It is essential for any party seeking to resolve a commercial dispute to have the sufficient resources to fund their case, whatever the outcome. A party to a dispute may be liable for any costs they incur unless an alternative method of litigation funding is put in place. Consideration should always be given to the suitability and availability of alternative funding approaches.

Annecto Legal fills the gaps when clients need access to the best legal advice on any business issue. It removes financial uncertainties and the need for balance sheet protection against unforeseen major uninsured legal expenses at a low cost.

Disputes can be inconvenient and disruptive, and we understand that covering the cost of the legal support you require is not always easy.

Types of commercial litigation funding

Before the event insurance (BTE insurance)

When pursuing any type of litigation, you should investigate whether you already have the benefit of legal expenses insurance that may cover your legal costs. Insurance, such as home or business insurance, may contain terms which agree to cover the costs of commercial litigation.

If you do not have a BTE policy in place which covers the costs of commercial litigation, Annecto Legal can offer a range of alternative commercial litigation funding policies.

After the event insurance (ATE Insurance)

After the event legal expenses insurance is perhaps best thought of as similar to a ‘swap’. For either no upfront fee or a small upfront fee, the insurer takes on all of the risk of the potential adverse cost award. Therefore, the client has swapped their obligation to pay the defendants in the event of a loss with the obligation to pay the insurer in the event of a win.

This is generally an attractive swap as the client is likely to be in a better financial position following a win than following a loss. Also, the payment to the insurer will only be a percentage of the adverse costs rather than the whole amount.

The actual amount the client will pay for the insurance will depend on how long it takes to settle the case. An early settlement could mean that they pay as little as 15% of the amount insured. If the case goes to trial, it is more likely to be in the 40% to 60% range (depending on the insurer and the case).

Third party funding agreements (TPF)

Third party funding is an arrangement in which someone with no prior connection to the dispute agrees to finance all or a part of the legal costs in return for a fee payable from the proceeds to be recovered. TPF can also be used alongside other available funding options, such as ATE insurance, conditional fee agreements and damages-based agreements.

With the help of TPF litigation, you can avoid taking any financial risks at all: the funder pays for everything in return for a share of the damages. If the case fails, the funder bears all the costs – you pay nothing.

Third party litigation funding providers take on the risk of your litigation finance, freeing up your cash flow and shifting all the risk off your balance sheet.

In return for taking the risk, the funder will typically seek in the region of a fifth to a third of any damages recovered. That means you keep up to 80% of the reward, having taken none of the risk.

TPF arrangements can be complex, and Annecto Legal is happy to assist clients in understanding the finer points, as well as helping to secure the best deal.

In many cases, third party funders will require a lawyer to give an independent assessment of a case and its prospects of success before they agree to provide funding. If you require more information on third party funding in the UK, please get in touch.

Who can Annecto Legal assist?

• Businesses with a dispute – Annecto Legal helps large corporates to small business owners with legal fees for commercial litigation to enable access to justice as well as the transfer of financial risk away from business’ balance sheets.

• Individuals with a dispute – Often, the best way for individuals with a dispute to pursue their claim is to transfer the risk and cash-flow implications to professional litigation funders and insurers. Annecto Legal is better placed than any other service to offer help with legal fees. It can offer access to in-house expertise and a network of solicitors alongside funding and insurance.

• Insolvency practitioners – If you’re an insolvency practitioner (IP) striving to ensure that unpaid creditors recover as much of their debt as possible whilst covering your own investigation and legal costs, impending litigation can be a large question mark looming over realising debtor’s assets. The team at Annecto offer free advice to enable claims to be explored and, if applicable, progressed to the stage where they are funded and insured.

• Solicitors seeking funding/ATE – Most clients are reliant upon their solicitors to advise them on insurance and funding for commercial disputes. However, few solicitors are well-placed to provide the comprehensive advice that ensures clients can make a fully informed decision. Annecto Legal offers a professional service to solicitors on behalf of their clients on matters such as conditional fee agreements, damages-based agreements, success fees and work in progress (WIP) insurance as well arranging ATE insurance and third party funding.

• Commercial insurance brokers – As a commercial insurance broker, litigation can be difficult for your clients. It’s seldom financially viable for companies to buy insurance for actions they may wish to bring in the future. Annecto Legal’s network of legal experts and access to multiple providers of litigation funding and insurance make it an excellent choice for your clients’ needs. Our Board is well-versed in the needs of commercial insurance brokers and can assist in developing specific litigation assistance products for your clients.

• Accountants – Accountants are always looking for ways to add value to their clients and provide innovative solutions to help their business clients manage financial risks. One area where businesses could really benefit from their accountant’s advice is legal costs. The team at Annecto Legal are available to provide guidance to accountants across all options of litigation funding and help to shift the risk from a client’s balance sheet.

How can Annecto Legal assist with commercial litigation funding?

Annecto Legal help clients realise the value of their commercial litigation claims. Our partners are lawyers that are frustrated with the traditional hourly rate funding model, and we work on their behalf to raise awareness of the alternatives available.

Get in touch with an expert member of our team to find out which commercial litigation cover is the right litigation funding choice for you.

Our firm is authorised and regulated by the Financial Conduct Authority as an Appointed Representative of 2direct Limited. We have a registered office located in Manchester.

Call us today 0800 612 6587, or our business development director, Mark Beaumont, can be contacted by email mark.beaumont@annectolegal.co.uk