Tacit Approval Of Conditional Fee Arrangements In TCI

• Published date: 24 February 2022
• Subject Matter: Litigation, Mediation & Arbitration, Insolvency/Bankruptcy/Re-structuring, Insolvency/Bankruptcy, Trials & Appeals & Compensation
• Law Firm: Griffiths & Partners
• Author: Murray Snider

Tacit Approval Of Conditional Fee Arrangements In TCI

The Supreme Court of Turks and Caicos Islands recently considered whether to widen local access to litigation funding and finance. Such arrangements can be of interest to clients who cannot afford to litigate, or those who prefer to keep some or all of litigation costs off of the balance sheet. In this article, we take a closer look at the court's tacit approval of conditional fee arrangements.

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In this article we seek to review developments in TCI law relating to the funding of litigation matters, which can be of interest for those clients who would otherwise be unable to afford to litigate, or who would prefer to keep some or all of the costs of litigation off balance sheet.

There are currently three common types of litigation funding agreements: (1) Conditional Funding Agreements ("CFAs"); (2) Contingency Fee Agreements ("Contingency Fees"); and (3) Third Party Funding ("TPF") agreements.

1. CFAs provide that attorney's fees and expenses, or (more usually) a part of them, will be paid only in certain circumstances (typically when the client's case is won).
2. Contingency Fees are understood by the common parlance "no win, no fee". Under a CFA clients agree that remuneration for legal services is contingent, in whole, or in part, on the success or completion of a case.
3. TPF agreements are where a third party agrees to fund part or all of the client's costs in return for a fee payable from the proceeds recovered by the funded litigant.

Each type of agreement has received varying degrees of acceptance in common law jurisdictions. In the US and Canada contingency fees are accepted subject to specific legislation and professional regulations. Third Party Funding Agreements have also received broader acceptance for particular matters. In the UK CFAs and contingency fees have also been accepted subject to specific legislation and professional regulations and TPFs have also seen broader acceptance. Certain Caribbean jurisdictions have also followed suit. The Cayman Islands introduced the Private Funding of Legal Services Act, 2020 on 1st May 2021, codifying the rules which apply to litigation funding. The Commercial Court in the British Virgin Islands recently approved TPFs¹ and the Legal Profession Act 2015 and Code of Ethics permit CFAs and Contingency Fees to a certain extent.

Consideration of CFAs in the TCI

The Turks and Caicos Islands ("TCI"), until recently, remained an outlier among competing commonwealth...