FINANCE OPTIONS

^Litigation Funding for Accountancy Firms

Q: What litigation funding options are available for accountancy firms in the UK?

Accountancy firms can use third party funding, CFAs, DBAs, fixed fees, and legal expenses insurance to fund litigation in the UK.

Q: Is third party litigation funding suitable for accountancy firms?

Third party funding is suitable for strong claims with good prospects of success and sufficient value, often used in commercial or fraud disputes.

Q: Can accountancy firms recover all legal costs if they win a funded case?

Usually, only standard legal costs are recoverable. Success fees or funder’s fees under CFAs or DBAs are not typically recoverable from the opponent.

Q: What risks do accountancy firms face if they lose a funded case?

If the case is lost, the firm may have to pay the opponent’s costs, but ATE insurance can protect against this risk.

Litigation funding for accountancy firms is when a third party provides money to help cover the costs of legal cases, so the firm doesn’t have to pay upfront. It’s a way to manage expenses while pursuing important claims. If you want to learn more about how it can help your firm, feel free to reach out!

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What are the ^benefits of Litigation Funding for Accountancy Firms?

Litigation funding for accountancy firms provides essential financial support to cover legal costs associated with disputes. This funding allows firms to pursue claims without the burden of upfront expenses, enabling them to focus on their core business activities while managing financial risks effectively. By alleviating the financial strain, accountancy firms can enhance their operational efficiency and ensure that they have the resources needed to pursue justice for their clients.

Access to capital

Risk mitigation

Improved cash flow

What are the different types of Litigation Funding for Accountancy Firms?

Third-Party Litigation Funding

External funders cover legal costs in return for a share of the proceeds if successful.

Third-Party Litigation Funding

Third-party litigation funding enables accountancy firms to pursue claims without upfront legal expenses, as funders cover costs in exchange for a portion of any financial recovery if the case succeeds.

Conditional Fee Arrangements (CFAs)

Accountancy firms pay legal fees only if the case is won, sharing the risk with lawyers.

Conditional Fee Arrangements (CFAs)

Conditional Fee Arrangements allow accountancy firms to engage in litigation with legal fees payable only upon a successful outcome, transferring some financial risk to the law firm.

After-the-Event (ATE) Insurance

Insurance that covers legal costs if the case is lost, mitigating financial risk.

After-the-Event (ATE) Insurance

After-the-Event Insurance is purchased after a dispute arises, protecting accountancy firms from paying the opponent's costs if the litigation is unsuccessful, thus reducing exposure to loss.

What is Litigation Funding for Accountancy Firms?

How Litigation Funding Works for Accountancy Firms

Litigation funding allows accountancy firms to use money from a third-party funder to pay for legal costs related to commercial disputes. The funder covers expenses like lawyer fees, court costs, and expert fees, usually in exchange for a share of any settlement or judgment if the case is successful. If the case is lost, the accountancy firm typically owes nothing, making this a 'no win, no fee' arrangement.

Benefits and Risk Management

This funding helps accountancy firms eliminate upfront legal costs, manage financial risk, and pursue claims they might otherwise avoid due to cost. It also allows firms to allocate their working capital more efficiently and can turn legal departments into profit centers. Funders only invest in strong cases after careful review, which reduces the risk of funding weak or frivolous claims.

Types of Litigation Funding and Control

There are different types of litigation funding, such as nonrecourse financing and portfolio finance. In most cases, the accountancy firm keeps control over the case, but the funder may require consent for major decisions. The process involves an initial review, due diligence, a funding agreement, and ongoing case management, with the funder acting as a passive investor.