Update prepared by Christopher Harlowe (Partner, Cayman Islands) and Harry Rasmussen (Senior Associate, Cayman Islands)
The Private Funding of Legal Services Act, 2020 (the Act), which came into force on 1 May 2021,1 codifies the rules that apply to litigation funding in the Cayman Islands, which had previously been determined on a case-by-case basis by the court including by reference to the anachronistic principles of champerty and maintenance. The widened access to litigation funding introduced by the Act brings the Cayman Islands into line with onshore jurisdictions such as the United Kingdom and the United States which have well-developed litigation funding markets and providers. The Act provides welcome certainty for litigants looking to manage the expense of litigating in the Cayman Islands.
There are three types of litigation funding agreements: i) Conditional Fee Agreements, in which the client pays an uplift on the attorney's standard fees if the claim succeeds but nothing if the case is lost; (ii) Contingency Fee Agreements, in which the attorney receives a percentage of the sum(s) recovered by the client if the claim succeeds, and nothing if the case is lost; and (iii) Third Party Funding Agreements, where a third party agrees to fund all or part of the costs of a client's case in exchange for payment on agreed terms.
History of litigation funding in the Cayman Islands
Historically, the main obstacles to the use of litigation funding in the Cayman Islands were the archaic English doctrines of champerty and maintenance, which remained both crimes and torts in Cayman until they were repealed with the introduction of the Act.
In recent years, the Cayman Islands courts have taken a pragmatic approach, having established useful guidelines for litigants looking to use Third Party Funding Agreements.2 The Cayman courts were also sympathetic to the use of Conditional Fee Agreements by liquidators to pursue meritorious claims that could not otherwise be pursued for want of funding. While helpful, these guidelines still required each case to be considered individually on its merits. The introduction of the Act specifies the circumstances in which litigation funding, including on a contingency fee basis (which was previously unavailable), is available to litigants, generally without court approval.
The key elements of the Act
Champerty and maintenance
Section 17 of the Act repeals the offences of champerty and maintenance under the common law, save where the cause of action accrued before the Act comes into force, so this provision does not have retrospective effect.
'Contingency fee agreements'
The Act permits the use of 'contingency fee agreements', save in respect of criminal (or quasi-criminal) proceedings, or proceedings in respect of the care of a child or any order under the Children Act.
Section 3 of the Act essentially defines a contingency fee agreement as an agreement in which the remuneration paid to the attorney for their legal services provided to or on behalf of the client is contingent, in whole or in part, on the successful outcome of the matter at hand. This definition therefore encompasses both Conditional Fee Agreements and Contingency Fee Agreements (as described above).
The Act and the Private Funding of Legal Services Regulations, 2021 (the Regulations) together specify certain limits on the success fee payable and what portion of a successful client's recovery can be paid to the attorney pursuant to a Conditional Fee Agreement and a Contingency Fee Agreement, as follows:
The above said, an attorney may enter into a either a Conditional Fee Agreement or a Contingency Fee Agreement which provides for the payment to the attorney of a larger amount than the specified percentages if the agreement to do so is approved by the court. Such an application must be brought jointly by the attorney and the client within 90 days of the execution of the agreement. The Act specifies the considerations the court will have regard to when determining such an application, which include the nature and complexity of the value of the proceedings. Notably, in determining such an application, the court cannot approve a contingency fee which exceeds 40 per cent of the total amount awarded, of any amount obtained by the client or of the value of any property recovered in the proceedings.
The Act further stipulates that any award of costs or costs recovered must be excluded when calculating the fee payable to an attorney under a Conditional Fee Agreement or Contingency Fee Agreement unless prior court approval to the contrary has been obtained.
The Act also includes a number of procedural requirements in relation to Conditional Fee Agreements and Contingency Fee Agreements, including as to their form and content, client cooling-off periods and the impact on costs. Notably, section 12 of the Act requires that a Conditional Fee Agreement or Contingency Fee Agreement must be first approved by the court (before payment to the attorney) where it is made by a client in a fiduciary capacity, including in their capacity of guardian, attorney or trustee under a deed or will.
Litigation funding agreements
The Act makes separate, albeit relatively brief, provision for litigation funding agreements (i.e. Third-Party Funding Agreements).
The only conditions prescribed by the Act regarding the entry of Third Party Funding Agreements are that: the agreement shall be in writing; the agreement shall comply with prescribed requirements, ' if any', and that the sum to be paid by the client to the funder shall consist of either any costs payable to the client in respect of the proceedings to which the agreement relates together with an amount calculated by reference to the funder's anticipated expenditure in funding the provision of the services, or a percentage of the amount or the value of the property recovered in the action or proceedings to which the agreement relates. There are as yet no prescribed requirements under the Act, and none have been proposed by the
Cayman Law Reform Commission but the Act makes allowance for such requirements in the future, which may cover matters such as information to be provided by a litigation funder to a client before the agreement is made or impose different requirements for different types of Third Party Funding Agreements.
