Litigation Capital Management Limited has recently closed its doors to new funding. It had managed to back eight unsuccessful cases, putting it into a serous financial position. It is now reliant on a substantial investment to be able to carry on with its run-off of existing funding. This has followed the spectacular collapse of two other litigation funders-Woodville and Fenchurch Legal. Why ? The answers must be speculative and there is scope for serious research into funding models.
The failure of eight cases must raise concerns about the model that LCM used to analyse cases. We all know that the unexpected arises in litigation which the legal team for the funded party could not reasonably envisage. I think that one problem may be the over reliance by funders on the opinion of an applicant’s counsel giving the applicant more than a 60% chance of success. It would be much better if funders had their own team of consultants to assess the merits of a case. This would mean that counsel would not be required to give a percentage chance of success but simply give an opinion on the merits and the tactics to be pursued. It should also be sensible to interview the claimant, if an individual, or, if a corporate, the person running the case and likely to be a key witness. The funders must also challenge legal budgets to ensure that they are not excessive and massaged by duplication or over reliance on counsel.
Unity offers it services to funders in the assessment and management of claims arising from its long experience of giving the most objective possible advice to clients at the early stage of cases.
Unity also advises potential claimants as to the funding market, the best legal team for the case and, if called upon to give ongoing project management of the case going forward. Please do consider emailing us at roger@unitylegalsolutions.com.