What Funding Options are Available to Go to Court?

If you don’t have the right funds and you are involved in a dispute, what do you do then? Do you bow to legal pressure and not achieve justice? Or do you stand up and fight by getting financial help?

Where there is a will, there is a way and there are viable funding routes which can help you go to court. Over the years, these options have evolved and some are no longer in use, but here are four funding choices you have to choose from:

Consumer Credit Agreements (CCAs)
These are hardly in use anymore because there was such a high risk involved. Fundamentally, they allowed a person to apply for funding through a funding house, which would allow the person to fund a court case for around three years.

If the application was accepted, one could access funds to pay for all fees and they would take out After the Event (ATE) insurance which would repay the loan back, if you lost the case.

If you won the case, the defendant would cover the lawyer’s fees and your CCA, leaving you with all of the damages awarded.

Direct lending
This became quite a popular funding option when CCAs stopped being used. Basically, the law company took on the full cost of the loan, but this came with a lot of risks too.

It was easier for law firms and better than the CCA; however there was just too much high risk involved.

Damages Based Agreements (DBAs)
This funding option is one of the newest methods nevertheless; it has not yet come into fruition. DBAs were created on a ‘no win, no fee’ basis to make sure solicitors had a vested interest in court cases.

They are set to come into effect in 2013, and involve a contract between the business and solicitor. The contract stipulates the payment terms and if the case is won, the solicitor is paid a percentage of the damages- so it really is in their best interest to win.

However, there is currently no cap on how much the solicitor is paid.

Litigation funding
Litigation funding has become extremely popular all over the world for one very good reason- the business doesn’t have to pay a single penny, whether they win or lose. Fundamentally, the option is ideal for big businesses that have multi-million pay-outs (minimum £500,000), and for cases that stretch out over a long period of time.

Otherwise called third party funding, it involves a funder covering all the costs associated with taking a case to court. They take on the huge risk of providing all the funds because if they lose, they have to pay the defendant’s fees too.

Why do they take the case on then? Well they do put themselves in a lot of danger, but the potential reward is extremely high. They get back their initial investment, as well as a return on investment (ROI) from the damages, if the case is won.

As it is quite a risky business, a third party funding company will evaluate your case when an application for funding has been submitted. They will choose whether or not to take your case on board, based on an extensive assessment procedure.

This really is the safest option for businesses because the firm’s cash flow is unaffected and as previously stated, no money needs to be paid.

So as you can see, there is a wide array of funding methods to help organisations go to court. Whatever industry you are in, there will be a funding option that is right for you.


Paul Jones

Editor of Business Matters, the UKs largest business magazine, and head of Capital Business Media's automotive division working for clients such as Aston Martin and Infiniti.


Editor of Business Matters, the UKs largest business magazine, and head of Capital Business Media's automotive division working for clients such as Aston Martin and Infiniti.