Certain forms of litigation funding agreements have been available to litigants in the Cayman Islands for over a decade, albeit often subject to the approval of the Judges in the Financial Services Division of the Grand Court of the Cayman Islands. The codification of the guidelines applicable to these types of fee agreements provides greater certainty for litigants wishing to rely on them without having to obtain the prior approval of the court (in most cases). The new availability of Contingency Fee Agreements (ie an agreement allowing the attorney to retain an agreed percentage of the client's recovery) marks a leap forward for the jurisdiction, and one that brings the Cayman Islands into line with competing common law jurisdictions.
Interestingly, and consistent with the position in England, the Law Reform Commission has not proposed any specific set of regulations governing the provision of third party litigation funding, for now favouring self-regulation over a more prescriptive approach. Consequently, we expect to see the market for these services in the Cayman Islands develop at pace.
Read the original here:
- Renting out your own private island may be cheaper than you think here are 13 incredible Airbnbs - Business Insider - July 25th, 2021
- Five Homes on Maine Islands You Don't Want to Miss Out On - Boston magazine - July 25th, 2021
- Cornering the market with the next big thing in retail - The Times - July 25th, 2021
- Marymount team helps in statewide effort to address 'heat islands' - Inside NoVA - July 25th, 2021
- 10 "No-No's" of Cruising After the Pandemic - Cruzely.com - July 25th, 2021
- We bought a $62,000 sailboat and moved in - Toronto Life - July 25th, 2021
- Exploring the Elizabeth Islands (and swimming with cows) - The Boston Globe - July 7th, 2021
- Holiday on Welsh private island goes viral on TikTok and stuns people around the world - Wales Online - July 7th, 2021
- Beautiful Scottish island goes on sale for the same price as Edinburgh city centre flat - Edinburgh Live - July 7th, 2021
- Secluded Camp with 4,000 ft of Lake Frontage in NY's Adirondacks Scheduled for Luxury Auction July 16th - PRNewswire - July 7th, 2021
- Ed Sheeran had to be talked out of buying an island and moving to Ghana - NME - July 7th, 2021
- The private Scottish island you can buy for the same price as a London flat - My London - July 7th, 2021
- 17 Sunny Photos of the Royal Family at the Beach - TownandCountrymag.com - July 7th, 2021
- Traveling to the Maldives during Covid-19: What you need to know before you go - KTVZ - July 7th, 2021
- What's New In The Bahamas In July - PRNewswire - PRNewswire - July 7th, 2021
- Revisiting The Island of Dr. Moreau: Marlon Brandos fever dream - Far Out Magazine - July 7th, 2021
- The Best Room at ... The Four Seasons Anguilla - TownandCountrymag.com - July 7th, 2021
- I went on Royal Caribbean's 7-day vaccinated cruise to the Bahamas - Business Insider - July 7th, 2021
- If you love travel then Netflix's The World's Most Amazing Vacation Rentals is your next watch - Woman & Home - July 7th, 2021
- Taxing tourists is helping the Balearic islands to give back to sustainable initiatives - Euronews - June 28th, 2021
- Escape to one of these 10 New England islands for your next vacation - USA Today 10Best - June 28th, 2021
- Some neighborhoods in DC can be 20 degrees hotter than other areas. Here's why - WUSA9.com - June 28th, 2021
- Where is the Love Island villa and can I stay there? - Manchester Evening News - June 28th, 2021
- Calilo a work of art on the Greek island of Ios - Travel Weekly - June 27th, 2021
- The perfect getaway: An interview with Luis D. Ortiz of Netflix's The World's Most Amazing Vacations Rentals - Charleston Post Courier - June 27th, 2021
- Yugo Private Aviation expands in Southeast Asia - Business Wire - June 27th, 2021
- Rare chance to own a renovated cottage on a private Welsh island - Wales Online - June 27th, 2021
- Would you like to stay in an igloo when your trip resumes? - Ohionewstime.com - June 27th, 2021
- Private aviation firm Yugo pursuing growth in PHL - BusinessWorld Online - June 27th, 2021
- Behind the Scenes: On the Hunt for the Real Ghislaine Maxwell - Rolling Stone - June 27th, 2021
- This Private Island for Rent in Greece is Heaven on Earth A private island available to - Greek Reporter - June 23rd, 2021
- Netflixs New Series "The Worlds Most Amazing Vacation Rentals" Is Giving Us the Travel Inspiration We Need - HouseBeautiful.com - June 23rd, 2021
- Find The Worlds Most Amazing Vacation Rentals on Netflix - The Detroit News - June 23rd, 2021
- The Ritz-Carlton Debuts In Turks & Caicos Hospitality Net - Hospitality Net - June 23rd, 2021
- Library bookmark contest... - Journal of the San Juan Islands - June 23rd, 2021
