Commercial litigation funding and liability insurance are in many ways strikingly similar and in many ways they are very different. You can consider them mirror images of each other. While both are designed to help the party deal with the consequences of litigation by shifting the costs and risks to someone else, commercial litigation helps the plaintiff; liability insurance helps the defendant.
You are not sleeping at night. You are anxious. You have a meritorious large commercial claim. You are cowed by your opponent’s deep pockets. You may need operating money for your business or just to feed your family. You need help. You need alternative litigation financing. YOU NEED BENTHAM.
Jeremy Bentham advocated litigation funding as a means for providing access to justice for people who cannot afford the cost of litigation. His beliefs live on as does his body. It is not every day that you can see mummified bodies of great thinkers of the world. At the end of the South Cloisters of the main building of University College of London, in a closet the size of a telephone booth is Jeremy Bentham, the Auto-Icon. How unusual is that!
Commercial litigation funders have been raising money the “old-fashioned way” via personal meetings or telephone calls with individual investors, family offices, hedge funds and large institutions. A recent example of crowdfunding to support a pro bono case shows that advances in the use and acceptance of social media might change the way money is raised and from whom it is raised.
Your business has been wronged. You file suit and pursue your day in court, but the tenacious, deep-pocketed defendant that has wronged you is now draining all your resources. You turn to a litigation funder to help you keep fighting. Do you need to reveal your financial arrangement with the other side to prove you are still the “real party in interest”? Judge Cole of the Northern District of Illinois says, “No.”
Your business has been wronged. You file suit and pursue your day in court, but the tenacious, deep-pocketed defendant that has wronged you is now draining all your resources. You turn to a litigation funder to help you keep fighting. Do you need to reveal your financial arrangement with the other side to prove you are still the “real party in interest”? Judge Cole of the Northern District of Illinois says, “No.”
Not a bad idea to interview several commercial litigation funders before choosing one to work with, but be sure to execute an NDA with each one at the start of talks. The plaintiff in Miller v. Caterpillar interviewed several commercial litigation funders, but did not heed this advice. The Court ordered Miller to produce certain exchanges with funders that were covered by an NDA, while those discussions that were pursuant to an NDA were protected. The moral of the story is clear.
Getting to know the person who is funding your large commercial claim litigation is as important as the funder getting to know you, your case and your lawyers. Prior to joining Bentham, Allison Chock was the youngest equity partner (in recent memory) at a prestigious law firm. She joined the Bentham team in August 2013 and in a matter of weeks, she had opened the Los Angeles office. Having her on the Bentham team is one more arrow in Bentham's quiver.
In July 2013, Regulations were introduced to require funders to have "adequate practices" for managing any conflicts of interest that might arise in litigation they fund. The article gives an overview of the conflicts management regime, how it is managed and the impacts it will have for litigation funders.
A concept from Malcolm Gladwell’s most recent book, “David and Goliath”, can be applied to a claimholder who does not have the money to fund his case. A litigation funder as a strategic partner who can pay for the costs of good counsel, hire expert witnesses, and use public relations levels the playing field and puts a bigger shot in the claimholder’s sling.
No matter what jurisdiction your case will be in, it is necessary to know how your client-attorney privilege is protected when you talk to a litigation funder. Jurisdictions differ one from the other and along with an executed NDA, you should also know how you are protected under the jurisdiction's work product doctrine.
Being where the claims and clients are is a no-brainer business decision. Bentham IMF Ltd, the parent company of Bentham IMF, has offices in Sydney, Perth, Brisbane, Melbourne and Adelaide. Australia is 2.97 million square miles; the United States is 3.794 million square miles. It made sense to cover more territory in the US than with just a New York office. However, opening an office in Los Angeles was about more than covering square miles. It was about opportunity. Read why…
When seeking third-party funding for your claim, you should be aware of maintaining the confidentiality of the documents that you and your lawyer have created. The protection afforded by the Work Product Doctrine varies by jurisdiction. Protection of your documents can potentially mean winning or losing a case if the documents are deemed to be discoverable.
Be wary of subjecting your attorney’s work product to discovery by your opponent in an inadvertent waiver of the Work Product Doctrine. Know how to protect the confidentiality of your attorney’s work product when seeking litigation financing. Each state jurisdiction as well as the federal jurisdiction have slightly different but critical differences. Know where you stand in your jurisdiction.
Sharing documents with a litigation funder is an important part of seeking funding for your claim. Part of the funder’s decision process is based on your attorney’s due diligence of the documents you provide. Equally important is preserving the confidentiality of the documents and abiding by the rules of the Work Product Doctrine in the jurisdiction where your case will be filed. Protecting your documents from discovery is critical. Not all jurisdictions have the same protections. Your lawyer will know the rules and you should be aware of them, too.
Stature, history and perhaps a bit of mystery. The name Bentham IMF combines
two of the most well-known and recognized names in commercial litigation finance.
It took two legal entrepreneurs in Australia to develop the first model for litigation finance. Hugh McLernon and John Walker are recognized by The American Lawyer Magazine recognized McLernon and Walker as one of the 50 top innovators in the legal industry in the past 50 years.
Say it isn’t so, or say it is so. Two hundred years ago and even more recently, litigation funders
were considered ruthless scoundrels and access to justice was limited to only those who could
afford the high costs of litigation.
Whether or not the American legal market is ready for commercial litigation funding, it is here and here to stay. Although commercial litigation finance may be new in the States, Bentham IMF’s parent, Bentham IMF Ltd, is the world’s most experienced commercial litigation funder and has been funding cases in Australia and around the world since 2001.
Regulations introduced in 2013 requires litigation funders to have adequate, documented practices for managing any conflict of interest that might arise in funded litigation. The presentation provides an overview of the conflicts management regime, how it is managed and the impacts it will have for litigation funders.
