Disbursement funder SpectraLegal has unveiled new backing of £100m as it looks to pursue an “aggressive” expansion policy.
US investor Waterfall Asset Management – which focuses on high-yield asset backed security and loan investments – has provided the money and has the option to double its investment.
Waterfall – which has approximately $7bn in assets under management – along with Bold Rock Management and Investments Ltd, have also taken a stake in SpectraLegal.
The company said it was aiming to “aggressively expand its offering and reach across the country”, with more staff and strategic partnerships with other suppliers.
SpectraLegal currently offers law firms three products: WIP and disbursement funding, court fee finance, and costs account finance, which enables them to receive advances against their costs and disbursements once cases have settled.
Steve Carter, managing director of SpectraLegal’s UK business, said it would be launching new products “imminently”, all aimed at helping lawyers with off-balance sheet finance.
The aim was finding ways to finance disbursements in way that was in both the client and lawyer’s best interests without having to take out loans, he said.
Mr Carter said the £100m recognised the level of demand in the market. “Pretty much every lawyer I speak to says they need money,” he said, noting that there were various different ways of securing it.
“The reason why lawyers end up having to settle for less than the case is worth in their own costs is usually because they need to get the money in,” he said. Good funding meant this did not need to happen.
Henrik Malmer, managing director at Waterfall, said: “The legal finance business offers a unique and innovative investment opportunity with the potential to achieve attractive and uncorrelated returns.
“SpectraLegal, with its experienced management team is well positioned to build out their business in this market segment.”
SpectraLegal was established in December 2014 and launched properly to the UK market with a £50m warchest three years ago. It is the European financing affiliate of Canada’s BridgePoint Financial Services.
Meanwhile, Sparkle Capital has launched a new funding product, Flexible Disbursement Funding, which it said filled a gap in the funding market by “providing the flexibility claimants need to cover a range of disbursements”.
It is designed to provide specific disbursement funding at fixed rates of interest. It is aimed at funding disbursements such as counsel fees, court/hearing fees and reports. However, it can be tailored to any specific funding requirement that may arise.
Sparkle is administered by legal expenses insurer Acasta Europe. Tets Ishikawa, Acasta director and senior adviser at Sparkle Capital, said: “Throughout 2018, we saw a significant increase in the number of requests to fund specific risks at competitive rates – a cry from the market for a dedicated product.
“The litigation funding market is moving away from finding risks that fit the product requirements of the funder, and moving towards a model where funding products can be tailored to the requirements of any given legal matter.”
Paul Gibson, head of legal at Acasta, added that tailoring finance to the real risks and needs of a particular legal matter “is the only way the market can evolve further”.