- Why I had no hesitations booking 2 cruises this summer - Business Insider - June 23rd, 2021
- An AZ of Greek islands and how to plan the perfect trip - Telegraph.co.uk - Telegraph.co.uk - June 23rd, 2021
- Bill Clinton and Jeffrey Epstein really are more scandalous than Prince Andrew Film Daily - Film Daily - June 23rd, 2021
- How to Rent Out Four of the Most Exclusive Private Islands on Earth - InsideHook - June 15th, 2021
- Disney is Still Moving Forward with Second Private Destination in the Bahamas - Cruise Hive - June 15th, 2021
- 7-Day Sailing Trip to The British Virgin Islands - AFAR Media - June 15th, 2021
- Why Private Travel Is The Newest Trend For Vacationers Private Travel - Upscale Living Magazine - June 15th, 2021
- Where Sun, Sand and Splendor Are Still to Be Discovered - The New York Times - June 15th, 2021
- A Japanese-Inspired Villa Hits the Market on the British Virgin Islands - Dwell - June 15th, 2021
- A Birding Adventure in Arizonas Sky Islands - The New York Times - June 15th, 2021
- Financing considerations for take-private transactions in the Cayman Islands - Lexology - June 15th, 2021
- Turks and Caicos Islands issued a Level 1 Notice from the CDC - eTurboNews | Trends | Travel News - June 15th, 2021
- A local's ultimate guide to visiting St. Martin, an island in the Caribbean - Insider - June 15th, 2021
- Hudson Valley On The Water: 5 Islands Park Kayak Excursions - Patch.com - June 15th, 2021
- Cruises are finally returning to U.S. ports here's what will be different post-COVID - MarketWatch - June 2nd, 2021
- First Look: The Ritz-Carlton Opens Its First Resort in the Maldives - Robb Report - June 2nd, 2021
- Traveling to the Maldives during Covid-19: What you need to know before you go - KRDO - June 2nd, 2021
- Culture Talk: Lisa Howie on Organizing Inaugural Atlantic World Art Fair, Online Event Features Works by Artists From Caribbean and Atlantic Islands -... - June 2nd, 2021
- OMG, I Want to Rent That House: Ibiza, Spain The Daily Beast - Daily Beast - June 2nd, 2021
- Join the luxury villa club with Stay One Degree - The Week UK - June 2nd, 2021
- Unparalleled Luxury Embraces the Circle of Island Life with the Debut of the Ritz-Carlton Maldives, Fari Islands - Yahoo Finance - June 2nd, 2021
- Tourism is Back and it Starts in The Seychelles With a Boom! - Al-Bawaba - June 2nd, 2021
- Post-COVID cruising: The ships are back at sea, but where can they go? - Yahoo News - June 2nd, 2021
- Everything you need to know about a Fiji and Pacific Islands travel bubble, and which islands to visit - Nine - June 2nd, 2021
- Open letter to the Lopez community | Guest... - Islands' Weekly - June 2nd, 2021
- 10 Private Islands That You Can Rent on Airbnb - Yahoo Lifestyle - May 24th, 2021
- L'Voyage Expands with New Shareholder and New Plans - Aviation International News - May 24th, 2021
- How to Build Anywhere in the Caribbean - Caribbean Journal - May 24th, 2021
- COMPETITION: Win a spectacular private island staycation in idyllic Clew Bay for you and your housemates - JOE.ie - May 24th, 2021
- Survey reveals who's willing to cruise - News - University of Florida - University of Florida - May 24th, 2021
- Here's Everything Worth A Watch On Netflix In June 2021 - Secret Manchester - May 24th, 2021
- Yorkshire jeweller becomes an unexpected tourist attraction - in the Falkland Islands - The Yorkshire Post - May 24th, 2021
- The Worlds Largest Private Residential Yacht Will Be Back on the Water This Summer - Robb Report - May 24th, 2021
- WATCH: This New Netflix Series Takes You Inside the World's Most Amazing Vacation Home Rentals - Yahoo Entertainment - May 24th, 2021
- Where Proof of COVID-19 Vaccination Is Required - Healthline - May 24th, 2021
- Mackinac Islands Sip n Sail boat offers new cruises, including 5 oclock Somewhere - MLive.com - May 24th, 2021
- The Best Outer Banks Vacation Rentals 2021, from Beachfront Bungalows to Family-Friendly Retreats - Cond Nast Traveler - May 24th, 2021
- Traveling to the Maldives during Covid-19: What you need to know before you go - Gwinnettdailypost.com - May 11th, 2021
- Pandemic, where are we heading to? - The Times of India Blog - May 11th, 2021
- Heres how to book a glamorous spot to go glamping - MarketWatch - May 11th, 2021
- Rarotonga bubble ready: Cook Islands' advice to Kiwi visitors - New Zealand Herald - May 11th, 2021
- Europe woos tourists with cash, cafes and Covid-free islands - Yahoo Singapore News - May 11th, 2021
- Private parking spaces in Provincetown near $100K each in densest parts of town - Wicked Local - May 11th, 2021
- He was on vacation that cost 15,000 Johnson was examined - asumetech - May 11th, 2021
- School Garden Iniative Continues To Grow - Government of the Virgin Islands - May 11th, 2021