Augusta’s £60m warchest to ratchet up litigation funding for SMEs

Young: lawyers generating new work

Young: lawyers generating new work

The only litigation funder targeted at the SME market says it has a £60m warchest that will allow it to fund 150 new cases in 2015.

In its first year Augusta Ventures sank £8m into 36 matters, two of which – one a contested probate and the other a shareholder action – have so far successfully settled (details at end of story).

The company, which first went public with its work last summer, said that in both the claimants could not otherwise have brought their actions.

Among the well-known firms whose clients have already used its Trinity product are Bond Dickinson, Burges Salmon, Fox Williams, Gordon Dadds, Hill Dickinson, JMW, Keystone Law, Stephenson Harwood, Stephensons, Squire Patton Boggs, Harcus Sinclair and Ward Hadaway.

Augusta looks to invest between £10,000 and £600,000 in a broad range of largely commercial litigation matters. It usually expects the claimant to make a financial contribution to their lawyers’ fees, while the solicitors work on a partial conditional fee agreement so that some of their fees are upfront.

Augusta generally receives around 20% of the net proceeds of a successful case. After-the-event insurance – provided by AmTrust Europe at a flat-rate of 13.2%, although claimants can seek other providers – is compulsory where there is an adverse costs risk, but the cost is covered by the financing.

For an additional premium claimants can also protect 90% of their own financial contribution.

Managing director Louis Young said Augusta’s first year showed the demand for funding and that an increasing number of law firms now see it as a way to generate revenue and business growth.

“[They are realising that] funding is not just for those with insufficient funds to run their claim. By introducing financing to all their clients, lawyers are generating new work, as well as retaining matters that would otherwise have disappeared out the door.”

David Gore, consultant at Gordon Dadds, said: “Augusta has realised that not all worthwhile cases are multi-million pound actions… For our firm it enables us to take cases on behalf of clients who otherwise may not have chosen to litigate, while for clients it reduces the impact on their cash flow and accounts.”

Augusta is backed by private funds, a Canadian family office and Metric Capital Partners, a pan-European private capital fund manager whose partners include former Clifford Chance managing partner Peter Cornell.

Its shareholders include David Cheyne, former senior partner of Linklaters, and Martyn Bowes, ex-head of real estate financing at Barclays. It has also formed a case review panel led by former head of dispute resolution at Speechly Bircham, Stephen Dobson, and comprising former High Court judge Sir Raymond Jack QC, Baker & McKenzie’s former global dispute resolution head Nick Pearson, and barrister Richard Davis of Hogarth Chambers.

 Claim 1: Contested probate claim

The claimP was the fiancée of B, who is now deceased. P was left nothing in B’s will, as B had failed to update his will after his divorce as intended. The value of B’s estate, net of taxes etc. is £730,000. P made a maintenance claim against the estate for £300,000.
SolutionAugusta contribution including ATE insurance premium:£80,300
OutcomeThe matter settled within 10 months of financing following mediation with a global offer of £210,000. The amount £140,500 remained after costs.
ReturnsClaimant Return:£95,000
Lawyer Uplift:£16,800
Augusta Return:£28,700

Claim 2: Shareholder dispute

The claimH was a minority shareholder in a company. The majority shareholders treated him unfairly, by refusing to pay him dividends and forcing him out of the management of the company. H brought a claim for unfair prejudice, based on the value of his shares for a maximum of £250,000.
SolutionAugusta contribution including ATE insurance premium:£44,900
OutcomeThe matter settled within 3 months of financing with a compromise agreement that provided for a global amount of £98,000. The amount of £77,482 remained after costs.
ReturnsClaimant Return:£59,324
Lawyer Uplift:None taken
Augusta Return:£18,158

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