Let’s Talk: Conversations About Litigation Funding
In a recent podcast, the team at Building New Law interviewed Casey Flaherty about his new book Unless You Ask. The book encourages law firms and clients to have conversations to improve their working relationships.
Law firms often ask us for talking points for discussions about litigation funding with clients, ranging from one-on-one conversations with clients to suggested language for a response to an RFP. When lawyers are comfortable with the intricacies of litigation funding, they can have meaningful conversations with their clients to uncover and address business needs and pressures.
When is the right time to have a conversation about litigation funding?
Any time. However, the topic naturally arises at the following points in a case:
• At the outset, when the firm is being hired or considered;
• When the client’s financial circumstances or business priorities change; or
• After trial but before any appeal - litigation funding can be used to fund appeals and/or monetize part of the judgment.
What should the conversation involve?
The following six points are often of the most interest to clients:
1. Flexibility of funding. Funding enables flexible financial arrangements between firms and clients, paving the way for firms to offer a variety of options, including:
• Full or partial contingency fees
• Blended hourly rates and contingency fees
• Discounts on hourly rates
• Flat fees
• Instalment payments
2. Broad use of funds. In addition to paying legal fees and disbursements, funds can be used by the client as strategic or operating capital.
3. Benefits to the case. Financial factors can limit the strategies that clients decide to pursue during a litigation. Funding affords clients the resources to employ the best tactics and hire the top experts without cutting corners.
4. Funding is non-recourse. Clients are not obliged to pay back the funding if they don’t prevail. The funder is reimbursed solely from the proceeds of successful litigation.
5. Client and law firm maintain control. The funder does not control the litigation; the client does. However, a funder can be a strategic sounding board, by providing expert advice and a free second opinion on the merits of the case.
6. Any court ordered costs will be covered. Funders typically pay any court ordered costs if the litigation is unsuccessful.
After the conversation
If the client wants to learn more about funding, counsel can offer to approach a litigation funder anonymously. The lawyer can provide the funder with information such as the type of case, realistic recovery, likely legal budget, duration of the case, jurisdiction, etc. and receive a preliminary assessment. If the client wants to move forward, the next step is to sign a confidentiality agreement with the funder as a precursor to sharing more detailed information about the case.
The clients and law firms we work with tell us it’s always worth the conversation, and as Casey Flaherty points out, conversations almost always improve relationships.