WHAT IS LEGAL FINANCE?
Legal finance, is known by many names, most commonly called a combination of legal/litigation/dispute/third-party and finance/funding.
It is effectively providing upfront capital by a funder to the claimant of disputes or litigation in order to pay for their lawyer's fees, court fees, disbursements, expert witnesses and other associated costs, in return for a portion of the settlement or adjudicated award. Legal finance can also be structured so it pays for any adverse cost in some jurisdictions when a case is unsuccessful, effectively providing insurance but with no insurance premium paid. It can also be upfront capital to law firms working on contingent fee cases to fund their working capital also in return for a portion of their share of the settlement or adjudicated award.
Legal finance is unsecured, non-recourse funding. This means that there is no liability to the borrower of the funds should the case not succeed or need to attach any assets in order to gain funding. In addition, legal finance providers are not permitted to control the direction or strategy of the case, unless the case is purchased rather than funded. In funded cases, the funder can provide advice on request but it is wholly up to the claimant and their legal representation to decide on the direction of the case.
It is effectively providing upfront capital by a funder to the claimant of disputes or litigation in order to pay for their lawyer's fees, court fees, disbursements, expert witnesses and other associated costs, in return for a portion of the settlement or adjudicated award. Legal finance can also be structured so it pays for any adverse cost in some jurisdictions when a case is unsuccessful, effectively providing insurance but with no insurance premium paid. It can also be upfront capital to law firms working on contingent fee cases to fund their working capital also in return for a portion of their share of the settlement or adjudicated award.
Legal finance is unsecured, non-recourse funding. This means that there is no liability to the borrower of the funds should the case not succeed or need to attach any assets in order to gain funding. In addition, legal finance providers are not permitted to control the direction or strategy of the case, unless the case is purchased rather than funded. In funded cases, the funder can provide advice on request but it is wholly up to the claimant and their legal representation to decide on the direction of the case.
IS LEGAL FINANCE AN ATTRACTIVE ASSET CLASS?
In our opinion it is. The IRR (Internal Rate of Return) is often higher than venture capital (VC) and with arguably reduced risks.
There are numerous reasons for this including - lower competitive environment for investments compared to VC, the unsecured and non-recourse nature of the investment, a more binary investment outcome, higher risk taken on by providing additional features like adverse cost protection and in most cases, the funder has no control over the direction and strategy of the case, which can effect settlement amounts and timing.
On the other hand, funders "cherry-pick" cases. Evidence provided by publicly listed funders in which Orington can invest in, have case selection success rates of 70%-90% (defined by any positive settlement or adjudication). These long track records have been established over 10-20 years.
There are numerous reasons for this including - lower competitive environment for investments compared to VC, the unsecured and non-recourse nature of the investment, a more binary investment outcome, higher risk taken on by providing additional features like adverse cost protection and in most cases, the funder has no control over the direction and strategy of the case, which can effect settlement amounts and timing.
On the other hand, funders "cherry-pick" cases. Evidence provided by publicly listed funders in which Orington can invest in, have case selection success rates of 70%-90% (defined by any positive settlement or adjudication). These long track records have been established over 10-20 years.
DOES LEGAL FINANCE CONTRIBUTE TO A MORE POSITIVE ENVIRONMENT, SOCIETY & GOVERNANCE (ESG)?
Yes, in our opinion. Legal finance first and foremost can provide access to justice whereby cost was a significant inhibitor. By providing access to justice, it increases enforcement of rule of law and thereby should increase governance within society. Case matters for which a case/dispute is brought may revolve around environmental destruction, livelihood impact, fraud, professional negligence, breach of contract, insolvency resolution and many others. Enforcing the law in each of these types of matters often contributes positively and can assist in righting wrongs.
CAN I INVEST WITH ORINGTON CAPITAL?
Orington Capital from time to time have opportunities where we recycle part or full assets before the maturity of the investment. We partner with sophisticated buyers to complete a transaction. In addition, we may syndicate these assets to offer smaller block sales. In all cases where Orington does not sell the asset in its entirety, Orington will continue to hold a majority of the investment ensuring there is continued alignment of interest for successful outcomes.
Please reach out to us via the email icon in the footer should you have opportunities you feel we may be interested in. We also currently have available opportunities to discuss with interested co-funders and buyers.
Please reach out to us via the email icon in the footer should you have opportunities you feel we may be interested in. We also currently have available opportunities to discuss with interested co-funders and buyers.
WHO SHOULD BE INTERESTED IN ORINGTON CAPITAL?
1. Litigation funders looking for equity or hybrid-debt investments in their firms.
2. Litgation funders looking to syndicate portions of individual cases or of their entire portfolio in order to recycle capital quicker and potentially increase their return on invested capital (ROIC).
3. Law firms working on contingent cases who require working capital or wanting to reduce the risk exposure by syndicating individual cases or their entire portfolio of contingent cases.
4. Brokers who can provide Orington greater access to investment opportunities.
5. Investment firms who are keen to expand their product offerings into legal finance and require or prefer an established platform to do so.
6. Sophisticated investors seeking to buy full/part blocks of Orington's legal finance assets they may come up for sale from time to time. We currently have available opportunities to discuss with interested parties.
2. Litgation funders looking to syndicate portions of individual cases or of their entire portfolio in order to recycle capital quicker and potentially increase their return on invested capital (ROIC).
3. Law firms working on contingent cases who require working capital or wanting to reduce the risk exposure by syndicating individual cases or their entire portfolio of contingent cases.
4. Brokers who can provide Orington greater access to investment opportunities.
5. Investment firms who are keen to expand their product offerings into legal finance and require or prefer an established platform to do so.
6. Sophisticated investors seeking to buy full/part blocks of Orington's legal finance assets they may come up for sale from time to time. We currently have available opportunities to discuss with interested parties.