Litigation Funding Agreement Template for New Zealand

When pursuing legal proceedings in New Zealand, litigation funding agreements provide a crucial mechanism for accessing justice when financial constraints might otherwise prevent you from seeking legal remedies. This contractual arrangement allows third-party funders to finance your legal costs in exchange for a share of any successful outcome, enabling you to pursue claims without bearing the full financial risk yourself.

When do you need this document?

You need a litigation funding agreement when facing substantial legal costs that exceed your available resources or when you prefer to transfer litigation risk to a professional funder. This is particularly common in complex commercial disputes where legal fees and expert costs can reach hundreds of thousands of dollars. Class action lawsuits frequently rely on litigation funding to enable groups of claimants to pursue claims against well-resourced defendants. The agreement is also essential in arbitration proceedings, intellectual property disputes, and insolvency-related litigation where the potential recovery justifies the funder's investment but the upfront costs create barriers to access.

Key legal considerations

Your litigation funding agreement must carefully balance control mechanisms between you and the funder while preserving your fundamental right to conduct your own litigation. Key provisions include funding limits and drawdown procedures, return calculations typically ranging from 20-50% of proceeds, and termination clauses that protect both parties' interests. You must address potential conflicts of interest, particularly regarding settlement decisions and case strategy. Professional privilege and confidentiality arrangements require careful drafting to ensure legal advice remains protected. The agreement should specify who controls key litigation decisions, how additional funding requests are handled, and what happens if the case is unsuccessful. Insurance arrangements, including after-the-event insurance, often form part of the funding structure.

Legal requirements in New Zealand

Under New Zealand law, litigation funding agreements must comply with the Contract and Commercial Law Act 2017's fundamental requirements for contract formation and enforcement. The Fair Trading Act 1986 mandates transparency in funding terms and prohibits misleading conduct in negotiations. Depending on the structure, the Credit Contracts and Consumer Finance Act 2003 may require specific disclosures if the arrangement constitutes a credit contract. The Lawyers and Conveyancers Act 2006 governs how legal professionals interact with funding arrangements and fee structures. High Court Rules 2016 establish procedural requirements for funded litigation, including potential disclosure obligations to the court and opposing parties. You must ensure the agreement doesn't constitute maintenance or champerty under common law principles, though New Zealand courts have generally accepted legitimate commercial funding arrangements that serve the interests of justice.