- A relationship between a litigation funder and a funded party is governed by a contract known as a litigation funding agreement (LFA).
- Key elements of a LFA include a detailed budget for the case, the waterfall of payments, what happens if any dispute arises, and confirmation that the funded party remains in control of the litigation.
Once a litigation funder has agreed to finance a claim, the next step is to draft a litigation funding agreement (LFA). Knowing about the clauses which are important to a funder allows you to give early advice to your client on what to expect.
At its core, a LFA sets out basic principles: the promises a funder makes to meet all the fees and disbursements involved in bringing the claim, and providing an indemnity for any adverse costs which might arise, in exchange for the return of the invested sum plus a pre-agreed level of return.
So,