Loi Funding Template for England and Wales

A Loi Funding agreement is a specialized contract that governs third-party litigation funding arrangements in England and Wales. This document establishes the legal relationship between a litigation funder and the party seeking financial support for legal proceedings, setting out detailed terms for funding provision, return calculations, and case management responsibilities.

When do you need this document?

You need a Loi Funding agreement when pursuing expensive litigation without sufficient capital to cover legal costs and potential adverse costs orders. This commonly occurs in complex commercial disputes, group actions, insolvency litigation, and intellectual property cases where legal fees can reach hundreds of thousands or millions of pounds. The agreement is essential when you want to transfer financial risk to a third-party funder while maintaining control over your legal strategy. You'll also require this document when your legal representatives recommend litigation funding as part of a broader litigation strategy, or when you're considering multiple funding options and need to formalize terms with potential funders.

Key legal considerations

The funding commitment clause must clearly specify the maximum funding amount, drawdown conditions, and circumstances that might affect funding availability. Return on investment provisions require careful structuring to ensure compliance with champerty and maintenance rules while providing fair compensation to the funder. Control and conduct clauses are critical, as they determine decision-making authority over settlement negotiations, case strategy, and key litigation milestones. You must address termination scenarios comprehensively, including circumstances allowing either party to withdraw and the consequences of early termination. Disclosure obligations are essential, as Civil Procedure Rules require parties to inform the court and opponents about funding arrangements. Consider including provisions for After the Event (ATE) insurance coordination, as most funders require ATE coverage to protect against adverse costs orders.

Legal requirements in England and Wales

Your Loi Funding agreement must comply with the Courts and Legal Services Act 1990, which permits litigation funding arrangements provided they meet specific criteria. The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) affects costs recovery and must be considered when structuring return provisions. Civil Procedure Rules require disclosure of funding arrangements to the court and opposing parties, typically within 7 days of entering the agreement. The Competition Act 1998 prohibits funding arrangements that create anti-competitive practices or market distortions. Most reputable funders follow the Association of Litigation Funders Code of Conduct, which sets professional standards for the industry. If your funder is FCA-regulated, additional financial services regulations may apply. You must ensure the agreement doesn't breach professional conduct rules applicable to your legal representatives, particularly regarding conflicts of interest and client confidentiality. Consider whether the funding arrangement requires court approval, especially in cases involving protected parties or specific types of litigation where judicial oversight is mandated.