A frequent talking point among claimant law firms and litigation funders is the use of delaying and prolonging tactics by defendants, hoping to continually increase the financial cost of bringing a case until it is no longer viable to do so. However, as a recent example demonstrates once again, third-party litigation funding provides a significant weapon in the claimant’s arsenal when it comes to combating this type of strategy.

An article in The Law Society Gazette covers ongoing developments in the group action being brought against the Ministry of Defence over claims that its prescription of Lariam, an anti-malarial drug, caused harmful side effects to armed forces personnel. The law firm leading these claims, Hilary Meredith Solicitors, has denied reporting that it is facing bankruptcy due to the large costs involved in the case, and told the Gazette that its financial backing is secure.

In a statement to the Gazette, the law firm stated that its “bank and litigation funders have confirmed their ongoing financial support”, which will allow the law firm to continue with the Lariam cases without fear of bankruptcy. Hilary Meredith Solicitors admitted that whilst it had been necessary “to borrow millions of pounds to fund this David and Goliath type action”, the law firm’s financial footing was secure with the support of outside lenders.

The identity of the litigation funder supporting Hilary Meredith Solicitors is not specified by the law firm’s statement or the Gazette’s reporting.

The firm also confirmed that with 10 lead cases scheduled for trial at the High Court next year, they are now “close” to agreeing a settlement with the MoD. The Gazette also cites its reporting from last year, which revealed that the MoD had spent £20 million on its legal budget to defend against the claims brought between 2021 and 2022.

As the Litigation Funding Agreements (Enforceability) Bill is subject to a line by line examination during the committee stage today, we can analyse the amendments that have been put forward by members of the House of Lords. Of the three amendments that were discussed during the committee stage, two were put forward by Lord Stewart of Direlton and one by Lord Marks of Henley-on-Thames.

Both of Lord Stewart’s amendments deal with the section of the bill that provides a definition of a litigation funding agreement.

The first of Lord Stewart’s amendments calls for the following line to be inserted at the end of the Clause 1, page 1, line 14: “(ia) where the litigant is a litigant in person, expenses incurred by that litigant, or”. In his explanatory statement, Lord Stewart said that this language “ensures that the definition of litigation funding agreements includes agreements under which a funder agrees to fund expenses incurred by a litigant in person.” 

The second of Lord Stewart’s amendments relates to Clause 1, page 1, line 16, which would take the following sentence: “the payment of costs that the litigant may be required to pay to another person by virtue of a costs order”, and would now be followed by: “, an arbitration award or a settlement agreement”. Lord Stewart explained that this would ensure that the bill’s definition of an LFA would also include “agreements under which a funder agrees to pay costs relating to litigation that arise by virtue of an arbitration award or a settlement agreement, as well as by virtue of a costs order.”

Lord Marks’ “probing amendment” would follow Clause 1 and would be titled “Review: enforceability of litigation funding agreements”. The language of the amendment requires the Lord Chancellor to “establish an independent review of the impact of provisions in this Act” and lays out the scope of such a review. This would include a review of safeguards for claimants, regulation of third-party funding, funders’ returns, and alternatives to LFAs. The amendment dictates that the review must be completed by 31 August 2025, and that the Lord Chancellor must then provide a response before Parliament within three months of receiving the review.

The full text of the amendments can be read here.

The current version of the bill can be read here.

LFJ will be providing a summary of the committee stage hearing once the Hansard transcript is available.

The Frankfurt-based litigation financier Legal Finance SE, a subsidiary of listed company Nakiki SE (ISIN DE000WNDL300), is taking massive action against online casinos: According to current German legislation, most online casinos have been illegal since 2021 and must compensate players for all losses incurred in recent years. This means that injured parties can use Legal Finance to recover all the money they have lost through legal action.

Many players have lost hundreds of thousands of Euros playing online poker or sports betting in recent years. This is where Legal Finance comes in. Legal Finance funds lawsuits against casino operators in German courts and takes care of the entire legal process together with specialised consumer protection law firms.

The chances of success are high: German courts have already ordered several online casinos to pay refunds. In March of this year, the Federal Court of Justice (BGH) agreed with Legal Finance's legal opinion that most online casinos are illegal and that gambling losses must be reimbursed to victims.

Legal Finance has a 40% success rate in each case. The average amount in dispute is between €30,000 and €50,000. Legal Finance initially plans to fund up to 100 cases per month and intends to increase this volume significantly.

Legal Finance acquires cases by working with law firms, and claimants can also contact Legal Finance directly via dedicated websites.

There has been a resurgence in calls for new rules that would implement mandatory disclosure of litigation funding agreements in US litigation, spurred on by arguments about the influence of foreign parties in American courts. Whilst this position has substantial support, it is clear that not all members of the judiciary are equally keen on the idea of forced public disclosures when it comes to third-party funding.

An article in Bloomberg Law covers comments made by Judge Robert M. Dow Jr., counsellor to Chief Justice John Roberts, at an industry conference hosted in New York by the International Legal Finance Association (ILFA). 

At the conference, Dow spoke out against the idea of mandating the public disclosure of litigation funding details, arguing that any concerns around the control of cases or conflicts of interest could be addressed through private disclosures to the judge overseeing the case. Dow argued that, “as long as the funder doesn’t have control, I don’t think it’s gonna be a major issue for judges.”

Explaining his concerns around the push for public disclosure, Dow pointed to the fact that such disclosures could be used by opposing parties to gain an unfair level of insight into the funded party’s litigation strategy. Dow argued that such a rule would create an imbalance, saying that it was “really not fair to give one side the other side’s litigation strategy unless it’s mutual.”

Ursula Ungaro, a former federal judge and now a partner at Boies Schiller Flexner, spoke alongside Dow on the panel discussion and joined him in voicing opposition to proposals of mandatory disclosure. Ungaro tackled the suggestion of potential conflicts of interest with third-party funding, saying: “There are all kinds of things that go on in the world that have some influences on lawyers and clients and judge’s cases, to think that disclosure is going to solve that problem is nonsense.”

In a post on LinkedIn, Factor Risk Management (FRM) announced the launch of its new M&A and Transactional Risks department. Building upon its existing litigation finance and ATE insurance solutions, FRM is launching this new offering to service clients ‘who wish to mitigate the threat of litigation or guard against any ongoing disputes when involved in M&A deals.’ The M&A and Transactional Risks solutions will be available to clients across all industry sectors, including insurance policies covering warrant & indemnity, tax and contingent liability.

As part of this service launch, FRM has announced the appointment of James Wilson as Head of M&A and Transactional Risks, and Camila Lonzetti Vieira de Carvalho as Associate Director of M&A and Transactional Risks. Wilson commented on the launch of the new offering, saying: “Our agile structure, subject-matter expertise and market experience will allow clients a new option when looking for a partner to provide insurance solutions in the often fast-paced and complex M&A deal-making community.”

Tom Davey, Director and Co-founder of FRM, said that the appointment of James and Camila will “strengthen FRM’s powerful mix of insurance and finance professionals servicing the needs of the disputes, mergers and acquisitions market.”

James Wilson and Camila Lonzetti Vieira de Carvalho both join FRM from United Insurance Brokers Limited, having respectively served as Head of Corporate & Capital Risks and Associate Director at the broker.