In the UK there is a nascent litigation funding market which has, to date, been fairly unknown since most cases are high value commercial cases. That’s until now.

Litigation funding was involved recently in a very high profile and high value case between 2 expat Russian oligarchs living in the UK, Roman Abramovich and Boris Beresovsky.

Aside from the sheer value of the case, in the region of $6.5 billion, the case received a lot of coverage because of apparent political machinations. Mr. Abramovich, the defendant, is still believed to be on good terms with the Russian Government whereas Mr. Beresovsky is persona non grata.

As regards the litigation funding aspects of the case, it seems that Mr. Beresovsky’s legal team from Addleshaw Goddards, a large and highly respected firm, agreed to represent him on a partial contingency fee basis. Mr. Beresovsky lost the case and the trial judge was highly critical of him as a witness.

The case is noteworthy for many reasons including:

1. Whilst Addleshaw Goddard have been pilloried in some legal publications, their willingness to be adaptable and to consider flexible forms of funding whilst still apparently protecting a base level of costs may well be to their advantage in that many businesses will respect the fact the firm has a progressive approach to litigation funding. Many businesses now look at ways of hedging risk and will also expect a law firm to back its judgment by being prepared to at least consider a risk element.
2. It seems that Mr. Bersovsky was able to secure an After the Event legal expenses insurance policy to protect his position on adverse costs. It is understood that the premium for the policy may have cost as much as £20 million for £50 million of cover. Aside from this aspect, it will be interesting to see if the insurers might seek to avoid or partially defray cover on the grounds that Mr. Beresovsky was found to be a highly unreliable witness by the trial judge.
3. As with many complex and high value disputes, in this case, as the claim progressed, a number of additional defendants were joined into the proceedings. Given the extremely high level of costs involved in the case, it is unclear whether the after the vent policy may have included the possibility of additional claims and possible counterclaims in the proceedings.

This high profile case shows how complex the litigation funding matrix can be, even in a case where outside funding for own costs or the ATE premium does not appear to have been sought from outside investors. It also indicates that even the richest businessmen are now seeking to hedge against litigation risk. The market for litigation funding is likely to get bigger and ever more sophisticated but it is not for the faint hearted and requires business acumen from all involved.

The above analysis was provided by Professor David Rosen, head of litigation at Darlingtons Solicitors.