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Funders’ Forebode

With Section 1 of the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018, having come into force this week we turn to look at some of the other sections still to be brought into action.

Perhaps, one of the most eye-catching sections for any involved in the litigation funding marketplace will be Section 10, which relates to Third-party funding of civil litigation.

Section 10, provides that a party utilising third-party funding must:

  1. Disclose to the court the identity of the funder and the nature of the assistance being provided.
  2. If the funder has a financial interest in respect of the outcome of the proceedings the party must disclose that interest to the court once the substantive issues in dispute in the proceedings have been decided or otherwise resolved.
  3. Finally, and perhaps the biggest shakeup is that Section 10 allows the court to make an award of expenses (costs) against the funder and any intermediary.

This is a fair departure from the current status quo in which parties are not obliged to provide any notice to the court that they are funded by a third party and awards against funders are almost unheard-of. The new legislation suggests that it may now be easier for the court to award expenses against a funder and in theory much more common. At present, the court must find that a funder was Dominus Litis before expenses can be awarded against them. This would involve proving that, as well as having a direct interest in the proceedings, that the funder also controls the direction of the litigation. However, because of this, as it presently stands nearly all funders have very little to do with the actual decision making in the case to shield themselves from this pitfall. Conversely, the new legislation seems to remove this requirement and suggests it gives the courts the power to award expenses as a matter of course.

Section 10 is not currently in force yet, but it is undoubtedly one to watch out for if you're involved with ligation funding.

At MBM, we pride ourselves on working with our clients to provide them with the most amount of choice and flexibility when it comes to financing their cases. We were one of the first firms in Scotland to successfully obtain and use Scottish ligation funding to help our clients achieve success in the Scottish courts, and we are the first law firm in Scotland to offer our clients a fixed fee for their entire litigation, providing clarity and certainty to the litigation marketplace.

If you, your business, or client has a claim, our expert lawyers at MBM are here to help and would be delighted to have a no-commitment chat to discuss your case. Call 0845 345 5004 to speak to one of the team today!

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