Carruthers Law

Commercial: Litigation Funding.

December 23, 2011

The Association of Litigation Funders of England and Wales has launched a code of conduct for litigation funders. The code sets out the standards of behavior to be observed by funders who are members of the association.

The code requires funders to ensure that they have adequate resources to meet the funding of a dispute throughout its duration.

Clearly in cases which are significant and may go on for many years it is important to know that the funder does have the adequate resources to fund the litigation.

The code means that that the minimum period that the funder must be able to fund the litigation is 36 months, which is increased from the original proposed period of provision which only allowed for 3 months.

The code also provides that a funder may reserve the right to terminate their role only in the following circumstances:

• The funder reasonably ceases to be satisfied with the merits of the dispute;
• The funder reasonably believes that the dispute is no longer commercially viable or;
• The funder reasonably believes that the there has been a material breach of the funding agreement by the litigant.

The code provides that in the event of a dispute over a termination then a Q.C.’s binding opinion is obtained.

Another important provision is that the code provides that the funder will ensure that the litigant should seek independent advice as to the terms of the litigation funding agreement. The funder should not take any steps which may cause or is likely to cause a litigant solicitor or barrister to breach their professional duties and should not seek to influence the litigant’s solicitors.

It is therefore important that if you are to enter into such an agreement that you do so with only those providers who are subscribers to the code of conduct.