1. Third Party Funding has come to mean funding of litigation by a professional funder or

Transcription

1 Third party funding 1. Third Party Funding has come to mean funding of litigation by a professional funder or investor with no previous interest in the case in return for a share of the damages in the event of success. Unfortunately the Code of Practice uses the term Litigation Funding which is obviously a misnomer. I use the term Third Party Funding. 2. It does not include funding by, for example, insurers or trades unions. 3. A typical Third Party Funding agreement provides for payment of some or all of the client s own legal costs on an interim basis with the Third Party Funder s fee being either a percentage of any damages received or a multiple of the amount of funding provided. 4. Confusingly the Third Party Funder s fee is often referred to as a success fee but it has nothing to do with a conditional fee success fee, although a Third Party Funded case may well be conducted under a conditional fee agreement. Consequently I utilize the term Funder s Fee. 5. Few cases are funded by Third Party Funders and the demand outstrips supply and Funders are highly selective in the cases that they choose to back. In its July 2010 consultation paper the Civil Justice Council estimated that no more than 100 cases had ever been funded in this way. 1

2 6. In particular very few personal injury cases are currently funded in this way, but that is likely to change in the near future. 7. The Third Party Funder s fee is typically two to four times the investment. Thus an investment of 100,000 funds will result in a fee of 200,000 to 400, If the Funder s Fee is calculated by reference to damages then the funder will generally expect between 25% and 45% of those damages. 9. However it should be noted that the Government takes the view that clients should not pay more than 35% including VAT of their damages in costs and The Damages-Based Agreements Regulations 2010 prohibit a lawyer from charging more than 35% including VAT, by way of a contingency fee. Here we have another example of confusing terminology. The whole world knows such fees as contingency fees, but the Regulations refer to Damages-Based Agreements (DBAs). Here I use the terms interchangeably. 10. At the last minute the Regulations were limited to employment matters but the principle has now been extended to contingency fees in all litigation. Thus the maximum contingency fees will be: personal injury 25% employment 35% all other work 50% 2

3 11. There is no proposal to limit the Third Party Funder s fee and thus lawyers may choose to act as Third Party Funders rather than under a conditional fee agreement, or a contingency fee agreement, although acting as a Third Party Funder does create a potential Arkin liability for adverse costs see below. Such a risk in relation to adverse costs does not exist in conditional fee cases see Hodgson & Ors v Imperial Tobacco Ltd & Ors [1998] EWCA Civ 224 (12 February 1998), [1998] 1 WLR 1056, [1998] 2 All ER 673, [1998] EWCA Civ 224 but on the face of it, applies to damages-based agreements. 12. In practice, Third Party Funders may be well-advised to become Alternative Business Structures running cases through the medium of conditional fee agreements, thus avoiding the Arkin risk. They will still be able to take 45% or 50%, or whatever, without exceeding the success fee cap, as much of the fee will be solicitor and own costs on a no win lower fee agreement and/or an after-the-event insurance premium. Code of Conduct 13. On 23 November 2011 the Civil Justice Council published a voluntary Code of Conduct for Litigation Funders, their name for Third Party Funders. The newly-formed Associate of Litigation Funders (ALF) has agreed to abide by the Code. 14. Lord Neuberger, Master of the Rolls, said: 3

4 I welcome the publication of the Code of Conduct for Litigation Funders. It is an important development and will help to foster standards of best practice and to promote greater transparency among the providers of litigation funding services to the benefit of the consumers of those services. 15. Under the Code the funder agrees not to seek more than 100% of the proceeds of the dispute unless the Litigant is in material breach of the Litigation Funding Agreement, but there is no other restriction or guidance in relation to the amount to be charged by the Litigation Funder, either by reference to a percentage of damages or otherwise. 16. Compare this with the restrictions on solicitors charges in employment cases and personal injury cases, whether conducted under a conditional fee agreement or a contingency fee agreement. Thus, as ever in this country, professionally qualified lawyers are heavily restricted, but bankers, which effectively describes the role of Litigation Funders, are free to do and charge what they like. 17. Paragraph 7 of the Code provides that a Funder will: (a) ensure that the Litigant has taken independent advice on the terms of the Litigation Funding Agreement, but advice taken from the solicitor instructed in the dispute is classed as independent advice, even though the solicitor is, in effect, being paid by the Litigation Funder; 4

