Litigation funding: an industry due to go under review

Does the margin of financial gain make it worth the action?

As liquidators, we must often decide whether to commence or to continue litigation for insolvent companies.

The potential financial return is of course attractive, but the risks of losing the case and having to pay the other side's legal costs is a suitable deterrent, particularly in the instances where such costs must be paid from liquidators' personal funds.

Financial hurdles—a lack of funds or our unwillingness to risk them—can sometimes be overcome, or partly overcome when creditors fund the litigation, or when solicitors agree to carry their fees during the actions. But getting such support is not always easy, nor always appropriate.