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An LFJ Conversation with Philippa Wilkinson, Associate Director, S-RM

By John Freund |
January 30, 2025

An LFJ Conversation with Philippa Wilkinson, Associate Director, S-RM

Philippa Wilkinson is an Associate Director on S-RM’s Disputes & Investigations team, which is dedicated to providing investigative support to parties to contentious situations. She has experience managing asset tracing investigations, as well as litigation and arbitration support engagements, associated with complex corporate disputes. While her practice is global, Philippa specialises in matters involving Middle Eastern parties, having spent several years in the Middle East, living and working in Tunisia and the UAE. She previously worked as a journalist covering finance and infrastructure in the GCC and wider Middle East, and subsequently covering European infrastructure funds. Philippa has an MA in Near and Middle Eastern Studies from the School of African and Oriental Studies, and a BA in Modern Languages from Durham University. She is a fluent Arabic, Spanish and French speaker. Below is our LFJ Conversation with Philippa Wilkinson. What are the most significant obstacles encountered during asset recovery processes, particularly in cross-border cases? The biggest obstacle is usually the cost of recovery. If the prospect of recovery looks weak or complex at first glance, perhaps because key assets are located in jurisdictions which are not enforcement-friendly, or are held through offshore structures, often the matter is shelved because the client or litigation funder decides it is not a good use of funds. But carrying out some light touch asset tracing at this stage can give the decision-makers confidence that a judgment or award can be monetised, and encourage them to move forward with enforcement or make a funding decision. This can also help funders get comfortable on duration risk, if there are assets which are ‘low-hanging fruit’ and the team can map out a clear path to enforcement. An investigator with asset tracing expertise can provide the information the legal team needs to develop a viable, costed strategy for enforcement and recovery, either by identifying specific assets to target, understanding how and where assets are owned, or instead identifying pressure points and vulnerabilities which will be useful in settlement negotiations. S-RM is acutely aware of the client’s legal strategy. We focus our investigations on the jurisdictions where enforcement is going to be feasible, efficient and cost effective, understanding early that are no attractive assets in a certain jurisdiction, so the whole team can rework their strategy and redirect resources to more viable leads to attachable assets elsewhere. Judgment debtors often decide to dissipate their assets to avoid paying judgments or awards. Pre-action asset tracing and ongoing monitoring gives you a baseline against which to track and document asset dissipation, such as the transfer of valuable assets to proxies (who could be family members or trusted employees), the creation of offshore trusts, and other asset protection structures. If you have carried out a thorough investigation into the asset dissipation and can prove that it is likely to take or has in fact taken place, you can seek worldwide freezing orders in common law jurisdictions such as England, Hong Kong and Singapore to prevent further dissipation, and allowing enforcement against proxies. Often compiling this evidence can be challenging, and this is why you need experts, whether it is obtaining hard-to-locate records in far flung places, using source intelligence to understand the adverse party’s financial position, or developing intelligence on assets. For example, as part of an asset trace in support of a freezing order application, we were told by sources that the adverse party, a shipping company, was using nominees to set up front companies to continue operating ships despite claiming it had no assets to satisfy the award. Following up on this intelligence, we were able to obtain the incorporation documents from the Marshall Islands corporate register and transcripts from the Liberian shipping register, which, on analysis, we found contained a correspondence address linked to the adverse party. These documents supported one part of the legal team’s freezing order application.  Can you discuss how effective asset tracing can reveal hidden value within a portfolio of claims? A portfolio of distressed debt often sits on the balance sheet of a bank, a fund or other entity, and sometimes they are reluctant either to write it off completely, or to invest in recovery. Asset tracing can triage which of the debts might be recoverable, and allow that recovery effort to move forward by making it more attractive for a funder to either finance or acquire. S-RM takes a commercial approach to triaging non-performing loans, focusing on identifying the viable opportunities for recovery. Based on this we can support analysis of how valuable the portfolio might be in the hands of a proactive legal and investigative team. We recently triaged a portfolio of bad commercial debts in the UAE over which the