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Managing the cost of litigation

Comprising Hausfeld partner Lianne Craig, Ross Clark, chief risk officer at Burford Capital, Nicholas Bacon QC of 4 New Square and James Blick, director at TheJudge, the session chair, Judith Ayling of 39 Essex Chambers introduced the “stellar line-up” for the final session of the day.

Outlining the role that litigation funders play, Clark stressed that funders take an arm’s length approach and are certainly not involved in any settlement negotiations. In a general sense, he said, funders are looking for parties who are commercial, rational actors, and who are working with a good legal team. The case itself needs to have strong merits, and a degree of predictability. “We do not want to see cases going to trial.”

Funders spend a lot of time working out how much a case is worth from the beginning, he added, stressing the “importance of a good budget for the claimant’s costs” – a sensible and justifiable budget.

In practice, when you are looking at the headline numbers, the damages need to be ten times that of costs. “The reason we say that is because, almost invariably, by the time you go through budgets with lawyers, they end up being about twice the amount you thought they would be.” Ten to one leaves funders with the more sensible ratio of one to four by the end of the case.

On whether funders are incentivized when lawyers share some risk, for example via a conditional-fee arrangement (CFA), he said: “Not necessarily. One thing that clearly helps is if lawyers are not getting all of their fees funded, then that clearly brings the budget down, which makes cases more affordable,” Clark said.

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