Adverse Costs, Risks & Awards
When you take another to court, you expect to pay for the legal services provided to you. If you win your case, then you will appeal to the judge to have the losing party pay the costs you occasioned so that you are placed in the position you were in before you had to pursue the defendant. If you are the defendant and are required to pay your opponent’s costs as well as your own these costs are ‘adverse costs’. The issuing of adverse orders is becoming increasingly reverent in most litigations in that in some cases your costs are more than the sums you claim and considering the potential of paying adverse costs litigation can become very expensive.
Claimants must therefore consider how to fund not only their own costs, but also those of the defendant should their litigation be unsuccessful. This contingent risk can be significant, particularly in high value cases.
If the risk is too high and will severely damage your quiet enjoyment should you lose the case, you can ask another to assume the risk. This is called litigation funding.
Litigation funding is not right for everyone. If you fund the case yourself, you will receive all your damages however if it's funded for you, then that funder will want a proportion of damages to pay the costs he occasioned and the required reward for them taking the risk.
You can either part fund, proportional fund, or fund entirely, enter reciprocal or self-standing funding packages which may include a contractual indemnity where the defendant’s costs are paid in the event of an unsuccessful claim, security for costs, or funding for an after-the-event (ATE) insurance premium.