Next Gen Solicitors

Next Gen Solicitors Limited 12 Month Fixed Rate Bond August 2020

S ummary

The following is a summary of the key points pertaining to the opportunity to invest in the Bonds of Next Gen Solicitors Limited (“The Company”, “Next Gen Solicitors Limited”) and should be read in conjunction with the full text of the Information Memorandum.

The arrangement allows the firm an optimum combination of the legal expertise needed to handle cases, along with the business and marketing acumen required to operate efficiently and attract cases to the firm. All cases are initially screened and risk assessed by Next Gen Solicitors Limited. Once a client agrees to be represented by Next Gen Solicitors Limited, the firmwill take out an After the Event Insurance Policy in the client’s name. If required, the client’s case will be passed to an appropriate independent specialist who will complete a report based on the facts of the case. This report will provide the rationale for the case to be pursued successfully, along with the specialist witness statement. In other cases the report will also specify the quantum of loss. The Company is seeking to raise up to £22,500,000 by issuing Bonds to replace existing funding lines and to fund all costs of cases they have identified with a high probability of success. Part of the proceeds raised will be used to repay a loan balance for the acquisition of cases and advance on work in progress.

Next Gen Solicitors Limited was established in November 2016 to merge the talents and experience of solicitors and skilled individuals working in the claims management industry.

Solicitors; Stephen Cornforth and James Reed are Directors of Next Gen Solicitors Limited along with Karen Smith who brings with her knowledge and experience of operating an FCA regulated claims management company. Next Gen Solicitors Limited has been established as an alternative business structure. This allows law firms to be authorised and regulated to provide legal services whilst non- lawyers have an interest in the ownership and/or management of the firm.

Contents

Page 3 - Summary

Page 4 - The Company

Page 6 - The Market

Page 9 - Security

3

The Company

Stephen Cornforth

The Company has advised that current Legal team at Next Gen Solicitors has over 100 years of combined experience.

acts as the Compliance Officer for the Legal Practice (COLP) and Compliance Officer for Administration and Finance (COFA) for Next Gen Solicitors. He was until 28th April 2017 Senior Partner of a leading Liverpool legal practice. He is also a former President of Liverpool Law Society.

1.4 Specialist Support All new cases are initially screened and risk assessed by Next Gen Solicitors. Once a client agrees to be represented by the firm, Next Gen Solicitors takes out an After the Event Insurance Policy (ATE) in the client’s name. If it is deemed necessary, the case is then passed to an independent specialist in the appropriate field, who will complete a report based on the facts of the case. This report will provide the rationale for the case to be pursued successfully, along with the specialist witness statement. In certain cases, the report will also specify the quantum of loss. Next Gen Solicitors maintains a wide ranging database of specialists with whom it has a successful working relationship, and with whose assistance it has recorded a large number of case wins. The availability of, and ongoing relationships with, these specialists helps to streamline and expedite the claim process and therefore increase case capacity. 1.5 Differentiation Next Gen Solicitors believes itself to be clearly differentiated from its competitors by its combination of: • high quality legal services; • operational and marketing expertise; and • business acumen and legal and commercial experience of its owners. 2. Investment Opportunity Next Gen Solicitors requires a readily accessible source of funding that is flexible to its needs and enables it to pursue more and more cases. The capital raised will be used to replace funding from private finance, which currently enables Next Gen Solicitors to pursue cases on behalf of clients. Next Gen is raising capital, which will be more competitive and flexible towards changes in the law which create newmarkets. The capital will be used to pay for the costs involved in initiating cases for clients. ATE insurance (a standard tool in conditional fee agreement, ‘NoWin, No Fee’, claims) will reimburse the legal costs and expenses involved in bringing the case, should it prove unsuccessful. This is how all cases in the model will be managed, with Next Gen Solicitors agreeing not to charge for its services should a claim be unsuccessful. On average, the costs associated with pursuing a claim is between £2,000 and £3,000. The Next Gen Solicitors business model allows for a high volume of cases to be active, with an average of 90% success rate and the ATE insurance (which pays out, on average, in 30 days) covering those cases which are unsuccessful.

1. Background

1.1. Entity Next Gen Solicitors was established in November 2016 to combine the talents and experience of solicitors with those of other key specialists working in the claims management industry. Next Gen Solicitors is authorised and regulated by the Solicitors Regulation Authority (SRA), a regulatory body for solicitors in England andWales. The SRA is responsible for regulating the professional conduct of 125,000 solicitors at more than 11,000 firms. Their Principles and Code of Conduct must be adhered to at all times to ensure integrity and protect the best interests of clients. Next Gen Solicitors is an established commercial firm, with governance and operations designed for, and proven effective with, high case volume. The Company operates in areas of law in which it has a solid track record or in which a clear precedent is in place. Next Gen Solicitors has been established as an Alternative Business Structure. This allows for law firms to be authorised and regulated to provide legal services with non- lawyers eligible to hold an interest in the ownership and/or management of the firm. The arrangement allows the firm an optimum combination of the expertise needed to operate successfully: the legal expertise to handle cases and bring these to optimal outcome, combined with the business and marketing acumen required to market the firm, attract cases and manage these efficiently. 1.2 Personnel and Responsibilities Solicitors Mr Stephen Cornforth and Mr James Reed are directors of Next Gen Solicitors, along with Ms Karen Smith, who brings to Next Gen Solicitors extensive knowledge and experience of operating an FCA Regulated claims management company.