principals of failed companies had provided personal guarantees. When they couldn’t service the debt, they fled the country. We were able to quickly focus on the guarantors who had connections to jurisdictions such as the UK and the US, and owned valuable residential real estate there. Based on our extensive experience of supporting asset recovery, we then classified the debts which made up the portfolio by attractiveness for enforcement, which supported a commercial analysis of the likely return on investment. Following on from this high-level ‘triage’ asset tracing , S-RM supports more in-depth asset tracing efforts once our clients reach the enforcement stage, to ensure that the recovery is maximised by identifying assets and understanding and documenting ownership. S-RM has for many years supported the National Asset Management Agency (‘NAMA’), created by the Irish government in the wake of the 2008 real estate crisis to consolidate bad debt, with asset tracing across Europe to support and inform their negotiations with debtors and recovery efforts. Having successfully recovered nearly EUR 48 billion, NAMA is due to wind up its operations by the end of the year. We are also on the investigations panel for Ukraine’s Deposit Guarantee Fund, which has a mandate to recover funds from its portfolio of distressed assets originating from failures of Ukrainian banks. How have advancements in technology, such as blockchain analysis and digital forensics, transformed asset tracing methodologies? The biggest shift in my opinion is the increasing availability and searchability of data. Some of that is open source or public data – available on the deep or dark web or via data analysis platforms – and with the help of AI search tools we can sift and interrogate that data. In some cases that might be as straightforward as identifying leaked contact details that then lead us on to social media activity that can be a rich source of leads and contextual information about assets. We can also synthesise that data using graphing tools to map out very clearly the web presence and social media interactions of a company or individual, and surface new leads. This can be very helpful in a challenging asset trace where your subject maintains a low profile, or has learned to be discreet about their assets, whereas their associates or family members might not be so cautious. In some instances, we have been lucky enough to find and download leaked documents published by anti-corruption activists and circulated on the web. We then process them in a safe environment so any malware in the data is contained, and then making them machine searchable and translatable using AI tools. Then we are able to map corporate structures that are deliberately obscured and understand how assets are truly controlled. In one recent sovereign asset trace, this type of leaked data showed that government officials were closely involved in the day-to-day management of a state-owned energy firm, directing managers to sign certain politically important contracts in other countries, supporting our client’s argument that the state-owned entity was an alter-ego of the state. In the crypto sector, blockchain explorers play a similar role, to help you navigate and analyse the enormous amount of public data generated by cryptocurrency transactions on the blockchain. When you are working with the victims of crypto frauds and scams, this is vital to understanding the money laundering activity of the threat actors, and getting the recovery process underway. The essential input for this type of work is a wallet ID or transaction hash as a starting point (for example the victim’s original transfer) – without this there is no way to start mapping the transactions. Any investigations firm claiming to be able to identify wallet IDs without such a starting point should be challenged on their methodologies. When we have access to corporate systems, cloud accounts or devices for our investigation, for example thanks to insolvency practitioners, or court orders mandating a search of some devices, the asset recovery team draws on its skilled digital forensics investigators. As part of digital forensic investigations we can recover and analyse a wide range of digital artifacts to guide our research, and also extract large datasets for analysis. Again, with the support of AI tools that allow you to machine read and translate a huge range of documents, and help identify key documents for analysis, we can do this in a much more efficient and targeted way. What legal and regulatory challenges do practitioners face in asset recovery, and how can they be navigated effectively? From the perspective of a corporate intelligence firm, we work closely with legal teams to understand where there are obstacles in a particular jurisdiction and where is attractive for enforcement, adapting our investigation accordingly. We are also very mindful of local laws and regulations regarding how we can work, including privacy laws, regulations on surveillance, and freedom of information laws. In the US, S-RM’s team includes licensed private investigators in New York and Washington DC, and we make sure that we stay in line with regulations on our