Listed City law firm Rosenblatt has outlined the “major market opportunity” it sees in backing clients’ litigation through its own funding subsidiary, particularly those worth £15m or more.
It also aims to offset its risk by selling parts of cases to other investors.
Some of the proceeds of its float last May were to invest in litigation, and in November Rosenblatt set up a litigation funding subsidiary.
In its first results as a listed company, chief executive Nicola Foulston said it has five cases under consideration for funding, “and we believe there is a major market opportunity to expand this”.
She continued: “We have initiated a new litigation funding product aimed at cases with a claim value in excess of £15m, which are often uneconomic for the larger litigation funders but where there remains a substantial demand for financing.
“Our well-capitalised balance sheet means our cost of funding is low. The group’s in-house litigation expertise means we can make decisions more quickly, which also limits costs and helps deadlines to be met.
“This, combined with our consistently high success rate, means we expect to make a substantial return from even smaller cases.
“Once cases are secured, we will reduce our own risk, by selling portions of the case to other investors. We have established a network of family offices and small hedge funds that are attracted by the high potential returns, and Rosenblatt will also receive a success fee on such transactions.”
Ms Foulston said that, to attract new cases, Rosenblatt would target, and partner with, other law firms and litigation brokers, as well as undertake direct marketing.
“These firms and brokers either lack the expertise to progress a case, or the capital to support the case.
“We will also target corporate entities that increasingly want to de-risk their balance sheets by removing litigation cost risk, but also increasingly see litigation as an asset class to be sold.”
She said the success of other litigation funders showed there was “a lot of money chasing, what is an effect, a new asset class”.
“We believe that a barrier to entry to this asset class is the speed of decision making by risk and investment committees, and the cost of such funding for both the client and law firm. Our USP in the market is therefore that we are faster, more flexible and cheaper.”
Litigation accounts for nearly three-quarters of Rosenblatt’s turnover, and Ms Foulston said the firm’s focus was on attracting “complex litigation matters and litigation finance opportunities”.
She said: “We are actively targeting overseas markets, where access to litigation finance is 6 harder for the client to obtain and is, therefore, less competitive and the margins are as high as we have experienced in the UK.”