the rule of law, individuals and businesses cannot enforce contract, secure property rights or obtain effective redress against other individuals, enterprises, or the state. Inadequate enforcement of regulations, high presence of corruption, insecure property rights, and ineffective means to settle disputes destabilise legitimate business and discourage both domestic and foreign investment. The rule of law can thus have a deep impact on the fairness and prosperity of a society. The rising costs of litigation has made such access to justice excessively expensive for many claimants. Cuts to legal aid have worsened the picture. Litigation funding helps to improve access to justice and ensure the rule of law. Alternative funding models and future developments There is considerable innovation within the funding sector. While large litigation funders are typically backed by institutional Funding is the life-blood of the justice system. - Lord Neuberger, President of The Supreme Court.

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