A legal finance business that backed Pure Legal’s £13m acquisition of York firm Pryers has formally launched into the UK market today with plans to lend at least £50m to personal injury law firms during 2016, with similar funding planned in years to come.
SpectraLegal is the brainchild of the principals of Canadian company BridgePoint Financial Group, which has provided litigation financing and ‘risk management solutions’ to more than 750 Canadian law firms since 2005.
Since opening its books in the UK in October, SpectraLegal has already approved in excess of £10m of loans to a handful of firms. A further £30m of lending is in the pipeline.
It will initially target personal injury firms operating on conditional-fee and damages-based agreements. The Costs Advance product enables law firms to draw down against expected costs awards in completed cases, so they can release cash without having to compromise on their costs claims. It was through this scheme that funding for the Pryers acquisition and backing for Pure’s expansion plans have been put in place.
SpectraLegal’s WIP & Disbursements product aims to help firms monetise their work in progress and disbursements to progress their cases, subject to a minimum of £200,000 for each facility.
COO Steve Carter, former head of professional practices (north) at accountants Baker Tilly, said: “The combination of our secure position and market insight has really struck a chord with firms, with new applications coming in all the time.
“Law firms like the fact that our business is based on growing those with whom we do business. Unlike traditional investors, such as banks, we spend just as much time looking at the market as we do the firm’s books. We delve deeper, make plans, organise and advise.
“Alongside this we’ve invested in a bespoke online platform that allows us to look at a wide range of factors, including how fee-earners and suppliers are performing. The result is a level of independent, proactive and granular analysis that firms may not have had access to previously.”
SpectraLegal’s entry comes after years of the options for personal injury law firms in England and Wales to fund their practices having shrunk.
BridgePoint co-founder John Rossos is chairman and CEO of SpectraLegal, which is headquartered in Ireland. He said: “The legal market in England and Wales represents a huge opportunity for our business because of the similar legal structure and our proprietary expertise. We bring a deep understanding and appreciation of the market and far greater insight than other providers of capital. Our credibility is enhanced by the success of our clients in Canada and we expect to make the same impact on the British market that we have done in Canada.”
The company – which is supported by major institutions, including Royal Bank of Scotland – said it expected its range of products and services to expand to meet market demand in PI and other areas of practice, and has the resources to continue lending at the 2016 level in the years to come.
There are strong similarities between the Canadian litigation system and that in England and Wales, with the damages-based agreements regime introduced by the Jackson reforms in 2013 copied directly from the one operated in Ontario, which created similar financial pressures for Canadian law firms.