James Reed heads Next Gen Solicitors Legal team. The team has a high success rate in both fast-track and multi-track cases across all areas of personal injury, including: • personal injury; • employer liability; • public liability. Next Gen Solicitors has a 100%

success rate in all litigated matters to date. There is a declared objective within the Legal department to

settle 80% of all cases within three to six months, securing the highest level of compensation obtainable for the clients concerned.

Karen Smith heads up Next Gen’s Marketing and Management team. This unit possesses the knowledge, skills and experience needed to generate a high case volume for the Company. Numbering more than 50 individuals, the Marketing and Management team specialises in: • bringing in new cases; • providing a reassuring point of contact for each client;

• handling the management of each case from commencement through to settlement. This allows Next Gen Solicitors Legal team to concentrate on managing cases to successful outcomes, without having to divert resources to sourcing

caseload or managing the claim process.

1.3 Specialism and Experience In the early days of the firm, the work generated by the Next Gen Solicitors team lay predominantly in the field of personal injury. As the firm has grown, the Company has acquired the resources and expertise to diversify its work base to include employers’ liability and public liability work. This has encompassed: • occupational disease; • financial mis-selling; • personal debt challenges; • housing disrepair. • medical negligence

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5

The Market

3.1 Mis Sold Financial and Pensions Advice Next Gen Solicitors is currently acting for claimants wrongly advised about investment into Self Invested Personal Pensions (SIPP). SIPPs were widely Mis-sold, and a great number of people lost much of their hard-earned savings as a result, placing their retirement in jeopardy. Considering the SIPP Mis-selling scandal, the Financial Services Compensation Scheme (FSCS) have set aside £532 million to pay for compensation costs, where complaints are made about Mis-selling in 2019/20. With the knowledge held by Next Gen Solicitors and its specialists, the company is able to identify precisely where and how a client has been Mis-sold, and will act for these clients to recover losses. The team has been involved with over 1,000 successful cases to date. 3.2 ‘Plevin’ PPI Claims Next Gen Solicitors is currently acting for clients making ‘Plevin’ claims. Plevin claims are claims for the commission charged on the PPI premiums that many people took out in the 1990s and early 2000s. The FCA believes that between approximately 60,000 and 140,000 clients need to be informed that they are eligible to make a claim under Plevin rules. They may have had complaints rejected previously, not been adequately assessed for undisclosed commission, and not been provided with written information about being able to claim for the previously undisclosed commission, which others were advised to do. There is still approximately £52 billion pounds to reclaim, currently with no time limitation on when a claimmay be entered. Our specialists in this area produce reports for cases requiring litigation that includes the likelihood of success and quantum of loss. The financial Mis-selling SIPP market has a reported 300,000 potential cases, with the value of a typical case claim averaging £38,000. Other commonly Mis-sold pensions and investments includes SSAS and QROPs.

1. Case Funding The case funding investment market has grown exponentially over the last few years. It is expected to grow further due to case funding investments being uncorrelated with market fluctuations. For instance, if the financial markets undergo significant changes due to global or regional factors, many other investment classes, being linked to the markets, are affected. Case funding, however, having no direct link to financial markets, is not exposed to these changes. In a landscape in which bringing a claim can prove extremely costly, case funding fills the gap, providing the finance for people to be able to pursue claims. In the specific instance of the investment, it allows Next Gen Solicitors to finance the client’s case and pursue the claim to recover damages. Next Gen Solicitors are raising capital to pursue claims for clients in markets it knows to have a high success rate, with lower costs and risks involved. Each market requires a high level of expertise, knowledge and experience, which Next Gen Solicitors and its appointed specialists possess. Next Gen Solicitors plan to use funds raised to finance cases in established markets including: • financial mis-selling; • personal injury; • medical negligence. • housing disrepair 2. Validity of ‘Case type’ market in which Next Gen Solicitors operates

3. Expansion of our Financial Mis-selling Department

Next Gen Solicitors has recently expanded its Financial Mis-selling department. This will enable the firm to increase its case load in lucrative markets including: • Mis-sold financial and pensions advice; • Plevin.

6

Security

1. Prioritisation of Investor Security Investor security is the Company’s priority.

Should a case fail, however, the ATE insurance policy provides cover for the legal costs and disbursements incurred by Next Gen Solicitors in the pursuit or defence of litigation and arbitration on each individual case. The policy is applied: • after the case has gone through the vetting process; and • once the client has instructed Next Gen Solicitors to handle the case.

