The importance of balance and proportion in litigation funding

Litigation funding has an important place in allowing individuals and businesses to pursue redress if they have been wronged by a better-resourced or larger opponent. It exists as a means of enabling justice but balance and proportion is important to ensure that it works as it should.

Governing principles of litigation funding are important to make sure that all third-party investment, such as that offered via companies such as https://www.novo-modo.co.uk/litigation-funding, should support the justice system and not distort it.

Why balance is important

Balance means that interests should be aligned between a legal team, the funder, and the claimant to maintain control for the claimant, who should remain central to the process, and distribute financial risk to allow meritorious claims to be pursued without the claimant having to face unmanageable risk. Balance is also important to maintain public trust and prevent the perception that justice is simply for hire or that legal outcomes can be determined by finances rather than merit.

Why proportion matters

Proportion is important to ensure that costs and financial rewards are reasonable when applied to the value of a claim. This ensures that factors such as fair and proportionate outcomes for claimants are considered and pricing and ratios. The latter references the way in which providers of litigation funding will look for a set ratio relating to any likely recovery and the funding required to ensure a claimant will get a satisfactory share. In general, this should be at least half of the recovery after funders have received their return.