Practical Law

Crowdfunding began as a way for start-up companies and charities to ask for resources from the public. Subsequently, litigation-specific crowdfunding platforms started up, initially in the US.

In the UK, CrowdJustice was launched in May 2015. Its mission is to increase access to justice by using technology to harness the power of communities to come together around legal issues that have an impact on them. It gives people the tools to raise funds for a legal action, whilst simultaneously increasing awareness of an issue and amplifying communities’ voices.

What types of cases can be crowdfunded?

Although there is no one “type” of case that succeeds under the crowdfunding model, the cases best suited for it tend to involve issues that affect a community. These cases range from judicial reviews, inquests, Equality Act cases and everything in between. National charities bring challenges where common values are threatened, while local resident groups use crowdfunding to challenge planning permission decisions affecting their community. Three of the cases hosted by CrowdJustice have reached the Supreme Court, including the recent Article 50 case, which forced Parliament to vote on how to proceed following the Brexit referendum. The strongest thread tying successful CrowdJustice cases together is quite simple: they tell a story that resonates with people.

What cases does CrowdJustice accept?

CrowdJustice does not assess the merits of the cases it accepts on the platform; we don’t see ourselves as gatekeepers of access-to-justice, but rather as facilitators. It is mandatory that all cases have a lawyer instructed. Once we have confirmed the lawyers’ instruction, we review the case details and give the case owner the tools to make the crowdfunding a success.

What are the elements for a successful crowdfunding campaign?

The CrowdJustice team is heavily composed of lawyers, who bring deep understanding of legal regulations and compliance issues that have an impact on the raising of funds for legal cases. One essential feature of the system we’ve established is that funds raised through CrowdJustice are transferred directly to the lawyer’s client account. This fact is made clear to potential backers. As a result, they have confidence that the fundraiser has a real case, and that contributed funds will be put towards it. Additionally, given lawyer-client account rules, we carry out sanctions and politically exposed persons (PEPs) checks on all people who contribute funds to a CrowdJustice case. We also perform know-your-customer checks on the fundraiser.

A successful crowdfunding campaign is rarely driven by lawyers. Rather, it is hugely dependent upon the efforts of the person or group affected by the issue. CrowdJustice aims consistently to provide support to all parties involved in cases on the platform (including lawyers, case owners, and backers). We work hard to make the process a simple and transparent one for the lawyers connected to CrowdJustice cases. We also provide toolkits and tailored guidance to help case owners develop the most effective promotion strategy for their case.

What sorts of legal costs are funds typically raised to cover?

Crowdfunding has been used to raise funds for legal fees (both for solicitors and barristers), court fees, disbursements, exposure to adverse costs, and a variety of other legal expenses. Crowdfunding is often just one funding source used in combination with others. It does not alter a client’s relationship with their lawyer or the courts; ultimately, the client remains responsible for all costs associated with the case. We’ve seen case owners use CrowdJustice to crowdfund for out-of-pocket expenses while the lawyer acts on a conditional fee agreement (CFA).

How does crowdfunding fit with litigation funding?

CrowdJustice provides a donation-based crowdfunding model; in other words, it is “pure funding”, not litigation finance. People who contribute to cases have no financial stake in the case’s outcome, nor do they have any input into how the case is run. Backers contribute to a legal case because they care about the issue and want to help a person or group better access the justice system.

The principle of pure funding is well-established (Hamilton v Al Fayed (No.2)) and provides that donors who do not control the litigation, and do not have a financial interest in it, will not be exposed to further adverse costs. This is a pragmatic approach that acknowledges that a single person may not always be able to afford the full costs of a case, and one which provides a high degree of comfort for philanthropic giving to legal cases. In relation to the typical crowdfunding donation (the average of which is £35), there is a de minimis aspect, which makes satellite litigation around costs inappropriate.

There have been changes introduced by the Criminal Justice and Courts Act 2015, by which funders of judicial review, who give over a certain amount (currently £3,000), may be identified to the courts. However, this does not change the basis on which a third party costs order can be made.

Looking forward

Crowdfunding is continuing to grow as a means of funding litigation, and has been behind several high-profile cases. There is a long way to go in the battle to level the access-to-justice playing field, and we see crowdfunding as a crucial part of that process.

An example of the impact of crowdfunding:

On Christmas Eve, 2009, Lenny McMullan and Denise Brewster, a cohabiting couple of 15 years, got engaged. Less than 48 hours later, Lenny suddenly passed away. Because Denise had not been married to Lenny, she was unable to benefit as a survivor through the occupational pension to which Lenny had contributed for years. Denise decided to fight for her rights, as well as those of other cohabitees in similar circumstances.

By 2015, she had instructed Deighton Pierce Glynn, specialist discrimination lawyers, who represented her for no charge because of the wider importance of the case. As her case continued on its path to the Supreme Court, she realised that she would have to pay the Supreme Court fee of £5,820, plus £5,000 of her opponent’s legal costs if the case failed. As this was money she did not have, Denise began exploring a creative way in which she might cover some of these legal costs: crowdfunding. Using CrowdJustice, she decided to try to raise £4,000. She created a CrowdJustice case page and circulated the link as widely as she could. One month later, she succeeded in reaching her goal. In February 2017, she hit another goal: five Supreme Court judges unanimously decided that there had been unlawful discrimination on grounds of marital status.