Answer ... (a) Single case fees and expenses
Historically, single case funding has been the most common form of TPF in Hong Kong and remains widely used.
Such funding involves a party using funding to cover all or part of the legal fees and expenses in a single litigation (insolvency), arbitration or enforcement case.
The covered legal fees and expenses include, among other things, lawyer, expert, arbitrator, institution and other hearing-related fees, as applicable.
(b) Portfolio fees and expenses
Portfolio funding for corporate clients involves bundling multiple cases together, including actions to enforce or monetise awards or judgments, all of which are supported by the funder.
The funder’s return is linked to the overall net financial performance of the portfolio of cases instead of the outcome of each individual claim.
Given that the funder’s risk is diversified, seeking funding for a portfolio of cases can improve the funding terms. This form of funding allows clients to fund a broader range of disputes, including smaller claims, non-monetary claims and even defences.
Portfolio funding for law firms allows firms to take on cases under contingency or conditional fee arrangements and treat those cases as revenue-generating assets against which they can secure funding to smooth liquidity, mitigate risk and extend alternative fee arrangements to additional clients and generate new business.
The introduction of the ORFS in arbitration and arbitration-related court, emergency arbitrator and mediation proceedings is expected to increase the prevalence of this latter form of portfolio funding in Hong Kong.
(c) Monetisation of claims
Monetisation of claims involves converting all or a portion of a pending claim into cash.
This is particularly common in the insolvency space. Section 199(2)(a) of the CWUMPO provides a liquidator with rights to assign causes of action, which allows them to sell their claims to a funder. The rationale is to help creditors recoup their money more quickly.
(d) Monetisation of judgments and awards
The monetisation of judgments and awards is a common legal finance product in Hong Kong. This involves funders purchasing a judgment or award held in a party’s favour for a discount off its face value or providing an upfront cash advance for part of its value.
(e) Insurance
There are different types of insurance products available. Please see questions 10.6 to 10.8 below.