The Level of Liability of Third Party Funders
The second day of our costs law countdown of 2019 clarified the position in respect of Third Party Funding.
Third party funding has become an increasingly viable option to fund larger forms of litigation and allows for a more even spread of risk between the parties and their solicitors. The apportionment of risk had previously been addressed in the matter of Arkin v Borchard Lines Ltd  1 WLR 3055. This was where the Court of Appeal set the limit of a Third Party Funder’s indemnity was the amount of funding provided by the Third Party Funder.
However, the application of the cap was reconsidered in Davey v Money. It was held that the Arkin cap was the starting position. If the Court found that the Third Party Funder was considerably more involved in the litigation, beyond simply providing funding, then they could subsequently depart from the Arkin cap and make a separate Non-Party Costs Order accordingly.
The full judgment can be read here.