Crowdfunding effectively and ethically

Use it for the right case

Most crowdfunded cases are discrete advice or pieces of work rather than big litigation in court. But a court case could still be crowdfunded. If you have an established network and profile that you can tap into for funding, that will make things much easier; as will media interest. A case with a wide pool of people who stand to benefit in some way from a successful outcome can also be a good candidate for crowdfunding. Crowdfunding can also be used to raise a Legal Aid ‘community contribution’ if that is a condition of Legal Aid being granted.

Cases where it is possible to limit the potential costs (see our practical tips below) can also make crowdfunding more attractive.

Pick a platform

You will need to decide how you will manage any funds that you raise. Bindmans works closely with a platform called CrowdJustice because it was specifically built for legal action; the organisation that supports it is highly professional and easy to work with; and they undertake important due diligence checks. Money raised through CrowdJustice goes directly to your lawyer once CrowdJustice and transaction fees are accounted for, so you do not need to have a bank account or a complicated accounting system. 

Whatever platform you choose, you must make sure that it has clear information about how it works and what fees it charges. It should also have clear and transparent policies about what happens if you do not reach your funding target or, conversely, if you have managed to raise more than is required. Finally, you will need to make sure that your lawyers agree to work with that platform. 

Be clear about everyone’s role

If you are a company or an unincorporated association, you should decide right from the beginning how you will make decisions, who is authorised to make decisions, and if there are any limits or conditions on that person’s ability to make decisions. 

In crowdfunded cases, it is also really important to understand the difference between you, as a client, and the people who have made financial contributions (the ‘funders’). The funders do not get to make decisions about how the case is run. In fact, if funders were to become too involved and go beyond being ‘pure funders’, they could be at risk of having to pay the costs of the other side if the court case is unsuccessful.

Be clear about what you can achieve

It is important that funders know exactly what they are funding and why. You are best placed to explain the ‘why’ – the impact of the problem and why you are taking legal action on it.  However, a lawyer’s input is important to accurately describe the ‘what’ – the legal process – and the outcome you are hoping to achieve without any exaggeration. Funders must never be misled, obviously. That doesn’t mean complicated legal language. Having worked on crowdfunded cases many times before, we know how to keep it simple but correct.

Be clear about what it will cost

You will need to think about not only the costs of the lawyers advising you but also, if your case is in court, the costs of the other side if you are not successful. It may be possible to limit your risk of paying the other side’s costs if your claim is being made on environmental grounds or by applying for a ‘costs capping order’ and sometimes in other ‘public interest’ cases, subject to strict criteria. You should get advice on these options right from the start of your case.

Be clear about what is happening as your case progresses

Keep funders informed about the case progress; what arguments have been made by both sides; and key dates, including any public hearings that funders may want to attend.  Keeping information up-to-date and accurate has two benefits. Firstly, it meets your responsibility to keep your funders informed. Secondly, funders who continue to feel connected to the issue are more likely to continue to make funding contributions. You will need advice from your lawyer, however, to avoid disclosing confidential advice.

Crowdfunding is not straightforward and only some lawyers are prepared to take on a case that is crowdfunded. Some cases are simply not suitable for funding in this way because they will not attract sufficient funders, or the subject matter is very sensitive and should not be widely shared. You should make sure that your lawyers have the expertise and experience to work with you on an ethical crowdfunding campaign – and to advise you candidly if crowdfunding is just not right for the case.

Your lawyer should:

• Be clear about the work they are doing and whether (and how much) they expect to be paid if you are unable to reach your crowdfunding target.
• Give you honest advice about the chances of your particular case succeeding. It may be that the outcome you are trying to achieve deserves support, but your particular facts and circumstances do not make a strong case. In fact, it may actually do more harm than good. You should expect your lawyer to tell you that.
• Be honest with the public and funders about the case, as long as that does not breach your lawyer’s duty of confidentiality to you.
• Be prepared to be fully engaged in your crowdfunding communications right from the start to make sure that you are giving a realistic and accurate description of the case and what can be achieved.
• Appreciate the unique position of funders. They are not the client, but their interests do matter and they deserve accurate and up-to-date information about the case.