Litigation finance company Erso Capital has launched a new sub-funding facility to provide litigation finance to help smaller businesses pursue commercial disputes, particularly in the wake of the pandemic.Erso recognises the need to operate this facility with a streamlined process by comparison to its larger investments. For jurisdictions involving cost-shifting, this will typically mean the efficient and simultaneous arrangement of competitive adverse costs insurance (known as ‘ATE insurance’) to further insulate the claimant from risk in parallel to the financing provided. For this reason, Erso advises the distribution of this new funding facility is in collaboration with its affiliate insurance broker, TheJudge Group. TheJudge Group, which was acquired by Thomas Miller in 2019, is a leading specialist broker operating exclusively in the provision of litigation insurance products including; adverse costs insurance and security for costs solutions; contingency fee/DBA insurance , and judgment/award preservation insurance (designed to cover damages awards against the prospect of appeal or annulments). The SME capital facility will operate in conjunction with TheJudge’s newly established SME disputes team which includes Donna Nortcliffe, a former commercial litigation lawyer from Irwin Mitchell and Kyle Hunter, an experienced ATE insurance professional. The team is led by Emily Thomas, also a commercial disputes lawyer. Matthew Amey, one of the co-founders of Erso Capital, said: “The funding of smaller value disputes is not straightforward. The ratio between the budgeted costs versus a realistic damages valuation is key to the economic viability of an SME’s funding application, as is transactional efficiency. We believe this specialist sub-fund, designed to provide a competitive offering for qualifying cases, along with the newly established team, will combine both capital and operational efficiencies to provide optimal assistance to SME applicants.” James Blick, another of Erso’s co-founders, and head of the US operation, endorses this view in the US: “Many US smaller enterprise businesses have suffered during the pandemic, with any available cash often being directed to the business’ survival. Having the ability to use non-recourse funding to pursue viable legal claims could prove a lifeline for many.” Toronto based President at TheJudge Canada, Nick Robson, said: “Canadian businesses, like all other jurisdictions, have suffered greatly over the past 24 months. We welcome the opportunity to be working with our colleagues at Erso Capital to bring competitive litigation funding to the Canadian market.”While much of Erso’s litigation activity involves funding large scale business litigation and arbitrations, with individual commitments typically running into millions or tens of millions of pounds, Erso believes smaller business disputes are often overlooked and have not been sufficiently catered for by the litigation funding market to date. The SME capital facility will target disputes that require a funding commitment between GBP £100,000 to £500,000 and will initially be accessible to SMEs and individuals acting in connection with commercial activities, who are pursuing cases in the UK, US and Canada.
The move has also been welcomed by litigators. Steven Beahan, Head of Commercial Litigation at Irwin Mitchell in Sheffield, said: “it is refreshing to see a litigation funder that not only invests in cases requiring millions of pounds of capital, but who is also seeking to support those businesses in need of smaller capital amounts, whose legal claims might be no less imperative to the business survival.”