The DNA of liability insurance shares some genes with commercial litigation finance, yet the "cousins" have different genes as well. We usually speak of the evolution of living species and how one population of a species changes over time. Here we compare the evolution of the acceptance of liability insurance with the evolution of commercial litigation finance – a newer tool to protect liability -- and its growing acceptance.
Ralph Sutton was invited to give a presentation on litigation funding to an august group of mediators and arbitrators at the 16th annual JAMS owners conference in Miami. JAMS mediators and arbitrators handle cases ranging in size, complexity and industry. Of course, their first choice is to successfully resolve cases without going to litigation. When successful, this route is often more efficient, less expensive and more private than the alternative – litigation. However, sometimes things do not work out as planned and the two sides move on to litigation. Everyone involved in the case should be aware of the opportunities that litigation financing might present to get the case resolved on what might be considered Plan B.
In the fall of 2013 Bentham IMF invited Professor Charles Silver and a group of distinguished academics, senior litigators and commercial litigation funders to discuss the evolution of litigation funding, the ethical and legal issues in the field and the efforts to increase acceptance. Professor Silver holds the Roy W. and Eugenia C. McDonald Endowed Chair in Civil Procedure at the School of Law at the University of Texas at Austin. In these interviews he discusses the similarities and differences between litigation funding and liability insurance.
Professor W. Bradley Wendel is a Professor of Law at Cornell Law School. His experience has been as a litigator, judicial law clerk and educator. Brad joined the Cornell faculty in 2004, after teaching at Washington and Lee Law School from 1999-2004. Before entering graduate school and law teaching, he was a product liability litigator at Bogle & Gates in Seattle and a law clerk for Judge Andrew J. Kleinfeld on the U.S. Court of Appeals for the Ninth Circuit. His teaching interests are in the regulation of the legal profession and torts, and his research focuses on the application of moral and political philosophy to problems of legal ethics.
Although you may never meet Stephanie in person, you will certainly come in contact with her by phone or email. As head of US operations for Bentham IMF, Stephanie’s outreach includes claimholders and lawyers who are looking for commercial litigation funding, vendors and new hires.
With the opening of an office in London, Bentham IMF Ltd can now claim that it is the only commercial litigation funding company that has working offices on three continents. Being a global company with 8 offices around the globe means that the Bentham IMF companies are accessible to more claimholders who require financing for their cases.
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.
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.
