When we set about creating Erso Capital we deliberately sought a wider investment mandate as we could – one that is broader than most litigation funders historically. This has been reflected in the variety of opportunities we’ve progressed since launch. These investments have included financing large group litigation, international arbitrations, trusts disputes, contract disputes as well as several matters involving IP rights.
We thought it might be useful to elaborate on our preferred target investments albeit this is by no means exhaustive.
Single Case Financing – EMEA, Asia Pacific and North America.
Many of the investments Erso considers are to fund the legal fees and expenses in commercial cases, whether litigations or arbitrations. The typical investment size ranges from GBP £250,000 to £15m.
Like many funders, we need a case to tick several boxes, namely:
- Strong legal merits and good overall prospects of success;
- Economic viability: the expected recovery should be sufficient to enable Erso to make a reasonable return whilst leaving the claimant with the significant majority of the total recovery;
- Collection: a financially sound defendant/respondent against whom a judgment can be enforced; and
- An experienced legal team
We endeavour to be as flexible and adaptable where possible. For example, we have no minimum ratio between budgeted legal costs and realistic damages. Instead, we work creatively to explore options to limit our funding to only a specific portion of the overall budget, meaning we can potentially find ways to finance cases where full funding would be uneconomic.
The types of cases we can consider expands across the spectrum of commercial disputes, including:
· Arbitration (both domestic and international);
· Patent and other IP infringement disputes;
· Shareholder actions;
· Claims arising in insolvency;
· Negligence or breach of duty claims; and
· General business to business contract disputes.
UK & European Group Litigations
In Europe and the UK, we’re keen to consider a variety of collective action/group litigations including securities; competition breach; data privacy and mass consumer claims.
Our typical investment size in group litigations ranges from GBP £5m to £25m. We’ve structured arrangements that in addition to funding the legal fees and expenses, also include a budget allocation for the book-building phase.
Our investments in group litigations can be made either directly to the claimant group or behind a law firm operating on an alternative fee basis.
Given our affiliation to TheJudge, we’re also prime placed to give our clients a competitive advantage when it comes to securing adverse costs insurance. TheJudge has been ranked Tier 1 for the second year running by Chambers & Partners. The availability and pricing of ATE insurance are proving to be the critical factor for the viability of group actions and we anticipate it will also be a vital component for so-called carriage disputes too when determining which representatives will represent a class of claimants.
Law Firm Portfolio Financing – EMEA, Asia Pacific and North America.
Erso is actively considering a number of portfolio financing opportunities internationally. Many of these are centred around law firms who are seeking a partial equity release from their existing contingency cases, whilst also putting in place a robust financial arrangement to allow them to expand their onward book.
Our portfolio finance can range from supporting a single specialist team within a wider disputes group (e.g. arbitration, IP, insolvency, competition etc) or a portfolio for the whole disputes team whether regionally or globally. Investments are tailored to the needs of the firm. We can provide law firm portfolio capital ranging from single-digit millions to £100m+ depending on the profile in question.
Corporate Portfolio Financing – EMEA, Asia Pacific and North America.
Corporate portfolio financing can encompass a number of different deal types. While, on the one hand, it can simply be a funding facility for a number of existing and/or future disputes. On the other, it may ultimately have little to do with funding litigation and instead be a mechanism to raise capital for other business purposes or to provide an exit for existing equity holders.
We can provide corporate finance ranging from GBP £20m to £250m. This could be structured to simply finance a group’s existing legal spend, or it could be used to monetise the potential value attached to the group’s portfolio of cases. This allows the group to pull forward the value of its existing cases whilst the funder takes the ongoing litigation and longevity risk in return for a share of any recoveries subsequently realised.
Our appetite and financing capability is very broad.
Should you have an opportunity that you feel would fall within our appetite then we’d be keen to hear from you.