5 (b) not cause the funded lawyers to breach their professional rules; (c) not seek to take control of the case away from the funded lawyer; (d) maintain adequate financial resources to cover funding liability for a minimum of three years. 18. Capital adequacy is not defined and it is not stated as to how this requirement will be policed. 19. Paragraph 8 provides that the Litigation Funding Agreement shall state whether, and to what extent, the Funder will: (a) satisfy an adverse costs order; (b) pay any premium for costs insurance; (c) give security for costs; (d) meet any other financial liability. 20. Paragraph 9 sets out the circumstances in which a Funder can terminate the agreement. 21. The Code gives very little protection to clients. In particular there is no guidance as to the interplay between the conditional fee success fee, to be paid by the client once recoverability is abolished, and the funder s fee. Taking in to account both of those 5

6 matters and an after-the-event insurance premium to cover adverse costs orders, and the Funder will almost always insist on such insurance, there may not be much left for the winning client. 22. Amidst the plethora of reforms it would be helpful to have guidance from the judiciary or lawyers regulatory bodies as to what is the maximum reasonable percentage total deduction from damages, including the funder s fee and any lawyers contingency fee or conditional fee success fee. 23. The waters have been further muddied by Lord Justice Jackson s suggestion that solicitors acting under a contingency fee agreement may be liable for the other side s costs in the event of defeat, following the principles set out in Arkin v Borchard Lines Ltd [2005] EWCA Civ 655, [2005] 3 All ER It is well-established that there is no such liability for adverse costs orders on solicitors in conditional fee cases Hodgson & Ors v Imperial Tobacco Ltd & Ors [1998] EWCA Civ 224 (12 February 1998) ([1998] 1 WLR 1056, [1998] 2 All ER 673, [1998] EWCA Civ Ironically it has only recently become clear beyond doubt that solicitors are allowed to assume responsibility for adverse costs orders see Sibthorpe and Morris v Southwark London Borough Council (Law Society intervening) [2011] EWCA Civ 25, [2011] 06 LS Gaz R 18, [2011] NLJR

7 26. The fact that most personal injury clients expect a free ride with no deductions from damages partly explains the low incidence of such funding in personal injury cases. 27. The Funder s Fee is not recoverable on a between-the-parties basis and thus must be paid by the client out of damages, but that is about to happen in relation to conditional fee success fees and already happens in contingency fee cases. 28. Unlike After-the-Event insurance, Third Party Funding generally covers the clients own legal costs in full or in part, and Third Party Funders who fund a losing case are potentially liable for the other side s costs to the extent of their own contribution. 29. Thus a Third Party Funder provides 100,000 but the case is lost. The Funder can be ordered to pay up to 100,000 to the successful party by way of costs, giving a total of 200,000 in all see Arkin v Borchard Lines Ltd [2005] EWCA Civ 655 [2005] 3 All ER Consequently Third Party Funders will often insist upon After-The-Event insurance being taken out to cover that risk, although it is not clear that the After-the-Event insurance market will survive the abolition of recoverability effected by Section 46 of the Legal Aid, Sentencing and Punishment of Offenders Act

8 31. Lord Justice Jackson has suggested that in a contingency fee funded case the court might hold the solicitor liable, in accordance with the principles in Arkin see below. 32. If After-the-Event insurance is not taken out and the funder is willing to bear the adverse costs risk then inevitably the Funder will charge an even higher fee to the client. If there is no After-the-Event insurance in place and the Third Party funder is not indemnifying the client against an adverse costs order then it must be determined who will be liable to satisfy the adverse costs order. 33. A funding agreement will invariably comprise a contract to support litigation in exchange for a fee similar to that contained in the CFA model. Such funding agreements are not regulated by statute but are governed largely by common law principles, recently to a more limited extent by the CPR and finally by the jurisdiction on costs contained in s 51 of the Senior Courts Act Such funding fills a gap which exists where clients cannot afford to pay lawyers and experts. Experts are expected not to work on terms which are conditional or contingent. 35. There is now a voluntary Code of Conduct, dealt with above. 36. Great care must be taken in drafting the various agreements between the client, the solicitor, the After-the-Event insurer and the Third Party Funder. 8

9 37. In particular it is of crucial importance to agree in advance the order of priority of application of damages in the event that the eventual recovery is insufficient to discharge all of the fees and disbursements, which will include the After-the-Event insurance premium, the Funder s Fee and the lawyer s fees and disbursements, including the lawyer s success fee. 38. The leading case in relation to Third Party Funding is Arkin v Borchard Lines Ltd [2005] EWCA Civ 655, [2005] 3 All ER 613 9

