Question 1

What is third party funding (TPF)?

Accepted Answer

As per a report by the International Council for Commercial Arbitration (ICCA) - Queen Mary Task Force on TPF, the term “third-party funding” refers to an agreement by an entity that is not a party to a dispute to provide to a party, an affiliate of that party or a law firm representing that party, a) funds or other material support in order to finance part or all of the cost of the proceedings, either individually or as part of a specific range of cases, and  b) such support or financing is either provided in exchange for remuneration or reimbursement that is wholly or partially dependent on the outcome of the dispute, or provided through a grant or in return for a premium payment. In other terms, third-party funding is the process by which an unrelated party (third-party) to a dispute agrees to pay whole or part of the cost to contest the litigation, with an aim to make a profit from the proceeds of such litigation. For a third party funder, it is an investment in a worthy claim that can generate a profitable return on investment from the amount of award or settlement.

Question 2

What is the difference between a third party funding agreement and contingency fee arrangement?

Accepted Answer

Third-party funding is a process by which a party unrelated to a dispute funds the cost of contesting the claim (such as litigation cost, counsel fee, tribunal fee, arbitral institution management fee etc.) in order to make a profit from the resulting award or settlement.    Under a contingency fee arrangement the legal counsel’s fee is dependent on the outcome of a case. In such arrangements, the counsel agrees to be paid only upon achieving the client’s desired outcome, such as a favourable monetary award or the successful completion of a sale and agrees that their fee would be a percentage of such award or sale amount and not their usual hourly rates.

Question 3

Is third party funding only for indigent claimants?

Accepted Answer

No. While third party funding does assist indigent claimants in pursuing their claims, well capitalised companies often opt for third party funding for the numerous advantages that it offers.

Question 4

Can capital rich companies obtain litigation funding?

Accepted Answer

Indeed. Several well capitalised companies opt for third party funding as it frees up their working capital to be utilised for other purposes instead of tying up capital for payment of legal fees and costs.

Question 5

Is litigation funding only for Claimants?

Accepted Answer

No. Funding can be obtained by Respondents too.

Question 6

How does a funder decide which case to fund?

Accepted Answer

Every funder has its own internal process to determine whether a case is a worthy investment or not. However, there are three broad categories which we believe are common for every funder and every case;  Legal Merits – How strong is the case on its merits? Quantum Analysis – How strong is the evidence to support the quantum of the claim? Location of assets and Enforcement Jurisdiction – Does the other party have enough assets and where are these assets located?

Question 7

Do I need to (re)pay the funder if I lose the claim?

Accepted Answer

No. The funding is provided on a non-recourse basis.

Question 8

Will the funder pay adverse costs if I lose the case?

Accepted Answer

It depends on the terms agreed between the parties in the funding agreement. In our experience, funders often agree to pay adverse costs (if any).

Question 9

Do I need to approach a funder at the very inception of a case?

Accepted Answer

No. A litigant can approach a funder at any stage of the matter.

Question 10

Can I get only a part of the case funded?

Accepted Answer

Yes. It is indeed possible to get only a part of the case funded. For example, a claimant can opt to only procure funding for the interim injunction through emergency arbitrator proceedings in the initial stages for a matter. Another example of partial funding is when the funder agrees to pay a certain predetermined percentage of each invoice raised by the counsel.

Question 11

What type of costs are funded by a third-party funder?

Accepted Answer

In our experience, a typical funding agreement would cover the following costs: Counsel Fee Queen’s counsel/senior counsel/barrister fee (if any) Expert fee  Tribunal Fee  Arbitral institution/court fee Please note this is not an exhaustive list. Separately, it is possible for litigants to secure funds to be used as working capital against the value of the claim(s).

Question 12

Will a funder reimburse already incurred legal costs?

Accepted Answer

Yes, funders often agree to reimburse the legal costs which have already been incurred by a litigant.

Question 13

How does the funder get paid?

Accepted Answer

The funder gets paid once the award is executed against the other side or from the proceeds of the settlement amount.