industry – the lawyers we work with need to feel confident about using our information in court. The direct challenges we face in asset tracing research often relate to shifting laws and regulations around transparency and privacy. For example, in 2021 US Congress passed the Corporate Transparency Act creating a beneficial ownership registry for US legal entities, which we initially hoped might include public access, as such registers are incredibly useful resources for asset tracing, providing documentary evidence of the beneficial ownership of assets. The implementation of the registry is currently on hold while the Supreme Court decides several cases, and there are currently no plans to allow private sector investigators to access the data. Similarly in 2018 the British Virgin Islands and Cayman Islands were forced to prepare to introduce publicly accessible registers of the beneficial ownership of companies. However, since the November 2023 European Court of Justice ruling that public access to such registers infringes privacy rights, the future of access to these registers has been in question. The UK is also planning a new Foreign Influence Registration Scheme (similar to the Foreign Agent Registration Act in the US, which can be a useful source of data around foreign states’ international commercial and lobbying activities, and how funds are channelled) which was intended to come into force in 2024 under the 2023 National Security Act. This can be helpful for developing in-depth analysis on the extent to which a state-owned entity is an alter ego of the state, by considering its participation in coordinated lobbying efforts. This has been delayed indefinitely and we are still waiting to be able to access the data. We are always monitoring for new resources and changes to the way information is accessible, to make sure we are making the most of transparency and anti-corruption laws. Why is a multidisciplinary approach crucial in asset recovery, and how does S-RM integrate various expertise areas in its investigations? At S-RM, we feel we work best when we are an integral part of the asset recovery team, in regular contact with our clients about strategy and working closely with other advisors. That allows us to target our research efforts most effectively and make sure that everything we do is supporting and advancing that strategy. There is nothing worse than investing a lot of time and hard work into following a lead on an asset, only to find that the client was already aware of it or has discounted it for strategic reasons. This can also include working with forensic accountants or insolvency practitioners who have access to internal documents of an insolvent company, and where we can support their work by investigating the recipients of funds and their connections to the company’s principals, or feed in questions for interviews with company officers. In addition, we regularly work with public relations teams, both defensively (to identify and mitigate vulnerabilities that could be exposed by the opposing party), and proactively, to provide intelligence on vulnerabilities that a skilled PR team can build a media strategy to exploit. In that scenario we are looking for pressure points that could bring the opposing party to the table for serious settlement negotiations. This can be particularly effective when an adversary is at an important inflection point with regards to attracting investment, for example states trying to attract foreign direct investment, a company planning an IPO, or a businessperson setting up a new venture or seeking advancement in their career. In all these scenarios, they will want to avoid ‘dirty laundry’ such as corruption or financial mismanagement coming to the surface at a moment when they most need to present their best image to others. We were recently carrying out an asset trace into a US businessman relating to a decade-old debt he was still refusing to settle, and found that he was developing a business partnership with investors in a new European market. This gave us an excellent opportunity to negotiate a settlement, as when the new partners were made aware of this historic dispute they were discouraged from investing. Again, the ideal dynamic when we work with other advisors is regular, open communication, so that the broader team pull together to focus on the most productive approach and make sure S-RM is providing actionable intelligence throughout. Finally, we have a network of surveillance specialists who have law enforcement or intelligence backgrounds, and can be incredibly important in asset investigations. To make the most of such a resource-intensive approach, surveillance needs to be targeted and timed with a specific outcome in mind, rather than open-ended. In the right circumstances, discreet surveillance can be vital to locate an individual to serve a freezing order, or understand the lifestyle and residence of a debtor without tipping them off. Often we need to set up surveillance at very short notice when we learn of upcoming travel or a court hearing, and having trusted, experienced individuals on the ground already is critical.
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John Freund

