Start-up credit provider Capital & Centric Funding has moved into the litigation funding and disbursement funding markets, reckoning there is scope for fintech to improve on current offerings.
The company is using a managed investment scheme for funding purposes, issuing an information memorandum for the Capital & Centric Funding Trustee Unit Trust last month. The fund’s investment objective is to pay returns of 8 to 8.5 per cent a year from a diversified portfolio of litigation claims.
Litigation funding involves a party not otherwise involved in the claim funding the proceedings in return for a share of any judgement or settlement. If the claim is unsuccessful, the funder does not receive a return.
Litigation disbursement funding is a loan arrangement guaranteed by the law firm that allows claimants to pursue personal injury and other claims.
Capital & Centric sources claims from “a small panel of well-known law firms”. The only one it named is Sydney firm Longton Legal.
The fund will consider litigation funding for commercial disputes, claims by insolvency practitioners, class actions, domestic and international arbitrations and patent infringement claims.
It will offer disbursement funding to law firms that routinely carry the costs of disbursement.
Capital & Centric founder and chief executive Mona Chiha said the company does its own internal evaluation of funding opportunities as well as relying on external counsel specialising in relevant areas of the law.
Chiha, whose background includes finance broking, IT services and software development, said Capital & Centric’s software incorporates artificial intelligence in its assessment process.
“There is room for improvement in litigation funding. Capital & Centric has developed applications that provide transparent and compliant financial information. The system uses algorithms to streamline investment tracking, risk management and reporting.”
The Morrison government had developed new regulations which would have imposed tougher rules on litigation funders. The proposed changes were abandoned with the change of government last year.
Chiha said Capital & Centric holds an Australian financial services licence, which was to have been one of the Coalition’s requirements.
“I support a strong approach to compliance. It is good for all parties involved,” she said.