Question 14

How much time does it take for the funder to assess an investment opportunity?

Accepted Answer

While there is no fixed time, most funders endeavour to complete the assessment within 3 to 6 weeks.

Question 15

Does the involvement of a funder affect any settlement discussions with the other side?

Accepted Answer

While all settlement discussions would depend on the parties and their appetite, we have noticed that settlement discussions often get accelerated in cases where a third party funder has invested a case.

Question 16

How involved is the funder after the execution of a Litigation Funding Agreement?

Accepted Answer

As much or as little as the client wishes. The involvement of the funders in the proceedings of a case will always depend on the terms agreed between the parties. Usually, funders maintain a hands off approach, unless agreed otherwise. A funder will always act in the best interest of the client and the matter.

Question 17

Is ELF a litigation funder?

Accepted Answer

No. ELF is a team of consultants and analysts that help source the right amount of funding from an interested funder for a worthy claim. ELF has its own internal process to identify the right claim, the right funder and the right terms.  ELF analyses any new claim or matter on the three core parameters in order to conclude if a claim can be considered a ‘worthy’ investment. These are: Legal Merits – How strong is the case on the merits? Quantum Analysis – How strong is the evidence to support the quantum of the claim? Location of assets and enforcement jurisdiction – Does the other party have enough assets and where are assets located?

Question 18

How does ELF assess a potential claim?

Accepted Answer

When approached with a new client or matter, the team at ELF together with experts from the industry, will immediately begin their assessment of the matter in order to identify its chances of success. The team will base their recommendation on the following core parameters: Legal Merits – The team at ELF, together with arbitrators and barristers from different sets of chambers from the United Kingdom, Singapore and India, analyse a matter on merits of evidence available and the proposed strategy (if any).  We ONLY accept a matter if our internal threshold of probability of success is met.  Quantum Analysis – ELF either independently or together with external damage             analysis/forensic accounting specialists will prepare a preliminary report on the quantum of claim. Location of assets and enforcement jurisdiction – ELF will work with experts in asset tracing and investigation in order to determine the location of the assets of the counterparty and prepare a preliminary report. ELF will then work with the client’s legal counsel (or the barristers assisting with the legal merit analysis) to ascertain ease of enforcement in different jurisdictions depending on the location of assets.

Question 19

How does ELF ensure confidentiality and protection of privilege?

Accepted Answer

Before ELF begins the assessment of any matter or receives any sensitive information, ELF will enter into a Non-Disclosure Agreement (NDA) with the law firm or the client.  Similarly, before ELF shares any information with a potential funder, ELF will enter into an NDA with the relevant funder.

Question 20

Can ELF help in finding counsel?

Accepted Answer

Yes, in matters where the litigant is not yet represented by counsel, ELF can help find appropriate counsel to represent the client. Please note, no employee or officer of ELF will represent the client in any matter.

Question 21

Which litigation funders does ELF work with?

Accepted Answer

ELF works with a number of global funders located in Singapore, Australia, United Kingdom, France, Netherlands, Cayman Islands, South Africa and the United States of America.

Question 22

What information does ELF require to assess my claim?

Accepted Answer

The exact information required would differ from case to case dependent on factors inter alia the stage of the matter, the current status of the claim etc. The more information provided, the faster the analyses can be completed. Usually, ELF will require all ‘relevant’ information about a claim.  For example, if ELF is engaged at the very beginning of a matter, the team will require all information available to the client at that stage in order to assess the claim’s viability and to assist the client in building the strategy. If ELF is engaged when pleadings have been filed by the parties (or are about to be filed), ELF will require copies of all pleadings filed thus far, any draft  pleadings prepared, copies of each order (including procedural orders) passed by the tribunal, all evidence introduced or proposed to be introduced,  expert reports (if any) and any other relevant information at such stage.

Question 23

Will ELF charge me for assessing my claim?

Accepted Answer

No. ELF will not charge a litigant or a law firm for the initial assessment of any matter. Our remuneration is tied to the successful execution of a funding agreement and the successful completion of a matter.