By Matthew Best – Senior Underwriting Manager
(Estimated reading time: 2 minutes 52 seconds)
You may well have read a few months ago that two large litigation funders exited the market. This, understandably, may have resulted in unease if you are currently considering utilising litigation funding or disbursement funding. With that in mind, below is a straightforward take on the five main disbursement funding options available in the marketplace.
There are several options available, but some have more pitfalls than others. These I have sought to briefly explain below (including terminology such as ‘tapered admin fees’, ‘CCA’ or ‘on-balance sheet lending’) so that you are able to make a more informed decision.
From my perspective there are five choices currently in the market.
1.On balance sheet lending – this can be a burden, particularly when a successful case may take years to reach a conclusion. It is also worth pointing out this option slightly defeats the object of disbursement funding for your law firm.
2. Using medical agencies – these often only allow deferment at an additional cost for an agreed term. If the case has not been settled within the deferment period, you must still fund disbursements until the case’s conclusion – a very costly exercise. In addition, medical agency fees are not recoverable as a disbursement in a fixed costs claim. Fixed costs are likely to be introduced on matters worth up to £25,000 – but in my view I doubt it will stop there.
3. Consumer Credit Agreements (CCA’s) – full disclosure, this is the solution Temple Funding offers. CCA’s are said to complicate discussions with clients. This honestly is a myth. We work with many leading UK law firms who find the procedure streamlined and straightforward; and we constantly review our processes to simplify it even further. The accrual of interest for a CCA arrangement may concern to some clients. However, it doesn’t have to be, and I can quickly explain this to you.
4. Increased ATE Premiums – effectively, being offered disbursement funding in return for increased ATE premiums? You rarely get something for nothing, so it is important to question the provider who says their solution is free of interest. The reality is that ATE premiums are inflated in order to access this type of facility – often at a higher rate than current market interest rates. Inflated ATE premiums are simply ‘disguising’ interest and your clients could actually be worse off.
5. Tapered Administration Fees – other providers may charge these; they are payable by your law firm at the end of a case, but only upon a successful outcome. As with 1) above surely this also goes against the fundamental reason a law firm wants disbursement funding? And, like 4) above, this also is a way of ‘disguising’ interest.
With the last two options, do also consider what other services your firm is being tied into, such as pagination services or medical agencies, to name just two. These can bring additional reporting requirements which, ironically, can add complication and an extra admin burden.
Temple Legal Protection do not tie you in with any service providers. You are the experts in law, you know your experts. I am a firm believer that if Temple has offered you one of its facilities, trust has formed. Quite simply, we let you get on with running your cases.
Click here to find why, with Temple, disbursement funding is just so much easier. If you have any questions on this, or want to learn more about Temple disbursement funding, please do contact me on 01483514804 or via email to firstname.lastname@example.org.
Matthew Best Cert CII
Matt has an insurance background and joined Temple in July 2011 having worked for 4 years in a leading insurance company where he was dealing with personal injury work.
Matt’s experience allows him to undertake a key role in Temple’s ATE insurance personal injury and clinical negligence teams. He also participates in the assessments of delegated schemes that Temple provide with the objective of helping our customers make the most beneficial and appropriate use of ATE insurance.
He has started studying for this CII exams which he will sit in the near future, which he will then use to develop himself, further into the company in order to provide Temple’s customers with the excellent service they expect.
Read articles by Matthew Best Cert CII