There is not an “element of doubt” that smaller commercial cases are suitable for litigation funding, the managing director of Augusta Ventures has said.
Louis Young said that in the six months since its Trinity funding solution was launched, 22 cases had been approved, with the funder committing an average capital amount of just under £200,000.
It is the first fund aimed specifically at smaller cases in a market where, hitherto, the conventional wisdom has been that matters usually need to be valued in the millions to be worth funding.
Mr Young said the total value of capital committed stood at £4.38m to date, with amounts per case ranging from £55,700 to £426,900. Augusta takes around 20% of the proceeds when the case wins. It says it has £50m of funds to deploy.
“The value of a claim is no longer a barrier to accessing finance,” he said. “We’ve had 515 enquiries about financing, and one in every four becomes an application.
“We’ve had cases come through the door and eight days later they’ve got their money. No-one else can do that. We want to get to the point where we’re doing 25 matters in a month, and 240-300 a year.”
The client is expected to cover some of the solicitor’s fees, typically 30%, with Augusta covering 30% and the law firm putting 40% of its fees at risk.
Augusta is backed by Metric Capital Partners, which describes itself as a pan-European private capital fund manager, and has among its directors David Cheyne, former senior partner of Linklaters, and Peter Cornell, former global managing partner of Clifford Chance. Mr Cornell is also a partner at Metric and a member of its investment committee.
Mr Young explained that before setting up Trinity, he had helped set up a database of 500 commercial litigation cases valued from £40,000 to £25m, which settled or went to trial over the last 10 years. “Lawyers were saying that they won eight or nine out of 10 of their cases, but no-one could put a finger on it,” he said. “So many firms do not keep records.”
Mr Young said 92.7% of cases settled or won at trial, 10.8% were carried out under a conditional fee agreement, and only 3.2% were covered by after-the-event (ATE) insurance.
“I understand why claimants don’t take ATE,” he said. “You only take it if you’ve got a good chance of using it because the premiums have gone through the roof.” However, Augusta is offering ATE at a flat premium of 13.2%; lawyers are expected to operate under CFAs. Unusually Augusta also offers own-costs cover.
Mr Young said the analysis of 500 cases showed that 70% of claimants won their cases at trial, but only 30% of defendants. “We’re quite content to be selling two-bedroom maisonettes, as opposed to selling No1 Hyde Park,” he added.
“We’re part of a new wave of people coming into the law, who are very service-orientated. Lawyers want a good service, and if you can give it to them, you can get repeat business.”