SpectraLegal, a business created by the experts behind Canada’s top law firm financier, has launched in England and Wales with plans to lend at least £50m to personal injury law firms during 2016.
It is the brainchild of the principals of BridgePoint Financial Group, Canada’s leading provider of litigation financing and risk management solutions, which has supported more than 750 Canadian law firms over the past 11 years.
Options for personal injury law firms in England and Wales to fund their practices have been in short supply in recent years amid caution from traditional lenders and the many reforms hitting the sector, some of which were copied from Canada. SpectraLegal offers a unique combination of secure finance and the expertise to provide strategic value to the firms it finances.
Since opening its books in the UK in October, SpectraLegal has already approved in excess of £10m of loans to a handful of firms, including backing the expansion plans following Pure Legal’s £13m acquisition of clinical negligence specialist firm Pryers in December. A further £30m of lending is in the pipeline.
SpectraLegal is led by COO Steve Carter, former head of professional practices (north) at accountants Baker Tilly, and business development and client relations director Matthew Gwynne, former UK head of credit structuring at Standard Chartered Bank.
It will initially target personal injury firms operating on conditional-fee and damages-based agreements, through two types of financing facilities: Costs Advance and WIP & Disbursements.
Costs Advance Facilities enable law firms to draw down against expected costs awards in completed cases, meaning they can release cash without having to compromise on their costs claims. It is through this scheme that funding for the Pryers acquisition and backing for Pure’s expansion plans have been put in place.
WIP & Disbursements Facilities help firms monetise their WIP and disbursements to progress their cases, subject to a minimum of £200,000 for each facility.
SpectraLegal – which is supported by major institutions, including Royal Bank of Scotland – expects its range of products and services to expand to meet market demand in PI and other areas of practice, and has the resources to continue lending at the 2016 level in the years to come.
Steve Carter says: “The combination of our secure position and market insight has really struck a chord with firms, with new applications coming in all the time. Law firms like the fact that our business is based on growing those with whom we do business. Unlike traditional investors, such as banks, we spend just as much time looking at the market as we do the firm’s books. We delve deeper, make plans, organise and advise.
“Alongside this we’ve invested in a bespoke online platform that allows us to look at a wide range of factors, including how fee-earners and suppliers are performing. The result is a level of independent, proactive and granular analysis that firms may not have had access to previously.”
BridgePoint’s experience is a key competitive advantage for SpectraLegal. There are strong similarities between the Canadian litigation system and that in England and Wales, with the damages-based agreements regime introduced by the Jackson reforms in 2013 copied directly from the one operated in Ontario, which created similar financial pressures for Canadian law firms.
Since launching in 2005, BridgePoint has established funding relationships with over 750 law firms across Canada. BridgePoint Global Litigation Services, a member of the BridgePoint Financial Group, was the first business in North America to finance class actions under court approval and, through BICO (another member of the BridgePoint Financial Group), it introduced legal cost protection (known as after-the-event insurance in the UK) to the Canadian market for a broad range of legal claims ranging from small personal injury to multi-billion-dollar class action claims. No other business associated with funding law firms or litigation offers the same level of integrated litigation risk management expertise on a global basis.
BridgePoint co-founder John Rossos is Chairman and CEO of SpectraLegal, which is headquartered in Ireland. He says: “The legal market in England and Wales represents a huge opportunity for our business because of the similar legal structure and our proprietary expertise. We bring a deep understanding and appreciation of the market and far greater insight than other providers of capital. Our credibility is enhanced by the success of our clients in Canada and we expect to make the same impact on the British market that we have done in Canada.”