BOOK REVIEW: Litigation Funding Handbook

Since conditional free agreements and after-the-event insurance were introduced in 1996, advising clients on cost and funding issues has become increasingly complex. We have subsequently been through an era of change, with success fees and ATE premiums recoverable from the losing party from 2000 onwards.

But that era ended (barring a few exceptions) with the implementation of the Jackson reforms in April 2013. While many of the drivers for law reform in this area and the leading authorities were set against the backdrop of personal injury litigation, the principles of litigation funding apply, to a lesser or greater extent, to all types of litigation. 

The introduction to the Litigation Funding Handbook, by general editor Rocco Pirozzolo, acknowledges that it describes the law in practice as of April 2014. As a result many aspects of the Jackson reforms remain untested in the courts, even if we have already seen several cases - post-publication - which have shed some further light on the Jackson grey areas. No doubt there will be many more to come over the next few years, but in the meantime this excellent book serves as a timely overview of the entire litigation funding landscape.

In the past, many litigators were reluctant or unable to advise on cost and funding issues, viewing the funding issue as the client’s problem and leaving cost draftsmen to pick up the pieces at the end of the case. Today, that is a very dangerous approach from both legal business and risk management perspectives.

After you have read the introduction you could skip straight to the final chapter and read that before the others – it overviews litigation funding in the context of the SRA Code of Conduct, identifying 12 relevant outcomes. That ought to drive home the message that these are issues that cannot be ignored or glossed over.

Even if you do not intend to offer all of the funding options to your client, you still have a professional obligation to advise your client about them. Failure to do so could result in complaints to the Legal Ombudsman, difficulties in cost recovery, or becoming part of a growing trend in actions in negligence relating to litigation funding. You will also be at a serious competitive disadvantage if you are unable to offer innovative funding solutions to your clients, because others already do and clients increasingly shop (and browse) around. 

Having digested chapter 12, I suspect that even those with a prior aversion to costs and funding will develop the appetite to turn back to the start and read this book in its entirety. At just over 200 pages (plus appendices), it is a surprisingly easy read given the technical subject matter. It is not intended to replace the more substantial cost reference works, such as those by Michael Cook and Mark Friston, but what it does give is very clear focus on how to advise your client on funding issues and how to effectively work with insurers and funders. 

There is an informative section describing what funders look for when vetting cases, much of which is equally applicable to ATE insurance applications. The chapter on cost budgeting is full of nuggets of wisdom, identifying tactical issues that may arise and providing a useful list of tips.

This book identifies several thorny issues which are likely to arise in years to come as the Jackson reforms are listed through the courts, including:

• The tension between ‘justly and at proportionate cost’;
• Assigning pre-Jackson CFAs;
• Justifying the level of damages-based agreement or CFA success fees;
• Application of the caveats to qualified one-way costs shifting;
• The tactical use of Part 36 offers; and
• The freedom of choice of lawyers when the client has before-the-event insurance cover, particularly if that BTE insurer has vertically integrated itself into an alternative business structure, offering direct litigation services to that client. 

Unless you already are a cost and funding guru then I thoroughly recommend you read this book to ensure that you are giving your clients the best possible advice on litigation funding issues, and that you can navigate your litigation practice through the perfect storm of the Legal Services Act and the Jackson reforms.

Julian Chamberlayne is a partner at Stewarts Law in London