We take on commitments to dispose funds to a claimant who could assert liability or other claims against third parties, but who does not have the financial resources necessary itself for this purpose. Usually these claims can be found in an environment of financial insolvency whereby the bankruptcy trustee or its foreign equivalent is the claimant. In exchange for the provision of funds, the investor will obtain a predetermined percentage of the proceeds. The terms and conditions of the litigation funding are recorded in a funding agreement concluded between the parties.
The acceptance of the principle of litigation funding is linked to strict conditions, so that the existence of a funding agreement entails no additional risk of judicial administration or integrity of the litigation. The protection that the courts require is that the plaintiff retains control of the proceedings. Given that liquidators or their foreign equivalents act under judicial supervision, the opportunity and the conditions of the funding agreement are subject to judicial oversight/approval.
The funding agreement itself is anyway protected by legal professional privilege, though by virtue of its specific nature, the courts desire in many cases an additional and absolute discretion, not only about the contents of the funding agreement but also with regard to its existence.