LITIGATION FUNDING

OVERVIEW

Litigation funding is a transaction whereby a third party provides non-recourse funding to a litigant for its legal costs in return for a share of a favourable outcome. The transaction is an investment and not a loan nor any other traditional secured finance transaction.

Since the global financial crisis of 2008, litigation funding has become a popular solution for litigants as a way to mitigate or hedge the cost and risk of commercial litigation. Litigation funding (also known as champerty) has been declared lawful and encouraged by the South African courts since 2004 following the Supreme Court of Appeal judgement in Price Waterhouse Coopers Inc and Others v National Potato Co-operative Ltd (448/2003) [2004] ZA SCA 64; [2004] 3 All SA 20 (SCA).

Litigation funding has gained traction in South Africa over the last five years. It provides a litigant with an opportunity to secure the best legal teams for their case while also allowing them to focus their capital on income generating activities as opposed to burden of legal fees.

Taurus are specialist litigation funders focussing on high-value commercial litigation.

FUNDING CRITERIA

WE LOOK FOR HIGH VALUE CLAIMS WITH
STRONG LEGAL MERITS AND EQUITIES

The key funding criteria are:

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Defendant Solvency

Will the defendant be able to pay an award or judgement if the claim is successful? The biggest risk to any litigation is that of receiving an empty judgment or award.

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Prospects of Success

Is the claim meritorious? The claim must be assessed as likely to be successful on a balance of probabilities.

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Claim Value

What is the claim amount? Is it easily calculable? We provide funding for claims of more than R20 million or for an asset of the equivalent value which can be easily realized on success.

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Budget

What are the estimated budgeted costs? We ringfence the entire budget for each new case we fund following its approval. The budget is conservative and considers the inherent uncertainties of litigation as well as adverse costs exposures, if required. The ratio between the claim value and budget should be ± 10 to 1.

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Legal Team

Is the legal team specialized in the area of law pertaining to the dispute? We provide the financial support for the top South African legal teams to ensure that claimants get the best legal services available.

OUR PROCESS

COMMITEES AND DUE DILIGENCE

  • litigation-funding-process-numbers

    Taurus Capital’s funding is guided by our legal risk and investment committees. Our committees are made up of experienced lawyers, accountants, actuaries, businessmen and private equity professionals who understand the costs, risks and timeframes of litigation.

  • litigation-funding-process-numbers2

    The legal risk committee provides an experienced, third-party assessment of the merits of your case. The cumulative experience of this respected team delivers seasoned insights not only into the legal merits of your claim but also into equities, strategy and second-order consequences of the litigation.

  • litigation-funding-process-numbers3

    Our internal investment committee conducts due diligence which starts with the critical question of whether a defendant will be able to satisfy a judgement in several years’ time. The committee analyses financial information relevant to the litigation to determine the accompanying financial risk to the claim value and recovery.

  • litigation-funding-process-numbers4

    Claimants benefit from an objective, professional assessment of your prospects of success, while the outcomes of the due diligence are often assets for your legal team during the resulting litigation.

  • litigation-funding-process-numbers

    Taurus Capital’s funding is guided by our legal risk and investment committees. Our committees are made up of experienced lawyers, accountants, actuaries, businessmen and private equity professionals who understand the costs, risks and timeframes of litigation.

  • litigation-funding-process-numbers2

    The legal risk committee provides an experienced, third-party assessment of the merits of your case. The cumulative experience of this respected team delivers seasoned insights not only into the legal merits of your claim but also into equities, strategy and second-order consequences of the litigation.

  • litigation-funding-process-numbers3

    Our internal investment committee conducts due diligence which starts with the critical question of whether a defendant will be able to satisfy a judgement in several years’ time. The committee analyses financial information relevant to the litigation to determine the accompanying financial risk to the claim value and recovery.

  • litigation-funding-process-numbers4

    Claimants benefit from an objective, professional assessment of your prospects of success, while the outcomes of the due diligence are often assets for your legal team during the resulting litigation.

LET'S WORK TOGETHER

At Taurus we are selective about the types of cases we fund. We partner with you from beginning to end and invest ourselves in your litigation.

We partner with you on your litigation journey to see it through to conclusion.

Process Step 01

Enquiry

Litigant and their attorneys make contact with Taurus and provide a brief and summary of the dispute.

Process Step 02

Case Assessment

Our legal risk and investment committee performs a due diligence on the merits and facts of your case.

Process Step 03

Expression of Interest

Taurus expresses interest in funding your matter and discusses the broad terms of funding.

Process Step 04

Investment Committee Approval

Final confirmation by investment committee to approve litigation funding facility.

Process Step 05

Funding Agreement

Litigation funding agreements are executed.

BENEFITS

Litigation Funding solves the inherent challenge of high costs and high risks for litigants pursuing commercial litigation.

Our solutions are flexible and can be used at any stage of the legal process. Our clients range from insolvent estates and company’s in
business rescue, to well-known South African corporates.

