Claim against Link in respect of the Woodford Equity Income Fund

In this case, Leigh Day are representing a group of claimants who are seeking to obtain compensation from Link Fund Solutions Limited (“Link”) for losses they suffered as a result of investing in the Woodford Equity Income Fund (“WEIF”).

Where a large number of people have claims against the same defendant arising out of the same set of circumstances, the most cost effective way of bringing the claim is for the claimants to join forces and progress as a group under a Group Litigation Order (“GLO”). The GLO allows the claims to be heard together rather than on an individual basis making it far more efficient.

Once proceedings have been issued in court on your behalf and you have joined the group register of claims, it is possible that you may be chosen as a test/lead claimant either by the claimant solicitors or the defendants and you may be required to give evidence in court. However, there are likely to be thousands of claimants and only a small selection would be chosen.

WEIF’s authorised corporate director, Link, is responsible for the operation of the fund. The rules of the Financial Conduct Authority (“FCA”) require funds, such as WEIF, to follow investment restrictions that are designed to protect investors. Among other things, the FCA rules: (i) Provided that WEIF may invest in securities only to the extent that it did not compromise Link’s ability to redeem shares; and (ii) prevented WEIF from holding more than 10% of its portfolio in unlisted companies. These rules were designed to prevent the fund from investing in securities which would be difficult to sell and might therefore prevent investors from withdrawing their money from the fund. Our investigations lead us to believe that Link allowed WEIF to hold excessive levels of illiquid or difficult-to-sell investments, and that this caused investors significant loss.

We are therefore proposing to issue proceedings against Link for their failure to properly carry out the management function of the fund and in particular, for breaches of rules in the Collective Investment Schemes sourcebook of the FCA Handbook.

Neil Woodford was a director of Woodford Investment Management Limited (“Woodford”), which performed the fund’s investment management function. Link delegated this responsibility to Woodford until 15 October 2019 when Woodford was relieved of this role. Because Link is the business responsible for the fund’s operation, we are currently bringing a claim against Link.

The case we are presently bringing is against Link as the opinion of both Leigh Day and counsel, having considered the evidence, is that a case against Link has the best prospect of success and is the best chance of achieving compensation on your behalf.

We are currently investigating bringing a claim against Hargreaves Lansdown.

It is too early to be able to give an accurate prediction of the timescale to conclude this matter to a satisfactory outcome. This is because the length of time depends on the defendant’s approach. If Link seeks to settle the claim, then the case should conclude relatively quickly. If, however, it is necessary to progress the matter through trial, the case could take longer than two years.

Not at this time. Our investigations have so far focused on WEIF as it was this fund that was affected by liquidity issues that caused the fund’s suspension and winding-up. If later it transpires that there are good grounds to bring claims on behalf of investors in the Woodford Patient Capital Trust or Woodford Income Focus Fund, we will communicate this.

Our current analysis on the progress of WEIF’s wind-up is detailed in the blogs listed below.

Investors in WEIF, who had money locked in the fund when it was suspended, will be able to instruct us to pursue a claim against Link for compensation. This includes those who used a platform to buy shares in the fund.

No. It does not matter which, if any, investment platform (e.g. Hargreaves Lansdown or Fidelity) you used to make the investment.

Yes. Using an investment platform does not make any difference to your being able to bring a claim.

If you invested in a fund which in turn invested in WEIF (e.g. the HL Multi-Manager Income & Growth Fund), unfortunately, we are currently unable to assist you with a claim in respect of those shares. We are still investigating how we can assist these investors.

Because HL’s portfolio management service invests in funds which in turn invested in WEIF (e.g. the HL Multi-Manager Income & Growth Fund), we are currently unable to assist you with a claim in respect of those shares. We are still investigating how we can assist these investors.

The main claim we are advancing is for those whose WEIF shares were locked in WEIF when the fund was suspended. We are, therefore, not at this time accepting as clients those who exited WEIF prior to its suspension.

This will depend on the legal arguments that can be advanced on your behalf and what would have happened to your investments if Link had managed the fund in line with the rules. This includes the potential outcome of receiving a return on your original investment.

When you sign-up to the claim, we will ask questions to identify which arguments can be made on your behalf, and a few days later we will request the data we need to calculate your loss.

We will need data about your WEIF investments to calculate the value of your claim. This is because we need to work out what would have happened if Link had managed the fund in line with the rules. Some of the key information we will need is the date each trade was made; the number of units traded; and the price per unit.

A few days after you sign up, we will send you an online form you can use to provide us with your data. Using the online form to provide us with your data is the most straightforward method for us to collect your data. We will also ask you for permission to request, on your behalf, the data we need directly from your platform.

Link is an important company in the UK arm of its parent’s fund solutions business. On 30 June 2019, Link operated 98 open-ended funds and 81 alternative investment funds, whose respective assets under management were £38,284 million and £34,426 million. Link appears to also be involved in the administration of other funds for which it is not the operator.

It is possible that by itself Link may not be able to afford to pay the damages of all the claimants. Should Link be unable to meet an award of damages against it, resulting in its being in default owing a civil liability, we will apply on our clients’ behalf to the Financial Services Compensation Scheme for compensation.

Leigh Day are accepting clients on a no-win-no-fee basis with each claimant’s contribution to the costs of the litigation being capped at no more than 30% (including VAT) of any compensation received.

Yes. The claims are funded by a Conditional Fee Agreement (“CFA”), which is a type of ‘no win, no fee’ agreement. The CFA states the you are required to pay up to 30% of any compensation you receive if your claim is successful, and also states that if the claims are lost you do not pay us anything at all. For example, you might bring a claim for £150 but in the end you may only receive £100 from Link and so you would only pay a maximum of £30 towards the claim (i.e. 30% of £100). Please also refer to the FAQ entitled “Are there any situations where I would have to pay before the end of the claim?”.

