Litigation Funding for IP Claims

Until 2000 a large number of freelance artists, authors, designers, inventors and self-employed individuals relied on legal aid to protect their artwork, inventions and other intellectual assets but that source of funding was cut off by paragraph 1 (g) of Schedule 2 to the Access to Justice Act 1999. In some areas of litigation such as personal injuries claimants have often been able to find solicitors and barristers who are prepared to act under a conditional fee agreement (that is to say, no win no fee) but the complexities, costs, duration and uncertainties of intellectual property disputes make it uneconomic for most specialist lawyers to accept instructions for intellectual property disputes on that basis (see “No Win No Fee” 11 July 2011). As I said in that article the best option is usually to take out before-the-event intellectual property insurance but the premiums are quite high and many patent attorneys are sceptical as to its value. There remains, of course, after-the-event insurance but that is likely to be less available as Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 takes effect.

Litigation Funding

There is yet another option, namely third party litigation funding. There are businesses that are prepared to invest considerable sums of money in claims for substantial damages. An example is Harbour Litigation Funding Ltd. which claims to be the UK’s largest litigation funder with £180 million of capital and to have invested more money, in more cases, than anyone else. On its “Funding Explained” page, the company states that “litigation funding involves paying the legal bills of a claimant in exchange for a share of the proceeds on success. If there is no success in the litigation, there is no repayment. Litigation funding is an investment in the litigation alongside the claimant. It is not a loan.” Further down that page, the company adds:

“Litigation funding gives claimants the opportunity to seek recoveries which they might not otherwise be able to pursue. Increasingly it provides a solution to corporate claimants to hedge their costs in litigation. Having Harbour alongside also sends a powerful message to the defendant that they cannot adopt a ‘scorched earth’ approach of trying to run up costs or demanding security in the hope that the claimant will not be able to afford to continue with their claim” (my italics).

On its “Case Studies Page” Harbour gives examples of some of the 100 plus cases it has funded since 2002. They include unfair prejudice claims, breach of trust cases and an action for breach of confidence by an SME against an investment bank. As there were no intellectual property disputes on the list save perhaps for the breach of confidence case I asked the company’s CEO, Brett Carron whether Harbour would entertain such claims and he replied that it would. He added, however, that the company has pretty strict investment criteria and that it does not commit to every case that is presented to it. Mr. Carron also said that high value computer supply disputes would be possible candidates for funding. Having been called to the Bar at a time when champerty and maintenance were still torts I had been nervous of the idea of investing in litigation but the involvement of Sir Gavin Lightman, Stephen Davies QC and Michael Napier (all of whom I have dealt with at one time or another) is good enough for me.

ALF

Harbour is one of the members of ALF (The Association of Litigation Funders of England and Wales). Other members include Calunius Capital, Therium, Vannin Capital and Woodsford Litigation Funding. ALF claims to be

“dedicated to promoting best practice in the Litigation Funding industry and campaigning to improve the uses and applications of Litigation Funding as an additional resource for Access to Justice and rational management of financial risk in making claims. We seek to ensure continued compliance with the Code of Conduct by our members and to promote awareness of Litigation Funding in the UK.”

A copy of the November 2011 that Code can be downloaded from ALF’s website.

Litigation Futures

A useful resource for finding funding is the “Find a Funder” facility on the Litigation Futures website This is a search facility for after-the-event insurers and brokers as well as third party funders. I searched third party funders for intellectual property and came up with a number of names that included Harbour, Therium, Vannin and Woodsford. I came up with a similar number of names when I searched for after-the-event insurers Incidentally, Litigation Futures appears to be associated with the Legal Futures site which is the first site that I consult for news on the legal services industry. I thoroughly recommend its blog and Friday newsletter.

Further Information

 Should anyone wish to discuss this article or  litigation funding generally, he or she call me on 0800 862 0055 or use my contact form.

About Jane Lambert

I am a barrister specializing in intellectual property, technology, media and entertainment and competition law. I specialize in helping SME (small and medium enterprises) protect and exploit their investment in brands, design, technology and the arts. SME require intellectual property (legal protection for their intellectual assets) at least as much as big business but their limited means restrict the way they can use it. Looking after such clients wisely requires skills and knowledge which have taken me years to learn.
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