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23.07.20

How legal crowdfunding can help you bring/defend a case

We are all familiar with the concept of crowdfunding, whether in the context of supporting a new business venture or contributing to a worthy cause.  Crowdfunding is now becoming an established method of funding a legal case - whether it is the pursuit of a claim or the defence of criminal proceedings.

In the legal environment, crowdfunding is akin to a 'virtual whip round', harnessing the power of the internet and social media to try and marshal funds from those who care about a particular issue or a litigant.  The procedure is straightforward. The litigant publishes a crowdfunding page (approved by their solicitors) on the crowdfunding company's platform summarising their plight.  This is then shared on social media and by email, text, WhatsApp etc.  Those who want to contribute simply click a button and select an amount (entering their card details if their device hasn't already memorised these). They may then have the option to share the campaign on their social media, promoting the campaign further.  Donors may receive periodic updates about the case.  Where a case is particular sensitive, limited details may be given about the case or the invitation kept within a closed group (and password protected).

A common misconception with legal crowdfunding is that the case must concern a point of public importance.  Whilst this may help attract more funding (if the campaign is properly promoted), crowdfunding can be a lifeline for anyone involved in any type of legal proceedings provided they are able to tap into a supportive network.  This includes proceedings that are already underway where a litigant's funding is drying up.

The popularity of crowdfunding can be easily explained.  The saying goes that 'Justice is open to all - like the Ritz'.  Like staying at the Ritz, bringing or defending legal proceedings is normally an expensive process.  The cost of seeing High Court proceedings to trial is rarely less than £100,000 (defamation and other specialist claims can cost several times more).  Equally, the defence of criminal proceedings, or pursuit of an appeal, can also be costly, particularly if the case is factually complex, evidence heavy or requires leading counsel.

Alternatives to private funding: for example, legal aid, conditional fee agreements, damage-based agreements or insurance are often not available or unsuitable.  The availability of civil legal aid is extremely limited (it will rarely cover disputes between private individuals).  Criminal legal aid is often means tested and/or requires contribution payments.  The case fees paid to firms are very low, meaning the quality of representation can vary tremendously (with files often run by unqualified staff).  Legal expense policies are a mixed bag.  They should always be examined carefully; some will provide extensive cover and allow a litigant to instruct a decent firm.  Others (as is often the case with policies added on to home insurance) may restrict a litigant's ability to instruct a top firm if the cover and/or hourly rates payable are modest.  Since the recoverability of success fees was scrapped, conditional fee agreements (CFAs/'no win, no fee' agreements) have lost much of their attraction to law firms.  Without the prospect of enhanced fees the risk is less attractive.  Moreover CFAs have never been viable for a law firm in borderlines cases or where there are questions over a defendant's ability to pay costs.  Generally speaking, good firms don't want or need to gamble on whether they will get paid or not.  Damage-based agreements (where a law firm can take a cut of damages) have had little take up from the legal profession to date, but would generally only be suitable in high value civil claims.

Thus, many litigants are forced to cash-in live savings or remortgage or - where they have the choice - not pursue meritorious legal action.  In the latter situation, this may mean sacrificing principles and allowing an injustice to go unchecked.  Crowdfunding potentially offers a way through here: allowing an important claim to be pursued, a defence to be mounted, an appeal to be lodged - with the best lawyers.  Of course, crowdfunding only works if there is a network to tap into and sympathetic ears.  This can work in different ways.  A case of public importance could be promoted on Twitter, attracting thousands of small donations from strangers.  Conversely, a more private case can attract help from Facebook Friends and family members.  In its most simple form, a crowdfunding platform can be used to allow a relatively small number of individuals to make larger contributions.

Crowdfunding isn't suitable for everyone or every case.  Unless an 'after the event' insurance policy is purchased it won't protect a litigant from a potential adverse costs order if they lose their case.  Similarly, it is not an investment vehicle - contributions to a crowdfunding campaigns are gifts not loans (although in some instances larger donations may be partially recoverable).  However, legal crowdfunding is rapidly emerging as a viable alternative method of funding that is allowing litigants to fight cases that might otherwise not have been fought.

 

Brett Wilson has a partnership with CrowdJustice that allows clients to crowdfund legal fees for their cases.  Click here to find out how we can help you if you are interested in crowdfunding a legal case.


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Legal Disclaimer

Articles are intended as an introduction to the topic and do not constitute legal advice.


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