From Australia to Africa: Litigation Funding Around the World

Litigation funding is growing in popularity all over the world. The funding solution is being embraced throughout the globe, especially in England, Wales, Australia and the USA.

Is it any wonder why so many countries are implementing the funding option into their legal system? It is a viable, effective route for businesses and solicitors to resolve a legal dispute, and fund a case to court. Court cases can be extremely expensive, but this route allows firms to achieve justice when they lack the right funds.

Litigation funding is growing in popularity all over the world. The funding solution is being embraced throughout the globe, especially in England, Wales, Australia and the USA.

Is it any wonder why so many countries are implementing the funding option into their legal system? It is a viable, effective route for businesses and solicitors to resolve a legal dispute, and fund a case to court. Court cases can be extremely expensive, but this route allows firms to achieve justice when they lack the right funds.

It can only be predicted that other countries will follow suit soon, and more entrants will emerge on the market.

However, litigation funding isn’t as straightforward in other parts of the world as it is in the UK, and the situation differs from jurisdiction to jurisdiction. There are certain laws that apply, making the route illegal and these are:

·         Maintenance

This is when a third party individual/business is a stranger to the other party funds litigation.

·         Champerty

This is when a third party is unconnected to the claimant and funds the litigation in exchange for a percentage of the damages.

So how is litigation funding being embraced around the world?

·         Canada

This is a relatively new funding option in Canada, as it has only just been legalised. Maintenance and champerty were illegal, but is has now been allowed following a securities class action against ManuLife Financial Corp. An Ontario judge ruled that the funding arrangement would be beneficial to the case, and therefore it changed the legal landscape in the country.

·         South Africa

Litigation funding has been around for around nine years in South Africa. The Contingency Fees Act of 1997 permitted ‘no win, no fee’ contracts being used, and this led to courts deciding that maintenance and champerty laws did not apply.

·         Germany

Germany’s legal system is quite similar to the UK with regards to litigation funding, as no maintenance or champerty laws exist. The market is booming in popularity and a lot of legal dispute cases are being taken to court via litigation funding.

·         Jersey

Litigation funding on the island is very much apparent. In September last year, the Royal Court of Jersey endorsed the role of litigation funding in bringing cases to court, in the case of Barclays Wealth v Equity Trust.

The case involved serious allegations of breach of trust and breach of fiduciary duty, and it was funded by third party funding. Equity Trust had claimed that the claimant had the benefit of litigation funding, but the Master of the Royal Court rejected the strike-out motion.

The landmark ruling followed a similar judgement in December 2011, in the Valetta Trust case.

·         Hong Kong

In Hong Kong, litigation funding is still in progress; however, a reform is under speculation. A solicitor was imprisoned for 15 months in 2009, after she was convicted of conspiracy to receive funding. The conviction was overturned in 2012 on appeal.

·         Australia

In Australia, the funding option is much more relaxed and it is very similar to England and Wales. The country is much more advanced though as litigation funding started way back in the 1990’s, and the impact on the Australian legal system has been noteworthy.

This is accordance to recent research conducted by David S. Abrams and Daniel L. Chen.

·         The USA

Litigation funding is apparent in America nevertheless, it is still a new concept in the commercial market. The funding route still hasn’t developed and damage awards are much higher. This means that solicitors can run cases and take a larger percentage of the proceeds.

So as you can see, third party finding has become very common over the past few years and on a global scale. It can be extremely beneficial for companies going to court, to reduce the risks involved and financial expenditures.

There will definitely be more changes to come in this area of law, so stay tuned.

This article was written by Vannin Capital, the go-to-experts in litigation funding for solicitors and businesses. If you need to resolve a legal dispute but lack the funds to go to court, speak to the specialists today.