The extent and scope of litigation funding liability is being questioned, after a High Court ruled the funder was liable for costs predating the litigation funding agreement (LFA).
In analysis for Lexology, Jodie Gittins and Chris Ross of RPC noted that this is a signal to funders to not assume their liability in unsuccessful claims will be measured against their portion of funding contributed, nor will it be limited by the start date of their funding agreement.
In the case of The ECU Group plc v HSBC Bank Plc & ors, the claimant had entered into an LFA with Therium in September 2019, to fund the action and partially cover costs that The ECU Group had accrued since November 2018. After the Commercial Court had dismissed all claims and ruled that ECU must pay the defendant’s costs, HSBC asked the court to order Therium to be jointly liable for all costs dating back to the start of proceedings. Mrs Justice Moulder ruled that Therium was indeed liable for these costs as they had (in part) covered these costs for ECU.
As the courts have a breadth of options when deciding costs orders, funders should be mindful that in cases where they have the potential to reap a large reward if successful, they may face an equally significant loss when the outcome is reversed.
