Litigation Funding: What UK Small Business Owners Should Know (Infographic)

No small business owner wants to involve in a lawsuit. But whether you like it or not, things happen, and when it happens, you’d better be prepared.

Lawsuit is the last thing you want to happen to your business for several obvious reasons: Legal disputes drain your resources; they can also affect your business operations; they can also impact – often negatively – your business reputation (especially when the dispute appears in the headlines.)

lady justice uk
photo credit: Jess Loughborough

Perhaps the biggest issue in a lawsuit is costs related to it. It’s costly and you might not have the budget for covering the costs, or you simply don’t want to pay for the costs. If you are a UK business owner, litigation funding can be a solution to both cases.

What is litigation funding?

When you are involved in a lawsuit – breach of contract, professional negligence, etc. – litigation funding lets you proceed with the litigation or arbitration without the need for you to pay for the legal costs (source.) What about the costs, then? Who will cover them?

A third-party funder will pay the costs/expenses related to the dispute. Why would a funder want to fund your case?

If you are winning the case, the funder will receive a share of the proceeds of the dispute. If it’s not, the winning party will need to bear the costs – thanks to the Jackson Reforms, which has changed UK’s court procedure since April 1st, 2013.

Why litigation funding?

A solicitor representing you in a lawsuit can seek for third-party help if you – for any reasons – can’t cover the legal costs. Indeed, litigation funding is beneficial for you and your lawyer: You don’t have to pay the costs, while your lawyer can start working on your case, as the fund has been made available by the funder. The key here is on choosing the right third-party funder for your legal case.

Third-party litigation funding is trendy in the UK right now: According to a survey conducted in February 2013 by Vannin Capital, 58 percent of lawyers have used it, and almost 90 percent of lawyers are considering to use it in the next 12 months.

For a complete view on what solicitors think about third-party legal financing, check out this infographic:


When you are talking with your lawyer regarding a dispute, be sure to bring litigation funding into the discussion. As always, this is not a legal advice; you need to consult with your mentor and/or lawyer about the right way to approach you issues.