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so what I'd like to do today is kind of go through a little bit of background on the litigation funding arena then kind of talk about how our panelists approach that and what are the changes in evolving trends in the space and I'd like this to be interactive so if at any time you have a question please raise your hand as opposed to waiting till the end I think that allows you to ask timely questions as opposed to making a list of them in the end so I will turn it over to the panel to introduce themselves tell us a little bit about their background how they found themselves in the litigation funding space and make a note or two about what their views or of the litigation industry completely open on that side so what they'll only share with you thanks for having me it's great to be here my name is Dave kirstine and I am an investment manager and legal counsel at bentham IMS in New York prior to coming to bentham about two-and-a-half years ago I was a litigator for 15 years most of that time at Gibson Dunn & Crutcher in New York are the commercial litigator kind of spanning the realm of litigation topics I actually sort of bumped into this industry accidentally about six years ago in 2011 when I was litigated the Chevron Ecuador matter on behalf of Chevron and in the course of that litigation we discovered that our adversary they're the plaintiffs was being funded by Burford and the whole notion that there was this industry called litigation finance was a shock to me and a very interesting one and that's sort of how I ended up here real quickly my thoughts on the industry I still describe it as a nascent industry but it is growing by leaps and bounds literally every day as far as I can tell and it's really gaining adoption in the US market at least pretty quickly amongst a big law and bigger corporations almost every day I'm Emily Slater I'm a director at Burford Capital I am currently the head of new business development and for six years I took that job on about a month ago for six years I was one of the lead underwriters at Burford investing and managing investments that we were making over time I was a litigator for nine years at Debevoise and Plimpton prior to joining Burford I did a really broad range of litigation commercial litigation bankruptcy fiduciary duty and a fair amount of white-collar defense and investigation work and you know I've been in the industry for about six years and it has gone from people wondering what it was when when I said I was I was leaving litigation to leaving Debbie boys to go to litigation funder to being really on the hot topic on discussion that many many conferences and on everybody's interest list so I think it's a growing industry we are just scratching the surface in terms of what we can do for law firms and for companies and and we're excited to continue to evolve involve all the industry over time hi good afternoon my name is Michael Weiss I have been in the litigation finance industry since 2009 my partners and I have put out close to a billion dollars across the spectrum we have invested both in the consumer pre-settlement business as well as law firm finance commercial case finance we've also founded the only federally chartered bank in America which is cater to the plaintiff law I Squire Bank most recently I founded a company called yield Street the premise of yield Street is to be a marketplace for accredited investors to get access to asset based lending investment opportunities litigation finance is our biggest asset class to date in less than two years we've done almost 70 million dollars on the platform across all those asset classes that I mentioned I think similar to what Emily had just touched on the industry has definitely evolved substantially since I started I remember being embarrassed to tell people that I'd finance litigation they would this guy's crazy he's a gambler over time I think that the industry evolves there are more there's more capital than there's ever been before and I think that we're still at the early stages of the industry being able to help law firms in more ways than we thought we would early on and I think that law firms and corporations today are seeing the value of litigation funders as a way to expand their businesses and make them more profitable entities because it seems that the practice of law or the business of law isn't really sustainable just on the hourly front and companies like ours with the investment initiatives that we have across this panel are helping those businesses and law firms really evolve and become better businesses I'm sure we'll talk about that a little bit more soon thanks everyone for having me my name is Jim little and since about 2008 I've run a series of funds called drum cliff we're a little bit specialized in the litigation funding industry and that we only take on claims that involve some degree of collection risk so we sort of look at the market that's having sort of three areas of liability I guess it's proving liability figuring out what the damages are and then actually collecting on the judgment we found in our sort of small neck of the woods in the litigation funding industry that there are a lot of recalcitrant debtors who are the judgment debtors for money judgments we finance a lot of victims of fraud which has a lot of overlap with the insolvency process and we also fund sovereigns who have fallen prey to corruption in their efforts to be able to repatriate assets for for their people it's a bit of an offshoot of investing in straight commercial disputes but I think like everyone else in the panel said it's also an expanding industry unfortunately fraud and corruption and we're