The downside of litigation funding
Luckily for myself, I reside as a resident in the UK and as a resident of England and Wales, I have rights when engaged in internationally funded litigation.
In the 2005 appeal case Arkin v Borchard Lines, the UK Court of Appeal held that a third-party funder may be found liable for the other side’s costs. This can occur from the point that the funder started funding the claim. The 2005 case created what is known as the Arkin cap. This was a previous limitation set at a maximum to the funder’s liability being equal to the funding that they had provided. Sir Rupert Jackson in his 2009 Report on Civil Litigation Funding took the view that this is wrong in principle. He argued that a litigation funder which stands to profit from its success should not be liable to escape liability if the claim fails. The result would be one where the successful defendant (eventually this will be me in my case) would be left out of pocket.
In the last 15 years, the court has seen sense and has moved away from applying the cap. In the 2017 case, Excalibur Ventures LLC v Texas Keystone Inc, the court wisely decided that indemnity cost may be ordered against funders. This decision brings a market increase into the financial exposures that litigation funders face.
The court has continued on this with line of reasoning in Davey v Money. There are many parallels in this case. Mr Ira Kleiman has no money and is unlikely to pay, but that doesn’t stop us eventually applying for an order for costs against the funder. Hedge funds have deep pockets. In this, we should be able to seek indemnity costs.
Given the nature and duplicitous actions of Mr Ira Kleiman and his council, we should not have too much difficulty on this point. A funder who involves themselves purely for profit without any motivation of providing access to justice needs to understand the risk they face.
Snowden J strongly took Sir Rupert Jackson’s 2009 paper to heart in his judgement:
“it is not easy to see why the choice of the funder as to the amount of its funding should dictate the amount of costs it should pay to the litigant’s opponent if the litigation fails”.
Luckily, we are about to engage on a series of forensic exercises that will completely discredit a number of people in this industry as well as demonstrating the falsity of the arguments put forward by Mr Ira Kleiman in his attempt to gain access to money he has no right to seek. His failure to protect assets, to secure his rights, none of that is my problem. But it will be his. And when we finish, we are likely in the position to have someone to go after for our costs. Otherwise, I would have been out-of-pocket nearly $50 million by the end of this and if we ran things up potentially a hundred.
Litigation funders should check the facts before they take the case and not let greed lead them. They fail to understand the duplicitous nature of their client and their clients willingness to lie even under oath for a small opportunity to a unjustly benefit, they will start to see that they face not only the cost they invest in their client, but that they need to fund the damages they cause.
(And, we will ensure that CoinDesk and their biased, false and dishonest “reporting” comes to be a later target… but there are only so many things one can do at a time)…
