Not every client who has a strong claim can afford to run it. Third-party funding solves that by bringing in an outside investor who pays the legal costs in exchange for a share of any recovery — treating the claim itself as an asset. As a solicitor, you'll come across this when advising clients on how to pay for litigation, and you need to understand both how these arrangements work and the duties they place on you.
This area sits at the meeting point of contract, professional conduct and costs, so getting it right protects your client, the funder, and you.
What this lesson covers:
- Nature and Regulation of Third-Party Funding — what third-party funding is, how it differs from a conditional fee arrangement, and who (if anyone) regulates funders.
- Enforceability of Funding Agreements — when an agreement risks being unenforceable for champerty, and when it counts as a damages-based agreement.
- The Solicitor's Professional Duties — your obligations on advice, confidentiality, and keeping the client in control of settlement.
- Costs, Security and Funding Terms — the court's power to order costs against a funder, the Arkin cap, and how funding affects security for costs.