10 The Arkin case 39. Mr Arkin, having originally had legal aid, switched to a CFA with solicitors and counsel but required funding for the forensic support and evidence of Ernst & Young. The case involved an alleged shipping cartel. The funder was Managers and Processors of Claims (MPC) who ended up funding 1.3 million for disbursements and forensic support. Their fee arrangement was 25% of damages (the claim was 80 million). The defendants incurred costs of nearly 6 million. 40. Mr Arkin lost. The judge at first instance decided that no third party costs order should be made against MPC on the grounds that this would act as a disincentive for professional funders of litigation. The Court of Appeal decided that there had to be a balance between access to justice on the one hand and being fair to defendants on the other. Their compromise was to order that a professional funder shall be liable for third party costs to the extent of their investment in the case. 41. In so deciding, they accepted that the funding arrangement was not champertous. To arrive at this conclusion, they satisfied themselves that the funder did not exercise control over the conduct of the litigation, and that control remained at all times with the claimant and his lawyers. 42. The case was more about the liability of the funder for adverse costs than about the minutiae of funding agreements themselves. 10

11 43. Here was the kind of funding usually afforded by a non-lawyer who finances a claim on terms in exchange for a shire of the proceeds. The funding is invariably specific to the facts and is usually agreed as a last resort means of advancing litigation. 44. It is also important to stress that they type of agreement which was made in Arkin was approved of by the court as the funder did not retain any control over the litigation. At all times control remained with the claimant and his lawyers and not the funder. 45. The Court of Appeal formulated a solution so as to give effect to the twin public policy objectives of: 1. encouraging funding which enables access to justice; and 2. ensuring defendants who successfully defend such claims can still recover costs if the claimant is a man of straw. 46. The decision has implications for: (a) the extent to which such agreements can now be said to be lawful and therefore enforceable as between the parties; 11

12 (b) the effect which the solution will have on the price a claimant must pay for funding. 12

13 47. In In the Matter of the Valetta Trust, 25 November the Royal Court of Jersey held that an agreement for the funding of litigation by a third party funder, Harbour Litigation Investment Fund LP, was not unenforceable and was not contrary to public policy. 13

14 Interplay between Third Party Funding and Maintenance and Champerty 49. The funding of litigation by third parties without an interest in the dispute is classic maintenance and champerty and has traditionally been unlawful and indeed was a criminal offence until It has been illegal since at least as early as 1275 when the Statute of Westminster codified the ban on such arrangements. 50. However for more than a century there has been a tension between that principle and the recognition that without third party funding many, probably most, claimants could not afford to pursue perfectly valid claims. 51. Although access to justice is a modern phrase that was the principle behind the courts allowing various litigation to be funded by various third parties, such as: (i) (ii) (iii) (iv) (v) a master funding a servant s litigation; trades unions funding members litigation; insurance companies funding their insured s litigation; legal aid;. lawyers working pro bono. 52. The Criminal Law Act 1967 abolished criminal and tortious liability for maintenance and champerty (section 14(1)) but section 14(2) unhelpfully provided that such abolition 14

15 shall not affect any rule of that law as to the cases in which a contract is to be treated as contrary to public policy or otherwise illegal. 53. Thus a contract could be declared unenforceable on public policy grounds, although not of itself illegal. This was very much the model followed in relation to conditional fees in both the Courts and Legal Services Act 1990 and the Access to Justice Act 1999 and indeed is central to the concept of the indemnity principle. 54. In terms it is a message, essentially to lawyers but also to third party funders, that although nothing is now illegal in terms of funding you will always be taking a substantial risk as to whether you will be able to recover your costs from the other side or from your own client. Furthermore you are at risk of paying the other side s costs in the event of defeat. 55. However the courts have worked hard to make conditional fees, and to a lesser extent, third party funding, work and there is no doubt that overall the senior judiciary take the view that the ethical problems are outweighed by the need to give access to justice to people of ordinary means in a post-legal aid world. 56. Lord Justice Jackson devotes a whole chapter of his Final Report to Third Party Funding (see below) and refers to the uncertain ambit of the law of maintenance and champerty casting doubt as to the precise boundaries of proper conduct in relation to litigation funding but does not offer any clear answers. 15

