A lender that provides costs funding for disbursements during ongoing cases has signed up its first law firm clients.

VFS Legal says it wants to plug the gap in the market left by banks and other funders. The scheme is mostly aimed at clinical negligence cases, which can incur significant disbursement costs. The funding involves a lump sum to cover disbursements incurred over the life of a case, repaid only at its conclusion.

In the meantime, recipients pay only the monthly interest on the funds advanced. VFS declined to reveal the interest rate.

VFS director Norman Kenvyn said the funding can offer firms ‘breathing space’ to fund cases.

He said: ‘More companies are now being forced into using their overdraft, not for the safety valve in working capital, but as the primary mechanism for their long-term funding, leaving the firm with a reducing safety margin for when it actually needs funds at short notice.’

Scott-Moncrieff & Associates became the first of several firms to sign up to the scheme earlier this year.

The firm’s director, former Law Society president Lucy Scott-Moncrieff (pictured), said: ‘Since legal aid was abolished for most [clinical negligence] cases, there have been concerns that some smaller firms might be unwilling to take on complex cases requiring expensive and front-loaded experts’ reports, even where ATE insurance is available, as this will adversely affect their cashflow.

‘This scheme solves the problem and should, therefore, improve access to justice.’