Hmm, I'm thinking we are more or less on the same page with this, with just a few exceptions:
"If no litigation funder is being used then the implications to SHJ would depend on if this is being run as no-win-no-fee. I didn't think that this was how CAs usually are billed with other lawyers, however the recent announcement for the water contamination case implies (but doesn't state) that this might be how Shine is running things."
We can be sure that the pelvic mesh action (ethicon & j&j, not the other mentioned on the site which I can't comment on) is run as no-win no-fee as it states as much on Shine's website when claimants sign up.
""However in the case of a win and payout there is no reason to think that Shine & shareholders would be better off. I would assume that Shine does NOT take a percentage of the payout (like a litigation funder would) but instead bills fees for hours worked. This means that if there is no litigation funder then in the case of a win the size of the payout does not impact the amount earned by the lawyers.
If my logic is correct then the presence or absence of a funder impacts the payout received by the customer, but not the lawyer.""
Actually I have to disagree again here but I will concede that we are both assuming. Firstly as you say it depends entirely on the contract signed, however there have been numerous instances where a percentage of the payout is taken by a CA firm in addition to their legal and disbursement fees. I will provide examples if you would like. Secondly it just makes more sense logically from the point of view of shine to write this into a contract they are funding themselves. As you know risk is always compensated for in finance, and in this case shine is bearing the risk that the case won't succeed at (however small this risk is, the WIP numbers are huge (30-40m perhaps). Hence shine is within it's rights to be compensated for by the client in the event of a payout for bearing this risk, as I said before this fact is well documented in other similar cases.
Secondly it just makes more sense during the contract negotiation phase if shine is the only party other than the clients haggling for the slice of the pie. The litigation funder isn't present, hence that share, which can be even up to 50% of a payout is still on the table. It would make sense in this position, given shine taking on additional risk, to ask for at least some of this part of the pie.
"Therefore it would always be better from the lawyers point of view to either use a funder or avoid running the case as no-win-no-fee. "
Again this entirely depends on how certain shine, or any CA firm, is of a successful outcome. Sure, in a risky case you would want the funder on board, but if the firm, who are meant to experts at predicting the outcomes of such cases, feel that the likelihood of a win or settlement is extremly high, then you wouldn't want the litigation funder involved to take a cut. In my opinion, this is what has happened with this pelvic mesh case. Shine has reasoned that it will very likely get the outcome they want and are happy to bear this risk in order to get a better return on investment. Alternatively, given we know for sure that the case is funded entirely by shine, they are being very reckless and the case could be a write-off in terms of 30-40M of WIP that they won't ever see in cash. This isn't what we are used to from a usually conservative management, but if it's happening then I would be very concerned and angry .
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