Repayment of funds after a case has concluded is agreed in the terms and conditions of a funding agreement. Therefore it is crucial to read through the contract before signing.
The Funder’s Return as a Multiple
Most litigation funders charge on a multiplier of capital advanced, such as between 1.5 times to 3 times the amount of capital advanced by the funder. Therefore, if a funder had advanced £200,000 then the return (on success) would be in the region of £300,000 to £600,000 (dependent on agreed terms).
Percentage of Recovery
In addition to the multiplier that is used to calculate the funder’s return, some agreements also include a percentage of the total damages recovered by the claimant. This can be anywhere between 20% and 35% of the total recovery.
Waterfall Priority
Most importantly, when a funded case concludes, it is necessary to know where one sits within a so-called waterfall. In simple terms, the funder’s return comes first, followed by the legal costs of the case and then the claimant is left with the remainder of the proceeds.
Partial or Lower Damages
Repayment obligations are scaled down to reflect the proportion of the originally anticipated amount that was actually achieved through the litigation. It is thus essential to review how your agreement treats partial recovery of the originally anticipated amount of damages.
Loss Versus Success
In a case that loses, funded cases agree repayment of the capital advanced, rather than the full return expected on success of the funded case. More on Litigation Funding London can be found at https://www.novo-modo.co.uk/litigation-funding-london.
Reading each clause of the funding agreement before accepting funding will ensure you have the most understanding of your obligations.
