Alternative fee arrangements gaining ground, litigators say

Hartigan: increasing focus on costs management

Hartigan: increasing focus on costs management

Alternative funding arrangements are grabbing a foothold among solicitors and their clients, a survey of litigators has indicated.

The poll of 101 commercial litigation partners at top 200 firms – conducted by third-party funder Therium and Just Costs Solicitors – said that 79% of them had seen funded cases in the last 12 months, with financial services the most prominent area.

Nearly 70% of them said there were having more discussions with clients about alternative fee arrangements than in the previous year, with 76% discussing funding as an option in all cases following the Jackson reforms and what the survey said was client demand to reduce cash investment in dispute resolution.

The ability to meet costs (23% of responses), risk management (21%) and cash flow (18%) were highlighted as the most important benefits of third-party funding for clients.

The survey also showed that solicitors preferred being paid on a restricted basis, entering into a fixed or capped fee arrangement (30% and 23% respectively), over risk-sharing with clients through a conditional fee agreement (20%) or damages-based agreement (12%).

Neil Purslow, chief investment officer of Therium, said: “It’s interesting to see that the ability to meet costs, risk management and accounting benefits are closely ranked as benefits.

“From the perspective of big corporates, we are tending to see that while they are able to meet the costs of disputes in many cases, the key reasons they turn to third-party funding is the risk sharing with the funder and accounting benefits, such as not having to lock working capital into a lengthy litigation.”

Mark Hartigan, client services director at Just Costs Solicitors, added: “Cost management of disputes following Jackson’s reforms has become an increasing focus for parties in arbitration and litigation situations, both funded and unfunded.”

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