By Kgomotso Ramotsho

Individual litigants and law firms can now access litigation funding in South Africa (SA). This comes after the launch by the Jericho Litigation Fund, on 8 September in Johannesburg. Chief Executive Officer of the Jericho Litigation Fund, Brandon Irsigler, said the costs of accessing competent legal advice was out of reach to almost all individuals, and added that larger companies, insurers, banks and state owned enterprises are aware of this.

Mr Irsigler said litigation funding levels the playing field for the plaintiff, allowing their claims to be taken seriously and to proceed to finality. ‘Litigation funders have been extremely successful in other jurisdictions, and we see no reason for it to be different in South Africa,’ he said.

Mr Irsigler announced that the Jericho Litigation Fund is backed by a private equity fund. He explained at the launch, that the fund will pay the plaintiff’s litigation costs for the duration of the dispute. He said that should the claim succeed, the funder will then share in the award amount. ‘The legal fees are paid at the risk, if the claim fails, the plaintiff makes no repayment and the funder covers any adverse cost order,’ he said.

Mr Irsigler added that, claim funding is a different model to the purchasing of claims, as the award amount is not yet determined, and is shared by the litigation funder. He said the interest of the claim-holder and the funder are completely aligned. He gave an example of how internationally, litigation funds have prevented large companies, insurers and state owned enterprises who previously cynically relied on the fact that few counterparts could afford to litigate to achieve a fair result.

Mr Irsigler added that without access to the litigation funding resources, plaintiffs with excellent claims are often bullied into settling for a fraction of the real claim value. Additionally, even plaintiffs who can afford litigation are turning to litigation funders to conserve cash flow. ‘The biggest area of growth seen by funds abroad, is in the de-risking of litigation by medium to large companies,’ he said.

Mr Irsigler added that it is cash constrained times. ‘Many finance teams are willing to forgo a full award in exchange for saving current cash flow when paying lawyers and not having to budget for a potential costs award in the event of a loss is an added benefit,’ he said.

Mr Irsigler also explained that claims eligible for funding are commercial claims, with awards valued in excess of R 3 million, brought against a solvent counterpart. According to the Jericho Litigation Fund website, their claim-holders have sought legal advice before contacting them, and that claim-holders are aware that, if they lose a case, they will be liable for both their legal costs, as well as approximately 65 to 70 percent of their opponents’ legal costs.

According to its website, the Jericho Litigation Fund, funds the following:

• Cases in any industry sector which have potential damages or money outcome in excess of R 3 million, excluding their costs.
• Cases that are to be heard under well-established rules (Arbitration Foundation of Southern Africa/International Criminal Court/London Court of International Arbitration).
• Cases to be heard under SA law, or the law of England and Wales.
• Tender irregularities.
• Breach of contract, typically:
  • unfulfilled contractual obligations;
  • premature and unilateral contract termination;
  • unilaterally applied ‘discounts’;
  • late payments; and
  • unilaterally imposed instalment payment.
• Claims arising from liquidation or business rescue proceedings.
• Claims against international trading partners.
• Claims against banks/insurers and finance providers.

Information about Jericho Litigation Fund, can be found at www.jerichofund.co.za

Kgomotso Ramotsho Cert Journ (Boston) Cert Photography (Vega) is the news reporter at De Rebus.

 This article was first published in De Rebus in 2016 (Nov) DR 15.