Most Top London Law Firms Seek Investor Funding for Lawsuits
Once unheard-of, third-party funding is now a standard option for clients bringing suit with the help of London’s top 10 law firms. And, with an expected increase in litigation on the horizon already, this could help swell a practice-area surge into something more like a tsunami.
Eight of the top 10 firms either already help some clients arrange such third-party funding, in which investors often get a slice of any eventual award in return for paying litigation costs up front, or are actively considering or pursuing plans to help some clients do so, reports Legal Week. Although this approach reduces the potential payout for a winning client, it also reduces the potential risks associated with pursuing a case that turns out to be a loser.
The two London law firm holdouts for the standard approach, in which all clients are expected to pay their own litigation or arbitration costs, are Linklaters and Slaughter and May.
Traditionally, third-party funding of litigation has been considered to pose legal ethics issues. But the concept has quickly been embraced in the United Kingdom since a Civil Justice Council report last summer to the Lord Chancellor that said “properly regulated third-party funding should be recognized as an acceptable option for mainstream litigation,” the Lawyer reported last October in a detailed account of the then-current external funding situation.
“We are now starting to see some serious proposals for the [outside] funding of major cases—if they are the right kind of cases—which clients are analyzing a bit like any other deal,” partner Paul Lomas of Freshfields Bruckhaus Deringer told Legal Week.
Adds Paul Mitchard, head of European arbitration for Skadden, Arps, Slate, Meagher & Flom: “Funding is definitely here to stay. It is a significant development in dispute resolution, where litigation and arbitration are now being viewed as a commercial venture for outside funders for the first time.”
