Axiom Legal Financing Fund

The Axiom Legal Financing Fund has passed its first anniversary successfully and the amount of money under management in the fund is growing at an increasing rate.  We are now commencing the next two funding models, which will provide loans to finance cases:

1) for unenforceable credit card agreements as fixed term loans and,

2) against solicitors who were professionally negligent when acting for clients purchasing their council houses. 

The Fund provides short term, fixed interest loans to UK law firms who work on a no-win, no-fee basis.
 
The reasons for the expansion are:
 
1.       We stated at the outset that we would finance more than one type of case
2.       We want to have more diversity of types of case to finance
3.       These new models are explained below and are more profitable than the existing model.
4.       More liquidity is made available to the fund as approximately 20% of the loan capital is repaid every month on the first of the 2 new models and the second model is expected to complete cases in less than 9 months.

• Capital protection, open ended fund.
• Consistent capital growth uncorrelated to stock markets, commodities, property prices or interest rates.
• Target minimum annual growth rates of: 11% (Sterling), 10% (US Dollar) and 10% (Euro)
• Target rates of return are net of all costs and charges to the Fund.
• No entry or exit fees.
• No AMC, performance fee only.
• Secure structure for protection of investor.
• 3 classes of shares. The fund operates in GBP but hedges to USD & EUR.
• Minimum investments are £25,000 or $40,000 or €30,000.
• Monthly dealing

Unenforceable loan and credit card agreements – fixed term loans
 
The first new model will still finance cases where there has been a credit card or loan agreement that breaches the Consumer Credit Act.  The difference between the new model and the original model is that instead of making a loan that is only repaid when the case completes, the fund will make a fixed term loan to be repaid in 4 instalments over 5 months.  The loan will be used to finance the defence of clients who have beaches of the Act in their credit agreements and have stopped making their loan or credit payments and are being taken to court by the lender.  It will be a smaller loan as the client’s lawyer does not have to finance the court costs of initiating an action. 
 
All cases will still be screened through the fund’s auditing software before acceptance and will be insured twice, against loss of the case and against non return of the loan.  The loan from the fund is repaid by the law firm regardless of the outcome of the case, as it will normally be repaid before the case comes to court.  This is good news for the fund as this ensures a regular income to the fund with the rapid turnaround of loans.  It also provides liquidity and greater profit potential.
 
The model has proved to have a high demand from law firms and clients.  The law firms pay a flat fee for the loan of 8%, but the fund is able to turn the money round more quickly as the loans are repaid in instalments over 6 months and do not have to wait for the case to go to court.  The law firms operate a different client charging structure for these loans.
 
Professional negligence on the part of solicitors acting for clients purchasing their council houses
 
The second new lending model relates to financing negligence claims against firms of solicitors.  The claims arise from bad practices adopted by a limited number of solicitors’ firms surrounding “Right to Buy” schemes for council house tenants.  The claims are based on allegations of professional negligence against solicitors arising from a failure by the solicitors to act in the clients’ best interest. 
 
As part of the “Right to Buy” scheme, the local authority was required to provide arrangements for tenants to obtain mortgages, which made the advice of a mortgage broker unnecessary.  Many such ex-council tenants were targeted by marketing companies or mortgage brokers who would charge the tenants a fee, sometimes running into thousands of pounds, for the “benefit” of having the marketing company assist them through the “Right to Buy” process.  These marketing companies would instruct their favoured panel of solicitors to carry out the conveyance of the tenant’s property.  In each case, a solicitor was required to act for both the lender and the tenant purchasing the property and was aware of all of the fees charged by the marketing companies.  The solicitor was responsible for receiving the mortgage monies and distributing the fees to the marketing companies.  The solicitors routinely failed to advise their clients that the fees being incurred by them upon exchanging contracts were excessive and unnecessary.  Nor did they advise their clients of any referral agreement in place between the marketing company or mortgage broker and solicitor.
 
The attractive feature of this model is that it is the negligent solicitors’ professional indemnity insurer who will be dealing with these claims.  The insurers acknowledge the difficulties in which they have been placed through the action of their solicitor clients. 
 
The timeframe for completion and settlement of these cases is estimated to be no longer than 9 months, and could well be less and so there is potential for turning over investment capital more quickly.  All loans will be fully insured to protect the investor’s capital