Once the matter has been litigated and the matter has come to an end, the funding arrangement needs to be wound up and this needs to be detailed in the same manner as the initial agreement.
When the Case Settles
Settlement is usually the Claimant’s “best exit” from a Case, as explained above. For the purpose of this document, upon Settling a Case, a Claimant’s litigation funding, legal costs, etc are released by a Funding Agreement in a “waterfall” and the sum received by the Claimant from the settlement is divided amongst the parties as agreed in the Funding Agreement. Again, the agreement needs to be examined and checked against the above to identify the parties and their respective positions within the above waterfall clause.
When You Win at Trial
Even if you have obtained a costs order against the opposing party, the assessment and recovery of your legal costs is not as clear cut as it seems. Often the recovery of legal costs is not 100% and is deducted from your award. The funding agreement will normally provide that the funder is repaid from your award prior to any remaining balance being paid to you.
When the Case Is Lost
Litigation funding agreements typically contain a non-repayment provision where the capital of the funder is not repaid by the claimant if the claim fails (save for the adverse costs ordered against the claimant to be paid to the defendant). Such adverse costs may be insured by after-the-event insurance (again, taken out by the funder together with the funding).If you are looking for Litigation Funding, see https://www.novo-modo.co.uk/litigation-funding.
When Recovery Is Only Partial
Partial recovery of a claim is usually covered by a proportionate repayment of monies previously distributed (e.g. a partial settlement may result in a proportionate repayment by the funder of the sum previously distributed to the funder). Some funders may set a minimum return to them in respect of a particular matter, even where the overall size of the matter does not necessarily justify such a return (e.g. a minimum return of £50,000, even if the overall return is only £100,000).
Disputes Over the Exit Calculation
Be aware that a dispute over an exit calculation is to be resolved by an independent expert in most cases instead of in court.
Finally, exit conditions should be read with the same care as entry conditions, because you need to understand what you are actually going to take home from the case when it ends.