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LFJ Conversation

An LFJ Conversation with Elena Rey, Partner, Brown Rudnick

By John Freund |
Elena Rey heads the firm’s Litigation Funding group and is a co-head of the European Special Situations team. Elena represents funders, private equity funds, family offices, law firms and claimants on complex cross border litigation funding, investment & special situations transactions, and is recognised by The Legal 500 as a leader in the litigation funding space. Elena is a founder of the Firm’s annual European Litigation Funding conference held in London, as well as the Litigation Funding industry working group, which was created with the aim of preparing model documentation for the litigation funding market. Elena is also a co-author of the Loan Market Association book on real estate finance. Elena is admitted to practice in England & Wales. She holds a master's degree from Harvard Law School and is fluent in French and Russian. Below is our LFJ Conversation with Elena Rey: What was the driving vision behind launching the European Litigation Funding Conference, and how does this year’s agenda reflect the most pressing issues for funders and practitioners in 2025?  At the time there was no forum in Europe for funders and those connected to the litigation funding industry to come together and share ideas. Given our relationships and experienceon both sides of the Atlantic, it felt like a natural step for Brown Rudnick to launch a European conference dedicated to this nascent but growing industry. Our conference is an opportunity to bring together leading players across the litigation funding industry from around the world to discuss trends and developments in different jurisdictions, focus on deals in this space and their origination as well as share knowledge and develop networks. As an advisor to investors, funders and claimants on all matters litigation funding related, we have reflected the issues, opportunities, trends and strategies that we see day to day in the panels. From your perspective, what are the most significant developments in litigation funding across the UK and continental Europe over the past year, and how are those shaping the conversations you expect at the conference?  In the UK,  funders have had to contend with PACCAR and the risk of that decision to historic funding agreements. However, it is anticipated that the CJC recommendations will pave the way for a fix to be enacted that will provide reassurance and certainty for users of funding as well as funders themselves,  which has been lacking and an unnecessary distraction for an industry that is still nascent. Continental Europe is discovering the benefits of funding, slowly but surely, and there is a lot of focus on countries such as Spain, Germany, Netherlands, Italy and the Nordics. There are several promising developments in jurisdictions including in Spain which is looking to introduce opt out collective redress regime for consumers that won’t be possible without funding.  We are also continuing to see strong demand for funding in the Netherlands where the regime is more established. Regulatory reform continues to be a key topic in the sector—how will the conference address differing approaches in the UK, EU, and U.S., and what takeaways do you hope attendees will gain from that dialogue? We have thought leaders from the UK, EU and US who will be sharing their insights on the regulatory developments and potential headwinds facing funders, investors, law firms and claimants who are also impacted. The industry is evolving, and our conference has been successful because attendees gain fresh insights and perspectives from their peers and users of funding as well as investors. The panel discussions cover a broad range of topics. Which are you most excited about, and why?  This is an impossible question to answer for me and it’s our fantastic panelists that make the sessions compelling and very relevant every year. Panels on Group Actions, Law Firm Funding, and European Developments address the key structures and legal issues that are central to the industry and to advancing funded cases. The Private Credit Panel is also consistently one of the most engaging, given the strong interest we are seeing from private equity and distressed debt funds, family offices, and other sources of capital. It is particularly valuable to hear how multi-strategy investment funds view the litigation funding space and how they weigh its risk and return profile against other alternative asset classes Each year we try to include a more light-hearted panel. Last year it focused on the funding of cryptocurrency cases. This year we’ve added a panel called “Trouble” — looking at what happens when a hostile action is taken by one of the parties to a funding arrangement, when a dispute arises, or when some other unusual challenge puts both the funder’s experience and the robustness of the funding documentation to the test. Several recent high-profile deals that went through restructurings have brought these issues into the spotlight, so I expect this will be a particularly engaging panel For many attendees, conferences are as much about relationships as content. What unique opportunities will this event offer for funders, lawyers, and investors to connect and potentially initiate deals? It’s rare for a conference to bring together industry leaders from around the worldconsistently,  and that is the secret of this conference’s success and what is has a strong reputation for. Funders, investors and users of funding know this and that is why they attend, so yes, I expect a lot of deals will be originated at the conference. And because we are not a commercial conference organisation, we are completely focused on the quality of our content and all of our panels are carefully curated to tackle important subjects and panelists are invited because they have something important and relevant to say on that topic. We expect that like in previous years, it will be a standing room only event. -- Click here for more information on the European Litigation Funding Conference 2025.  The event will take place on Thursday, October 9th, and panel discussions will include: 1. State of the Market and Managing Regulatory Uncertainty 2. Private Credit Investment Interest in Litigation Funding 3. Portfolio Diversification and Law Firm Funding Strategies, Risks and Returns 4. Co-funding and Secondary Syndication Strategies 5. Group Actions Landscape - Recent and Upcoming Decisions that Impact Funding 6. Developments in the European Litigation Funding Market 7. Trouble - What Happens When Things Go Wrong & Value Loss Mitigation
LFJ Conversation

