We launch litigation funding with DBA option

Litigation | Product

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Shakespeare Martineau is to offer, for the first time, damages-based agreements (DBAs) as part of its portfolio of litigation funding options called ‘FeeManage’.

DBAs are a fairly new addition to English law and are contingency-based agreements where legal fees are payable as a percentage out of the damages received in the event that the case is successful. Shakespeare Martineau is proud to be in a position to offer DBAs as part of its FeeManage proposition.

If a DBA is entered into, and the predetermined success criteria is achieved, but the recovery from the losing party is relatively low, the DBA percentage fee from recovered monies may be a sum significantly less than that which would have been payable by the client on a normal retainer basis or pursuant to a conditional fee arrangement (CFA) – meaning an increased shared risk between client and legal advisors.

In addition to DBAs, the firm is working with a variety of funders to offer, third party funding (TPF) and after the event (ATE) insurance in combination with CFAs as potential options.

Unlike competitors, Shakespeare Martineau is not tied to a single funding provider, in order to flex requirements and offer full or part funding for litigation claims.

Too often businesses are put off from pursuing debts and assets that are rightfully theirs due to the associated costs, impact on the balance sheet and risk,” explains Barry Jervis, partner and litigation expert at Shakespeare Martineau.

Litigation was buoyant across the country before the pandemic and, as we emerge into a post-pandemic economy, we can expect disputes to increase further. However, the costs of litigation are climbing sharply, alongside increasing numbers of businesses experiencing cash flow issues as a fall out from the pandemic.

Our new ‘FeeManage’ service helps to reduce the financial risk of litigation.”

Every individual and every business is unique and while traditional CFAs might work for one client, third party funding might be more appropriate for another. Whatever the size or complexity of the litigation, we have an option that will suit.

We’re really proud to be taking a different approach to litigation funding. We’re not fixed to a single provider and we’re giving our clients every option available for funding their claim.

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Barry brings a no-nonsense approach to resolving disputes for his clients whilst involving them at every stage of the process.

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FCA attempts to scrap “loyalty penalty” for insurance customers

Blog | Asset Finance

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Since 1st January this year, new rules have come into effect, to provide greater protection for loyal and vulnerable home and motor insurance customers.

The new rules, which have been introduced by the FCA, state that any person who renews an existing policy won’t need to pay any more than a brand new customer would. Essentially, customers who tend to remain with the same insurance companies won’t be affected, but for those who like to switch up their providers, it could mean a price hike.

What does the FCA believe?

In reality, many people believe that their insurer will automatically reward loyalty, but the FCA believe that is not what happens in many cases. Not all, I hasten to add! However, the FCA principles of treating customers fairly adds a powerful narrative around customer engagement, hence the need for change.

It is thought that this change will save customers £4.2 billion over ten years. These rule changes follow pressure from Citizens Advice complaints, and are a bid to avoid the phenomenon known as “price walking”.

Matthew Upton, director of policy at Citizens Advice, said: “Rip-off renewal prices have seen consumers paying over the odds for far too long. No longer can you be exploited just for staying loyal.”

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Airlines’ Potential Consumer Law Breach Speaks to Overall Consumer Finance Issues

Blog | Asset Finance

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On 19th June this year, the CMA made it known that it was investigating whether airlines British Airways and Ryanair had in fact breached consumer laws, by refusing to offer refunds to passengers who couldn’t travel due to lockdown laws.

Now, the CMA has announced the closure of this investigation.

What were the findings?

The CMA’s findings concluded that the law “does not provide passengers with a sufficiently clear right to a refund in the particular circumstances relating to COVID-19 restrictions.” The legal position appears to be that passengers are entitled to refunds in the event that the airline cannot provide its services as contractually obligated. What is still unclear, is whether passengers deserve refunds if the flight still goes ahead, but temporary legislation (such as the lockdown regulations) prevents passengers from taking the flight altogether.

What did these airlines do?

The findings suggest that British Airways and Ryanair refused to refund passengers who were unable to fly due to lockdown rules.

  • British Airways offered vouchers or rebooking;

  • Ryanair offered rebooking only.

Even though these actions suggest that both airlines may have flouted consumer law to some degree, the CMA’s findings have concluded that they did not, even though some passengers were left out of pocket for a period.

Why did the CMA close the investigation?

