Thursday 17 November 2011

Investec to fund civil litigation: what does this mean for IP?

A media release today informs IP Finance that Investec Specialist Private Bank has become the first UK bank to offer litigation funding to clients requiring specialist finance to pursue a civil claim in court. This is said to be "in response to increasing demand for innovative funding solutions from law firms and their clients". According to the media release:
"... Investec has no pre-defined lending criteria [well that's good, since most IP players have no pre-defined litigation criteria -- unless perhaps they are trolls], which means that it can provide fast decisions and competitively priced funding for commercial litigation. Each case is evaluated on its own merits and structured accordingly. The minimum funding is £250,000 [This doesn't necessarily bar loans to fund litigation in courts where costs awards are capped, though such a high minimum may tempt a potential claimant in England and Wales to opt for the more expensive Patents Court than the Patents County Court on order to justify the high minimum].

Jonathan Harvey, Specialised Lending, Investec Specialist Private Bank said, “The cost of litigation in the UK can be prohibitive [For many businesses the cost of borrowing is also prohibitive ...]. Many clients have strong cases but in such uncertain times are not prepared to take on the cash flow risk associated with pursuing their case. This can represent a significant opportunity cost in terms of lost revenue for the law firm and damages for the client.

“Over recent months we’ve been approached by a growing number of law firms [not IP owners or prospective defendants?] looking for alternative ways to fund litigation in the commercial sector. This is partly driven by changes in the way law firms fund their own working capital and partly by claimants’ growing need for flexible finance. Based on the success of our pilot transactions mid-year, we anticipate significant demand.”

Investec’s specialist finance team works with law firms and their clients to find innovative and flexible ways to finance their cases. The availability of litigation funding can itself be a powerful asset in bringing about a negotiated settlement, rather than going to court [but can't the same be said about the lack of availability of litigation funding?].

... The Investec professional services team was set up in response to increased demand from managing partners at law firms who are considering financial support to make structural changes to their businesses as a result of the impending introduction of the Legal Services Act 2011".
It would be good to receive readers' comments.

1 comment:

  1. There was a strong rumour that one of the leading law firms nearly went under last year because of its overdraft. I wonder therefore whether this is an attempt to move the cashflowing of litigation from the firm to the client - hence the reference to "structural changes".