We review Case To Answer – litigation funding investment paying 12% per year

Case To Answer offers an unregulated investment in litigation “invoice financing” paying interest of 12% per year for an investment of 12 months.

Unregulated third-party introducers promoting Case To Answer’s investment claim it represents an opportunity to invest in “one of the most secure investment sectors in the UK” and “low-level risks”.

Case To Answer investors loan money to Case To Answer, who then use it to source leads to provide to solicitors looking for clients. Case To Answer then invoice the solicitor who buys the lead, who becomes the creditor of the investor.

Who are Case to Answer?

Case To Answer was incorporated in October 2018 and is wholly owned by managing director Francisco Xavier (aka Javier) Rodriguez-Purcet. Rodriguez-Purcet took over the company in October 2019; for the year before that it was owned by Andrew Neal.

Case To Answer MD Xavier Rodriguez-Purcet

Rodriguez-Purcet was formerly head of marketing at Tandem Law, which received money from the Axiom Legal Financing Fund. Rodriguez-Purcet was cleared by the Solicitors Disciplinary Tribunal of receiving improper payments in 2019, who overturned a ban imposed in March 2018, at a hearing at which he was not present.

As of 2018, Rodriguez-Purcet has suffered from bipolar disorder since the age of 20. The Disciplinary Tribunal’s March 2018 ban was overturned in October 2018 because they declined to postpone the hearing, after Rodriguez-Purcet’s solicitor rang the Tribunal the day of the hearing and asked for a postponement on medical grounds. The Tribunal refused and went ahead with the hearing in his absence. The High Court ruled that they should have adjourned and ordered the March 2018 ruling to be set aside. At the replay in 2019, Rodriguez-Purcet succeeded in overturning his ban.

Another interesting name behind Case To Answer is Lord Razzall, who is a director of C2A’s sister company, Lawthority. Lord Razzall was a non-executive director of MJS Capital, which collapsed in 2018 owing over £40 million to investors in its bonds. Lord Razzall jumped ship from MJS Capital in March 2018, a few months before investor complaints began to surface, and is not accused of any wrongdoing.

How safe is the investment?

Unregulated introducers claim Case To Answer provides an opportunity to invest in “one of the most secure investment sectors in the UK” and “low-level risks”.

Case To Answer itself claims in its literature that its investment offers “numerous security features that give peace of mind”. These features rely heavily Case To Answer deploying investor funds to generating leads which are sold to solicitors, resulting in an SRA-regulated solicitor becoming the creditor.

Nonetheless, like any unregulated investment paying 12% per year, this is an inherently high risk investment with a risk of total loss. In the first instance, investors are handing their money to Case To Answer, and if for whatever reason Case To Answer fails to generate enough leads to sell to solicitors, and cannot make good on the promise to return investor’s money plus 12% after twelve months, investors may lose up to 100% of their money.

If the liability for returning to investor’s money is taken on by a solicitor, loans to solicitors are not “low-level risk” either, regardless of what assurances may be given about the likelihood of their success in winning cases.

It is not enough for the solicitors to win their cases, or failing that claim “After The Event” insurance: to return investors’ money, Case To Answer and/or the participating solicitor have to generate sufficient returns to pay investors their 12% per year, after their own costs.

A particularly eye-catching claim in Case To Answer’s literature is that “Investors are eligible to claim for compensation from the UK legal industry watchdog if the solicitor defaults”.

As far as I can tell this is not the case. The Solicitors Regulation Authority’s compensation scheme is designed to cover those who lose out from fraud or mismanagement committed by a solicitor, or lack of PI Insurance. Trading debts and liabilities – which would seem to cover paying lead generation firms to find clients – are specifically listed as an example of what is not covered.

I have asked the SRA to comment. However, as a rule, compensation schemes usually decline to give assurances over whether something would be covered or not until a claim arises – by which point it is too late for an investor to pull out.

Should I invest in Case To Answer?

This blog does not give financial advice. The following are statements of publicly available facts or widely accepted investment principles, not a personalised recommendation. Investors should consult a regulated independent financial adviser if they are in any doubt.

As with any investment in an unlisted micro-cap company, this investment is only suitable for sophisticated and/or high net worth investors who have a substantial existing portfolio and are prepared to risk 100% loss of their money.

Any investment offering returns of up to 12% per year is inherently very high risk. As an individual, illiquid security with a risk of total and permanent loss, Case To Answer’s 12 month loans are much higher risk than a mainstream diversified stockmarket fund, let alone cash accounts.

Before investing investors should ask themselves:

  • How would I feel if the investment defaulted and I lost 100% of my money?
  • Do I have a sufficiently large portfolio that the loss of 100% of my investment would not damage me financially?

If you are looking for a “low-level risk” investment, you should not invest in loans to unregulated companies with a risk of 100% loss, or rely on novel interpretations of the SRA compensation rules.

Add comment