The CMA decided that it could not continue the investigation due to timescales and the uncertainty of the legal position. This decision was made after they took expert advice on the matter.

Consumer rights in this case were not as obvious as some commentators thought, so this is an area that the travel industry, its regulators and government may need to look at. That said, COVID-19 was an unprecedented event and forcing all operators to make such refunds may have had a catastrophic effect.

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Eddie works with a highly skilled team to deliver industry specific advice to the asset finance and leasing sector.

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Rising “Buy Now Pay Later” Debts Cause FCA Concern

Blog | Asset Finance

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For years, the UK’s consumer finance sector has accommodated several “Buy Now Pay Later” (BNPL) schemes, allowing consumers to effectively purchase goods and pay in instalments, or without needing to pay until a later date. But, since the COVID-19 pandemic hit the UK, causing salary sacrifices and surges in unemployment, the level of consumer debt racked up by using BNPL schemes has increased at an alarming rate. It would appear that people with more time on their hands, spent this shopping! Certain consumers have made repeated purchases that have led to debt issues arising. As such the FCA, which is deeply concerned, is looking to regulate this corner of the consumer finance industry.

Examples of BNPL schemes

The problem is, not every consumer pays their BNPL debt on time. Klarna has a “Snooze” functionality, enabling a further 10 days before payment must be made. Even then, a high number of consumers are being chased for late payments. The FCA is concerned that these debts are currently hidden from mainstream credit checkers, and could be creating a real threat to consumers as affordability is not investigated to any great extent.

What does it mean for the finance sector?

To provide credit facilities in the UK by way of business an entity needs to be authorised by the FCA, in line with the provisions of the Financial Services and Markets act 2000 and the Regulated Activities Order 2001 (RAO). Currently, certain agreements are exempt under the RAO, which allow businesses and smaller entities to avoid the huge cost or regulation. Being authorised or permitted is costly both financially and in terms of management time and resource. More alarmingly, it can attract personal liability to the directors and managers under the Senior Managers Regime.

The regulatory landscape

These providers must urgently show the government that they can self-regulate. All that is required is technology to check affordability and credit worthiness. If not and the FCA regulate, this could seriously hamper the ability of responsible consumers to have access to easy funding, and will also create huge hurdles for both business and credit funders.

Plan not ban?

Global high street giant Klarna swept onto the scene in 2015, and with its quirky branding and no-nonsense, easy-to-navigate process, soon caught the attention of consumers. Consumers who purchase from certain retailers can buy and pay in 30 days, or split their payments into three smaller amounts using Klarna. To date, Klarna has over 15 million customers.

Other BNPL schemes such as Clearpay, Openpay and Laybuy offer similar repayment processes, enabling consumers to handle their balance in a different way. But this is clearly a slippery slope, and having an “I’ll pay for it after next payday” mentality seems to be landing many consumers in high amounts of BNPL debt.

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EV Sales Growth Stunted By Cuts

Blog | Asset Finance

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Despite the sales of battery electric vehicles hitting a milestone (500,000 low emission vehicles now on the UK roads), the grants for manufacturing have been cut by the government. But how will this affect the predicted rollout of electric vehicles?

With government plans to abolish the manufacturing of new petrol and diesel vehicles by 2030, it seems the cut to the BEV grant could affect the number of electric vehicles available. In March 2021, vehicle sales increased generally but dealers have seen a swing towards hybrids which comply with green air schemes, and appear to have come back into favour since the reduction in grants and the perpetual anxieties based around range for EVs.

It is estimated that “BEVs will account for 8.9 per cent of all registrations by year-end – down from the 9.3 per cent forecast in January. With PHEVs anticipated to take a 6.3 per cent market share, plug-in vehicles should comprise 15.2 per cent of all cars registered in 2021” (InsideEVs).

Could this impact leasing companies and consumers alike? The answer has to be yes. Some manufacturers are short of product, something which has not happened for years. That in turn affects the ability for leasing companies to source product.

Sustainability

Environmentally, these cuts could mean that petrol or hybrid vehicles will remain the first consumer choice. We will see the pace of reduction regarding carbon footprint starting to slow, too.

Legislative changes are struggling to keep pace. Many dealers have increased training needs as technicians move from combustion based training to that of high voltage EV.

