Legal disputes during the pandemic and beyond: alternative funding considerations for organisations

The Government is now laying out its phased plan (to be interpreted as you will) to re-open society and therefore the economy. With that, there will be a notable shift in the thought processes of many business owners from how to stay afloat in lockdown, to how to transition effectively into the post-COVID economy. A recession of some sorts is likely to be on its way, but the question on the minds of many will be in what form will that recession take and how long will the economy take to bounce back? 

Regardless, many organisations affected by the pandemic will enter into a period of austerity and cash flow and spending will be scrutinised more than ever before. However, companies will be conscious to keep the wheels of their supply chains turning. Break downs in those supply chains are likely to be unavoidable for some time to come as organisations and the economies in which they operate re-adjust at different rates.

Businesses will still need to protect their legal positions and enforce their rights even when cash is tight. It is likely to be now more than ever that agreements will need to be reviewed with third parties in order to ensure risk and reward is effectively balanced. Some may have been able to take advantage of force majeure provisions to relieve their liability in the event of non-performance, but many will not have been able to and many will still require financial compensation. 

Whilst organisations will be forced to commit to pursuing monies which may be owed, recovery of both monies owed and funds invested in litigation could take some time. So whilst no doubt legal disputes will be on the rise, there is likely to be a change of mindset with respect to funding of these disputes. Alternative funding arrangements (including Damages-based Agreements and Conditional Fee Arrangements) are likely to be more readily considered for the right cases and where there is a benefit for both client and adviser, in exchange for a share in the risk. As always, these types of arrangements must be carefully thought through and each assessed on its own merits to balance the financial pressures of litigation with ensuring businesses can still receive the legal advice they require.

At Charles Russell Speechlys, we understand that flexibility may sometimes be required, which is why we have created a bespoke litigation funding product called “Feesible”. More information can be found here.