How we help:

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Full or partial funding
for legal costs

litigation-funding-benefits-icons-indemnity

Indemnity to reduce or mitigate the cost
and the risk of losing the litigation

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Monetize and accelerate
judgements or awards

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Enforce outstanding
judgments or awards

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Work with client’s choice of attorneys
and counsel

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A tried and tested solution to the
uncertainty around litigation
budgets, timing and risk
management.

WHY TAURUS

Taurus has a dedicated litigation fund which is unmatched in the scale and reliability. Our capital management, transaction terms, and transparency follows international business practices. Our solutions meet the needs of our clients for the for the duration of their litigation and puts in puts the right processes and incentives in place in order to align the litigant, legal team, and funder in order to cater for any outcome in the litigation.

Litigation generally favors the party who is better resourced. A litigant with means can appoint the best legal representatives and access expertise and strategies which otherwise would not be available to a litigant with a limited budget constraint. This party will be inherently advantaged throughout proceedings. Litigation funding enables a litigant to gain these advantages, or level playing the field against a well-resourced defendant.

Taurus provides funding for all legal costs required to litigate to finality. We act as passive investors and do dictate instructions or strategic decisions. Our capital is a non-recourse investment transaction which shifts the cost and risk of legal fees from the client to Taurus.

In addition to capital, we provide the comfort of an experienced partner who performs an ongoing and objective assessment of prospects of success.

FAQ's

Yes, litigation funding transactions were sanctioned and declared lawful, and desirable, in 2004 by the Supreme Court of Appeal case of Price Waterhouse Coopers Inc and Others v National Potato Co-operative Ltd.

Yes, the documentation and discussions had with a litigation funder is legally privileged as it falls under the categories of the work-product doctrine and common-interest privilege.

We provide litigation funding for high-value commercial litigation (generally more than R20 million, although exceptions can be made). The dispute must pertain to money or an asset that can be valued and is easily realisable.

We do not provide funding for the following types of disputes:

•  Family law
•  Defamation
•  Personal injury
•  Criminal law
We do not provide litigation funding for RAF or medical negligence claims because there are several specialist personal injury attorneys that will litigate such claims on contingency and provide more suitable funding terms to their personal injury claimants. We do have a separate division within Taurus that assists these law firms with funding these claims.

The identity and nature of the defendant is a critical piece of any funded claim. The defendant must be based in South Africa (or have realisable assets in South Africa), and must have the financial means to satisfy a judgment or award.

Taurus can be approached for finance at any stage of proceedings, from inception until appeal, or even when recovery proceedings are completed.

Taurus can provide full or partial funding. A matter co-funded by the claimant will reduce the share of the proceeds to which Taurus would be entitled if the claim were successful.

The legal team must have suitable expertise and experience to litigate the matter. We have no preference as to the legal team; however, we want the litigation to proceed as efficiently and effectively as possible. Our funding is generally used to bolster the legal team by providing funding for additional junior or senior counsel, as well as any experts that may be required in the claim.

No, it is not a loan. The transaction is an investment. It is non-recourse and provided by Taurus on risk. This means that Taurus will only be repaid its investment and receive a return if the litigation is successful. No security is obtained from the claimant or legal team in return for the litigation funding provided.

The proposal sets out the amount of the litigation facility provided and the share of the proceeds payable to Taurus, if successful.

The proposal is non-binding and subject to entering into a formal litigation funding agreement and may contain further conditions depending on the nature of the matter. A comprehensive litigation funding agreement will be concluded if the parties agree to the transaction. This agreement will govern the relationship between the parties and set out the process for drawdowns, etc. The claimants’ attorneys will be a third-party stakeholder to this agreement.

The claimant remains the client in the litigation and the legal team is always subject to the claimant’s instruction. Taurus provides funding based on an investment case and is therefore comfortable with the likely strategy and instructions that will ensue in the litigation after the funding is provided.

The decision for settlement always lies with the client, but the broad terms of such a settlement are agreed between the parties upfront. Any settlement proposal will always consider commercial factors as well as the view of the legal team.

The attorneys provide regular progress reports and updates on material developments in the litigation. These reports are the same as those given to the claimant. Our monitoring is in place to ensure the claim proceeds according to the forecast strategy and budgeted costs.

Litigation is, by its nature, unpredictable, and Taurus takes this into account as part of its claim assessment and risk analyses. We understand that a claimant has approached a funder to cater for a large portion of this unpredictability. Taurus acts as a partner. It is common for initial estimations of budgets and timelines to be exceeded and extended in litigation. Taurus will continue to provide funding as long as the prospects remain favourable and there is a favourable ratio between the cost and potential return in the litigation.

Taurus has a unique and transparent fee structure calculated according to a success fee percentage, time, process and how much money is spent on legal costs in the matter. This return is calculated and agreed upfront with the client and is commensurate with the rates charged by international litigation funders.

Taurus is the general partner of a litigation fund, the Taurus Fund One, which, as of 2021, has R145 million available for investment in litigation.

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