29 November 2017Print This Post

Time to end commercial litigation’s “something for nothing” culture

Litigation funding: Grandma knows best

Posted by Chris Deadman, director of operations at Litigation Futures Associate Invicta Capital Funding

Your dear old granny was full of wise sayings. ‘Look before you leap’, ‘If it looks too good to be true, it usually is’ and ‘Many a mickle makes a muckle.’ I have no clue what the last one means.

All of these pithy aphorisms could apply equally to the 100% conditional fee agreement (CFA) in the post-Jackson landscape. The days of receiving something for nothing have long gone.

It is time for claimants to grow up and face the fact that in the brave new world, they are going to have to pay for the services of their legal team. It is also time for lawyers to wean clients off the novocaine that is 100% CFAs for commercial claims.

To illustrate this point, I had a recent meeting with a very well-regarded firm that specialises in professional negligence claims. Whilst the firm acknowledges that it would benefit considerably from financing part of their fees and those of counsel for the purposes of cash flow, they were unable to agree a financing package because their clients expected them to take “all the risk”.

If the firm indicated that they were not prepared to take all the risk, their clients would simply seek the services of a potentially less competent firm that was prepared to conduct the work on a wholly conditional basis.

In the words of not just your granny, this is absolutely bonkers. For the long-term good of the profession, solicitors have a responsibility to wean clients off the ‘something for nothing’ culture and educate them in the ways of the post-Jackson world.

But what do you say to the client who hints darkly that they are tempted to take their stonking commercial claim down the road to a ‘no win, no fee’ firm?

In the main (and I am here to be shot down in flames), a firm acting on a 100% CFA is unlikely to allocate it 100 hours of partner time a week. In all probability, the case will be parked with a pretty junior fee-earner who will give it just enough attention to keep the matter live in the hope of securing an early offer of settlement. And that makes perfect commercial sense. Why would you throw the kitchen sink at a case when you aren’t being paid?

The key message to give the client is that if you want a senior fee-earner to run your case properly, you are going to have to pay for it. Paying a senior fee-earner by way of a financing arrangement ensures that the lawyer is properly resourced to run the case effectively. Counsel is similarly remunerated.

Avenues can be explored. Evidence can be collected. Proper strategies can be devised. In short, the legal team can prepare the case in such a way as to maximise its prospects of success.

For the claimant, this can often mean a higher settlement and, crucially, a shorter timescale to conclusion. Obviously there are never any guarantees with litigation, but having a properly resourced legal team can make a significant difference to both the quantum realised and the time in which it can be achieved.

This is a far more compelling argument for the would-be claimant than simply caving in or losing the work all together. Inevitably there will be occasions when the client is simply seduced by the promise of something for nothing and goes elsewhere. When that happens, it is best to recall one of granny’s other sayings: ‘You don’t miss what you’ve never had.’


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