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Cutting out the middle man: Capital Law opens £50m litigation fund

Welsh firm Capital Law has launched a £50m commercial litigation funding service, marking the first time a UK law firm has established its own disputes funding pot.

Publicly launched today (1 February), the fund is secured and will be managed by Capital Law directly, rather than by an external litigation financier obligated to other equity and asset management partners.

The firm will operate cases on a no-win, no-fee basis and, if the claim is won, fees are priced on a bespoke basis but indicative terms are up to 25% of the damages recovered, or up to two times the committed amount. Fees are also staggered to ‘reflect risk and encourage quicker recovery,’ a statement said.

The firm said it is: ‘cutting out the middle man and its associated financial implications’ while the team’s experience in litigation ‘ensures quicker and cheaper funding, with a decision on whether a case should be funded in weeks rather than months, providing far greater confidence and control to the potential litigant.’

The firm handled the high-profile Roadchef dispute, a 17-year long £100m legal battle against the motorway service operator’s former chief executive, Tim Ingram Hill, regarding an employee share scheme. That case was bankrolled by Harbour Litigation Funding.

Capital Law senior partner Christopher Nott tells Legal Business: ‘It took me two years to do this. The partners are used to me going off on bonkers schemes every now and then, so my colleagues gave me a bit more latitude than you might get in a conventionally structured firm. Litigation funding is very clunky – the middle man makes it so. It’s also very expensive. We’ve got a traditional spread of clients and most live in the ordinary world of commerce – the things they need dealing with can range from £100k to £1m – funders only deal with the top end of that.’

He added: ‘When we first became aware of the case the Roadchef employees had against their former employer 20 years ago, it was impossible to finance litigation and the easiest thing for everyone to do would have been settle it cheaply. We believed in the case, and, through funding from the hedge fund, thousands of Roadchef employees now stand to benefit.’

Nott added when realising a claim can be an asset, businesses can now seek to recover that without taking on the finance and risk themselves.

‘As it is controlled and managed by us, it ensures that all decisions are taken quickly and costs involved within a business’ litigation claim can be covered. Its structure and lower cost also enables Capital Law to fund smaller cases that may have been previously ignored, whilst also allowing it to fund larger litigation cases that may have been “written-off,”‘ Nott said.

In other litigation funding news Burford Capital announced in October last year it was investing $30m in US competition law boutique Hausfeld for its office opening in Germany.