Fieldfisher has devised its own version of a litigation funding model that will enable it to offer damages-based fee arrangements to clients for the first time.

The top 50 U.K. law firm will use a combination of bank debt, firm and partner money to cover the costs it incurs on cases and will then take a portion of the winnings, should damages be awarded.

The firm hopes the new service, dubbed FeeSolve, will provide more certainty to clients around litigation costs and reduce the financial risks facing a client when it brings a claim.

The firm joins more established market players in offering a litigation funding service. Mishcon de Reya set up 'Protect' 10 years ago, while Addleshaw Goddard debuted 'Control' back in 2008, which it relaunched last year on the back of renewed interest in the market.

However, whereas Mishcon and Addleshaws link their clients to third-party funders, Fieldfisher will take on the risk itself. By offering damages-based agreements (DBAs), Fieldfisher also hopes to carve its own niche in the market.

DBAs, which became permissible in the U.K. in 2013, are designed to replace the standard hourly rates model, and arrive at charges by way of reference to a fixed percentage of litigation damages – up to 50%.

DBAs differ from the more traditional conditional fee arrangements (CFA) in that they are not based on a lawyer's hourly rates. While in a CFA a lawyer may operate on a reduced fee but receive an uplift on success (based on their hourly rate), in a DBA what a lawyer receives is only ever a proportion of the damages recovered. 

FeeSolve will also offer more well-known forms of alternative funding, including CFAs, third-party funding, and insurance for before and after the event. A Fieldfisher committee will continually monitor and review each case, including the extent to which the firm is exposed to risk. According to an insider, the firm is budgeting for a "reasonable" proportion of its disputes work to proceed on a DBA – or "contingent" – basis. 

The move comes on the back of burgeoning interest in the litigation funding space which, according to one estimate, now has more than £1 billion under management in the U.K, and more than £70 billion globally.

It is an environment currently dominated by the specialist third-party funders, such as Vannin Capital, Therium Capital, Woodsford and Burford Capital, which is today among the wealthiest AIM-listed companies.

Fieldfisher disputes partner Tony Lewis said: "Litigation funding and insurance products are becoming mainstream in the UK legal sector and Fieldfisher has always been a pioneer in this area."

He added: "While litigation funding and insurance can assist such clients, it can also support other kinds of legal services user, including corporate clients, who are looking to share litigation risk and effectively manage their external legal budgets."

Commenting on the growth of the market, Rosemary Iannou, managing director at Vannin Capital, said: "The fact that City firms are even contemplating the dispute resolution funding market is a reflection of the exponential growth of the market in recent years.

"My sense is that independent, well-capitalised, well-regarded and self-regulated funders – such as Vannin – are leading the way on the global stage with the quality and experience we bring.

"And it's about far more than capital," she added. "We're partners throughout the dispute process and the rigour we bring beyond funding is essential."