When it comes to legal disputes, the cost of litigation can often be a significant barrier to seeking justice. This is where litigation funders come into play.
In Australia, litigation finance (also called litigation funding) has emerged as a viable solution to help plaintiffs cover the expenses associated with lawsuits. However, choosing the right litigation funder is crucial to ensure a successful outcome.
But before delving into the process of hiring litigation funding firms, familiarize yourself with the legal and regulatory framework surrounding litigation funding in Australia.
Understanding Legal Funding in Australia
In Australia, the regulation of litigation finance has undergone several changes in recent years and has become highly politicized.
Litigation funding was pioneered in the 1990s and has since become a sophisticated tool used in various practice areas, including commercial litigation, insolvency, class actions, arbitration, and intellectual property. While traditionally, the doctrine of maintenance and champerty applied in Australia, legislation in all states and territories, except Queensland and the Northern Territory, has abolished it. However, certain contracts that are contrary to public policy or otherwise illegal may still be unenforceable.
The High Court decision in 2006 established that litigation funding is not an abuse of process or contrary to public policy. This decision led to significant growth in the industry, particularly in class actions. It is essential to stay updated with recent court decisions and legislative changes that impact litigation funding in Australia.
Factors to Consider When Choosing a Litigation Funder
1. Experience in litigation funding
Look for litigation funders with a proven track record and experience in funding cases similar to yours. An experienced commercial litigation finance firm will deeply understand the legal landscape and the challenges faced by litigants.
Research the litigation funder’s background, including their years of experience in the industry and the jurisdictions and sectors in which they provide funding. Look for funders with a strong presence in Australia and a deep understanding of the local legal landscape. Consider their financial stability and whether they are listed on a reputable stock exchange.
2. Scope of funding
Before hiring a litigation funder, carefully assess the scope of funding they provide. Different funders may specialize in specific areas of litigation, such as class actions, commercial claims, international arbitration, or claims arising out of insolvency. Consider the type of dispute you are involved in and ensure that the litigation funder has expertise and experience in funding similar cases.
Additionally, evaluate whether the litigation funder offers both single-case financing and portfolio funding. Single-case financing involves funding a specific legal dispute, while portfolio funding provides financial support for multiple cases. Assess your needs and determine which type of funding arrangement aligns best with your requirements.
3. Transparent terms and fees
Work with a funder who maintains transparency throughout the process. Ask for a clear breakdown of all costs, including interest rates, administrative fees, and any other charges that may apply.
4. The funder’s network
When hiring a litigation funder, consider the extent of their network. A well-established funder will have a broad network of legal professionals, experts, and consultants that they can leverage to support your case. This network can provide valuable insights, guidance, and support throughout the litigation process.
5. Adequate financial resources
Assess the funder’s financial resources to ensure they can provide the necessary funding for your case. Consider their ability to cover litigation costs, expert fees, and court fees. A financially stable litigation funding firm will give you confidence in its ability to support your case effectively.
6. The funder’s risk management strategies
Litigation funding comes with inherent risks. Thus, you must evaluate the risk management strategies employed by the funder. A reputable litigation funder will have robust risk management processes in place to assess the viability of each case and mitigate potential risks effectively.
Consider whether the funder conducts thorough due diligence before providing funding. They should assess the merits of your case, evaluate the potential for success, and analyze the financial aspects, including the potential recovery and the defendant’s ability to pay.
7. Client reviews
Seek references and feedback from previous clients who have worked with the funder. Research the funder’s reputation and consider their track record in successfully funding cases.
Tips for Seeking Legal Financing
Before pursuing legal financing in Australia, consider the following tips:
1. Clearly identify your financial needs
Determine how much funding you require and specify how it will be used (e.g., attorney fees, expert witness fees, court costs, living expenses).
2. Explore other funding options
Consider alternative ways to finance your legal case, such as personal savings, loans from family or friends, payment plans with your partner law firms, or traditional bank loans. Compare the costs and terms of these alternatives with legal finance options.
3. Review the terms and conditions
Thoroughly review the terms and conditions of any legal financing agreement before signing. Seek clarification on unclear or ambiguous clauses.
4. Assess the funder’s involvement in the litigation process
Some funders take a more hands-on approach, actively participating in case strategy, decision-making, and settlement negotiations. Others may take a more passive role, primarily providing financial support.
Consider your preferences and the level of involvement you want from the funder. Ensure that the funder’s approach aligns with your expectations and that they have the necessary expertise and resources to ensure the success of your legal claim.
5. Consult with your attorney
Discuss legal financing options with your attorney to gain insights and advice. Your attorney may have recommendations for reputable providers or insights into how legal financing could affect your legal claims.
Conclusion
Hiring Australian litigation funders is a strategic decision that will have an impact on the outcome of your legal dispute. By understanding the legal funding process, considering key factors, and employing the tips mentioned above, you can navigate the complex landscape of litigation financing and secure the support you need to pursue your legal rights.