An LFJ Conversation with Robin Ganguly, Partner, CANDEY

By John Freund |

Robin Ganguly used to be a litigation funder and insurer, and is now a Partner at elite London disputes law firm CANDEY. Robin has almost 20 years of litigation and arbitration experience. He conducts a broad range of commercial, financial and insolvency disputes and has extensive experience of high-value international cases. Robin acts for large corporates and individuals alike, and is praised by clients for his commercial approach.

Prior to joining CANDEY, Robin spent almost 10 years at Magic Circle firm Linklaters, including secondments at investment bank clients, and four years at Bryan Cave Leighton Paisner, where he led the contentious insolvency practice alongside his broader commercial litigation role. Robin then spent time at litigation funder Burford Capital and in the litigation insurance industry at Aon and Fidelis. Robin is therefore uniquely well placed to assist clients looking to obtain funding and insurance for their disputes, and to advise on disputes in relation to funding agreements and insurance policies.

Robin speaks French, Italian and Spanish. He is qualified as a Solicitor Advocate and can appear himself for clients before the Higher Courts of England and Wales.

Below is our LFJ Conversation with Robin Ganguly:

CANDEY is involved in a wide array of high-value disputes. Can you share some insights into the types of cases that are most challenging or rewarding to work on?

We often work in collaboration with litigation funders to achieve access to justice for clients who have been defrauded and as a result of the fraud do not have funds to pursue expensive litigation. In those situations we use our deep experience of litigation funding and litigation insurance to put together the best structure for the risks in the case to be allocated among different stakeholders, which often means our firm taking on substantial fee risk.

One of our core practice areas is international trusts disputes. These cases are very challenging because they often involve arbitration and litigation in multiple jurisdictions, co-ordinating local firms, freezing injunctions and other emergency applications to attempt to secure assets for enforcement. These are all expensive processes which rely on a law firm (and sometimes litigation funders) to have faith and stand behind their clients for many years to avoid capitulation to the bad actors. When we achieve success in disputes such as these it makes all of the effort worth it.

With offices in multiple international locations, how does CANDEY navigate the complexities of cross-border disputes and international law?

Our cases often involve multiple offices (various of London, New York, BVI, Vienna, and we’ve got plans to open in Asia), and our ability to serve clients internationally is a key reason why clients come to us. In New York our team provides a transatlantic bridge between the US law firms with whom we co-counsel, and the CANDEY teams in other locations, but having one firm that’s able to take ownership of as many jurisdictions as possible ensures things run smoothly. Due to the way we are structured we are able to explore international contingency fee arrangements for clients, in a way that very few other firms can do.

Given CANDEY's focus on lawyers' rights and access to justice, what initiatives are you most proud of, and how do they align with the firm's values?