calso trent debtors are there sort of thriving and alive and well and the problem seems to be only exacerbated by globalization and like like everyone else said I feel like we're analogy I use we're sort of in the second hour of the litigation funding day so we in my own view I feel like the the industry itself is people understand the value that Legation funding provides in the right circumstances there's still a lot of figuring out about the best way to use it and and how to use it efficiently but after a lot of growing pains I think since we've all been involved in the industry which was it seems like it just cropped up in about 2007 2008 I think we've ironed out a lot of those problems in the industry and I you know I did I think it'll only expand over time thank you I think a little bit more granular about the actual types of cases that you all take on and so if I could ask you guys to give a case example even on a nose no-names basis so that our audience can see how this process works and if you can and as part of your response talk about how you intake cases a bit the type of due diligence or not that that you might engage in and how you've seen those that mix of cases change since you first entered the business Emily why don't we start with you so I am just I think maybe talk a little bit about the nuts and bolts of how litigation funding works I still find it when I talk to lawyers and business people all the time it's a buzzword but they don't quite understand how it works in practice and maybe I'll talk about that and then Dave can talk a little bit about the diligence process the basic concept of litigation funding is that a litigation is a contingent asset it needs some investment in order for it to come to fruition and litigation finance provides capital to pay for legal fees and expenses that are necessary to litigate a case and get it all the way to the finish line it is typically provided on a non-recourse basis to the litigant and and the funder receives in return a portion of the proceeds that are that are generated from the from the litigation from a successful litigation if the litigation is not successful the funder gets nothing back so that is that is the basic concept of it and we have as the industry has involved from what we would probably call that now kind of a classic single case litigation funding investment where you have one case a litigation funder provides legal fees and expenses for that one case and is dependent on one generally very binary outcome either the case wins or loses and we have taken that from doing those deals directly with claimants to doing multi case deals with claimants that have a series of litigations and we provide a pool of capital for those litigants to apply as necessary across those cases and we get a predetermined return from the pool in some cases might win some cases might lose and we get a return across the pool and also capital to corporations for large groups of cases and anta law firms that we provide non recourse investments to the firms across a single case or even a large pool of cases so that's the basic concept there's a lot more interesting and esoteric kind of investing that's happening now but that's the sort of your classic litigation funding and I will turn it over to Dave's talk a little bit more about how we look at cases sure that was that was great Emily I'd say the one thing I would add to the uses of our funding besides for legal fees and costs more and more our funding is used for operating or working capital businesses that are involved in litigation might not be able to survive the life of the litigation without the infusion of capital or Emily's firm recently publicized sort of what I would call monetizing a judgment prior to an appeal allowing someone who has a judgment a trustee in bankruptcy for example to take some money off the table and use the resources to fund other things that trustee might do want to while the appeal is pending and that's another use of our funds we really fund cases all across the commercial spectrum at Bentham we're usually looking to deploy at least a million or a million-and-a-half some folks thresholds might be a little higher at other at other funds and the top end is somewhat unlimited the wheelhouse of what we like to fund is usually about five to fifteen million dollars in a single case and we also fund portfolios as well and we're usually looking to see that the the value of the case what you could really settle it for or return a reasonable judgment that's collected is going to be about eight to ten x of whatever we're being asked to commit to the case and I don't think that's that different across the industry as well usually when a case will come to us we will do a quick intake of it to see if it generally hits our parameters and if it does we'll immediately ask the decline or the lawyer on behalf of the client to sign up in an NDA and then we'll do a bit of a deeper dive into what the case is about what some of the strengths their weaknesses are look at some key documents speak to the lawyers and the client we want to meet the lawyers in the client in person and and generally within about a week or so of that initial look at the case if it's something that we want to pursue we will propose a non-binding term sheet to the client that sets out the proposed financial arrangements going forward if we can reach agreement on that term sheet the one piece of it that's binding is we ask her a period of exclusivity uses about 30 to 45 days where we that that part is binding because we spend a lot of money time and effort doing a deep dive into the diligence of the case really kicking the tires pretty heavily the investments are all non-recourse