Adoption of infrastructure

Less than 50% of UK businesses polled in Centrica Business Solutions’ research have adopted infrastructure for the move to EV, such as charging points. 46% of businesses plan to install these, while 37% already have.

The government should provide further grants and funding to businesses, and bring in legislation that will require such change, rather than the disparate local green air schemes that can be punitive for diesel commuters. Consumers need support both in terms of grants and the legislation to protect them when entering into finance or subscription agreements, which are now coming into sharp focus.

Together with countries such as Norway, the UK has a real opportunity to make cogent transformations to the towns and cities of the nation, with cleaner air and quieter roads. After the optimism delivered by the government whitepaper it is a false economy to reduce the grants and delay transformative legislation.

I’ll be following up on this topic in the weeks to come, given that our country’s economy is still in a process of levelling out from the pandemic. Will the government reverse the cuts to grants for EV vehicle development? In the meantime, if you’d like to discuss this subject or raise a general enquiry, please get in touch.

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Leasing electric vehicles: A smart option for fleets?

Bolstered by the government’s 10-point plan, electric vehicles (EVs) are becoming increasingly popular for both personal and business users. Read more about how electric vehicles are vying for first place in the new greener future.

However, for fleet managers considering switching, it can be difficult to know if now is the right time to make the leap. Leasing can simplify this decision, allowing fleets to try before they buy.

Why should we move to electric vehicles?

As well as tackling climate change and benefitting the health of the community, EVs also come with plenty of financial and commercial bonuses when compared to Internal Combustion Engine (ICE) vehicles. These include:

  • Increased energy efficiency
  • Lower maintenance costs
  • Lower fuel costs
  • Exemption from paying driving sub-charges, such as congestion charges
  • Government grants, such as the plug-in-grant
  • Tax breaks, including the zero percent benefit in kind (BIK) tax
  • Meeting the global demand for greener organisations

As the number of EVs on the market grows, they will only become more attractive to consumers and to fleets.

What are the problems with electric vehicles?

There are still some areas for EVs to improve on in order to truly match ICE vehicles. The most common issues are:

  • Less range and flexibility, leading to range anxiety
  • Lack of charging infrastructure
  • Higher price
  • Extra considerations when planning a journey, such as thinking where to charge the vehicle
  • Longer charging times when compared to conventional refuelling

However, these concerns are becoming obsolete as EV batteries become more efficient and capable of longer ranges. There’s also a growing charging infrastructure being built across the country, with a 36 percent increase from previous years. This is being accompanied by increasing financial support for the installation of charging spots in both private and commercial properties.

Can you lease an electric vehicle?

Leasing rather than buying an EV can provide a host of benefits to fleets, especially with so many leasing companies offering a variety of perks. Some advantages of leasing include:

  • Paying for usership of the car rather than the full price
  • Being able to update the car model more frequently, so companies can take advantage of innovation
  • Inclusion of charging infrastructure within the contract
  • Regular maintenance

Companies should focus on the shift to EVs as an investment for the long run, not as a financial burden. As with any major transformation, electrifying a fleet will involve the full commitment of the business and its employees.

The climate crisis is pressing, and more action is required from businesses. Reducing the number of ICE vehicles in fleets is a critical step in going carbon neutral and with the risks of choosing EVs quickly becoming obsolete, making the shift will undoubtedly be a worthwhile investment. Leasing can help facilitate the change, helping companies to assess their needs and adapt to a greener future, on a flexible basis.

Super-deduction tax break

In his spring Budget on 3 March 2021, the Chancellor announced the super-deduction that can be off set against tax liabilities.

From 1 April 2021 until 31 March 2023, businesses investing in qualifying new plant and machinery assets will be able to claim:

  • a 130% super-deduction capital allowance on qualifying plant and machinery investments
  • a 50% first-year allowance for qualifying special rate assets

The super-deduction, together with various funding instruments, may provide further impetus to the rate of change.

Contact us

If you’re considering making the switch to electric vehicles then we can support you throughout the entire process - from setting up the agreements, right through to recovering funds, if necessary. For further details or advice please contact Eddie Flanagan or Mark Bartholomew in our energy team.

If you would like to read more of our energy blogs and guides sign up to our mailing list to join our quarterly energy mailer.

Our energy team is ranked as a Leading Firm in the Legal 500 2021 edition.

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