Posted by Michael Lent on 03/06/2020

Case assessment: Legal merits

When AxiaFunder take on cases for investment the merits of the case are given careful consideration. This, in turn, raises the question about what is meant by the merits. There are many constituents.

They include some basic points which do not actually relate to the legal merits but are necessarily fundamental, such as the presentation of the case.  Poor presentation i.e. missing documents, documents presented out of order and repetitively, result in the case not getting through the front door. If a solicitor cannot present the case well to us, they are unlikely to do so to a Court. 

Regardless of merit, does the opponent have any money or readily identifiable assets? The best defence any opponent has is that it has no money/assets.

The nature of the funding relationship between the solicitor and the claimant is also important. Generally, the greater the amount of risk that the solicitor is prepared to share with the client, the greater the encouragement that we can take.

The value of the claim is also fundamental. There is no purpose in spending time considering a case where the damages sought do not support the funding required.The stage at which the claim has also reached in its life is also an important consideration. Ideally, funding should be at the outset of the case but the ideal is not always the usual. 

Having considered these issues, the actual factual and legal merits of the case can then be explored. 

On the factual side, ideally, the case will be well documented, and the evidence of the claimant supported by contemporaneous documents. Therefore, for example, oral contracts are difficult to fund in what are known as “he said/she said” disputes because it is impossible to predict how an individual will perform in Court when giving evidence under cross examination.

Secondly, it is important that the Claimant has behaved well e.g. they have the moral high ground and it is the Defendant who has behaved incompetently or say, is trying to manipulate a contract to their advantage.

As regards, the legal merits of a claim, typically we will be provided with the views of an experienced barrister who will have carefully analysed the issues in the case and set out with detailed reasons why they conclude that the case has good prospects of winning.  A very strong case might see counsel assess the prospects of success at 65%. Therefore, counsel’s advice that the case stood 100% prospects of success, ironically, would be rejected. Counsel are always cautious in their assessment of prospects of success because they are well aware of the unforeseen issues that can arise when a case proceeds to trial.

Simply because counsel takes the view that the case is strong does not mean that AxiaFunder would fund it. We will consider counsel’s advice carefully. This will usually lead us to raise enquiries of our own and seek our own independent external views.

In addition, we may also have to consider expert evidence. It is important for us to be satisfied that the expert (a) has the appropriate expertise and (b) that they are providing an impartial view in respect of the issues they are addressing and not simply being a “hired gun”.

We will also require an opportunity of considering the opponent’s arguments and consider the case from their point of view in detail. 

Assuming a case makes it through all of these assessments, it is then worth taking a step back, coming back to it afresh and seeing if the case still makes sense. When it has passed all of these stages, and we are still convinced of its merits, then the case can be offered for litigation investment investment on the AxiaFunder platform. While our assessment ensures we only bring forward cases we deem to have high merits this does not eliminate the risk that you could lose all of your money if the case fails.