Paul Havenhand outlines the benefits of commercial litigation funding.
The fundamental benefit of commercial litigation funding is that it provides up-front capital to help cover the costs of pursuing a claim. For some Law Firms the cost of litigation can be restrictive. Even when there are bona fide claims that could produce substantial returns, claimants are sometimes forced to settle for pennies on the pound or abandon cases because of the associated legal expense of continuing to trial. Litigation funding solves this problem by financing cases and generating a return on its investment only if, and when, the matter is successfully resolved.
In the first instance litigation funding can remove any monetary concerns, but it also allows the legal team to concentrate on the case and can improve the chances of winning. There’s no doubt that using commercial litigation funding can minimise the financial impact on companies. Operating a profitable law business is tough as costs can be high, expectations are high, and clients, seeking redress for injury for a vast swathe of reasons rarely understand the challenges involved to give them the best possible chance of winning. That’s why commercial litigation funding exists. At BMS Funding we have many years’ experience innovating within the legal sector. Our mission is to help ambitious Law Firms deliver the best possible service to their clients whilst maximising the Practice’s profitability and strengthening their cashflow. Any good commercial litigation funder will have an approach which is flexible and to ensure delivery of the best advice to clients, whilst remaining commercially astute.
At BMS funding our founding partners have many years’ experience innovating within the legal sector. Their vocation is a simple one – to help ambitious Law Firms deliver the best possible service to their clients whilst maximising profitability and strengthening cashflow. The adage that “Cash is King” has never been truer, and at BMS Funding we typically work with Law Practices operating in; Personal Injury, Medical Negligence, Commercial Litigation and Housing Disrepair. The structure of those firms that BMS Funding are best placed to assist include; new Law Firms and high growth start-ups, established Law Firms with ambitious scale-up plans and traditional Law Firms who want to free-up capital to fund future growth.
Traditionally, finance has been found from partners, bank loans and through finance leases. But with the sums now required, these avenues may be insufficient. The cost of commercial bank lending has also now returned to more realistic levels, with increased interest rates eating into margins. This may deter some firms, just at the time they should be seeking funding to invest. Essentially Law Firms are businesses and a successful business needs the cashflow to invest and drive forward.
At BMS Funding our proposition is two-fold. We are appealing to both Lawyers who wish to provide a funding solution to their clients, but also directly to the clients who have a commercial litigation case they wish to pursue and or fund. We can provide a funding solution that caps the client financial exposure to £20,000 on any litigation case that we accept. All additional costs are paid for via BMS funding partners. These include 40% WIP, expert costs, court fees and ATE premiums and interest on the money loaned. It means from the client perspective it gives certainty on their cost exposure and from the Lawyer’s side, they don’t have to fund it themselves, or turn away clients who haven’t got sufficient funds to run a case.
Times are changing. For many businesses, litigation is no longer perceived as a ‘distress purchase’, i.e. hiring a litigator when they’re in trouble. Claims can be hidden assets, which can be recovered without risk through commercial litigation funding. For many businesses it’s about shifting risk and using what working capital they have for other areas of their business. At BMS Funding we recognise this opportunity for Law Firms, and with a strong desire to shake up the current funding market which can be sluggish, expensive and exclusive we aim to provide a simpler, easier approach to garnering finance. There are now more opportunities to take on a larger volume of cases for some Law Firms, and that needs a somewhat bigger funding commitment. Setting a cap on client liabilities makes the BMS Funding solution unique as its ideal for lower value cases of £200K plus, through to multi-million-pound projects.
When a commercial litigation practice has a good claim for a client, they are no longer hamstrung by heavy ‘underwriting’ procedures by bankers, insurers and their respective legal teams. This affords them greater control over solving their client’s problem. If they believe they can win a claim, they can get it funded and insured quickly and more cheaply than before. In short, it also provides an in-road into solving the access to justice problems. Winning a claim is essentially problem solving and easy to access funding from companies like BMS Funding can often be a large part of the puzzle. It’s crucial to have access to the right lawyers. The cost of the process is certainly crucial, as is financial support to take the case all the way by removing lines of defence which can include: stalling, security of costs and trying to out-cash the client. It seems crystal clear that external funding is ultimately the way forward and is here to stay. The demand resonating from the legal industry is clear and a simple, quick and effective funding mechanism from companies like BMS Funding can enable Law Firms to seek new business without the handicap of chasing cashflow while negotiating over historic costs incurred.
The commercial litigation market is very solid right now. Funders in the market place are booming as clients seek to offset the risks of cases through third party funding and are willing to forego some of their damages to do just that. To avoid losing out business people need to manage risk. Currently they aren’t certain of the costs, and what their exposure is. So, they can’t assess risk versus reward. At BMS Funding our product range gives them that certainty. It also provides Law Firms with the knowledge that their client has the resources to take a case to the end.
It’s not just all about fighting for justice, the bills need to be paid too. Increasing capital with reducing risk should be at the very heart of any plan for growth and that’s exactly where BMS Funding can play a crucial role as the funding we supply is free. At BMS Funding we provide the cash for businesses to deliver the utmost professional service for their clients, with no consumer credit agreements, so firms can focus on what they do best, whilst business takes care of itself.
Paul Havenhand, Managing Director, BMS Funding is a Finance and Insurance specialist with an impressive track record of delivering transitional change and corporate growth within blue- chip and corporate companies. Paul has been instrumental in the evolution of BMS Funding and its development of a broader suite of funding solutions to support an evolving legal services market.
For more information and to explore the wide choice of funding options available call 0333 212 7151 or visit our commercial litigation funding page.