At CANDEY we believe that everyone should have the right to legal representation so that they can bring their arguments before a court of law. Many firms will refuse to act on certain cases where they fear “biting the hand that feeds them”, or cases where they do not like the potential impact of being associated with certain claimants or arguments, but we feel that if all firms took those views, clients would not be able to test and enforce their legal rights, with a corresponding chilling effect upon the English legal system more broadly.

CANDEY has been vocal in championing the rule of law and refusing, along with the Bar Council, to allow prejudice to prevent anyone from being represented before the Courts on the basis of their race, religion or nationality.

How has CANDEY adapted to the increasing prevalence of cryptocurrency disputes and financial crime, and what strategies do you employ to stay ahead in these evolving areas?

We have a well-established fraud practice and involvement with organisations such as CFAAR in the UK, and we have been seeing increasing numbers of cryptocurrency disputes. These sometimes concern fraudulent investment schemes and in those cases the catch is often obtaining a “book” of victims that is large enough and organised enough to make a case economically viable for a law firm or funder to back. Building the book costs money so it can be chicken and egg. Due to the international nature of cryptocurrency, the cases frequently involve competing claims on frozen assets by different states or prosecutors and therefore have a political dimension which can be difficult to predict.

What are your thoughts on the current landscape of legal funding, and how do you see it impacting the types of disputes CANDEY handles?

The litigation funding market in the UK is experiencing some challenges at the moment. As is the global litigation insurance market (other than ATE) following large losses on complex judgment preservation policies. That makes it increasingly important for law firms to be able to share fee risk, either alongside funders or where funding cannot be obtained. We get a large number of enquiries from clients looking to us to represent them in their cases, big and small, and we are able to use our experience of funding and insurance to be able to advise clients whether the case is likely to attract funding and/or insurance and to put them in the best position to secure it. When enquiries come in, my role can feel very similar to my previous role at Burford Capital: assessing the legal theory and case merits but also looking ahead to enforcement and whether the damages are likely to be large enough to make the case viable. In terms of case type, we always see plenty of shareholder disputes, contract disputes and trust disputes, and those types of claim have not seen the same souring of attitudes or aggregation issues among funders or insurers as, say competition cases.

LFJ Conversation

An LFJ Conversation with Kevin Prior, Chief Commercial Officer of Seven Stars Legal

By John Freund |

Kevin Prior has been sourcing funding for regulated Law Firms since 2019 and has over 30 years’ experience in investment structuring, principally in the Real Estate development sector. He was responsible for securing the finance line for a high profile UK GLO project, as well as assisting law firms in representing individual claimants in over 15,000 settled cases.

Before moving into the litigation funding sector, Kevin created and piloted a regulated crowdfunding firm and a specialist distressed property fund. He has a background in economics, which coupled with his vast commercial experience allows him to make clear assessments of prospective borrowing law firms from the outset of Seven Stars’ due diligence processes.

Below is our LFJ Conversation with Kevin Prior, CCO of Seven Stars Legal: 

What specific strategies does Seven Stars employ to ensure market-leading investor returns in the litigation finance sector?

Our view has always been that the key to successful litigation financing lies in the selection of cases or case types to fund, which is why we take the time to select cases that we believe offer the most secure route to a successful and profitable judgment, delivering results for the business and its investors.

Rather than funding class actions and other high-risk, high-return litigation, we work at the other end of the spectrum, specifically targeting precedent-based claims or claims brought under UK Government compensation schemes or Acts. This approach significantly reduces the risk involved and enables us to target ambitious returns and highlight the opportunity of our litigation finance solution as an alternative asset investment.

We insist on After The Event insurance cover on funded cases where cases may be settled in England or Wales or where a risk of adverse costs may exist. In addition, we only fund cases against liquid entities, such as banks or housing associations, or where claims go to organisations like the Financial Services Compensation Scheme, which exists in the UK to pay redress to clients when financial institutions or financial advisers fail.

Finally, at claim level, we establish minimum claims values for each specific case type, which as well as ensuring sufficient capital cover means that our investors can achieve a return, the law firm in question can run claims sustainably and, most importantly, that claimants get the compensation they deserve.

