City law firm Rosenblatt has launched a standalone litigation funding business with an initial £2m cash injection from the money it raised from its stock exchange listing in May .
The creation of subsidiary Rosenblatt Litigation Funding Ltd (RLFL) comes ahead of the ‘within 18 months’ schedule the firm set out for the idea when it went public.
In an announcement to shareholders today, it said: “Initially, £2m of the proceeds of the float will be used by RLFL and will enable the group to take on more cases where there is a third-party cost element and retain the funding margin that would otherwise be paid to an external funder.
“The company is delighted that RLFL has secured its first case under a damages-based agreement and is in the process of on-boarding two further cases.”
Rosenblatt also published interim results for its first eight weeks as a listed company, up to 30 June, which showed a 15% increase in revenue from the previous year to £3m, and profits before tax of £950,000, up from £800,000.
CEO Nicola Foulston said: “Our maiden results show that Rosenblatt has made a strong start to life as a public company. Our current caseload and pipeline of new business remain healthy and consistent with what we expected at the time of our IPO in May.
“We are progressing with the strategy we set out at IPO to deliver long-term value to shareholders. This includes using the proceeds to underwrite more of Rosenblatt’s litigation portfolio by increasing the number of cases we are undertaking on either a conditional fee or damages-based agreement basis.”
Speaking to Legal Futures in May, Ms Foulston said : “I believe [in a model] where the underlying core business is a law firm that feeds day-to-day returns, and the litigation funding piece sits on top of that for exponential returns.”
The results showed that Rosenblatt’s main practice areas – dispute resolution and employment – collectively saw turnover up 54%, with gross margins of 73% and 66% respectively.
“In line with our expectations, the corporate division, which is focused on commercial transactions, has not performed as strongly as last year.
“Like other sub-sectors of the legal market, it has been impacted by the cautious business environment in part caused by Brexit uncertainty. However, there is a good pipeline of new business in both this and our real estate division which has performed well.”
The firm told investors that the overall outlook for the broader legal sector was “mixed” due to the uncertainty caused by Brexit.
“However, we believe that there is increasing demand for litigation services and the funding to support such actions which provide significant opportunities for the Group.
“We remain confident that Rosenblatt is ideally placed to capitalise on the cases and commercial opportunities that have already come to us since IPO and which we expect to continue as our profile and track record are enhanced further as a public company.”