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Solicitors: Clinical negligence

About the loan

    What can the loan be used for?

    The loan is regulated under the Consumer Credit Act 1974 and can be used to pay for disbursements, such as court issue fees, medical reports and GP records.

    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.

    This is a fully recourse loan and the client is always responsible for repayment of the loan.

    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.

    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.

    What security do you require from the client?

    The Novitas lending scheme requires the client to sign a ‘Deed of Assignment’. This gives Novitas an assignment over the proceeds of the claim, meaning Novitas is repaid first from any settlement monies received, before the balance is sent to the client.