Litigation funders win protection in the US and Australia

America: common-interest protection

A US Federal Court has ruled decisively in favour of litigation funders being able to see privileged material and so-called ‘attorney work product’ without those materials being disclosable to opposing parties.

Work product is the US term for materials created in the preparation of a case. In the unnamed case, which involved funding from AIM-listed Burford Capital, the court held: “It is quite evident that the subpoenas seek the production of documents that were prepared by counsel for [the claimant] in anticipation of and during litigation and are protected by the work product doctrine.

“Litigation strategy, matters concerning merits of claims and defences and damages would be revealed if the documents were produced. The matters directly involve the mental impressions of counsel and are protected from disclosure as work-product. Moreover, the production of the items subpoenaed would intrude upon attorney-client privilege under the ‘common-interest’ doctrine. The ‘common-interest’ doctrine protects communications between parties with a shared common interest in litigation strategy…

“Here, Burford and [claimant] now have a common interest in the successful outcome of the litigation which otherwise [claimant] may not have been able to pursue without the financial assistance of Burford.”

Chistopher Bogart, Burford’s chief executive, said: “This ruling is significant in ensuring that litigants can seek funding to even the litigation playing field without fear of exploitation by their opponents.”

Meanwhile, in Australia, funder International Litigation Partners has survived a challenge to the legality of its agreement after the High Court (the country’s highest court) ruled that the funder was providing its client with a credit facility rather than a financial service as defined by legislation, and so did not need an Australian financial services licence.

Had it been the latter, the client would have been able to rescind the contract because the funder did not hold a licence and walk away without having to pay an $A8m (£5.1m) early termination fee.

The decision comes on the heels of changes to Australian corporate law that seek to ensure that litigation funding is not treated as a managed investment scheme and therefore subject to detailed regulation.



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