What are the Key Security Features of Small Ticket Litigation Funding?
Litigation funding is a distinctive and growing asset class that has attracted significant investor interest. Setting it apart from traditional assets are its unique security features. Fenchurch Legal has enhanced its offering further with key features aimed at minimising risk and maximizing protection.
Charge & Assignment over Case Proceeds
Fenchurch Legal takes a fixed charge and full assignment rights over all present and future case proceeds. All proceeds paid out by defendants on successful cases form part of the security that Fenchurch Legal take, to ensure sufficient repayment of the loan against the case.
After the Event (ATE) Insurance
We only fund cases with active ATE insurance cover, that covers all legal costs and disbursements on unsuccessful cases. Fenchurch Legal advances the premium directly to the ATE Insurer, ensuring cover is in place for each funded case. This specialised insurance policy is key to investment protection, as it mitigates the risk if the case is unsuccessful. Fenchurch Legal always have an assignment over the insurance proceeds.
Upfront Interest
Fenchurch Legal charges 12 months of upfront interest on each loan before disbursed. This means the upfront interest is retained on drawdown. This structure ensures income from borrowers is available for interest payments throughout the year, irrespective of the case’s outcome and timeframe of settlement of the case.
Debentures
In addition to case and insurance proceeds, Fenchurch Legal takes fixed and floating charges over all of the borrowers’ assets in the form of a debenture. This grants a legal charge over the law firm’s assets – creating additional security as collateral, reducing the associated investment risk.
Personal Guarantees
For all facilities provided, Fenchurch Legal require personal guarantees to be pledged by the law firm’s shareholders. This personal liability adds another layer of commitment from the owners to ensure the facility is repaid in full and provides further recourse should there be any repayment shortfall. This additional feature demonstrates the law firm’s own confidence in the case.
Diversification
Fenchurch Legal focuses on funding small-ticket claims at high volumes across multiple law firms and against different claim types, rather than concentrating on a few large ones. This diversification strategy spreads the investment risk across multiple cases, case types, and law firms, reducing the impact of any single case’s outcome. Spreading capital across multiple claims minimises risk and enhances portfolio diversification.
Proven Track Record and Processes
In addition to these key security features, Fenchurch Legal boasts a strong track record of success, with a proven business model in the small-ticket litigation funding market.
Our rigorous processes involve:
- Onboarding: Meticulous assessment of borrowers before funding, ensuring they meet our stringent criteria. Our expertise and experience reduce the likelihood of unforeseen challenges and enhance investor security.
- Monitoring and Auditing: Our risk management involves continuous case and firm monitoring, allowing for swift intervention and ensuring investor interests are protected.
Conclusion
As investors increasingly recognise the potential of small ticket disbursement funding, Fenchurch Legal’s combination of ATE insurance, upfront interest, debentures, case diversification, due diligence, and ongoing risk management creates a robust framework. This framework ensures risk minimisation and maximizes capital protection.
If you’re interested in exploring the potential of litigation funding and how Fenchurch Legal can enhance your investment strategy, contact us for more information.
