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About the loan

How does the loan work?

The loan contract is between Novitas and your client. The money is drawn down from the facility as it is needed and paid directly to your client account to pay disbursements associated with the case. Your client does not have to use the entire loan amount and interest only accrues once the money is sent to your client account.   There is nothing for the client to pay until the case concludes as interest is rolled up on a simple basis i.e. there is no compounding of interest.  An insurance policy is put in place to cover the loan repayment if the case is not successful. This policy will be arranged between yourself and the Insurer. The client instructs the firm to repay the funding from the proceeds of the case or otherwise from the proceeds of the insurance policy. You will have a dedicated online portal to administer the facility, where you can make new applications, make drawdown requests, and monitor the status of any applications or drawdown requests. The scheme is only available to clients of approved firms, and Novitas will consider each case individually.

How much does the loan cost?

There is no minimum loan period, no early repayment charges and no minimum interest charge.

If the client case is unsuccessful, the loan is repaid from an insurance policy.  If the case is settled, the loan is repaid from the settlement award.

Our charges are straight forward and transparent:

  • An administration fee of £75 for each of the first five amounts drawn down from the loan. This is taken directly by Novitas and added to the amount drawn down
  • Interest is fixed at 15% per annum or 1.25% per month and calculated on a simple basis, i.e. there is no compounding of interest. Interest only accrues on money drawn down from the loan facility.
  • Interest is calculated by taking the annual interest rate of 15% (1.25% per month), multiplying by the amount used and dividing by the number of days it has been drawn down. For example, if the client has drawn down £10,000 for 6 months, they will pay back interest on the £10,000 of £774

Recent legal precedent may make a proportion of the interest recoverable from the other side. This is not guaranteed however so assume that the interest is to be repaid from the settlement. The non-recoverable element of the insurance policy must be repaid from the awarded damages. If the claim is unsuccessful the loan is covered in full by a Legal Expense Insurance Policy and the client will not be liable to repay the loan.  

What is the duration of the loan?

The agreement has no fixed duration, but will last at least 12 months. The funding must be repaid on conclusion of the claim to which it relates.

Does the client have to have insurance?

Yes. The loan must be covered by an insurance policy from an Insurer approved by Novitas. The policy proceeds will be used to repay Novitas if a case is not successful. The solicitor will arrange the insurance with our approved insurer. The cost of the insurance depends on the claim type and the insurer chosen, and is deferred and contingent upon case success. It is only payable if the case is won. Where a case is lost, no premium is due to be paid.  

Once approved, is there a time limit for the first drawdown to be requested?

The first draw down will need to be requested within 12 months of the date of the Agreement. If not, the Agreement shall automatically terminate.

During the case

Does the client have control over how we use the money?

Yes, an email is sent to the client notifying them that a drawdown request has been processed. They can contact you directly if they have any queries.

How often can we make a drawdown from the loan?

The loan can be drawn down as many times as required, up to the limit of the loan.

Where does the money get sent to?

Funds will be paid directly to the solicitor’s client account to clear any approved outstanding invoices. Drawdown requests can be made through the online portal. Once submitted and approved funds will be sent to the firm's client account within 72 hours.

What happens if the client changes solicitor?

As the solicitor firm gives certain undertakings to Novitas, any new firm would also have to be approved, otherwise this is a breach of the loan agreement and the loan will need to be repaid immediately.

What happens if the customer decides not to continue with the claim whilst on funding?

The solicitor firm must notify the insurer and Novitas immediately and a claim will be made on the policy. The client may be liable to repay the amount already drawn down depending on the reason for the case stopping, for example, in the case of customer fraud or cancelling without a valid reason

Can Novitas stop funding during the case?

Yes, there are circumstances which may mean we stop any further drawdowns from the loan, including:

  • disclosure of subsequent material facts that adversely affect the case
  • solicitor coming off the record
  • solicitor not meeting the undertakings in the Global Terms agreement
  • client behaviour that causes concern about the performance of the loan and its recoverability. 


Is the client liable to repay the loan?

Yes. The client instructs the firm to repay the facility from the proceeds of the case and takes out insurance in the event the case is lost.

Is the firm liable if the case is lost?

No, the insurance policy will repay Novitas. However, the firm will need to notify Novitas as soon as possible if the case in unsuccessful.

Can the client repay the loan early?

Yes. There are no penalties for paying the loan off early. We calculate interest daily so the shorter the time they have the loan, the less they will pay in interest. Note that the loan is not a revolving credit facility.  

Can Novitas ask for repayment at any time?

Any breaches of the loan agreement by the client can result in Novitas calling-in the loan and requiring full repayment of the loan and any interest owing. This can include dis-instructing you as their solicitor without agreement from Novitas or failing to follow advice from their solicitor which impacts our prospects of recovering our funds from the anticipated financial settlement.

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