Caprica, a new litigation funding company, is the brainchild of Thomas Miller
, a new alternative litigation funding company, has launched as a dedicated litigation funding business to claimants whose access-to-justice might be impaired by the announced package of Ministry of Justice (MoJ) reforms.
Caprica is the brainchild of Thomas Miller, which has secured backing from banks and other investors for the new venture. Thomas Miller believes this institutional investor support gives Caprica an unrivalled access to capital to fund a wide range of cases. Caprica aims to invest approximately £100m in the medium term. It is believed to be close to funding £15m of pre-launch generated cases.
The impressive capacity and pre-launch numbers are testament to Caprica's funding model which, it believes, is distinct from existing Third Party litigation funders for the following reasons:
- The funding is significantly more competitive than traditional funding
- The funding fee is not related to damages recovered
- It has extensive capital backing supported by Thomas Miller's highly-experienced legal risk assessment team
- No exclusivity required during due diligence
Caprica intends to redefine the current funding market by offering a responsive service and a competitive pricing model with a funding fee that is not related to the client's damages. It is so confident about its business and pricing model that it does not insist on a period of exclusivity while it conducts due diligence thus enabling claimants to shop around freely.
Caprica's business model has been designed with the MoJ reforms in mind by extending the availability and affordability of funding for many businesses which might otherwise find it difficult to pursue their legal claims through the courts following implementation of the reforms. It hopes its "Alternative Litigation Funding" will enable litigation funding at last to be recognised as an 'accessible option for mainstream litigation' as envisaged by the Civil Justice Council in 2007.
It will consider cases with funding requirements from as low as £50,000 compared with many Third Party Funders' usual starting point of around £500k. As a result Caprica would consider funding a wide range of cases ranging from SME disputes through to major commercial disputes, bi-lateral investment treaty arbitrations, and securities litigation.
Litigation funding and ATE insurance specialists,
have been instrumental in helping to bring Caprica and others to the market and are supporters of the "Alternative Litigation Funding" concept, recognising that a changing market needs an innovative and sustainable response.
James Delaney, Director at TheJudge, advised:
"Few could argue that the litigation funding market has not expanded with the pace that some early commentators envisaged. Conceptually it sounded ideal, third parties paying lawyers' fees. But extreme selection and high pricing have prohibited the growth of the market. That's not a criticism of funders in the market, on the contrary some are doubtless doing well, but if the market is truly to be embraced by litigators and claimants, market adjustments will need to occur. Caprica is a positive step in the right direction and will hopefully lead to much-needed price competition."
Bruce Kesterton, CEO of Thomas Miller added:
"When we looked at the litigation funding market we were adamant we would only get involved if we could fundamentally reshape it with a funding solution that works not only for the complex high damages cases but also smaller business disputes.
"We felt the present funding market did not have mainstream appeal. Many of the lawyers we spoke to during the planning phase were very disillusioned with the current market advising that litigation funding was something they would only recommended to a financially-distressed litigant.
"The MoJ's proposal to remove the recoverability of success fee on conditional fee arrangements and ATE premiums has chimed perfectly in our view with the introduction of a lower cost funding model. For many the economics of running litigation is going to become increasingly complex and it will be incumbent upon lawyers to steer their clients to the most economic funding package, which we believe is unlikely to be offered by a traditional third party funder but will be provided by an alternative litigation funder such as Caprica."
Frits van Kempen, of Caprica Management Limited commented:
"Price is a key point of difference for Caprica. We've typically come in at less than half the cost of many traditional funders. Are we taking a risk on price? We don't believe so. In fact we think there is arguably a greater risk in demanding too high a return, which then reduces the deal volume. Litigation is highly unpredictable. Our strategy, therefore, is to secure a large well-diversified portfolio of risks ranging from small to large disputes."
The launch of Caprica has attracted positive comment from the legal sector:
"A lower-cost funding solution is something any lawyer discussing options with clients must consider. There is a significant risk to lawyers, particularly those involved in heavyweight cases if they steer clients to high cost damages-based funding agreements before considering competitively-priced alternatives. I suspect we might well see cases in the future where clients will be suing former legal advisors because they gave up such a significant share of their proceeds despite more competitive funding packages being available."
Nigel Mallett, Chief Executive of the Professional Negligence Lawyers Association.
"Many traditional litigation funding terms would not be of major interest to large institutional clients. The high cost of funding can be a barrier to take-up in major litigation and arbitration. If Caprica is bringing to market an alternative litigation funding proposition which is more competitive on price then it's something we will have to look at carefully with our clients."
Richard Leedham, Head of Litigation at Addleshaw Goddard LLP.
"Some current litigation funding models could alienate claimants involved in small and medium-sized business disputes. We say this in our position as Pannone, but also from shared experiences with lawyers in Connect2Law, a network of 2,500 law firms. It's refreshing to see a funder emerge that is seemingly determined to shake the market up and provide SMEs with greater access to funding and justice."
Paul Jonson, Head of Dispute Resolution at Pannone LLP.
Links to Caprica in the press:
Law Society Gazette: