Litigation funder pledges money to probe merits of case

Topics: Costs, fees and funding,Litigation Funding

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A third-party funder has pledged to pay for claimants to investigate the merits of their case before committing to litigation.

Augusta Ventures, which targets cases worth less than £1m, says there will be no obligation to pursue claims and parties who choose to back down will not have to pay money back.

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The money will fund the costs of an opinion from a solicitor and, if the case has merits, from counsel also.

Third-party litigation funding has become an increasingly prominent factor in the funding of cases, particularly since recoverability of success fees and after-the-event insurance was removed by the Jackson reforms in April 2013. This is believed to be one of the first examples of a funder offering finance in advance of cases being actively pursued.

Engagement director Jeunesse Edwards (pictured) said: ‘We recognise that just getting to the point of deciding whether a case is worth pursuing can be expensive and off-putting for would-be claimants. This expanded offering allows meritorious claims to get over this first hurdle and assists solicitors to generate more work.’

In the event that Augusta goes on to provide finance for the case, the funding will be included in the overall case budget. If the decision is not to proceed, the client will have to reimburse Augusta only if it wants sight of counsel’s opinion.

Both the solicitor and counsel will be expected to work on a partial conditional fee agreement to ensure what Augusta calls ‘an alignment of interest’ amongst all parties.

The solicitor is required to initially assess the case on the basis of Augusta’s economics, selection and prospect of recovery criteria.

Edwards said the prospect of early assessment should also help to speed up the litigation process by persuading defendants to settle cases.

‘The fact that a case has been so thoroughly vetted before being taken forward will also send a very strong message to the defendant,’ she added.

Augusta started at the end of 2014 and has funded 64 cases to date, with a total investment of £15m.

The company, backed by private funds, a Canadian family office and private capital fund Metric Capital Partners, says it receives around 20% of the net proceeds of a successful case.

Augusta’s shareholders include David Cheyne, former senior partner of Linklaters, and Martyn Bowes, ex-head of real estate financing at Barclays.

Readers' comments (7)

  • Investigating the merits before launching litigation? What will they think of next?

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  • A medical report, Anon?

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  • It doesn't appear to cover cover medical negligence claims.

    The 'calculator' on their website is interesting:
    https://www.augustaventures.com/dispute-process/funds-provided

    Seems like quite a large deduction if no client contribution to the initial costs. e.g £100,000 claim, £30,000 costs to run it with no client contribution up front - client gets £55,000.

    Must be a market for it though

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  • There was a time when this sort of thing was champerty and maintenance. Some of us are still old fashioned enough to think it all should be. There are so many ways in which current practices demonstrate why their abolition has been a 100% retrograde step.

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  • "If the decision is not to proceed, the client will have to reimburse Augusta only if it wants sight of counsel’s opinion."

    Er, what? Doesn't the client have a right to see counsel's opinion, if it was produced under a joint retainer? If Augusta decide not to fund the litigation, the client only gets to see counsel's opinion only if he pays the fees which Augusta have incurred in obtaining it?

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  • To all those who have taken the time to comment on the above article, thank you.

    Our decision to make early stage claim finance available was primarily driven by the large number of lawyers we work with who make the comment that there is a limited amount of WIP they can carry when it comes to reading into a potential client’s matter. Many said they saw good, though early matters, walk out the door as they couldn’t afford to undertake the work on a speculative basis and the claimant could not pay their fees.

    In order to assist lawyers and claimants alike, we have made finance for the preliminary investigation available which is non-recourse and which satisfies our commercial expectations as a business.

    The calculator on our website provides an indicative worked example of how our full finance works. In the example mentioned by Hilton, a claimant who cannot finance their case can use our early stage financing to get the case off the ground, and then if it is approved for the full finance take their matter all the way to trial at no cost to them and with ATE coverage in place.

    There is further information available in relation to the cases we have financed under Claim Types and on the infographic we produced recently. Please take the time to look at the following links:
    https://www.augustaventures.com/claim-types
    https://www.augustaventures.com/augusta-by-numbers

    Jeunesse Edwards
    Director of Strategic Engagement

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  • OK, but what is this stuff about the client having to pay to see counsel's opinion if someone (Augusta?) decides not to proceed?

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