Member Article

Guernsey emerges as jurisdiction of choice for litigation funding support services

The small Channel Island of Guernsey is rapidly establishing itself as a leading provider of fiduciary services to the UK’s litigation funding industry, explains Simon Graham, Group Managing Director of Lancaster Guernsey.

Litigation funding is where a funder, who is not party to the dispute, finances the cost of the litigation in return for a portion of any damages. Litigation funding seeks to address the “David and Goliath” situation where a well-resourced defendant might otherwise be able to outspend a small claimant and can be a key plank in ensuring access to justice.

The industry has enjoyed significant growth in England and Wales over the past decade and has established itself as a key feature of the legal landscape. Last year, litigation funding assets in the UK hit a record £2.2 billion. With spiralling inflation, an economic downturn looming and companies and individuals ever more concerned about their financial position, the ability to borrow on a non-recourse basis to cover the legal fees of major disputes is becoming still more attractive and the industry is expected to expand further in the short term.

The industry’s growth is a direct boon for UK plc as London remains the hub for the industry globally. But with the industry’s growth has come increasing professionalism. Most obviously the leading industry players have formed a self-regulatory body, the Association of Litigation Funders (ALF), based in London, but also an increasing number of specialist ancillary service providers have sprung up to service the industry’s needs including brokers, insurers, lawyers, and operational service providers.

While London is the hub for many of these ancillary services, the Channel Islands of Guernsey and Jersey, have established themselves as the jurisdiction of choice for many global litigation funders, in large part because of their well-respected regulatory regimes and sophisticated service providers. Burford, a large litigation funder listed on the LSE and NYSE, is a Guernsey company that has long taken advantage of Guernsey’s sophisticated regulatory and corporate regime. Therium, another major funder, has several funds established in Jersey and regulated by the Jersey regulator, the JFSC. Bench Walk Advisors, a third major global funder has a significant number of funds established and administered in Guernsey.

What is it that makes the islands attractive? Language, law, location, and legitimacy. English is the native language. The islands boast a well-established, predictable legal system that is instantly familiar to most common law practitioners (notwithstanding an interesting basis in Norman law, which persists in some areas). The islands are a hop, skip and a jump from London and in the same time zone. And the sophisticated offering of service providers and robust regulatory regime lends it a legitimacy enjoyed by very few offshore and/or low tax jurisdictions.

Many funders, for example, value Guernsey’s company law provisions that permit “protected cell companies”, which offer clients the combination of administrative efficiencies and cost benefits with the advantages of a normal corporate structure. Technological innovation has helped further reduce the costs of the islands’ offerings. The Guernsey Registry, for example, has developed a sophisticated online portal to ensure administration is simpler and more efficient than in many other jurisdictions.

Guernsey’s blend of innovation and close legal alignment has helped fiduciary service providers on the Island to develop their expertise in the litigation funding sector and establish their reputation.

One such example is Lancaster Guernsey. Established in 2007 with the specific ambition of offering our clients an alternative to the way large financial corporations operate, we combine the provision of excellent client service levels with the ability to handle client matters in an efficient manner.

Our professionally qualified staff have developed in-depth experience of working both directly with litigation funders and lawyers themselves. They also have extensive experience of reviewing and executing supporting Litigation Funding Agreements.

With our collective knowledge and understanding of the industry, we are well placed to continue to satisfy the needs of this exciting, innovative, and burgeoning sector.

This was posted in Bdaily's Members' News section by Simon Graham .