Litigation funder pledges money to probe merits of case
A third-party funder has pledged to pay for claimants to investigate the merits of their case before committing to litigation.
Augusta Ventures, which targets cases worth less than £1m, says there will be no obligation to pursue claims and parties who choose to back down will not have to pay money back.
The money will fund the costs of an opinion from a solicitor and, if the case has merits, from counsel also.
Third-party litigation funding has become an increasingly prominent factor in the funding of cases, particularly since recoverability of success fees and after-the-event insurance was removed by the Jackson reforms in April 2013. This is believed to be one of the first examples of a funder offering finance in advance of cases being actively pursued.
Engagement director Jeunesse Edwards (pictured) said: ‘We recognise that just getting to the point of deciding whether a case is worth pursuing can be expensive and off-putting for would-be claimants. This expanded offering allows meritorious claims to get over this first hurdle and assists solicitors to generate more work.’
In the event that Augusta goes on to provide finance for the case, the funding will be included in the overall case budget. If the decision is not to proceed, the client will have to reimburse Augusta only if it wants sight of counsel’s opinion.
Both the solicitor and counsel will be expected to work on a partial conditional fee agreement to ensure what Augusta calls ‘an alignment of interest’ amongst all parties.
The solicitor is required to initially assess the case on the basis of Augusta’s economics, selection and prospect of recovery criteria.
Edwards said the prospect of early assessment should also help to speed up the litigation process by persuading defendants to settle cases.
‘The fact that a case has been so thoroughly vetted before being taken forward will also send a very strong message to the defendant,’ she added.
Augusta started at the end of 2014 and has funded 64 cases to date, with a total investment of £15m.
The company, backed by private funds, a Canadian family office and private capital fund Metric Capital Partners, says it receives around 20% of the net proceeds of a successful case.
Augusta’s shareholders include David Cheyne, former senior partner of Linklaters, and Martyn Bowes, ex-head of real estate financing at Barclays.