A Canadian law firm financier has created a business which claims it will lend at least £50m to personal injury firms this year.
SpectraLegal, founded by the leaders of litigation funder BridgePoint Financial Group, purports to be the solution to PI firms’ struggles to secure backing to grow their business.
The company says it is Canada’s leading law firm financier and says it has supported more than 750 Canadian practices in the past 11 years.
Securing loans from traditional lenders has proven increasingly difficult for the PI sector in recent years, with the Jackson reforms and fixed costs eating into profits and turnover.
SpectraLegal says it has already approved more than £10m in loans to a handful of firms since arriving in the UK last October.
This has included backing the expansion plans of Pure Legal and its £13m acquisition of York-based clinical negligence specialist Pryers in December.
Chief operating officer Steve Carter (pictured), former head of professional practices (north) at accountancy firm Baker Tilly, said: ‘The combination of our secure position and market insight has really struck a chord with firms, with new applications coming in all the time.
‘Law firms like the fact that our business is based on growing those with whom we do business. Unlike traditional investors, such as banks, we spend just as much time looking at the market as we do the firm’s books. We delve deeper, make plans, organise and advise.
‘Alongside this we’ve invested in a bespoke online platform that allows us to look at a wide range of factors, including how fee-earners and suppliers are performing. The result is a level of independent, proactive and granular analysis that firms may not have had access to previously.’
The company will target PI firms through both conditional fee and damages-based agreements.
Costs advance facilities enable law firms to draw down against expected costs awards in completed cases, meaning they can release cash without having to compromise on their costs claims. It is through this scheme that funding for the Pryers acquisition and backing for Pure’s expansion plans have been put in place.
WIP and disbursements facilities help firms monetise their WIP and disbursements to progress their cases, subject to a minimum of £200,000 for each facility.
SpectraLegal, which is headquartered in Ireland, says it has the backing of major institutions including Royal Bank of Scotland.
Carter said the similarities between the English and Welsh costs regime and the Canadian system will be a ‘key competitive advantage’.