FAQ’s – Litigation Funding Questions
Who administers Sparkle Capital?
Our products are administered by Acasta Europe Ltd. You can read more about Acasta on their website.
Are Sparkle Capital regulated?
No. However, our products are administered by Acasta Europe Ltd, who are regulated by the Financial Conduct Authority (FCA Reg No: 599391).
Are Sparkle Capital members of the association of litigation funders?
No. ALF has an important part to play in the litigation funding market. However, only 9 out of the 40+ funders active in the market are members of ALF. Sparkle products are administered by Acasta Europe Ltd, who are authorised and regulated by the FCA. So we are happy that due process is followed in administering Sparkle products.
About the Application Process
Will Sparkle only accept litigation funding applications from solicitors?
Although solicitors usually submit the forms, we will accept applications from any party. However, please note that any funding application that is agreed will then require a solicitor to be appointed.
What do Sparkle need in order to assess whether to fund a case or not?
The following information should be sent across when applying for funding.
– Application form;
– A detailed summary of the case;
– Pleadings (draft or finalised);
– Copies of correspondence with the opponent;
– Expert or Witness evidence where available;
– Counsel’s advice;
– Completed costs budget;
– Evidence of opponent’s financial strength;
– Solicitor’s own risk assessment of the claim.
How much does the litigation funding application process cost?
There is no cost to apply for funding. However, claimants should be aware that their solicitor may be incurring costs for submitting an application.
How long does the application for funding take?
The funding application will take approximately 3 weeks from start to finish. Sparkle aims to have an in-principle decision within 3 days, with final terms offered within 14 days. Once the terms have been agreed, documentation may take a further 3 days before monies can be drawn down.
About Case Monitoring at Sparkle
Can we control the claim?
No. Neither us or Acasta, are able to, or inclined to want to, control a claim.
What are our on-going monitoring requirements?
Monthly reporting is required of solicitors. Furthermore, there is a common-sense obligation for solicitors to report any material changes to us. We will not be involved on a daily basis. We simply need to be kept informed when something changes in the case.
Additionally, ourselves and Acasta will not decide when and how the case is settled. We are required to be notified and can express an opinion but the final decision rests with the claimant’s solicitor.
About Sparkle Funding Parameters
What is non-recourse funding?
Non-recourse means that your Sparkle funding is not repayable under any circumstances. Therefore, if a claim is unsuccessful, the Claimant will not have to repay the funds that are advanced or any interest or return component.
Will Sparkle fund a claim which has already begun litigation?
Yes. The decision to fund a case or not is based on the assessment of the legal merits of the case.
Must a solicitor be instructed on a CFA or DBA?
This is preferable as a CFA or DBA is an explicit endorsement by the solicitor of the legal merits of a claim. However, Sparkle recognises that most solicitors have a limit on the amount of work they can run on a CFA / DBA basis.
What are staged premiums?
If the claim is unsuccessful, how much does it cost the Claimant?
What if the required funding increases?
At what stage should Claimants apply for litigation funding?
An application with as much documentation as possible would receive the highest chance of securing funding. However, Sparkle recognises that funding is required to proceed with the claim.
Typically, the earliest stage that funding should be applied for is at the point that pleadings are drafted. It should be submitted along with a case summary and a solicitor’s risk assessment. Where funding is being sought ahead of a solicitor’s risk assessment, the claim is too early for application.
If Sparkle agree to fund my case, will the Claimant have any on-going costs to pay for?
No, unless if the claimant has agreed to fund some of the costs themselves.
How do monies get drawn from Sparkle?
A draw down request form is completed on a monthly basis. This sets out expenses incurred to date and the costs about to be incurred.
How is the interest charged?
Interest is charged on the agreed facility amount on a simple basis.
What cases will Sparkle fund?
We only fund cases in England and Wales and under exceptional circumstances, Scotland and Northern Ireland. We will also only fund certain claim types.
Will Sparkle fund retrospectively/costs already incurred?
Yes. Where solicitor costs have already been incurred and remain unpaid by the claimant, these can be funded by Sparkle.
What costs do Sparkle typically fund?
Our products fund own side solicitor costs (non-CFA portion where applicable), disbursements and the ATE insurance premium, where the premium is required to be paid upfront. If the claimant wishes to fund part of the costs, this will reduce the amount of funding advanced by Sparkle. Therefore the cost, as the interest component is applied only to drawn amounts.
What are CFAS and DBAS?
CFAs and DBAs are contingent fee (no-win no-fee) agreements between claimants and solicitors.
Conditional Fee Agreements (CFAs) are where a solicitor acts on a no-win no-fee basis for some or all of the incurred fees. They act on the condition that if the claim is successful, that unpaid portion will be paid with a mark-up / uplift, capped at 100%.
Damages-Based Agreements (DBAs) are where a solicitor acts on a no-win no-fee basis for some or all of the incurred fees. This is on the condition that if the claim is successful, the solicitor will receive a pre-agreed share of the award.
Will Sparkle only work with a pre-determined list of solicitors?
Sparkle has no solicitor restrictions. Additionally, we will not advise or otherwise seek to influence a claimant’s choice of solicitor. However, Sparkle and Acasta will undertake some due diligence as part of its assessment in determining the suitability of a solicitor for an application. It is rare that Sparkle and Acasta do not accept the solicitors.
What is After-The-Event Insurance?
Please read our section on After the Event Insurance
Will Sparkle fund cases without ATE insurance in place?
No. An ATE insurance policy is required to protect the claimant from Adverse Costs risk.
Is a counsel's opinion, including prospects of success, required before Sparkle agree to fund?
It is preferred but Sparkle recognises this is not always possible. If the claim is evidently meritorious, then Sparkle can fund it without Counsel’s opinion.
What is Own Sides ATE insurance?
Own Sides ATE is the insurance policy provided by Acasta which covers the loan amount. So if the case is unsuccessful, the Claimant is not required to replay the loan.
Key Legal Terms
What are adverse costs?
What is a Part 36 offer?
Are ATE insurance premiums recoverable?
What are the civil procedure rules?
The Civil Procedure Rules (CPR) are a procedural code that sets a framework around how civil claims should be undertaken. So that the courts can deal with cases justly and efficiently and legal proceedings made cheaper and quicker.
What are security for costs?
Security for Costs are amounts ordered by the court to the claimant to lodge monies on account in case the defendant is successful. The reason for giving such an order is a defendant’s reasonable belief – as agreed by the court – that its legal costs will not be paid for by the claimant in such a scenario.
What are the cost consequences of a Part 36 offer?
If a defendant makes a Part 36 offer in a form, which is genuine and in accordance with Part 36 at least 21 days before the trial, then there are potential cost consequences for the Claimant if the claim is won but for an amount which is less than the Part 36 offer. The simple principle of this is that the trial will have seemed unnecessary when it could have been settled at the time of the Part 36 offer for an amount greater than what the court arrived at.
In such circumstances, to apply fairness, the claimant will typically be ordered to pay the defendant’s costs from the Part 36 offer (and interest) as a form of penalty for not accepting the offer, even though the claimant has won the case.