16 57. He supports the continued existence of section 14(2) of the Criminal Law Act 1967 but suggests that it be made clear either by statute or by judicial decision that if third party funders comply with whatever system of regulation emerges from the current consultation process, then the funding agreements will not be overturned on grounds of maintenance and champerty. 16

17 Jackson proposals 58. Lord Justice Jackson appears not to understand the way funding, as opposed to costs, works. 59. At present a client s success fee is paid by the other side but the third party funder s fee is paid by the client. 60. If the client is to be the payer in any event then an informed decision needs to be made in each case between these two methods of funding. 61. For example in what looks like a safe case the client may feel better off with a Third Party Funder taking 25% of any damages and agreeing to pay the solicitor in the event of defeat. The potential loser here is the solicitor who will receive no success fee but face no risk. 62. These will be difficult calls and the tension between non-recoverable success fees and third party funding has not been fully considered. 63. In the pre-2000, pre-recovery days there was no third party funding and so the issue has not arisen. 17

18 64. Suppose a third party funder was to advertise that it would back any viable road traffic accident case in return for 10% of damages. 65. What would the solicitor s duty then be? To limit their own success fee to 10%? To take no success fee at all? 66. Lord Justice Jackson says in favour of Third Party Funding that it provides an additional means of funding litigation, and for some parties the only means and, unlike conditional fee agreements does so without any additional financial burden upon opposing parties, and that it tends to filter out unmeritorious cases. 67. Reflecting his view that recoverability of success fees should be banned Lord Justice Jackson states that it is better for a claimant to recover a substantial part of damages than nothing at all, and notes, correctly, that Third Party Funding would become even more important as a means of financing litigation if success fees under conditional fee agreements become irrecoverable. 68. Jackson also appears to accept that in the absence of the recoverability of after-theevent insurance Third Party Funding may fill the gap. 69. In referring to Stone and Rolls (in Liquidation) v Moore Stephens (a Firm) [2009] UKHL 39 where the third party funded claimant lost and had not taken out after-the-event insurance to cover its adverse costs risk Lord Justice Jackson said: 18

19 70. These facts illustrate that third party funders can operate satisfactorily in the absence of ATE insurance and they can accept liability for any adverse costs orders, adding that the risk undertaken by the funder was reflected in the percentage of damages which the funder was entitled to receive in the event of success. 71. What was not addressed is the percentage of damages to be left to the successful third party funded claimant. 72. Thus a clinical negligence action is third party-funded in a post-jackson world where there is no recoverability of the success fee or after-the-event insurance premium. The third-party funder agrees to cover any adverse costs order, in other words to be the after-the-event insurer as well as the funder. In those circumstances a percentage take towards the top of the range for the third party funder would not be unreasonable say 40% of damages. It agrees to pay a discounted fee to the solicitor in any event, that is the solicitor works under a discounted conditional fee agreement. 73. The solicitor s conditional fee agreement success fee is capped at 25% of damages. 74. The claimant wins and thus gets 35% of damages awarded. 75. It could in fact be rather less there may be interest on the third party funding and some irrecoverable solicitor and own client costs. 19

20 76. That is why Third Party Funding in an age of non-recoverability of success fees and afterthe-event insurance premia risks a re-run of Claims Direct and the Accident Group. 77. While endorsing Third Party Funding, Lord Justice Jackson identifies three main areas of concern: (i) Withdrawal by a funder 78. Jackson s view is that the funder should be obliged to continue to provide whatever funding it originally contracted to provide unless there are proper grounds to withdraw. 79. The Code of Conduct sets out the circumstances in which a funder may withdraw. (ii) Capital adequacy 80. Jackson s initial view was that capital adequacy, that is the third party funder s ability to pay the costs, was a matter of such pre-eminent importance that it should be the subject of statutory regulation by the Financial Services Authority. 81. He now states that given that most third party funded clients are commercial parties there is no need for regulation. 82. Quite why a commercial client should be unprotected is unclear. 20

21 83. What is clear is that Jackson fails to see the likely role of third party funding in lay client work, especially personal injury and clinical negligence. 84. The Code of Conduct provides that there must be capital adequacy to meet liabilities for a 3 year period, but there is no indication as to how this will be policed. (iii) Liability for adverse costs 85. Jackson supports the notion that third party funders should be liable for all adverse costs, stating that it was wrong in principle that a litigation funder who stood to recover a share of damages in the event of success should be able to escape part of the liability for costs in the event of defeat. 86. He said that going against the Arkin principle, whereby third party funders liability for adverse costs was limited to a sum equal to the extent of the funding provided (see above), would not inhibit third party funding. 87. There is no evidence that full liability for adverse costs would stifle third party funding or inhibit access to justice. 88. Well, obviously there is no evidence as it has never happened, but some would say that it speaks for itself res ipsa loquitor in language that Lord Justice Jackson may understand. 21

