A high-profile litigation department has set up shop as an alternative business structure to pursue a US-style model of funding its own cases through contingency fees.

Harcus Parker de-coupled itself from private client and family law firm Harcus Sinclair to set up as a separate litigation practice with a war chest believed to be around £50m provided by an unnamed investment house.

The investor is understood to have provided Harcus Parker with a dedicated pot of cash to be managed under an agreed protocol. The operation of the protocol will be overseen by a third-party funder, reported to be Therium Captial Management, which is not the ultimate investor. It is understood that Harcus Parker has authority to make investment decisions in cases that fit within the protocol, while decisions on cases that fall outside it will be managed by the third-party funder, which will also ensure that the law firm keeps an appropriate spread of cases.

Damon Parker, founder and managing partner of Harcus Parker, told the Gazette: ‘The US firms have built up their war chests over a long time. We didn’t have this, and so we have used the [credit fund investment] to provide a jump start. We will be looking to build up our own war chest in future.’

He said that as the model allows the firm to fund its own cases at a cheaper rate than traditional funding, it will be able to run cases under damages-based agreements, or contingency fees, ‘on a large scale, paying the disbursements’. There has been little take-up of DBAs, which allow lawyers to be paid as a percentage of their client’s winnings, in the UK litigation market since their introduction in 2013. However, contingency fees are widespread in the US, where firms have used them to build up substantial cash reserves to fund future cases.

Parker said the firm will also run some cases with traditional billing, and with third-party funders.

The firm, which is currently acting in high-profile disputes including a shareholder action against Lloyds Banking Group and an equal pay claim against Tesco, plans to balance its caseload with 60% class actions - including financial services litigation, consumer litigation and human rights - and 40% commercial litigation.

Parker added: 'As litigators we are wired in a different way to lawyers who spend their time, for example, drafting wills and LPAs. Even if a litigation practice is more profitable overall, it works to a different rhythm. Each side thought it would be better to run things separately. It had also become increasingly difficult to explain what sort of beast we were. So it seemed a good idea to be consciously uncoupling. We are now entirely separate.’