we're only getting a return of the case is successful so we want to make sure that we're going to be investing in a case that's highly likely to be successful and during that diligence process we'll usually look at who the claimant is who the lawyers are what the value of the case is the strengths and weaknesses of the underlying merits and who the defendant is and whether the case may or may not be collectible so it looked like you have a question of yes I would say that generally you know the the mode that by far the most capital is being used to fun claimant claims now but certainly I would say the holy grail out there for both law firms and litigants and funders is to do defense side funding where we are providing finance for litigation defense side litigation and structuring essentially defense i contingency and that is something we look at routinely Burford had an investment public one with Grant Thornton where we provide a capital for a group of litigations that were being prosecuted by an insolvency practitioner at Grant Thornton and it went across declaratory cases defense side cases and some affirmative litigation so it can be applied across any kind of litigation it's a little bit harder to structure a defense side deal but it is absolutely something that we are looking at and doing and working very hard to really figure out how to perfect if I could just add one thing to that as well yeah I agree with that the bulk of what we do right now and look at our plaintiff side cases but we do look at as Emily Ann mentioned and thought a lot about defense side funding and there's probably two different ways to do it one is sort of like a reverse contingency as Emily mentioned in the second way then we also mentioned is to sort of package plaintiff and defense side cases together where in a sense you're using the plaintiff side cases if they're valuable enough to finance the defense that game and let me ask you all of David before we turn over to Tim and Michael where do your cases come from and do you guys have any parameters on who your clients are in other words are you funding individuals in personal injury cases or these major companies and complex or somewhere in between so two parts of that I think the bulk of the best cases that we end up investing in really come through trusted law firm connections but more and more of these days and I'm sure this is the same for Burford as well we're getting direct contact from clients or lawyers and especially sort of CFO types or savvy General Counsel's or CEOs of public and private companies who are coming to us directly often before they have a law firm attached to the case or maybe they have the wrong law firm attached to the case and so we're getting good cases that come to us directly as well at Bentham at least we generally consider ourselves to be commercial funders meaning that we fund all sorts of commercial litigations and sometimes it's easier to say what we don't fund we usually don't fund at least in a single case basis personal injury medical malpractice attorney malpractice or class actions although those those kind of cases can be part of portfolios that we might fund yeah perfer does generally the similar parameters we do commercial litigation and and cases come from from everywhere I think we also do a fair amount of looking for opportunities paying close attention to what's happening in the litigation space and what we think is coming next and working with firms that we have good relationships with and clients to help them see where the next next opportunities are coming thank you Jim tell us about the process and referral sources and origination zatt drum cliff sure so we're a bit unique in that first of all we do not do any defense side work it's because we deal with a collection risk most of the people on the other side of the equation are not the most reputable people I think in there you know they're doing a lot of facet protection work because either they're not being a judgment or they've stolen money or they've committed a fraud so we just as a matter of personal principle we don't help those people out but by the same token not all defendants are fraud well that's you know we don't deal with commercials years ago it's not if two people want to have a healthy argument that's fine but I like to think that our it's easier for us to do underwriting sometimes on these claims when we know the person who's on the other side of the civil claim also is has a criminal claim against them it kind of gives us a higher ground this is just just in my neck of the woods that's absolutely right by the same token when we because of the nature of fraud and and judgment debt and corruption my colleagues and I have described our sort of process of looking for investments as sort of waiting for lightning to strike because you're not really go
ng to know if there's a claim to be had unless the wire transfer doesn't hit 30 days after they agree to a settlement or until a corrupt administration comes out of office and the new administration comes in and realizes that the Treasury is empty or if there's a bankruptcy that occurs on a large for a large company and the trustee is appointed and realizes that there isn't any money in the bank account we don't know where that's going to occur but we do have some preferences similar to the same sort of economic underwriting standards that Emily and Dave and Mike have which is basically because it costs a lot of money either to litigate or you know in our in our field to pay for investigators and forensic accountants as well as litigators we just simply can't go after claims of a certain size because it costs the same amount of money to litigate over $10,000 as