22 89. He points out, with justification, that such limited liability is unjust not only to the opposing party (who may be left with unrecovered costs) but also to the client (who may be exposed to costs liabilities which it cannot meet). 90. However Lord Justice Jackson appears not to see the irony in this. At present after-theevent insurance deals with all of these problems at no cost to the claimant, but it is the Jackson Report itself which has successfully argued for the abolition of recoverability of after-the-event insurance premia! 91. He also argues that experience in Australia was to the opposite effect in that only five costs orders, out of 200 funded cases, had been made against third-party funded claimants. 92. However in Australia third party funders themselves are not liable at all for adverse costs, following the decision of the High Court of Australia: Jeffery and Katauskas Pty Ltd v SST Consulting Pty Ltd [2009] HCA Consequently it may be that cases were settled which otherwise would not have been, maybe on a drop hands basis, as the potentially successful defendant knows that it cannot get costs from the third party funded claimant, who is unlikely to be good for the costs. If they were then they are unlikely to have entered into a third party funding agreement to start with. 22

23 94. Lord Justice Jackson states that it is perfectly possible for litigation funders to have business models encompassing full liability for adverse costs. This will remain the case, even if ATE insurance premiums cease to be recoverable under costs orders. 95. That is correct, but it will come at a heavy price to the claimant, maybe 40% to 45% of damages, with the lawyer taking up to 25% of damages by way of a conditional fee success fee, so the client being left with just 30%. 96. As we have seen Parliament has decided in employment cases, where the lawyer will not get a fee from the other side, that clients should get at least 65% of damages see The Damages-Based Agreement Regulations What is almost certain to happen is that certain Alternative Business Structures will offer claims management services and third party funding comprising after-the-event insurance and legal services and take a very hefty slice of damages at least 50%. 98. It could be worse. Let us look at a variation on the clinical negligence action looked at earlier. The third party funder agrees to fund expensive disbursements and, say, half of the claimant s solicitors costs in the event of defeat, but this time not to cover an adverse costs order. Because s/he is receiving something in any event the solicitor charges 15% of damages as a success fee rather than the maximum 25%. In fact the case settles for 40,000.00, which is distributed as follows: Damages 40, to Third Party Funder 40% 16,

24 Success fee to solicitor 15% 6, Balance 18, out of which the after-the-event insurance premium has to be paid. That is very unlikely to be less than 25,000.00, leaving the successful client with a shortfall of 7, It is Claims Direct and the Accident Group all over again The issues are not addressed in the Jackson Report. The formal recommendations are: 6.1 I do not consider that full regulation of third party funding is presently required. I do, however, make the following recommendations: (i) A satisfactory voluntary code, to which all litigation funders subscribe, should be drawn up. This code should contain effective capital adequacy requirements and should place appropriate restrictions upon funders ability to withdraw support for ongoing litigation. (ii) The question whether there should be statutory regulation of third party funders by the FSA ought to be re-visited if and when the third party funding market expands. 24

25 (iii) Third party funders should potentially be liable for the full amount of adverse costs, subject to the discretion of the judge Unfortunately this chapter also deals with Maintenance and Champerty and even more unfortunately recommends retaining the rule, and even even more unfortunately that the rule should be abrogated for third party funders So, a qualified extremely heavily regulated, insured solicitor who agrees to indemnify his or her client against an adverse costs order breaks the rule A voluntary coded (weren t they discredited 30 years ago) unqualified Third Party Funder Claims Management Company Alternative Business Structure is free from such restriction Why? 105. Because A number of respondents pointed out that abolishing the common law doctrine of maintenance could have unintended consequences Well, that could apply to any proposal ever made anywhere. That is the problem with unintended consequences they are just that unintended Furthermore Lord Justice Jackson, speaking in January 2012, suggested that solicitors acting on a contingency fee basis should be liable for adverse costs orders. I have dealt 25

