Reducing uncertainty: options for defendants

With stock market volatility expected to continue for some time and a very difficult outlook for all businesses, uncertainty is the great challenge business leaders are facing. Litigation has not been a priority for boards over the last few months as their legal budgets have contracted, but as the current situation becomes the new normal, we are seeing corporations review existing and new claims against them.

There is a much greater desire than ever before for businesses to reduce their exposure to claims they are defending, with many considering options they may not have thought about previously. It is worth remembering that litigation funding is available for defendants, as well as claimants. There are also funding options which can also help secure injunctions by covering the necessary cross undertakings in damages which often thwart such measures.

Three options that can be considered are:

Funding
Many people don’t realise that defendants can obtain litigation funding. If a business is trying to fight off a claim but doesn’t have the necessary funds to do so, or simply doesn’t want to pay such costs, a funder may be willing to assist in return either for a share of the amount saved by successfully defending the claim or a multiple of the funding provided. The successful defence of the claim or an agreed reduction in the damages owed would trigger an obligation to pay the funder.

Insurance
Some insurers provide cover against potential future liabilities or to lay off exposure to particular claims and the cost of such insurance can often be funded. The insurance premium will be driven by whether the cover protects against an identified liability or against future (unspecified) liabilities.

Cross undertakings in damages
If a party needs to obtain an injunction to freeze money or assets pending the outcome of litigation, a funder can help cover the necessary cross undertaking in damages.

We can discuss each of these options with you. If you would like to learn more, please contact Susan Dunn at susan.dunn@harbourlf.com.