Firms 'too risk averse' to commit own funds to big cases, says CEO

The chief executive of a listed firm with its own litigation funding business has claimed rival firms are too afraid to take a similar step.

Nicola Foulston, chief executive of Rosenblatt Group plc, told the Gazette it wants to be both a law firm and litigation funder – not just running cases but buying and selling them as well.

The litigation arm was established in November with £2m of the proceeds from Rosenblatt’s float last May and has five cases under consideration for funding.

Foulston said there is a major market opportunity from bypassing litigation funders and partnering other firms to finance their biggest cases. She insisted this is not about stealing cases from competitors but providing a service they are not set up to provide.

She said: ‘They understand the legal side of the case but I have seen time and time again law firms come to us for help, where the firm would put its own money in but is overruled by the other partners.

‘They are risk averse and don’t want to support it. We often get the case referred to us where these businesses should be commercially managed centrally.’

Rosenblatt’s new litigation product is aimed at cases with a claim value of more than £15m, which may be beyond some litigation funders.

In its financial results published last week, the firm said it will secure cases and then reduce its own risk by selling portions of the case to other investors. The subsidiary is expected to make a ‘substantial return’ by going to market with the promise to be ‘faster, more flexible and cheaper’.

Foulston added: ‘Either [other firms] stay on the record or we bring in counsel. What we are not about is stealing clients. We will recognise where a case has come to another law firm they need resources. From our point of view that is the relationship and they may never meet a [Rosenblatt] legal partner.’ 

While litigation funding has become a familiar presence in the UK in recent years, few firms have opted to commit their own finance to cases. 

Last week, 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 new company has authority to make investment decisions in cases that fit within an agreed 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.