How to fund construction disputes
Construction disputes on major energy and infrastructure projects are often exceptionally complex, long, and expensive.
That complexity of construction disputes is not just in the technicalities of who did what and when, but also in the process and the goals. They generally require combing through a backlog of information and perspectives – that note that wasn’t quite recorded as it should have been or that phone call that wasn’t logged – whilst navigating raw emotions, anxiety and broken down relationships. That’s all being done while trying to salvage financial resources, working dialogues in case of future partnerships and possibly keeping a construction project on track as well.
While the wise contractor will build a certain amount of allowance into their plans for claims and construction disputes, it is impossible to prepare adequate finance for any eventuality. This leaves a phenomenal burden of risk on contractors and subcontractors, as well as creating a sense of anxiety for project owners.
So realistically, what are your options when it comes to funding construction disputes?
The traditional method for funding construction disputes
Because of the complexity of the issues involved, it’s not uncommon for the services of an industry specific claims consultant to be required.
Traditionally, once appointed the consultant will usually take a brief from the claimant and then provide some form of quotation for the work. His/her fee will, more often than not, be based upon an hourly or daily rate for each specialist consultant employed and for as long as it takes for the claim to be researched and developed.
The claims consultant may well be pressed by the claimant to provide a lump sum or other form of guarantee as
to the ultimate cost of the assignment. However, he will be very reluctant to do so as it is extremely rare to find a claims consultant who will work on the basis of a lump sum or contingent fee.
The claimant’s existing losses are therefore compounded by the costs of employing the consultant, and understandably, under the circumstances, the claimant may choose not to take the claim forward, thus forgoing the opportunity for
The Quantura method for funding construction disputes
Recognising this to be an increasingly serious issue, we created Quantura, which provides a unique alternative approach, which provides domestic and international construction companies, subcontractors and construction industry consultants with access to non-recourse funding to recover the cost of bringing a claim.
Once Quantura’s funding has been agreed, the Claimant is assured that they will incur no additional costs going forward and Quantura© will only recover it’s fees (based upon a pre-agreed budget), once the claim has been resolved and paid. By using the significant financial strength and global experience strength and global experience
of Quantura©, claimants and their projects can benefit from developing construction and engineering claims with a leading construction claims specialist at no cost.
Quantura© provides a truly viable “no win, no fee” approach to claims and claim resolution, effectively levelling the playing field and providing claimants with a wider range of options.
Aren’t other people doing this?
Sometimes referred to as Third Party Finance (TPF), there are other organisations that offer this type of claims funding. Indeed, TPF is described as an “an integral part of the future of the global arbitration and litigation markets” in the ICCA-QMUL Report April 2018.
However, where ours goes a step further, is our involvement in recommending and assessing a claim for funding, which in turn leads to its higher likelihood of being accepted. We have created our own fund because we want to help those with valid claims to be able to seek justice regardless of the cost.
In the wider market, 90% of applications for claims funding are typically rejected. By contrast, we speak to clients from the outset. We will say whether we think they have a claim worth pursuing based on initial conversations. We then assess claims ourselves before they are recommended for funding, including a careful due diligence process. As a result, around 90% of the claims we recommend for funding are accepted. We always pride ourselves on being upfront with clients about realistic expectations, so because we are involved in the whole process, by the time we recommend a claim for funding the probability of it being accepted is very high.
In all TPF processes, clients are asked to fund the initial due diligence process needed to apply for claims funding themselves. That can be expensive as well as time consuming. Because we are a ‘one stop shop’ with carefully designed and structured criteria (that we are obviously aware of before we recommend you go to this stage) however, while we still charge a comparatively small fee for the due diligence part of the process (absorbed into the fee and covered by the funder if the claim is accepted), the chances of a positive outcome for funding are significantly higher.
Unless you’ve not been upfront with us from the start, if we reach the stage of due diligence, we are already confident that you have a claim that will be accepted for funding, and it’s not in our interests to recommend you if we don’t believe this to be true. Your fee is a small show of commitment on your behalf, our commitment is in allocating a significant part of our fund to pursuing your claim.