On the shelf

The London litigation market is often lamented as being the most expensive in the world. Yet with innovative solutions being offered by the alternative funding market, is it really a difficult place to get access to justice?

The eagerly awaited judgment in the Stone & Rolls (in liquidation) v Moore Stephens litigation will have far reaching implications for the world of third party funding.

Stone & Rolls (in liquidation) has secured funding for its case, which concerns allegations that its auditors Moore Stephens failed to discover credit fraud by Stone & Rolls and its ultimate owners Zvonko Stojevic. The $174m (£87.66m) claim is among the largest for which funding has been secured.

If the case fails it will send shivers through the litigation funding sector.

Increasingly, lower value claims are emerging that demonstrate how alternative funding methods are improving  the chances of getting access to justice for smaller companies and individuals who might not otherwise be able to afford the cost of justice in London.

Next week (1 July), ITV will go to the High Court to defend itself against a multi-million pound claim from Excelsior, the production company behind The Darling Buds of May and A Touch of Frost.

Excelsior, represented by Fulbright & Jaworski partner Chris Warren-Smith and senior associate Stephen Elam, is seeking royalties from ITV for programmes the broadcaster sold on to ITV2 and ITV3.

ITV, represented by Eversheds partner Antony Gold, has disputed the claims, arguing that a clause in its contract with Excelsior says it will pay a set fee for repeats shown on ITV, but it is not obliged to pay the same level for repeats shown on ITV2 and ITV3.

Other production companies that make programmes for ITV would be entitled to increased royalties because they belong to talent unions that have struck deals with the broadcaster. However, smaller companies like Excelsior sit outside the unions and have instead looked to litigate against the company.

Excelsior could stand to gain more than £2m in royalties from ITV, but without litigation funding it would never have been able to take on the broadcaster.

As Warren-Smith points out: “Small companies don’t have the capital to support large proceedings, even if they have a strong case. Without the funding Excelsior couldn’t have brought the case, losing it’s right to access to justice.”

Yet the very fact that Excelsior, like Stone & Rolls (in liquidation), has managed to secure funding has shown it is an invaluable tool in helping those with limited budgets get access to the courts.

Nevertheless, ITV is understood to have been aggressive in its defence. In the hearing on security for costs ITV counsel Charles Hollander QC of Brick Court Chambers challenged every aspect of Excelsior’s predicted costs.

Andrew Sutcliffe QC of 3 Verulam Buildings succeeded in his defence of the funding arrangement.

This shows the court is increasingly finding favour with the alternative funding market – even if it is used in conjunction with an after-the-event (ATE) insurance premium.

One suggestion put forward by Lord Justice Jackson in his paper on costs is for funding arrangements, such as ATE premiums, to be non-recoverable. This is still up for discussion, but will no doubt be an area of contention for many litigants.

It may well be expensive, but London is an elite litigation centre and when it comes to litigation corporate general counsel will look for quality – and they are willing to pay for it.