Litigation funding will become a fixture of NZ’s legal landscape, says top firm

by Sol Dolor01 May 2017
Litigation funding is not only here to stay but will become an increasingly significant part of the New Zealand litigation landscape, MinterEllisonRuddWatts says in its latest “Litigation Forecast” report.

Litigation funding is rapidly gaining traction in New Zealand, and several factors will ensure that it becomes a major cog in the country’s legal machinery, the top firm said.

Minters said that there are no obvious common-law or statutory obstacles hindering the growth of third-party funding in the country. Moreover, the Supreme Court has rejected taking a supervisory position over litigation funding arrangements. Courts have also been liberal when considering litigation funding, except for cases where funders take control of proceedings.

Whereas Australia is expected to roll out substantial regulatory action for litigation funding, challenges to funding agreements in New Zealand will likely not gain as much traction due to differences between the Australian and New Zealand financial services regulatory frameworks.

Maybe funders should be more worried about the recent award of costs in excess of $5m in favour of defendants in the failed Feltex Carpets suit, Minters said. However, it remains to be seen whether the Feltex case will discourage funders due to risk, the firm added.

Incentives for litigation funding remain firmly established, the firm said. Plaintiffs face a possible win/win situation engaging litigation funders, as they gain when claims succeed and also lose nothing if a claim fails. The outsized returns on capital will continue to attract funders, Minters said.

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