Litigation funders celebrate as clients seek third-party capital

Third-party funder Harbour Litigation Funding has raised £120m to plough into commercial litigation cases while its market rival Vannin Capital has quadrupled its annual litigation fund from £25m to £100m to meet growing demand.

Harbour head of litigation funding Susan Dunn said as the market was beginning to mature clients were increasingly looking to the funding sector to get claims off the ground.

It has been two years since Harbour’s last capital raising exercise when the funder put together £60m to invest in cases valued at above £3m (13 May 2010).

The new fund’s portfolio is expected to be made up of more than 50 cases. The fund has a six-year life span, with a targeted annual spend of more than £40m. Investors in the new fund include endowments, family offices, private wealth managers and high-net worth individuals.

“We’re seeing strong demand from in-house lawyers and finance directors at companies who are using funding strategically to lay off litigation cost risk and preserve capital for use elsewhere in their businesses,” Dunn said.

Vannin Capital, meanwhile, entered the market in June last year backed by private equity firm, Bramden Investments. Initially Bramden agreed that £100m would be handed to Vannin to invest in cases over a four year period.

At the end of the first year, however, the venture’s success has resulted in a four-fold increase with Bramden agreeing to set aside £100m to be drawn down in the first year, with a further upward review planned for within the next 12 months.

Founding solicitor Nick Rowles-Davies said there had been a step change in how litigators approached alternative litigation funding packages. “Lawyers are starting to endorse funding,” he said. Since December, he added, the company had received more than 30 referrals a month, with cases coming also from outside the UK.

Rowles-Davies said the cash injection would be used to fund cases in the US.

“As well as high volumes of quality litigation in the UK and US, we are also seeing a good number of international arbitration cases,” he said. “Our initial remit and capacity targets have expanded many fold since inception, with our original UK focus now being completely global.”