Gateley launches £50m litigation fund as LCM reports “robust” results

Healey: Clients reluctant to commence litigation

Listed law firm Gateley has signed a deal with a US-based litigation funder for a £50m facility to back disputes run under ‘no win, no fee’ agreements.

Bench Walk Advisors is providing funding for an initial £20m, with room for a further £30m.

Richard Healey, partner and head of Gateley’s dispute resolution group, said they assessed a number of funders before settling on Bench Walk.

“We see numerous examples these days of clients being reluctant to commence litigation for fear of throwing good money after bad and potentially being liable for opponents’ costs if the litigation is not successful.

“By offering this facility we are in a position to provide a solution to such concerns. We have for some considerable time been keen, where the circumstances are right, to move away from the traditional hourly rate model and to align a successful outcome for our clients, shareholders and our own business.”

Gateley is offering both conditional fee and damages-based agreements in appropriate cases.

Adrian Chopin, co-founder and managing director at Bench Walk, added: “This agreement will enable Gateley to provide its clients with a simple one-stop-shop solution for pursing claims at no cost.

“Our arrangement with Gateley gives them discretion as to where to deploy capital and allows risk to be spread across Gateley’s book of disputes bringing the cost of the facility down. That cost reduction, in turn, will allow Gateley to support clients’ cases even where traditional funding arrangements might otherwise be too expensive.”

Meanwhile, AIM-listed litigation funder LCM delivered “robust results” for the year to 30 June, despite the impact of Covid-19, which it attributed mainly to the resolution of six investments and partial resolution of another 12.

The group’s gross revenue of £20m was down by less than 4% on the year before. Adjusted profit before tax was £7m.

LCM funds off its own balance sheet but is increasingly moving to co-investment, having launched a $150m (£110m) fund with blue-chip global investors last year.

This is now more than 75% committed and the company expects to launch a second fund, at a target size of $300 million, later this year.

“All our cornerstone investors in the first fund have expressed their interest in participating in the second fund,” the stock exchange announcement said.

Since inception, LCM has completed 237 investments, sustaining a loss in just 4.6% of them.

The number of funding applications received increased by 10% to 572, but the company “encountered disruption in our ability to conduct efficiently our rigorous due diligence and risk management process”.

This resulted in a reduced level of new commitments – £58m in the year, compared with £78m in the previous 12 months. In all, LCM has $336m invested in litigation, split between 30 direct balance sheet cases and 20 co-invested cases.

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