Funder eyes capital boost ahead of post-Covid litigation wave

Moloney: Applications on the rise

AIM-listed Litigation Capital Management (LCM) is looking to increase the capital it has available because of increased demand for litigation funding post-Covid.

However, it made a marginal loss in the six months to 31 December 2020 on income of £4.5m due to delays in cases concluding as a result of the pandemic – but several of its 40 directly funded cases are now nearing realisation.

It told investors that it received 266 applications for funding in the half-year, a 5% increase on the same period in 2019.

Chief executive Patrick Moloney said the “extraordinary instability in global markets and economies” over the past year were driving increased demand for capital.

“In recent months, in all jurisdictions in which we operate and through all offices, we have continued to see an uplift in applications…

“We are considering either an upsize of the existing third-party fund or a new second fund. We are well advanced in those considerations and in discussions with relevant stakeholders.”

Some 70% of its $150m global alternative returns fund are now committed, while in February LCM secured a $50m credit facility.

When LCM published its 2019/20 results, it said it could start building a new and larger warchest once 75% of the fund was committed. It stood at 61% then. Mr Moloney at the time expected to commit the fund by the end of 2020, however.

He said yesterday that the likely increase in insolvency and restructuring disputes presented the funder with “a significant opportunity as we have both significant experience and long-standing and deep referral relationships with insolvency practitioners”.

Mr Moloney said the market has met the challenge of adapting to ‘new normal’ world of disputes, and its steady state was “healthy and encouraging”.

He continued: “Certain quarters of the legal profession may post very good results this year, despite the pandemic, but the realisation by most law firms that their clients are thinking differently about legal spend and legal budgets has been addressed and disputes finance has been one way to deal with the challenge.”

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