Cardiff-based Capital Law has today launched a £50m fund – backed by a hedge fund – to help its clients pursue litigation, in a first for a law firm. Senior partner Chris Nott said the fund had already helped a small business sue a government department for £1m and another client bring a professional negligence claim against one of the big four accountants.
A litigation funder with £40m a year to invest is considering using alternative business structures to make funds available to law firms, according to its chief executive. They have to be prepared to work under damages-based agreements (contingency fees), however.
Hundreds of millions of pounds are to be poured into backing litigation after both Vannin Capital and Harbour Litigation Funding unveiled significant funding boosts, the highest profile of a series of developments in the third-party funding market.
Law firms and third-party funders will not be allowed to initiate group actions for breach of competition law – and such cases will be exempt from the move towards allowing solicitors to work on a contingency fee basis, under proposals published this week by the government.
The House of Lords yesterday inflicted two defeats on the government over part 2 of the Legal Aid, Sentencing and Punishment of Offenders Bill, but the main elements of the Jackson reforms remained intact. Third-party litigation funding and referral fees were also under the spotlight.
The government is to consider tightening up the ban on referral fees in personal injury and also introducing statutory regulation of third-party litigation funding, it confirmed yesterday. It also clarified whether payments can be made for solicitor-to-solicitor referrals under the ban.
The introduction of self-regulation for third-party litigation funding may not be sustainable in the long term, a team of leading academics has warned. They also highlighted the risks that contingency fees pose.
News in brief: ABS applications update, SfH founder fights on, Eversheds’ "absolute fixed fee" and more
Our regular round-up includes the latest number of ABS applicants, an about-turn by the founder of Solicitors from Hell, Eversheds extending its partnership with Tyco, more cash for Rocket Lawyer, plus Manchester mergers, litigation funding and more.
A recently listed third-party litigation funder is expecting to invest £50m in cases over the next year, Legal Futures can reveal, as separately Buford Capital, the largest funder in the world, enters the UK market by buying leading after-the-event provider Firstassist Legal Expenses.
The third-party litigation funding market received another boost yesterday after a funder raised a new tranche of money to put into cases. However, the SRA has told Legal Futures that solicitors are not under a requirement to choose funders that comply with the new voluntary code of conduct.