INSIGHTS INTO LITIGATION FINANCE

“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 and State Bars — What Should Counsel Know? (Part II)

Marla Decker

In our last post, we examined how state law has addressed litigation finance, reviewing key cases in four states. We discussed the ongoing national trend towards removing perceived obstacles and clarifying that properly structured funding arrangements do not violate state law. Naturally, counsel exploring litigation finance options should be mindful of case law in their…

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Litigation Finance and State Law — What Should Counsel Know?

Marla Decker

At Lake Whillans, we frequently field questions about the legal issues surrounding litigation finance.  One question that frequently comes up is whether legal doctrines such as champerty and maintenance impede litigation finance arrangements.  For the most part, the doctrines of champerty and maintenance do not impede litigation finance arrangements.  But the answer will depend significantly…

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Communication with Litigation Funders — What Should Counsel Bear in Mind?

Marla Decker

Counsel who have not been through the process of raising litigation funding often have questions about the risks of disclosing confidential information about their client’s case. The process of obtaining litigation funding necessarily involves sharing information about the facts, legal theories, damages and defenses of a claim, often coupled with discussions about the claimholder or counsel’s views on the strengths and weaknesses of each. Cases are more likely to get funded when a robust dialogue is established on these topics. Nonetheless, counsel should be aware of where the boundaries lie, and how to protect their clients from inadvertent waivers and fulfill their professional responsibility obligations.

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Raising Litigation Finance — What Should You Expect?

Marla Decker

The potential benefits of litigation funding are increasingly well-known to litigators and in-house counsel. But until you have been through the process of raising funding, it can be difficult to know what to expect. Lake Whillans has years of experience introducing claimholders and counsel to the funding process and helping to determine whether litigation finance makes sense for their claim. In this article, we outline the main steps in raising funding.

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Litigation Finance and the ABA — A Mixed Bag of Best Practices (Part II)

Marla Decker

In Part I of this double post, we reviewed some of the key issues raised in the American Bar Association Best Practices for Third-Party Litigation Funding document released in August 2020. In this Part II, have excerpted parts of a Q&A that I did with Above the Law that compares the ABA’s recommendations and to current standards practiced by reputable funders.

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Litigation Finance and the ABA — A Mixed Bag of Best Practices (Part I)

Marla Decker

In August 2020, the American Bar Association released its Best Practices for Third-Party Litigation Funding. In this Part I of a two-part post, we highlight some of the key issues the ABA raises and suggest how counsel might best interpret the document. In the upcoming Part II, I will do a Q&A style article discussing the ABA’s recommendations and how they compare to current standard practices among reputable litigation funders.

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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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Litigation Funding in Bankruptcy and Distressed Situations

Garrett Ordower

Bankruptcy filings have dropped precipitously in the last decade (from more than 60,000 in 2009 to 22,000 last year) — but that trend has reversed as companies deal with the devastating consequences of the pandemic. Law firms are reportedly scrambling to hire bankruptcy attorneys to help with the flood of expected filings. Litigation finance may be a creative and viable option for restructuring attorneys and advisors to consider throughout the bankruptcy process especially as traditional sources of financing by outside lenders, creditors and law firms are constrained by the current environment.

Litigation finance can preserve or increase estate resources for creditors and enable additional recoveries. But its use is not limited to a debtor or potential debtor. Financing can be useful for creditors in intercreditor disputes or other matters and especially useful for a litigation or liquidation trust seeking to prosecute ongoing claims. Here are some examples where litigation finance may be an attractive option (although creative restructuring professionals may find it useful in a host of other circumstances):

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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.