No. You will only contribute towards the costs of the case if you win and receive some money, and then you will only contribute up to 30% of the money that you receive. For example, you might bring a claim for £150 but in the end you may only receive £100 from Link and so you would only pay a maximum of £30 towards the claim (i.e. 30% of £100).

You are in principle liable for the defendant’s costs if you are unsuccessful. However, we have received terms for insurance to protect you from having to pay those costs should that event occur. The premium for the insurance will deducted from your compensation as part of the 30% fee if your claim is successful.

If you decide to cancel the agreement after the end of the 14-day cancellation period, you may be required to pay for your share of the total costs at the date you choose to end the agreement. This is because we may have already begun working on your case. You will also be required to pay for your share of the total costs if we have to end our agreement with you because, for example, you misled us.

Our success fee, the insurance premium and the funders’ fees, together with VAT, will never be more than 30% of your costs, irrespective of the number of claimants within the group.

An alternative source of funding may be cheaper for you than the funding package we are offering (e.g. legal expenses insurance as part of a home insurance policy). However, we are not offering to act through alternative sources of funding, and so if you wish to use it, you will need to instruct another firm.

After the event insurance (“ATE”) is to indemnify you in respect of the defendant’s costs in the event the claim is unsuccessful.

There may be unforeseen circumstances for which we have not been able to cater but we have done everything we can to minimise any risk exposure.

Should you provide false information, as a result of which it is necessary to discontinue proceedings, the ATE policy may not cover you in respect of the defendant’s costs.

You may also not be covered by the ATE policy if we issue proceedings on your behalf and you thereafter decide, against our advice, to discontinue your claim prior to the conclusion of the case.

You may also be liable for a fee for our legal costs,  if you terminate the retainer after the 14-day cancellation period or if we are obliged to terminate your retainer because you have not complied with the terms of the CFA or given false information.

It is therefore important that you are committed to pursuing the claim prior to entering into the conditional fee agreement.

To be able to progress your case, court documents require us to identify the owners of the shares that are the subject of the compensation claim. Therefore, this form should be completed by the person(s) who bought and holds the shares in WEIF, or a fund of funds with holdings in WEIF. This will almost always be the holder of the account with the investment platform that was used to buy the shares. For example, if you bought your WEIF shares through HL, it will be the person who holds the HL account. If you hold your HL account jointly with someone else, then it will be both of you who will need to bring the claim the together.

If you and someone else hold the shares together through a joint account, then both of you will need to bring the claim the together. This means both of you will need to complete our sign-up form and consent to our terms and conditions.

If you hold some shares by yourself and some jointly with another person, you will need to complete the form twice (once for the shares you hold by yourself and once for those held jointly together with your co-claimant) so that we can correctly capture and present the different ownership structures of the shares.

If you the hold the shares on trust for your child (e.g. through a junior account), then you will be able to bring the claim as the representative of the child and the sign-up form will request the relevant information. After you have signed up, we will request the necessary supporting documents.

If you act as the representative for the estate of a deceased relative (e.g. under a Grant of Probate), then you will be able to bring the claim as the representative and the sign-up form will request the relevant information. After you have signed up, we will request the necessary supporting documents.

If you act as the representative in a different capacity for someone else (e.g. under a power of attorney), then you will be able to bring the claim as the representative and the sign-up form will request the relevant information. After you have signed up, we will request the necessary supporting documents.

If you hold the shares in the name of a company, then the person bringing the claim will be the corporate entity.

No. If you have already formally instructed another firm by entering into a formal funding agreement with them, you cannot instruct an additional law firm in respect of the same matter.

In most cases, you are entitled to terminate your contract with a law firm, within 14 days of entering into that agreement, without penalty. In these circumstances, if you still wish to instruct Leigh Day, you will need to notify the other firm within the 14-day period to avoid any charges being applied.

Our view is that this is not a good approach. Ultimately, you can only be compensated once for the same loss, which means that if your claim against Link is successful you would likely have to bring to an end your claim against the platform, or vice versa. In this regard, if you decide to terminate your contract with a law firm after 14 days, charges may apply. There may also be issues if it is necessary to approach your platform, for example, for data for a claim against Link while you are bringing a separate claim for an overlapping loss against that platform.

No. You can either use the FOS’ assistance to resolve your complaint against a company you consider responsible for your losses, or you can instruct a law firm to bring court action. If you have already started your case with the FOS, you can withdraw from that process and join the Leigh Day claim.

The FOS is a free service; however, there is currently no provision within its rules for bringing claims by way of a group, and therefore, you may consider that joining the Leigh Day action has some advantages over the FOS process.

Ultimately, you can only be compensated once for the same loss, which means that if your FOS complaint against the platform is successful, and you decide to accept the outcome, you would likely have to bring to an end your claim against Link. This is because the compensation you receive from the platform is likely to be the same or substantially the same as the one you are seeking from Link. In this regard, if you decide to terminate your contract with a law firm after 14 days, charges may apply. There may also be issues if it is necessary to approach your platform, for example, for data for a claim against Link while you are engaged in a FOS process for an overlapping loss against that platform. In the circumstances, we will not be able to act on your behalf if you have an ongoing complaint in the FOS against a platform with respect to your WEIF shares. You may, however, choose to instruct us if the FOS process against your platform is unsuccessful, subject to your claim being within the limitation period to issue proceedings. You may also instruct us if you choose to withdraw from the FOS process.

In cases, such as the one against Link, where several law firms are proposing to bring the same/similar case, we consider that it is better if the law firms collaborate to present the strongest case possible in a united way.

If some law firms do not wish to collaborate, it is difficult to say how the outcome of one case could impact another as this may depend on how the different cases are argued.