Litigation funder eyes ABS as way to finance law firms’ contingency fee work


Carron: DBAs mean firms have shortage of working capital

A litigation funder with £40m a year to invest is considering using alternative business structures (ABSs) to make funds available to law firms, according to its chief executive.

Speaking at the Law Society’s civil justice section conference last week, Brett Carron, the chief executive and co-founder of Harbour Litigation Funding, said Harbour would consider funding arrangements with firms willing to work under damages-based agreements (DBAs, formerly known as contingency fees), which are due to be introduced next April.

One option would be for a firm to set up an ABS structure including funding vehicles for their firms, or departments within their firms, said Mr Carron. “From our point of view we would certainly look at those kind of arrangements, where we were comfortable with the lawyers working on those kinds of cases… so we would effectively become an ABS funder for that particular group within that particular firm.”

He emphasised that Harbour was not interested in becoming an ABS provider or a source of capital for the firm. “We’re really focused on litigation rather than on financing law firms generally,” he said.

The firms would have to be interested in doing DBAs, said Mr Carron. “Part of the issue with DBAs is that from a law firm’s point of view you have a shortage of working capital – you have all the [work in progress] tied up, you’re not able to bill for it. You hope the case will be successful but you don’t know if it will, so for some firms it puts enormous pressure on them – it limits their ability to do these kind of things.”

 

Tags:




    Readers Comments

  • Interesting tactic in the use of ABS structures here, it looks as if the legal industry in already taking more entrepreneurial steps in response to turbulent times. I’ll be keeping a close eye on how this develops.


Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Blog


Why a digital-first mindset is crucial for successful hybrid working

A report from the Chartered Management Institute found that over 80% of managers said their businesses had adopted hybrid working. This is certainly reflective of the legal sector.


Is your law firm protected from ransomware attacks?

Ransomware attacks can have devastating consequences for law firms, including financial losses and reputational damage – and it’s not just the large firms that are being targeted.


Planning your office for the next generation

We strongly believe lawyers now and in the future will want and value a space that’s not their home to work from and, most importantly, a space to connect and collaborate with colleagues and clients.


Loading animation