April 22nd 2020
The Sooner the Better
It was back in 1985 that Sir Jack Jacob, the former chief master, identified cost, delay and vexation as the “three-headed hydra” that bedevilled litigation (“Justice Between Man and Man,” Current Legal Problems Vol 38 (1), 1985).
The three are connected: delay usually adds to costs; and costs and delay individually, never mind in conjunction, vex lawyers and litigants alike.
Whilst it is popular to associate delay with the lawyers themselves or the system they operate (remember Hamlet’s “Law’s delays” and Dickens’s Jarndyce v Jarndyce), it is often the client who is to blame. How often does an Insolvency Practitioner say (or think), “If only you had come to me six months ago?” How often does a solicitor see a client who he or she could have helped - if they had just come before signing that contract or sending that letter?
It is sometimes the same story when it comes to funding. The IP refers a case only after being in office for five or even ten years, perhaps as a limitation period is about to expire. But by then potential causes of action may already have been lost, memories will have faded, former Directors who could have been asked questions have disappeared, and books and records have been mislaid or even destroyed. The result is that a case that might have been attractive, or even a sure-fire winner, a few years ago, is now too risky to contemplate - even for an adventurous funder. Or, if the action is still a runner, the assets are no longer there to recover: they have been dissipated, or have moved to sunnier climes, whence they will not be easily extracted.
A prudent IP will try not to get into this position, although it can happen to the best. The message, we think, is this: come to Manolete as soon as you can, as soon as you are thinking about litigating and haven’t the funds to do so without support. There is no obligation on you to give us the job, just as there is none on us to take it. There is never any harm in asking about the possibility of funding or assigning; indeed in many cases doing so is just part of the IP’s job.
Major Benefits of Getting Manolete Involved Early in the Process
Involving Manolete early in the process can offer IPs and their legal teams significant benefits. For example:
- Investigation funding: where there are few or no assets in the Estate but more work needs to be done before a claim can be fully formulated. Manolete can finance this as part of the funding package.
- Manolete never asks solicitors or counsel to act contingently: they are paid as the work is done. So even on potentially very risky claims, the legal team know their costs are covered. Court fees, expert fees and other disbursements are covered.
- Manolete always pays an initial consideration sum into the Estate as soon as the Assignment or Funding Agreement has been executed. This is often a significant amount. This initial consideration is non-refundable to Manolete, no matter what the eventual outcome of the case is. These funds can help defray some or all of the previously unpaid WIP that has built up on the case.
- In larger cases, the IP may need to undertake expensive additional investigation and/or analysis work (for example, establishing the date of insolvency in many antecedent transaction claims). Manolete can finance the costs of this.
- Getting a respected third-party funder supporting a claim will add significant credibility to it, particularly in the eyes of the Defendants and their lawyers. This is often an important factor in settling the claim – with a Funder on board, the Defendants know the claim is not going to go away. A claim that is properly financed from the outset is more likely to be settled at an early stage; thereby saving costs and maximising the return to the Estate.
- Security for Costs applications by the Defendant will no longer be a threat to the claim proceeding. Manolete is very well financed and no application for security for costs has ever been made on a case that has Manolete backing.
- No adverse costs concerns – Manolete provides a 'no quibble' indemnity supported by its strong balance sheet and a £20m RCF with HSBC.
We look forward to hearing from you. Please contact myself or your local Associate Director.