An innovative model for funding ‘risk-free’ group actions against ­business cartels could have its first court blooding this autumn, the scheme’s originators said this week.

‘Cartel Key’, launched by collective claimant specialist Cohen Milstein Hausfeld Toll and insurers FirstAssist Legal Protection, will remove a deterrent to group actions against cartels by providing clients with after-the-event insurance against the risk of adverse costs.

Rob Murray, managing partner at Cohen Milstein, said the innovation would ‘transform the viability of civil cartel claims’ for claimants taking action under European judgments and the Competition Act 1998.

Under the scheme, Cohen Milstein will undertake cases on a conditional fee arrangement ‘light’ basis, recovering fees from defendants only in the event of success. FirstAssist provides after-the-event insurance, protecting claimants against adverse costs.

The package will be attractive to claimants, predicted Peter Smith, managing director of FirstAssist Legal Protection, because ‘damages will be intact in almost all cases.’

The innovation could prove a further setback to the growing market in third-party funding, after the collapse of the £93 million Moore Stephens case in June. Smith said that there would still be a place for third-party funding. However ‘its role will not be as dramatic as some would have you believe’, he said.

The first claim to be funded through the scheme is ‘up and running’, Smith added. ‘The next step will be an issue of proceedings.’ Although developed purely for cartel cases, Smith said the model could be adapted for other types of case. ‘Shareholder disputes would be a logical extension,’ he said.