Law Firms

Whether to facilitate representation of under-resourced clients, to hedge the risk of litigation, or pursuant to a litigation finance portfolio strategy, law firm partners are increasingly driving the decision to seek third-party funding.

The Argument for Why Counsel Have an Ethical Duty to Inform Clients About Litigation Finance

Marla Decker

Recently, I met a General Counsel of a mid-cap company who had only just learned about litigation finance.  She was both intrigued about the possibilities that litigation funding could unlock for her company (as a company with an active litigation docket) and dismayed that she hadn’t heard of this option sooner: “Why haven’t my outside counsel told me about this?”

Our conversation reinforced that even though litigation finance is increasingly well-known among litigators, there remains substantial opportunity for education, especially among in-house counsel.  But the GC’s question also made me consider whether the pendulum has now swung from the industry’s early days when counsel questioned whether they were ethically permitted to inform their clients about litigation funding to a point where counsel now have an affirmative duty to inform their clients about litigation funding as an option to finance litigation costs?

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What a Litigation Funder Learned from A Litigation Funding Conference

Marla Decker

I recently attended the LITFINCON conference in Houston, Texas.   This was my first in-person conference I attended in 2+ years, and it was a welcome breath of fresh Texas (blissfully warm) air.   

The conference organizers (Siltstone Capital and Litigo Financial) did a great job of creating a diverse set of topics and finding great panelists.  Speakers included funders, law firm partners, general counsel, brokers, investors and even judges.  We covered a wide range of topics including the basics of litigation funding, litigation finance as a maturing asset class, the role of brokers, rise of secondary markets, and even the intersection of litigation funding with block chain.  The stars of the show were probably the judicial panelists, including two federal judges from the Southern District of Texas, and a Texas state court judge.  It’s unusual to get a view from the judiciary outside of the courtroom, let alone one on litigation finance, and this panel was particularly engaged and candid about their knowledge and impressions.

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Why A Delaware Supreme Court Decision Affirming Shifting a Contingency Fee to the Losing Party Could Have Applications to Recovering the Costs of Litigation Funding

Marla Decker

n general, the U.S. legal system requires parties to bear their own costs, and does not automate “loser-pays” rules like other jurisdictions or arbitral institutions. There are certain exceptions, notably when the dispute arises under a contract providing that the prevailing party will be entitled to its fees and costs. An incentive to both parties to include such a provision is so that each party will truly be “made whole” after any dispute, rather than netting from any recovery the costs of legal fees and expenses. 

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Levelling the Playing Field: The Rise of Litigation Funding in Canada

Marla Decker

Lake Whillans has been following closely the developments in Canada related to litigation funding and recently consummated its first public and court-approved litigation funding agreement in Canada.  In Lilleyman v Bumble Bee Foods LLC, a class proceeding alleging violations of the Competition Act among canned tuna producers, Lake Whillans provided expenses and a cost indemnity to the plaintiff in exchange for a share of any future proceeds.   We first wrote about early decisions related to litigation finance in Canada in 2015, and since then litigation funding has steadily gained acceptance amongst parties, practitioners and the courts.   While litigation funding is becoming a world-wide phenomenon, each jurisdiction approaches the practice slightly differently.  We asked Gavin Finlayson (Partner, Miller Thomson LLP) and Monica Faheim (Associate, Miller Thomson LLP), to provide us with an overview and insight on the Canadian viewpoint and legal framework of litigation funding.

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How to Choose a Litigation Funder

Marla Decker

Litigation finance is growing in prominence in the legal industry, embraced not just by lawyers but also increasingly by courts and state bars.  As lawyers and claimholders have come to understand the utility and flexibility of litigation finance, the demand for funding has increased, and so too has the number of funders in the market.  Some funders (like Lake Whillans) focus exclusively on litigation financing, whereas others are incorporating litigation finance investments as part of a larger investment portfolio.  Some funders are interested only in the highest-value disputes, whereas others target smaller investments.  Some will fund a strong case in any area of commercial litigation, whereas others specialize in a more focused range of cases.

How are claimholders choosing among the increasing diversity of funding options?  How should they be choosing?  In this article we first present some empirical evidence on considerations in funder selection and then offer our advice, gleaned from our long experience in the litigation finance market.

