Continuing to add new cooperation partners and increasing the investment opportunities for investors, Mintos is pleased to announce a new lending company from the United Kingdom – Fenchurch Legal.
Fenchurch Legal is a UK-based specialist in litigation financing, offering a flexible funding solution to UK law firms to fund small ticket ATE (“After the Event”) claims. Each of the company’s disbursements is insured by an ATE insurance policy.
After identifying a significant gap in the UK small ticket – high volume litigation funding marketplace, Fenchurch Legal launched its business in 2020 and began providing funding to law firms that specialize in ATE claims. While in continental Europe litigation funding is not as widespread due to a different legislation system, in the UK, US, and some other countries this industry is growing rapidly. According to recent reports, the market is expected to grow at a CAGR of 8.3% and is anticipated to reach around €18.3 billion by 2027. Moreover, reports show that in the UK, the litigation funding market has doubled over the past three years as the pipeline of court cases and cash held by litigation funders in the country hits €2.3 billion.
Fenchurch Legal’s unique product
The company’s clients are small UK SRA-regulated (“Solicitors Regulatory Authority”) law firms who take on cases such as housing disrepair, personal injury, and pension mis-selling claims. Housing disrepair claims against local councils make up the biggest percentage of cases that Fenchurch Legal has funded. An average loan provided is approximately €3 500, with an average term of 6 to 12 months. By only funding small ticket ATE litigation cases, a high level of diversification is created as a large volume of smaller cases can be funded. To date, the company has funded over 2,500 individual cases totaling over €9.76m.
Fenchurch Legal only funds claims that have an active insurance policy in place and a loan agreement whereby all rights to the claim proceeds and the insurance proceeds are appointed directly to the company by way of security. All cases funded by Fenchurch Legal that are taken on by a law firm have two potential outcomes: either the claim is won and the loan is repaid by the defendant, or the claim is lost and the insurance covers the loss and pays Fenchurch Legal on behalf of the law firm. The security features from the ATE insurance policy make funding the cases significantly more attractive to a litigation funder.
When onboarding a new law firm, Fenchurch Legal undertakes extensive due diligence on the law firm, its personnel, systems, processes, and strategy as well as performs ongoing monthly performance monitoring to ensure there is a strong loan book.
Louisa Klouda, Managing Director of Fenchurch Legal said: “We are delighted to be joining the Mintos platform, offering Mintos’ investors access to a new and unique opportunity not seen on the platform before. The impact of the pandemic has been highly damaging and throughout the year we have seen law firms experience an increased demand for their services, hence resulting in increased demand to fund the cases. Our mission is to become among the foremost experts in the UK litigation funding industry by building proactive relationships with law firms. Our company aims to grow the portfolio to at least £40 million over the next 2 years and we’re sure the strategic relationship with Mintos will help us achieve that.”
Fenchurch Legal business loans on Mintos
Annual interest rates
Up to 11%
Average loan amount
€3 500
Non-performing loans ratio (PAR 60*)
0%**
Average loan term
12 months
Skin in the game
10%
Mintos Risk Score
6
Buyback obligation
Yes
Penalty fee on delayed payments
0.0055% per day
*Portfolio At Risk (overdue more than 60 days).
**Since all legal claims are either (1) still in the court process, (2) already won and repaid, or (3) lost and covered by insurance, there haven’t been any loans overdue for more than 60 DPD.
Fenchurch Legal’s loans on Mintos will be listed as business loans. Following borrower’s payment schedule where the interest is charged upfront (deducted from the total loan amount before disbursement) and capital return at maturity (or prepaid early in case of early case termination), the loans on Mintos will be listed with a discount, and both the interest and principal will be distributed to investors when received at the end maturity date. There’s an assignment of loans placed on Mintos, a pledge over a bank account, and a group guarantee by SHP Capital, Fenchurch Legal’s parent company.
The Mintos Risk Score for Fenchurch Legal loans on Mintos is 6, the subscore of Loan Supply 7, Servicer 5, Buyback Obligor 8, Structure 5.
How to invest in Fenchurch Legal loans on Mintos
Loans issued by Fenchurch Legal will be added to the Diversified and High Yield strategies. If you want to invest in these loans with a custom automated strategy, make sure to adjust your strategy settings. If you’re investing manually, you can filter the loans on the Primary Market.
