Investec enters third party litigation funding market with new package

Investec has become the first bank in the UK to offer commercial litigation funding to help companies pursue civil claims in court.

The bank has launched a litigation financing package for law firms to offer clients seeking to take claims to court. The minimum funding package is £250,000 and there is no upper limit.

Investec’s move comes as part of a bid to increase its efforts in the legal sector and in response to growing demand for litigation funding in recent months.

The bank will have no pre-defined lending criteria beyond the minimum loan amount, with each case to be evaluated on its own merits. It has already tested the package with a number of pilot transactions during the current year.

Investec specialised lending adviser Jonathan Harvey said: “The cost of litigation in the UK can be prohibitive. Many clients have strong cases but in such uncertain times are not prepared to take on the cash flow risk associated with pursuing their case. This can represent a significant opportunity cost in terms of lost revenue for the law firm and damages for the client.

“Over recent months we’ve been approached by a growing number of law firms looking for alternative ways to fund litigation in the commercial sector. Based on the success of our pilot transactions mid-year, we anticipate significant demand.”

The funding package is the latest in a number of legal investment opportunities pursued by Investec over the last year, including the launch of a professional services finance unit at the end of 2010.

The unit will invest up to £10m per law firm to those looking to set up alternative business structures, which will allow external investment in law firms. The bank already provides funding to support firms’ growth plans.

  • Click here for more on Investec’s finance ventures for law firms