Opening the doors to the court: clients worried about taking action because of costs

Investec has become the first UK bank to offer litigation funding to clients, with more than £5m already invested in cases following pilot transactions.

The specialist private bank said it had acted in response to “increasing demand for innovative funding solutions from law firms and their clients”.

The company has no pre-defined lending criteria, with each case evaluated on its own merits and structured accordingly. The minimum funding is £250,000. It said this means that it can provide fast decisions and competitively priced funding for commercial litigation.

Jonathan Harvey, who works in the specialised lending team, said the cost of litigation means many clients are not prepared to take on the cash flow risk associated with pursuing their case. “This can represent a significant opportunity cost in terms of lost revenue for the law firm and damages for the client.

“Over recent months we’ve been approached by a growing number of law firms looking for alternative ways to fund litigation in the commercial sector. This is partly driven by changes in the way law firms fund their own working capital and partly by claimants’ growing need for flexible finance. Based on the success of our pilot transactions mid-year, we anticipate significant demand.”

Investec issued an endorsement from Michael Green, the former Addleshaw Goddard partner who co-founded niche litigation practice Enyo Law. “At a time of significant market uncertainty, our specialist litigation practice seeks to achieve the best possible outcomes for our clients across a range of complex commercial disputes,” he said.

“Investec’s new offering is exactly what the sector needs. It’s a bank with a strong track record of developing and delivering innovative loans and can demonstrate the ability to see cases through to the finish.”

Investec has been marketing itself to City law firms over the last couple of years as an option for financing in a post-alternative business structure world.

Last week Legal Futures reported on the launch of another new funder, Managed Legal Solutions, and the departure from the market of Allianz Litigation Funding. Next Wednesday the Civil Justice Council will publish its long-awaited code of conduct for third-party funders.

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