A recent report stated that the litigation funding market has more than doubled over the course of a three-year period, valued at up to £2 billion, with entrepreneurs eager to invest in this growing sector.
In 2020 alone there were 1.2 million court proceedings issued in civil courts in England and Wales. Tribunals in the same jurisdiction received a further 304,000 cases over the same period. The challenge for funders is to ensure they support cases with high probabilities of success, through transparent investment vehicles.
Axiafunder's litigation funding platform, Europe's first online litigation funder coupled with the UK's first associated secondary market, offers investors just that. Read on to find out more...
Litigation funding - context
Litigation is traditionally self-funded. Some insurance policies may include legal costs coverage, however, the range of alternative funding arrangements, including Conditional Fee Agreements ('CFAs') and Legal Aid, have either limited or no presence in Commercial Litigation, Axiafunder's area of expertise.
The general position is that the successful party recovers litigation costs from the losing party (Civil Procedure Rule 44.2(2)(a)).
However, with even a relatively straightforward case costing in the region of £30,000 to pursue, the challenge for many potential claimants is how to fund proceedings without it affecting their bottom line or personal financial position.
Axiafunder's solution
Axiafunder's litigation funding platform provides investment opportunities in carefully vetted Commercial Litigation claims.
Investors can tailor their investments to align with their own bespoke risk appetites, whilst cases are scrutinised by Axiafunder to avoid exposing investors to undue risk.
Where cases are successful the investor recovers their initial investment, plus a contractual proportion of the recovered damages. Where the claim is unsuccessful there is a risk that the investor loses their capital, unless mitigated by After-the-Event ('ATE') Insurance. For this reason, Axiafunder only markets cases that have been scrutinised by their Case Evaluation Team, with over 3 decades worth of Commercial Litigation experience.
Axiafunder only looks at cases with at least an estimated 65% win/settlement probability, using a sixfold-filter investment approach:
1. Strong legal merit, typically supported by independent Counsel (Barrister) endorsement;
2. Cases with ATE insurance, which protects investors from the effects of an adverse costs order, should the claim be unsuccessful. In addition, ATE providers will independently scrutinise the legal merits of a claim in addition to Axiafunder's assessment;
3. Damages must generally be estimated at or above 5x costs, ideally with a resolution expected within 36 months or less;
4. Defendants have assets against which to enforce any judgment or settlement;
5. Claimants must have a credible legal team in place to pursue the case; and,
6. Interests of the Claimant, lawyers, and investors must align.
In addition, security for costs risk, regulatory factors, adequacy of financing to the end of trial and appropriate pricing must be considered in the assessment process.
In contrast to many traditional Peer-to-Peer lending platforms, Axiafunder has remarkably limited cash drag with limited uninvested cash left idle. Further, to support transparency, investors receive quarterly reports on the progress of their investments and associated cases, presented in a confidential format to comply with Data Protection legislation and Privilege.
Winning a litigated claim more or less ensures the recoverability of a proportion of costs. However, pre-action settlement is often the most preferable disposal of disputes, as this pre-empts negative cost consequences, subject to terms of settlement agreements, whilst recovering the disputed capital sum, although of course many defendants will only agree to a 'fair' settlement in the context of the credible threat of trial that is facilitated via litigation finance. Nonetheless, litigation remains a high-risk high-reward investment and should be only one part of a broader diversified investment strategy.
Axiafunder - Market Disruptor
There is no doubt Axiafunder's successful model is making a market impact, with Cormac Leech, Axiafunder's CEO invited to talk at the latest Litigation Finance Journal Special Digital Event on innovations in Litigation Funding.
However, Axiafunder's launch of the UK's first litigation funding assets secondary market of its kind has consolidated its position as being in a different league from its competitors. The market enables investors to divest their holdings at a time and at a price that suits their investment portfolio. Axiafunder has published recent trading activity across a range of holding classes, and details setting out the simple, swift, and transparent exchange mechanism.
Axiafunder sets out a coherent and symbiotic vision of litigation funding for the future, which presents attractive investment opportunities delivered with robust risk mitigation mechanisms which will give significant assurance to a broad range of investors.
This information does not constitute advice or a personal recommendation and you should seek advice concerning suitability. As with any investment your capital is at risk. Past performance is not an indicator of future results.