In addition, to help ensure liquidity and cash flow via coupon payments for investors, as well as for broader strategic reasons like risk mitigation, we follow what we call the 30/30 rule, meaning that we aim to have no more than 30% of our funds committed to a single law firm or case type, and as we continue to diversify our activities are fast working towards a balance closer to 9% - 11% as our maximum exposure in any one area.

Could you elaborate on the due diligence process Seven Stars undertakes when assessing legal claims, particularly concerning the solvency of defendants?

Our due diligence process is multi-faceted, covering our borrowing law firms at both the initial stage of signing a funding agreement, again when the law firm requests a drawdown of funds, and, if we’re funding a case type for the first time, a comprehensive review of the legal position and opportunity around such claims.

To assess whether a specific case type is suitable for funding, we review various aspects including the level of funding required, the potential returns, and sought independent counsel opinion on the claim or case type before making a decision as to whether to fund. The nature of our process means that it’s feasible we would identify that a claim type can generate a specific level of returns but would require too much funding for it to be viable, although likewise, case types that require very little funding may generate relatively small returns, meaning we wouldn’t fund those unless there was a high enough volume of claims to make it worthwhile for all parties.

To come back to the firms, while our partner law firms conduct their own robust due diligence as a prerequisite for their own business requirements, we conduct our own independent verification process. This ensures a second layer of security and aligns with our own stringent criteria, which apply to both the initial funding proposal as well as the specific request for a tranche of funding.

Then, when the borrowing law firm comes to us, we review all the case files for which they are seeking funding, checking their files include all the relevant and correct documents, and a verification of the case and claimant details, the latter being where we’d identify and ensure that the defendant is solvent. For each claim type, we have a strict list of criteria that must be met for us to commit funding to a specific case, so it’s possible that an approved law firm could request a drawdown of funds but we’d only provide funding for the claims that meet our criteria.

The level of due diligence we need to go into differs depending on the case type. For example, if a pension mis-selling claim is going to the FSCS we know that it will pay out, so we can focus less on the solvency of the defendant and more on the technical aspects of the claim and the likelihood of it succeeding.

All of these processes are subject to two levels of due diligence. The first level is our operational management team, who should they approve a specific case type or law firm after collecting and reviewing a substantial tranche of data then pass this information along with a recommendation to our Advisory Panel, which includes a highly regarded King’s Counsel. The Advisory Panel then reviews this information independently to make a decision on whether to fund a specific case type and/or provide funding to a specific law firm.

To further enhance our Governance structure as well as strengthen the level of independent oversight within our due diligence processes, we’re currently at the advanced stages of appointing an external auditor to conduct pre-lending and firm auditing due diligence processes, which will also give us further capacity to scale our due diligence pipeline, attract further investment, and distribute monies to approved law firms.

Can you describe the structure of the debentures or assignment of interests in fee income used to protect capital, and how the Security Trustee oversees this process?

Our Security Trustee sits external to the whole process, only getting involved on behalf of our investors if we were to default on our payments to them. So the Security Trustee would step in were we to default, and take action based on the debenture and floating charge they hold over all Seven Stars assets, which includes bank accounts, physical assets AND the debentures and fixed and floating charges we hold over our borrowing law firms.

As such we have two layers of structured security for our investors. There is what the Security Trustee holds over ourselves, but there is also what we hold over the law firms, which include fixed and floating charges over their assets, as well as the right to re-assign cases to another law firm in the event they default on their funding agreement with ourselves.

This is further supported by our ongoing risk mitigation and analysis that we conduct in relation to borrowing law firms, which includes our funding going into a segregated bank account within the law firm, conducting monthly management accounts and retaining bank account access, and conducting ongoing audits of the borrowing law firm’s claims book. We’re currently in the process of making our ongoing audits fully automated by introducing AI to conduct this process, while retaining a human, physical element and manually auditing up to 10% of the claims book we’re funding with each law firm per month, depending on borrowings, the claim type, and other factors.