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“State of the Rules” on Third-Party Funding in International Arbitration

Marla Decker

The role of third-party funding in international arbitrations is on the rise, in both common and civil law jurisdictions. Lake Whillans is meeting that demand with expanded capabilities and investments in the space.  To help our audience understand the developing corpus of rules and guidance set forth by international arbitral institutions addressing such matters as disclosure obligations, privileges, and allocation of costs, we asked  Ari MacKinnon, Aaron Gavin, and Leila Mgaloblishvili of Cleary Gottlieb to provide an overview.  

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Litigation Finance Sounds Good — But What Role Will The Funder Play?

Marla Decker

Much of the discussion of litigation finance naturally focuses on the underwriting phase of the funding process. We’ve written previously about the variety of flavors of litigation finance deals and the fact that it’s never too early or too late to seek funding. We’ve also discussed the pricing that a claimholder should expect in negotiating a litigation funding agreement.

But what about when all the terms have been agreed and both claimholder and funder have signed the funding agreement? What role does the funder play? Who controls settlement? And what type of interaction should a claimholder expect to have with the funder on an ongoing basis? And how do the mechanics of funding work? How does the money flow both for covering litigation expenses and for dividing the proceeds from a successful claim? Lake Whillans has seen many litigation funding investments through to their conclusion, and although each case has unique elements, there are some standard practices.

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Litigation Finance – Quickly Evolving Beyond “Traditional” Uses

Marla Decker

In its early days (not so long ago), litigation finance entailed a straightforward proposition. A claimholder with a meritorious claim, but without the resources to litigate it, would seek funding from a litigation finance provider. The funder would conduct due diligence on the claim and negotiate investment terms. If the claim succeeded, the funder would recoup its principal, plus a return; if it failed, the claimholder would walk away with no liability. Funder and claimholder had no particular expectation of any longer-term partnership.

This type of one-off, single-case funding is still going strong today. But the field of litigation finance has expanded considerably, and funding now comes in a variety of flavors. A growing proportion of funding deals involve neither a single case nor a poorly-resourced claimholder. Today, entities seeking funding are often more concerned with managing risk than with acquiring sufficient resources to litigate.

This article will explore three growth areas in the current funding landscape: (1) deals involving funding for larger corporations, (2) law firm portfolio funding, and (3) acquisition of claims by litigation funders. Lake Whillans has extensive experience investing in each of these structures.

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International Arbitration and Third Party Funding in Hong Kong: Q&A with the Secretary-General of the Hong Kong International Arbitration Centre

Marla Decker

As jurisdictions compete for status as premier international arbitration hubs, a differentiating factor (or, increasingly, a must-have factor) is whether the jurisdiction’s legal framework allows for third party funding in arbitrations seated there. We have followed the development towards a more permissive environment for third party funding in Asia closely, recently asking members of Freshfields’ international arbitration group to provide an update on developments in Asia with Singapore and Hong Kong leading the charge. Today, we focus in on Hong Kong, which on February 1, 2019, put into effect previously enacted legislative changes to permit third party funding in international arbitration. In connection with this development, the Ministry of Justice has released the Code of Practice for Third Party Funding of Arbitration, which sets out practices and standards with which third party funders are expected to comply in connection with funding of arbitrations in Hong Kong, and the Hong Kong International Arbitration Centre (“HKIAC”) amended its rules to harmonize with the legislative changes and to address disclosure requirements, confidentiality, and costs in third party funded matters. We asked Sarah Grimmer, Secretary-General of HKIAC to discuss the changing landscape.

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How to Choose A Litigation Funder

Marla Decker

It’s 2019, and litigation finance is going to play prominently in the legal industry this year. Lawyers and claimholders increasingly desire the utility and flexibility of what litigation finance can offer. As demand for litigation funding has increased, so too has the number of litigation funders in the market. Some funders (like Lake Whillans) focus exclusively on litigation financing, while others have added litigation finance investments as part of a larger investment portfolio. The field has matured to the point that Chambers & Partners ranked litigation funders in the U.S. and U.K. last year. (Lake Whillans as a firm, and Lake Whillans co-founder Boaz Weinstein individually, each were ranked among the top bands in the 2018 Chambers rankings).

So if you are a claimholder, a lawyer seeking funding for your client or firm, or law firm management trying to differentiate between funders, how should you be analyzing the options? We suggest there are key differences among funders that you can use to compare:

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The best way for companies and their counsel to determine if litigation finance is an attractive option is to discuss it with us.