Why did you join SpectraLegal?
I was sold the vision by John Rossos, our CEO. He’s such a passionate guy. It’s not about making money out of lending, but about enabling access to justice. We don’t want solicitors to look at us simply as a pot of money; rather we are there to work with and help them.
How needed was SpectraLegal?
I’ve been advising solicitors of all shapes and sizes for 25 years, and the group that has had the most difficulties in the past 15 years or so are personal injury specialists. The business model – and it is a business – has been battered.
The opportunity for us is straightforward – we provide finance where firms cannot get it from traditional sources.
The problem with bank lending is that they don’t take the time to get to know the sector or the firm well enough. When your workload is predominantly ‘no win, no fee’, that’s a problem – banks don’t understand that they may need to lend for five years with no return. Even if individuals within the banks get it, the corporate policies won’t let them extend lending.
What is happening with Slater & Gordon is likely to make banks even more terrified of lending into the PI sector.
What impact will the upcoming whiplash reforms have?
The increase in the small claims limit could be countered by the use of damages-based agreements, while even if general damages are removed, there will still be business in uninsured loss recovery claims, but it will be much smaller than the market now.
With the possible extension of fixed costs also potentially on the way, the uncertainty is overwhelming. Many are choosing to sit tight to see what happens. Some will leave, but there are opportunities for those with the confidence in their own ability to grow.
We say that so long as you’ve got a profitable business model, we can help, both by providing finance and our experience on how you can improve.
What has been the response to date?
It’s been great. We’ve had enquiries from lots of different firms; there’s clearly a lot of interest that there’s someone with finance in the market. The increase in court fees has been a particular problem for firms with larger cases because there’s been nowhere to get the money from.
We conduct extensive due diligence before we lend, because this is more than just a case lending relationship. If your working capital needs are for other purposes, such as marketing, then we will back that too.
Our focus is on the mid-sized business with multi-track cases and happily there are good ones there that just need the push we can provide to fulfil their potential.
What have been the challenges?
As established as Bridgepoint is in Canada, we’re the new kid on the block in the UK. Although I’ve been around the market a long time, as has my colleague Matthew Gwynne, we obviously need to prove our credentials. Pure Legal Group’s use of our Costs Advance scheme to help fund its acquisition of Pryers late last year was a signal of intent, and the types of deals we are signing off show that we mean business.
What’s in the pipeline?
We’ve been clear that our Costs Advance and WIP & Disbursements facilities are just the start of what we think we can offer the market. The interest we’ve already received, whether from solicitors needed ‘treatment finance’ for rehabilitation, or costs lawyers who do budgeting work at the front-end of a case and then have to wait ages to be paid, has given us plenty of food for thought.