A litigation funder says it has created a ‘unique’ service helping to finance court fee costs.
SpectraLegal Ltd, formed by Canadian financier BridgePoint Financial Services, says it will provide capital upfront for firms paying out for ‘crippling’ fees.
As of this month, litigants must pay 5% of the value of their claim, with the maximum fee capped at £10,000.
Issuing a claim for a county court possession costs £355, while hearing fees for a multi-track claim cost up to £1,090.
The fees, which have grown significantly since they were first introduced, are often paid by law firms on behalf of clients who cannot afford to pay.
SpectraLegal says its funding solution is targeted at those law firms, giving them a flexible facility to pay anything from issue fees to smaller interim application costs.
The scheme works effectively as a drawdown facility and is not dependent on the case succeeding or pegged on individual cases.
SpectraLegal says its funding package enables firms to pay court fees ‘without impacting on cashflow or affecting overdraft borrowings’, although it has not disclosed what rates of interest are charged.
‘By having this drawdown facility a firm can improve its ability to issue court proceedings in a tactical and timely way,’ said SpectraLegal director Matthew Gwynne. ‘It also reduces dependence on overdraft borrowing, and in a sector where cash is increasingly king, firms are looking for accessible solutions such as this.’
The firm is led by Gwynne, a former UK head of credit structuring at Standard Chartered Bank, and Steve Carter, former head of professional services (north) at accountants Baker Tilly. It was formed two years ago by BridgePoint, which claims to be Canada’s leading finance provider in its field.
The issue of firms underwriting their client’s claim has been discussed since fees were introduced. In 2015, when they increased, the Law Society warned practices would have to find significant extra amounts to meet upfront costs, with no option to ask clients to pay fees.