International bank Investec has revealed it has lent around £5m this year to legal clients pursuing commercial litigation.

The bank started a pilot of the scheme eight months ago and claims it is the first to offer specialist finance to pursue a civil claim in court. In a statement Investec said it expects ‘significant demand’ for the arrangement in the coming months. The minimum funding is £250,000 and the bank takes a share of the compensation if a case is successful.

If the case is lost, repayment of the facility depends on the circumstances and can be structured on a non-recourse basis similar to current third-party funder offerings.

Jonathan Harvey, from Investec’s specialist banking division, said: ‘Over recent months we’ve been approached by a growing number of law firms looking for alternative ways to fund litigation in the commercial sector.

‘This is partly driven by changes in the way law firms fund their own working capital and partly by claimants’ growing need for flexible finance.’

The bank has been researching opportunities in the legal sector for several years and is now preparing to finance firms looking to restructure in response as the 2007 Legal Services Act comes into force.

Harvey added: ‘Our bespoke approach sits well in an industry that is going through so much change. The [professional services] team was originally established to provide innovative funding lines for firms looking to grow and fund themselves in different ways, potentially through an alternative business structure.

‘Litigation funding is an area that we feel a similar approach may be beneficial and enhances our growing offering to the legal sector in general.’