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Leading litigation funders, institutional claimants and insurers have teamed up with law firms and barristers to set up a working group to agree model documents for use in litigation funding.
The working group is chaired by London-based Brown Rudnick partner Elena Rey and includes funders Litigation Capital Management (LCM), Augusta Ventures, Therium and Omni Bridgeway, insurers Marsh and AmTrust Financial, and the asset recovery experts Grant Thornton and BDO Global.
The initiative aims to generate model litigation funding documents for the UK and European markets, akin to those developed in debt finance transactions by the highly respected Loan Market Association (LMA).
Rey said she would draw on Brown Rudnick’s extensive experience working with the LMA. The documents are expected to be available by spring 2021 and will adopt agreed common wordings, enabling clients, funders and law firms to rely upon standardised boilerplate provisions.
Rey said this would free up parties to negotiate on commercial terms, as well as case-specific considerations. The working group, she added, would “support the institutionalisation of the industry by introducing best-in-class documentation” available to all.
Nick Rowles-Davies, executive vice chairman of LCM, said: “Whilst a few funders are involved in a wide range of sophisticated finance offerings, the vast majority of the market is still making most, if not all, of their investments via single case matters.
“The standardisation of boiler plate provisions in these funding agreements, along with common wording and structure, can only assist with the continued development and promotion of the litigation finance market as a credible and established asset class.”
Luke Harrison, a partner at London commercial litigation boutique Keidan Harrison, said the initiative was an “extremely positive step” as a standardised approach would help reduce costs for clients and speed up transactions.
One market commentator said that input from institutional claimants would be critical in protecting corporate clients, so as to avoid standard terms reflecting purely funding and insurance interests. With secondary market interests also engaged, the initiative could also help set the terms for a marketplace in which funders and insurers could trade cases, the commentator added.
In September, 12 leading litigation finance firms launched the International Legal Finance Association, which aims to represent litigation funders in their dealings with governments, regulators, international associations, as well as professional legal bodies.