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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 outstanding invoices for your fees and 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. The client instructs your firm to repay the funding from the proceeds of the settlement. 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. This is a fully recourse loan and the client is always responsible for repayment of the loan. If the loan is not repaid by the client, Novitas or the insurer may ultimately take legal action to recover the loan monies.  

How much does the loan cost?

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

Our charges are straight forward and transparent.

  • The set-up fee is £500 (or 1% of the facility if the loan amount is above £50,000). This can be added to the loan or paid up front.
  • Interest is fixed at 18% per annum or 1.5% 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. The loan does not require servicing, which means that the loan funds and the interest can all be paid at the end of the loan. This helps all clients with cash flow concerns and particularly those with little or no income.
  • Interest is calculated by taking the annual interest rate of 18% (1.5% 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 £900 of interest in addition to repaying the £10,000.
  • We ask the client to take independent legal advice on the loan documentation, which is typically circa £300 (and cannot be added to the loan).
  • Initially, the client will need to pay the cost of Counsel's opinion, but if Counsel is willing to wait for their fee to be paid, this can be added to the loan if approved, along with insurance, if required. You and the client are free to choose any Counsel.

If the client does not have sufficient security by way of assets in their own name, they may be required to take out insurance provided by Novitas. The insurance premium is 10% plus Insurance Premium Tax of 1.2% (as at 3rd December 2017) of the amount that is drawn down and will be added to the loan. Please note that this insurance does not insure the client against failure to repay the loan.

The client may also take out After the Event (ATE) insurance for adverse costs. This is not mandatory, and the cost will be agreed with the ATE insurer directly. This is purely a decision for the client. Novitas does not accept responsibility for the clients’ adverse cost risk.  

What is the duration of the loan?

We agree a time period for each loan, often based on an event such as the sale of a property or a settlement. While we may put a time period of 12 months on the loan contract from the date of the agreement, we understand that this needs to be flexible and will roll on the loan on a 30-day basis according to your client's individual situation.

Will Novitas fund the trial?

If a case does not settle and is likely to go to trial, we may ask for a new opinion from Counsel at the case management meeting before agreeing to fund the trial stage. We reserve the right to decline further funding for trial (typically when Counsel believes a current offer is in the range of possible outcomes and ought reasonably to be accepted).  

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

The first drawdown will need to be requested within one year after the cooling off period has been completed. If after two months the Novitas loan has not been used, we will carry out a further credit check.

During the case

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

Yes. Each drawdown request is sent to the client for approval. You can only draw the money from your client account against invoices the client has approved. You can also clear off any outstanding legal bills using the loan.

How often can we make a drawdown from the loan

The loan can be drawn down as many times as required, provided that the costs are in line with your costs estimate, so that the facility will enable you to reach the final hearing if needed.

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 which, once submitted, will send an email to your client requiring their confirmation that Novitas can release funds to you. Once approved, Novitas will aim to send funds to the firm's client account within 48 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 client stops the proceedings?

If proceedings are stopped the client is liable to repay any sums used.

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
  • if there is an extension pending


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 the client pay off the loan in instalments?

No, the loan needs to be settled in a single payment once the case has been settled.


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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