Litigation Funding Investment Opportunities

Funding of £80,000 required to fund a shareholder dispute case, where the majority shareholder and director of a company has diverted economic value from a minority shareholder who was instrumental in developing the business. In our view, the Claimant has a strong claim under s.994 of the Companies Act 2006 that she has been unfairly prejudiced and should be repaid a fair value for her shares. Both the Claimant’s solicitor and the barrister are to be paid on a 75% contingent basis (Conditional Fee Arrangement), ensuring strong alignment of incentives. If the case settles within 18 to 24 months, investors will potentially have a Multiple on Capital (MoC) of 2.2x to 2.6x. If the case wins at trial or settles after 24 months, we estimate investors would have the MoC of 2.8x.

Equity capital required to fund a high-value employment dispute case – in relation to non-payment of contractual commission entitlements. Claim value is estimated to be at least £2.6 Million net of tax. The Claimant verifiably sourced significant institutional investment capital for the Defendant (a publicly listed asset manager) who subsequently refused to pay without a valid justification. A detailed QC barrister’s opinion confirms that the case has strong merits. Both the Claimant’s solicitor and the barrister are to be paid on a 100% contingent basis (Conditional Fee Arrangement). Enforceability is likely to be straightforward. The projected Multiple on Capital (MoC) is 2.5X if the case resolves at trial, with a minimum 1.6x MoC if it settles at any time in the first 12 months. Funding required £105,000. The offer is fully underwritten.

Funding required for a Francovich claim against a European-based tax authority for inappropriately charging VAT in breach of EU law. Proceedings were issued in 2018 and a strike out application has recently been made by the Defendant arguing, incorrectly in our view, that the case is misconceived. There is a high threshold for this type of strikeout to succeed. Senior counsel for the Claimant expects that the strike out application will be denied and sees good prospects of Claimant-success at trial. Statistically, we expect that if the Defendant’s strike out application is denied, a pre-trial settlement is likely. Funding of £192,000 to £225,000 is required to fund the case to the end of the strike out hearing. If the Claimant wins before trial, the projected Multiple on Capital (MoC) for investors is 3.3x up to 12 months, increasing by 1.1x for each 6 months thereafter, up to a maximum of 7.8x after 30 months. The MoC if the case wins at trial is projected to be at least 5.6x. The claim value is £15m. The Claimant has a distinguished legal team. We believe the case is likely to be resolved within 18 months. The minimum raise is already fully underwritten.

Equity capital required for a portfolio of 3 pre-vetted commercial litigation cases being run by an experienced solicitor, with net funding of £20,000 to £25,000 required for each case. The 3 cases are: a professional negligence claim against a solicitor; a construction contract dispute; and a breach of contract on a business sale & purchase agreement. The solicitor has significant ‘skin in the game’ only getting paid on positive outcomes and always after investors, ensuring good alignment. All the cases are fully funded through trial if necessary and each is 77% principal-protected by investment grade ATE insurance. In the unlikely event that all three cases lose, net of this insurance cover, the total downside is limited to 23%. Diversification increases the likelihood of a positive return: if only one case wins, depending on the time to settlement the portfolio is expected to generate an overall positive return of 0-21%. If all three cases win, the return on the portfolio is expected to be 51% per annum. Total funding required £91,000. The offer is fully underwritten.

Funding required for a pre-vetted professional negligence claim against a firm of solicitors and a planning consultant in connection with an application to install several wind turbines on some land in the North of England. The solicitors failed to identify the time limitation on the case and the planning consultant made an application which didn’t meet the basic requirements to even be considered by the Planning Authorities. The majority (88%) of the solicitor’s fees are contingent on a ‘Win’. Similarly, the insurance company, who have conducted their own due diligence, get paid their premium only if the case wins. The funding requirement of £70,000 is structured as an IFISA eligible bond with a coupon of 61% per annum (accruing quarterly) and with 83% of its principal guaranteed if the case loses against all the Defendants. If the case is resolved favourably, investors get all of their principal and interest before the solicitor or the claimant receive any of the proceeds.

It's alleged that a company director, through devious means, misappropriated a high-value property development opportunity for his own gain and to the significant detriment of the company and its other shareholders, enabled by a joint-enterprise conspiracy. Claim value £19m. Comprehensive analysis by senior barristers has identified ‘overwhelming’ evidence of breach of fiduciary duties and of joint enterprise conspiracy, including incriminating email correspondence between the defendants. The nine defendants have joint and several liability with significant property and business assets owned by the key defendants. Both the Claimant’s solicitor and QC barrister are on a Contingent Financing Arrangement (100% and 50% respectively). The insurers’ premium is also fully contingent on a case win. Bond return of 72%+ per annum for the first 3 years, IFISA-eligible.

Funding required to prepare a legal opinion on a high value employment dispute– in relation to non-payment of contractual commission entitlements. Claim value is conservatively estimated at over £10m. The Claimant verifiably sourced over $200m of institutional capital for the Defendant (a publicly listed company) who subsequently refused to pay without a valid justification. The Defendant has already made several preliminary attempts to settle and we believe has a strong incentive to do so once proceedings have been issued. Investors in this case can expect a return of up to 260% if the case is resolved favourably at any time. Investment grade insurance which will be put in place once proceedings are issued. A preliminary barrister’s opinion confirms that the case has strong merits. Enforceability is likely to be straightforward. The Claimant’s legal counsel are experienced top-ranked specialists in high value employment disputes. In due course there will be follow-on funding (at lower returns) for an additional £810,000.

Breach of contract: funding required to enforce an adjudication award against a developer against whom an award was made but who has failed to make any payment. The case is backed by an A- rated insurance company which is insuring the claim against adverse costs and also guaranteeing capital used for disbursements. Bondholders will receive up to 75% per annum if the case wins. If the case loses, bond holders are unlikely to lose more than 17% of their capital invested, due to the principal protection provided by the insurer. Both solicitor and insurer are being compensated on a no-win, no-fee basis, implying good alignment of interests. IFISA eligible.

Refinancing a bridge loan to fund the trustees of a pension scheme that are issuing a claim of professional negligence against a firm of solicitors that advised them on a property sale. The case is backed by an A- rated insurance company which is insuring the claim against adverse costs and also guaranteeing all capital used for disbursements. If the case wins, the expected return for investors is 60% to 65% per annum. If the case loses, the investors will lose no more than 21% of their capital invested, due to the principal protection provided by the insurer. Both solicitor and insurer are being compensated on a no-win, no-fee basis, implying good alignment of interests.