Burford launches non-recourse funding for smaller claims

Rowles-Davies: minimal due diligence

Rowles-Davies: minimal due diligence

Third-party funder Burford Capital has turned its attention to the SME market by launching a funding option for claimants pursuing cases valued between £25,000 and £500,000.

Primarily aimed at disbursement funding, its ‘Sprint’ product will be marketed and administered exclusively by broker The Judge.

The “straightforward” criteria for the non-recourse funding are a damages to budget ratio of at least 4:1, approved after-the-event (ATE) insurance for the sums funded in place, and sufficient adverse costs cover in place.

Burford’s UK managing director, Nick Rowles-Davies, told Litigation Futures that Sprint is based on the company’s experience of ATE, rather than traditional third-party funding principles.

“The product came about because of issues raised in the market over how traditional funding is difficult and unwieldy when dealing with lower-value cases,” he explained.

In particular, the due diligence process took too long, the pricing process was too lengthy, the pricing was too high and “the experience from start to finish was unwieldy and painfully slow”.

Mr Rowles-Davies said: “We operate minimal due diligence. We simply check the costs to damages ratios and sense check the proposal to ensure it meets our criteria. We do not spend months on due diligence or seek extensive exclusivity periods. That does not work with these cases.

“A prerequisite for Sprint is an acceptable ATE policy. We rely primarily on the underwriting carried out by the ATE insurer. These underwriters have very good historic performance and we do not need to second guess them. Accordingly, with ATE in place, the process from application to receipt of funds can be only a few days.”

The pricing is from a rate card and is time based, so the quicker the case ends, the lower the cost, starting from around half of the money borrowed to 1.5x.

Mr Rowles-Davies described Sprint as “a simple product which fills a gap in the market where there is a significant need”. A short three-week trial had generated dozens of inquiries, he said, including a number of cases where clients need extra funds to cover experts or counsel trial costs.

He added that it would help with those cases that do not secure ATE because the insurer is unconvinced that the client will have the money to fund the disbursements.

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