Given the company's experience in funding over 56,000 litigation cases, what key lessons has Seven Stars learned about risk management and successful case selection in the litigation finance market?

While we have comprehensive governance and risk mitigation strategies in place that inform all we do, our most significant learning – and one that we continue adapting to as we go – is the importance of having room to be agile and flexible in our approach to funding different case types and law firms, which is predominantly led by the 30/30 rule that I explained earlier.

I’ve outlined a little about our case selection process and due diligence earlier, but what I’d add to that is one thing we have picked up on is that there’s often an appetite from investors to commit funds even if a legal picture isn’t 100% clear. And to that end, it’s vital that we continue to monitor and are active in specific sectors even if there’s little to no movement in them. A good example would be business energy claims, where we had committed funding prior to an adverse decision handed down in early 2024, which was subsequently overturned by a later hearing. They key here is that we didn’t overexpose – we were nowhere near 30%, for example – and so were able to continue operating and supporting the borrowing law firm even while the legal picture was unclear.

We’ve seen similar recently in car finance claims – we know of one funder that committed around 80% of its lending book to such cases in 2024, but that cash is now tied up until probably March 2026 at the very earliest, when compensation payments look like they’ll commence. In contrast, we’ve been more cautious around this case type and are awaiting final legal and regulatory decisions before committing to an approach.

An excellent example of our approach to risk management succeeding can be seen in our acquisition of the non-legal assets of Sandstone Legal earlier this year. Sandstone Legal were a firm that we had previously provided funding for and had passed all our usual due diligence checks, but for various reasons continued to face financial difficulties. Our funding agreements ensured that we were able to acquire those cases through the firm’s insolvency and assign them to new law firms to run them to completion, many of which have already started generating returns for our investors. All of this was done with Solicitors Regulation Authority oversight, enabling us to act quickly and help cases to move forward quickly to the benefit of the claimants involved.

With the industry under sustained regulatory pressure, what should be the industry's response to those who want to regulate it out of existence?

The regulatory picture in the UK is still evolving. In June, the Civil Justice Council published its Final Report into third-party litigation funding, which called for minimal regulation where funding is provided to a commercial party and “greater, but still light touch” regulation where funding is going to a consumer or where funding is for a collective action.

Most notably, the CJC called for the reversal of the PACCAR ruling to happen as soon as possible, while the Court of Appeal also subsequently handed down a ruling that supports the litigation funding sector.

With all that being said, against this background there’s a significant opportunity for funders in different areas of the market to speak up, highlight what they do, and educate across the legal services sector as well as those who do seek to introduce stringent regulation.

One thing we’re passionate about and try to address in our content is that a lot of commentary around litigation funding is fairly narrow and exclusively focused on funding in the context of class actions. Now, when you consider stories like the Mastercard collective action where there’s been controversy between the funders and the lawyers and claimants are likely going to walk away with a negligible sum of money, it’s understandable that people will look at that and say litigation funding may cause problems.

But what we do is at the other end of the market, focusing on smaller, individual, mostly precedent-based claims that have a real impact on someone’s life, and collectively on society as a whole. There’s genuine difference-making on a human level in our approach that often isn’t discussed or even considered when talking about regulating the sector and making it difficult to provide funding.

Think the social housing tenant waiting months for repairs when their health is suffering, the pension mis-selling victim who doesn’t know if they can look forward to their retirement, or the bereaved spouse who wants to grieve but is facing an inheritance dispute. These are people who get the financial justice they deserve because Seven Stars and other funders lend a law firm money to run a specific case.

There are real people behind these stories and case studies, and as an industry we owe it to these people to highlight the impact litigation funding can and does have on their lives, rather than allowing the narrative of funding being a cash cow for funders and lawyers to proliferate.