Hundreds of millions of pounds pour into third-party litigation funding

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Rowles-Davies: original UK focus now completely global

Hundreds of millions of pounds are to be poured into backing litigation after both Vannin Capital and Harbour Litigation Funding unveiled significant funding boosts.

The highest profile of a series of developments in the third-party funding market, Vannin now has £100m available for this year – four times that originally planned – while Harbour has successfully closed a new fund, raising £120m of new capital.

Bramden Investments, which backs Vannin, originally allocated four years of funding at £25m per year. However, the company said that due to the volume of business the funder is receiving, this has now been increased to an overall facility of £100m to be drawn down when required and will be reviewed again, upwardly, within 12 months.

Vannin, which launched in June 2011, said it has already committed in excess of its original year one allocation of £25m. The revised capital figure will see Vannin expand in the US, where it has already signed some high-profile cases.

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

Harbour’s new fund’s portfolio is expected to comprise over 50 cases with a minimum claim value per case of £3m. The fund has a six-year life span, with a targeted spend of over £40 million per year over its three-year commitment period. Investors in the new fund include endowments, family offices, private wealth managers and high-net worth individuals.

In 2010 Harbour closed its first found, worth £60m, and said that last year alone it invested £40m in claims worth in excess of £1bn. While its main focus is the UK, it is already funding cases in the US, Channel Islands, New Zealand and the Caribbean.

Harbour chief executive Brett Carron said the regulatory environment since the publication of the Jackson report and the formation of the Association of Litigation Funders has “definitely advanced the acceptance of litigation funding to the highest levels of the judiciary”.

Susan Dunn, head of litigation funding at Harbour, added: “While we expect an increase in the use of funding for commercial litigation in the UK and other jurisdictions, there is a long way to go. We estimate that only 10% of litigators have used litigation funding.”

Elsewhere in the market, Woodsford Litigation Funding has acquired IM Litigation Funding – which pioneered third-party funding in the UK – including the name, its goodwill, website and ongoing rights relating to certain invested claims.

Annual results from AIM-listed funder Juridica, which is mainly focused on the US, showed total cash profit up 578% to $12.9m (£8m) for 2011 through the full or partial settlement of six cases. It currently has 18 investments worth $155m in 23 different competition, patents and commercial cases.

Burford Capital’s 2011 results, also released last month, showed that the London Stock Exchange-listed funder generated $15.9m in profit in 2011, a 965% increase on 2010, from nine cases which concluded. Buford, which has now formally completed its acquisition of after-the-event insurer Firstassist to pave the way to invest in UK litigation, invested $180m in new litigation last year.

Finally, Therium Capital Management has agreed its first mandate to manage an account for an institutional investor. Therium will act as exclusive investment adviser for this investment of an initial £5m fund in a portfolio of litigation and arbitration claims. It is the parties’ stated intention, in due course, to increase the size of the fund to up to £15m.