New Fund Targets Commercial Claims

The litigation funder is launching the Katch Legal Lending Fund to finance commercial disputes, including a £250 million lawsuit against Uber Technologies on behalf of London's black-cab drivers. This represents a strategic shift away from consumer claims that devastated its previous fund, which financed UK car finance misselling cases.

The fundraising comes as Katch winds down its KLIF fund through voluntary self-liquidation after writing down its value when compensation payouts fell dramatically short of expectations. The UK's Financial Conduct Authority ordered lenders to pay £8.2 billion in compensation—far below the £30 billion initially anticipated.

A Year of Mounting Challenges

Katch has endured a turbulent 12 months. The firm was a key backer of Sheffield-based SSB Law and Liverpool-based McDermott Smith Law, both of which collapsed into administration in 2024. Additionally, the FCA is investigating Katch-backed claims management firm The Claims Protection Agency Limited for its advertising and sales tactics, though no conclusions have been reached.

The KLIF fund halted redemptions in September after investors were told payouts would be substantially smaller than projected. The fund has attracted no new investors for nearly a year.

High-Risk Industry Dynamics

Litigation finance remains inherently volatile. Funder Burford Capital secured a $16 billion settlement in a 2023 Argentine oil nationalisation case, yet payment has stalled in US courts, causing its shares to fall 36% in London trading last year. Similarly, Pogust Goodhead lost nearly £400 million in two years funding claims against BHP Group over a 2015 Brazilian dam disaster, despite a judge ruling against BHP.

Despite these setbacks, the global litigation finance market is projected to grow from $17.5 billion currently to exceed $67 billion by 2037, according to Chambers and Partners. Katch's new fund is being pitched alongside French asset manager Entrepreneur Invest, which views UK legal funding as an attractive opportunity.

Industry observers note that experienced investors understand the binary nature of litigation finance outcomes. Nick Rowles-Davies, chief executive of legal finance platform Lexolent, stated that those backing Katch's new fund would likely do so based on conviction and due diligence rather than naivety.