What Business Owners Need to know about Litigation

For any business, pursuing a court case can be, very unpleasant, however necessary as a matter of principle. It can, for example, a drain on the company's financial resources, a drain on the management time of its directors and senior personnel, and it can also be damaging to its reputation. But it’s worth educating yourself on exactly how you should conduct matters if your business does find itself involved in litigation.


The financial obstacles of pursuing a court case

The main obstacle to litigation no matter the strength of the case or the principal underpinning the same? Simple – MONEY. Litigation can become a fight so drawn out that you could be tempted not to fight the case at all simply due to your own limited financial resources. Still, it’s crucial to look at possible funding solutions if you consider that you have a strong legal case, the strength of a case is static and often will not change, whilst finances can be fluid and with some third party assistance any financial challenges which could potentially put the brakes on a good and principled case could be overcome. At Pinder Reaux & Associates Ltd, we can talk you through many of the options.


An especially appealing option: third party litigation funding

The issue of how small companies finance their legal campaigns was recently complicated by the government's decision, against huge opposition from small businesses and the legal community, to hike up court fees on 9 March 2015. In some instances, the fees rose by a massive 600%! This is another good reason to carefully consider what options for funding litigation remain open to you.

Perhaps the best source of such funding for SMEs is third party litigation funding. This is when a third party will – provided that they will receive a  proportion, typically 30-40%, of any damages – agree to take on all of the case's costs. The deal usually also comes with After the Event (ATE) insurance, which the claimant can fall back on should their litigation be unsuccessful, without having to be worried about exposing itself to the other sides costs.


Don't overlook these benefits of third party litigation funding

This kind of funding can have a myriad of benefits beyond the obvious. It can, for example, greatly boost your confidence. With a third party behind you, you can feel more assured that your case is a strong one. Also, your opponent will know that they can't simply try to wear you down by dragging out litigation until your coffers are emptied; they are more likely to decide to settle.

Your company's financial reputation can also be better protected. Should you indeed win compensation, that money is likely to trickle in slowly. Therefore, your accounts can be left in bad shape even if you win. With third party litigation funding, all of your expenses will be in a single "contingent asset" - and this should help to avoid financial burden that could result from the case.


If you would like more information on this subject, please call us on +44 (0) 20 8252 7373 and we will be happy to assist you and discuss in further detail.