The Company has granted a debenture over all of its assets to the Trustee, acting on behalf of Bondholders. The debenture over the Company will be only be filed once the charge held by VFS Legal Ltd has been satisfied in full. The contractual right to receive the proceeds of each case actioned by Next Gen Solicitors, whether in the form of costs awarded and success fee for a successful claim or the proceeds of ‘After the Event’ (ATE) Insurance policy for an unsuccessful claim, will be assigned by the client to the Company and then assigned by the Company to the Trustee to be held for the benefit of Investors pending the repayment in full of their subscribed capital.

These disbursements include: • the cost of the insurance policy premium; • any specialist report; • third party court costs; • court costs incurred to bring the case.

Please note, these security arrangements only cover Investors’ subscribed capital. It does not cover any interest payments due to Investors.

It should be noted here, too, that Next Gen Solicitors uses invested capital solely to cashflow the costs of the case. Next Gen Solicitors does not take any fees, commissions or business expenses of any kind from the capital raised. In summary, ATE insurance removes the risk of having to pay the other side's costs if Next Gen Solicitors were to lose a case. It also provides an incentive for the other side to settle, knowing that the insurer will have conducted its own analysis of the merits of the case.

The Trustee, acting as Escrow Agent, will hold investors’ funds until they are drawn down by Next Gen Solicitors to fund a specific case. Proceeds received from each case, in the form of either damages or proceeds of ATE Insurance claims, will be held by the Escrow Agent and allocated against the specific case in the ledger. In the event of the insolvency of the Company or its default under the Bond documents, this will form an asset pool controlled by the Trustee fromwhich to satisfy the claims of Bondholders. As regards on-going cases in a default situation, a substitute Solicitor has already been contracted to continue with any ongoing cases until completion in the event that the Company is unable to do so. 2.2 Capital protection – ATE Insurance On each case it enacts, Next Gen Solicitors has in place After the Event (ATE) Insurance. This class of insurance is essential to the 'NoWin, No Fee' service model offered by Next Gen Solicitors. (ATE insurance is a one-off payment, made up front by Next Gen Solicitors.) Next Gen Solicitors finances each case on behalf of that client in exchange for a share of the winnings should the claim be successful. It is this share of the success fee model (as opposed to charging fees to the client) that makes the entire ‘claimant’ sector so profitable.

ATE insurance also sends a clear message to the defendant that the insured is in the litigation for the duration, having already minimised the litigation costs risk.

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SIPP

HDR

Plevin

Personal Injury

Alignment of interests The investment offered is directly into the business of an SRA Regulated firm of solicitors. This means that were the investment to fail in any way, Next Gen Solicitors would stand to lose its regulation and licence and no longer be able to operate. Next Gen Solicitors has elected not to create a Special Purpose Vehicle (SPV), which may be readily liquidated should something go wrong, for this offer. This is in contrast with the use of SPVs popularly employed by property developers and others offering non-regulated investments. Robust nature of purpose Unlike many non-regulated investments, Next Gen Solicitors does not propose using the funds invested to ‘develop an idea' or to bring a new concept to market. Next Gen Solicitors is an established, commercial law firm structured to process high case volume. It operates in areas of law in which it has a strong track record or where a precedent is in place.

£4,000

£3,500

£3,000

£2,500

£2,000

£1,500

Report Cost

£1,000

ATE Cost

£500

£330.40

£216.00

Total

£0

£2,333.33

£1,406.00

£3,739.33

£2,100.00

£761.25

£2,861.25

£750.00

£866.28

£1,616.28

£546.40

SIPP

HDR

Plevin

Personal Injury

The capital raised from the issue replaces Next Gen Solicitors existing funding channels, enabling the company to operate with greater flexibility and economy.

9 - 12 Months

9 - 12 Months

6 - 9 Months

9 - 12 Months

Time to Settle

Every case which is financed using investors funds is protected by an ATE insurance policy.

Settlement Success

90%

98%

85%

98%

Next Gen will deploy the funds into a number of different sectors, thereby reducing the risk of investing into just one specific sector.

Investor Return

£4,038.48

£3,090.15

£1,745.58

£590.11

Case Costs Next Gen Solicitors has provided the following example of the average case cost for the four markets the proceeds raised will be used to fund cases for.

Report and ATE Settlement Success

Settlement Period

Investor Return

SIPP

£300,000.00

90%

9 - 12 Months

£324,000.00

HDR

£300,000.00

85%

9 - 12 Months

£324,000.00

Plevin

£300,000.00

98%

6- 9 Months

£324,000.00

Personal Injury

£100,000.00

98%

9 - 12 Months

£108,000.00

Total Investment

Total Investment

£1,000,000.00

£1,080,000.00

The above settlement success rates and settlement periods have been provided by the insurance company providing the ATE Insurance. These figures provide an oversight of the relative performance of each case type from an ATE perspective based on the insurance company’s current portfolio of Solicitors and Insurers. The figures are purely indicative and are based on the MI Insurers would expect to see on an account by account basis.

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Next Gen Solicitors Limited 3rd Floor Exchange Station | Tithebarn Street Liverpool | England | L2 2QP

Company Number: 10501720