One of the UK’s biggest litigation funders is in talks with law firms about using alternative business structures to invest in a ‘portfolio’ of their commercial litigation.
The move by Harbour Litigation Funding signals what is expected to become a closer relationship between law firms and funders once damages-based agreements are introduced for solicitors from next April.
Under DBAs, solicitors will be able to take a proportion of a client’s damages if they win, but will risk not being paid if they lose.
The rules are likely to increase demand for third-party funders, which can meet the costs of counsel’s fees, disbursements, insurance premiums and other fees as the case progresses – in return for either a multiple of the amount invested, or a percentage of damages.
Speaking at the Law Society’s Civil Justice Section conference last week, Harbour’s chief executive officer Brett Carron revealed that Harbour planned to become ‘an ABS funder’, with its funds to be targeted at a ‘portfolio’ of cases rather than used to fund the firm more generally.
Carron told the Gazette that Harbour is in discussions with three law firms over such arrangements. He added that, by funding a group of cases, Harbour would be able to finance smaller claims below its usual minimum dispute value of £3m.
He said: ‘DBAs are not particularly effective for law firms because of disbursements, which can be significant… My view is that there will often be a hybrid arrangement with funders where there are DBAs in place.’