26 with this issue above, but this threat makes contingency fee agreements in civil litigation even less attractive to lawyers As solicitors have to deduct, pound for pound, any costs received from the other side from the contingency fee charged to the client, and as they do NOT have to do that in relation to a conditional fee success fee it will almost never be in the solicitor s interest to act on a contingency fee basis as compared with a conditional fee agreement For clients the opposite is true they will nearly always be better off under a contingency fee agreement than under a conditional fee agreement The risk of solicitors being liable for adverse costs under a contingency fee agreement, but not a conditional fee agreement reinforces this point If there is to be no cap on the percentage of damages taken outside the personal injury and employment fields than contingency fee percentages will be driven up to reflect the solicitor s risk of having to meet an adverse costs order, and to reflect the fact that the client will never have to pay that sum as all costs received from the losing party will be deducted from that sum. Conclusion 112. Properly regulated, Third Party Funding has a major role to play in the funding of civil litigation in England and Wales and should be welcomed. 26

27 113. Unregulated they risk a repeat of Claims Direct and The Accident Group, where winning clients found themselves left with nothing I set out below the November 2011 Code of Conduction for Litigation Funders: The code 1. This code (the Code) sets out standards of practice and behaviour to be observed by Funders who are Members of The Association of Litigation Funders of England & Wales. 2. A Funder has access to funds immediately within its control or acts as the exclusive investment advisor to an investment fund which has access to funds immediately within its control, such funds being invested pursuant to a Litigation Funding Agreement (LFA) to enable a Litigant to meet the costs of resolving disputes by litigation or arbitration (including pre-action costs) in return for the Funder: (a) receiving a share of the proceeds if the claim is successful (as defined in the LFA); and (b) not seeking any payment from the Litigant in excess of the amount of the proceeds of the dispute that is being funded, unless the Litigant is in material breach of the provisions of the LFA. 27

28 3. A Funder shall be deemed to have adopted the Code in respect of funding the resolution of disputes within England and Wales. 4. The promotional literature of a Funder must be clear and not misleading. 5. A Funder will observe the confidentiality of all information and documentation relating to the dispute to the extent that the law permits, and subject to the terms of any Confidentiality or Non-Disclosure Agreement agreed between the Funder and the Litigant. 6. A Litigation Funding Agreement is a contractually binding agreement entered into between a Funder and a Litigant relating to the resolution of disputes within England and Wales. 7. A Funder will: (a) take reasonable steps to ensure that the Litigant shall have received independent advice on the terms of the LFA, which obligation shall be satisfied if the Litigant confirms in writing to the Funder that the Litigant has taken advice from the solicitor instructed in the dispute; (b) not take any steps that cause or are likely to cause the Litigant s solicitor or barrister to act in breach of their professional duties; 28

29 (c) not seek to influence the Litigant s solicitor or barrister to cede control or conduct of the dispute to the Funder; (d) maintain at all times adequate financial resources to meet its obligations to fund all of the disputes that it has agreed to fund, and in particular will maintain the capacity: (i) to pay all debts when they become due and payable; and (ii) to cover aggregate funding liabilities under all of its LFAs for a minimum period of 36 months. 8. The LFA shall state whether (and if so to what extent) the Funder is liable to the Litigant to: (a) meet any liability for adverse costs; (b) pay any premium (including insurance premium tax) to obtain costs insurance; (c) provide security for costs; (d) meet any other financial liability. 9. The LFA shall state whether (and if so how) the Funder may: 29

30 (a) provide input to the Litigant s decisions in relation to settlements; (b) terminate the LFA in the event that the Funder: (i) reasonably ceases to be satisfied about the merits of the dispute; (ii) reasonably believes that the dispute is no longer commercially viable; or (iii) reasonably believes that there has been a material breach of the LFA by the Litigant. 10. The LFA shall not establish a discretionary right for a Funder to terminate a LFA in the absence of the circumstances described in clause 9(b). 11. If the LFA does give the Funder any of the rights described in clause 9 the LFA shall provide that: (a) if the Funder terminates the LFA, the Funder shall remain liable for all funding obligations accrued to the date of termination unless the termination is due to a material breach under clause 9(b)(iii); 30

31 (b) if there is a dispute between the Funder and the Litigant about settlement or about termination of the LFA, a binding opinion shall be obtained from a Queen s Counsel who shall be instructed jointly or nominated by the Chairman of the Bar Council. 12. This code is to be read in conjunction with the Articles and Rules of the Association of Litigation Funders of England and Wales, which are available for inspection at: 31