The Litigation Funding Industry in Australia

The essential nature of a litigation funding business is that the litigation funder provides funds to enable a party to meet the cost of pursuing a legal claim and, in return for assuming those funding obligations, the litigation funder is entitled to receive a percentage (typically 30 percent to 45 percent) of the amount ultimately recovered under the claim, whether by way of court judgment or an earlier agreed settlement.

The costs funded and paid by the litigation funder generally include the legal fees, at usual hourly charge-out rates, of its client party’s solicitors and barristers together with the disbursements or expenses (such as the costs of any requisite experts reports) relating to the litigation. If the client party is an insolvency practitioner pursuing a claim in an insolvency matter, the costs funded and paid by the litigation funder generally also include the reasonable fees of the insolvency practitioner involved in pursuing the claim.

In addition, the litigation funder typically provides its client party with an indemnity (secured by either a bank guarantee or cash on deposit) against an adverse costs order in the event that the claim is unsuccessful. No amount is received by the litigation funder if the claim is unsuccessful.

Litigation funding is applicable in situations where a person or a company: has a good legal claim but not the financial resources to pursue it; or cannot provide security to meet a security for costs order; or wishes to lay off some or all of the financial risk associated with litigation; or is concerned about being exposed to liability for the other side`s costs.