The law now allows Claimants to be advanced sums under funding facilities. In exchange, the claimants to the action enter in to a detailed contract under which, in exchange for the funding, they agree to pay a contingent share of their damages.
From 1st April 2013, (with exceptions such as Arbitration Cases), the ATE premium is no longer recoverable as part of the Claimant’s costs. So the private individual must pay the premium out of his own resources, or via a litigation fund.
The methodology applied by the CFS Advisory Board and by Knights PLC, in evaluating a case and the ATE underwriting model are all based on stringent due diligence procedures which can be used equally for the when assessing a funding proposition and the provision of ATE Insurance.
In addition a funded case must pass:
Quantum of Damages Test
Is the likely amount of damages to be awarded on a case win, sufficient to repay the funders its capital plus the agreed upside, with a significant surplus remaining for the Claimants themselves? This also provides underwriters with a margin of comfort just in case the damages achieved are less than originally expected.
Quality of Defendant Test
Do the Defendants have the means to pay the envisaged damages, costs etcrelatively easily? This is why cases are selected where the Defendants are banks, insurance companies and other large institutions or have professional indemnity insurance in place.