Tech comes to litigation funding

Litigation in the UK has seen remarkable growth over recent years. In the Litigation Finance Survey conducted by Burford Capital, use of litigation funding amongst lawyers has increased from 10% in 2012 to 32% in 2018. In 2015 the size of this market was circa £1.5billion, a figure that has now increased dramatically. Yet it is a market that has seen little to no improvement in the way business has been transacted, making it unattractive and difficult for solicitors to use…until now. 

In late 2019, Sentry Funding Limited (Sentry) launched the UK’s first litigation portal with the aim of making litigation funding and After the Event (ATE) insurance, that covers the legal costs of a claim, mainstream products.  

We asked Sentry five questions to understand how they propose to change this growing market.

What does Sentry do?

Sentry operate a software as a service (SaaS) platform called CLAS, that uses sophisticated technology to bring together a large number of litigation product providers. This makes it easier for solicitors to comply with their regulatory duties and obtain funding and/or ATE insurance.

CLAS is free to use and its main features include:

• the largest panel of funders and ATE providers on one platform, currently there are over fifteen
• a panel of funders that can fund cases from £5k to £10million
• a sophisticated algorithm that provides a funding and/or insurance decision in minutes
• bespoke and editable compliance reports
• electronic trading files that operate within a regulation ready process
• exclusive products that are cheaper for the client
• a fifteen day service standard from application to funding agreement/insurance policy.

How is CLAS better than what is already available?

First, it is important to understand how the current market operates. If a solicitor is looking for funding and/or ATE insurance, they tend to only approach the company they have a relationship with. Typically, the solicitor would phone the provider and then, if it’s a positive response, supply them with a synopsis of the evidence held on the case. Several weeks later, after a lot of “toing and froing”, the provider will give the solicitor a decision, which the majority of the time is a ‘no’.

Shockingly the industry standard is that only 4% of applications obtain funding and/or ATE insurance. This may be because solicitors do not know which funder or insurer to approach as all providers tend to say that they look at cases on a ‘case by case’ basis and do not publicise their actual criteria.

By using CLAS, the solicitor can obtain a decision in principle from all the providers within minutes. The solicitor answers a number of questions about the case and then a sophisticated algorithm can place the case with the funder/insurer that best matches the case criteria. CLAS will provide the solicitor with true market analysis and aims to have at least a 90% application to completion ratio. Once the solicitor progresses the case, all the dealings are direct with the provider through an electronic trading file, speeding up the whole process.

How does CLAS help with compliance?

The SRA Code of Conduct is clear that solicitors have to advise their clients on the various options that are available to pay for their litigation at the outset of the case. CLAS produces an automated report that the solicitor can provide to their client to explain the options and thus satisfy their compliance obligations.

With so many providers now in the market, it is imperative that solicitors can demonstrate that they have looked at the whole market on pricing alone. Pricing is also now a huge factor because funders have different pricing methods. Some charge a percentage of the award, whereas others just charge a return based on the funded amount. On larger cases the difference can run into hundreds of thousands of pounds. When a case fits the criteria of several funders, CLAS will then obtain the rates that they would each charge, supplying the solicitor with a price comparison.

Is it more expensive for the client to use Sentry?

No it is the same, but Sentry is also delivering exclusive products that are either cheaper or have more benefits for the client. For example, Sentry has an exclusive funding product where the pricing is fixed at 3% per month and takes nothing of the award. This is one of the cheapest rates available.

How do solicitors use Sentry?

Solicitors need to go to the Sentry website and register to use CLAS, which is free of charge for solicitors. When CLAS is used correctly, solicitors and their clients will be able to source funding and ATE insurance in a time effective and straightforward way.

Written by Jenny Screech and Tony Webster from Sentry Funding Limited