it does to litigate over 15 million dollars let's say so 10 to 15 million dollars in putative death is usually the minimum amount of sort of the economic threshold that we'll where we'll look at an investment as dave said sort of in that initial review to figure out its bub if our financing can make sense just from an economic standpoint both for us and for the claimants I also have a personal rule where we don't take a majority of any proceeds in any claim only the reason why is because we feel that the restitution should be should be for the claimants themselves and just for my own reputation I wouldn't want to be making money at the expense of victims of fraud because they have a lot of other emotional problems and things that they have to deal with in that in that environment so that just means that a claim probably has to be a larger size until we're willing to take a look at it thank you there's a question from the gentleman in the back yes absolutely yeah absolutely and when we talk about litigation I think we mean both litigation and courts and arbitrations legal finance yeah yeah same same offenses you look at international and domestic arbitrations equally with litigation I might go so far as to say that you know litigation funding and finance in terms of what we're talking about encompasses any investment of capital that has disputes internationally or any aspects of disputes at it as a collateral in some shape or fashion beautiful yeah it's also a judgment of course yes funding Michael we're really interested to hear from you about how you go about it because you have a very unique approach sounds very successful sure so I I kind of tripped on this space in 2009 where there was a particular hedge fund that was financing a lot of law firms and coming out of the credit cycle they were no longer able to provide financing toward their borrowers and I was kind of my entrance into the space so we don't look at a specific area of legal financial litigation funding we've looked at legal finance as a business business of law so to speak and over the years the strategies where we place capital has evolved I think across the board will really look at is betting on the jockey we don't do buying risk for the most part unless it's incredibly compelling we have invested across pre-settlement finance class action you know settlements or preliminary settlements where there is a period of time where there are commercial businesses that are party to some sort of class or mass action that have been involved for a long time waiting to monetize those claims they need to still be in business they need capital we can come in and finance those claims that require those claims law firm loans is a big portion of our business and we do that across a variety of type of firms so we've done that in commercial litigation so top 50 law firms in the world we look at portfolios of complex business litigation or other types of litigation we underwrite them on a portfolio basis and we're typically structured as first money out and then we have some sort of sharing beyond that we finance firms that have asked a recovery components to them we are very large finance ears and the mastoid space through multiple entities of ours across the entire strategy so anything from advertising to medical record acquisition and plaintiff factsheets a lot of expenses that go into processing these mass tort some of our involvement and on a very infrequent basis we'll look at binary risk complex commercial litigation or patent litigation our business has always been like I said to bet on the jockey the process that was explained by my colleagues here is very similar to the process that we employ as well I would say one thing with regards to our due diligence is we have always believed not in hiring a team of experts or lawyers in-house we always felt that outsourcing that would give us a better ability to look at as many possible business opportunities so as opposed to building you know 10 all-star names that have certain expertise in-house at a very high cost to operate we can have judges or lawyers or other experts in different areas where depending on the opportunity that we're looking at we'll hire them as a third party consultant we operate the same way we take an initial review we kind of have a good sense of what we like to do if it's something we're interested in we'll get back to you really quickly put out a term sheet if we can agree on economic terms we'll take a deposit usually then we'll bring on a third party expert to do diligence on that particular claim type or legal area that we're funding and we take the process from there so what do you guys do more credit analysis of your counterparties is part of your analysis or is it mostly case focus it's mostly case focus the only credit side analysis that we do is sometimes we found in the past that people get tripped up when they provide financing they enable a firm to take on more cases they build their warehouse of cases now they have to hire more people their operating expenses go through the roof and all the sudden they show back up and say hey great news we have all these cases that is we can't pay for an electric going out we need another 10 million bucks so the credit analysis that we do is simply to understand that the business could continue to operate a number continue to operate we always say we want to make sure that you know come 5 days before the months you have in the deposit in the account you're operating go out make your money processor cases do your thing don't worry about the business expenses so that's the extent of our credit analysis thank you let's turn our focus a bit to to how its industry is impacting the way litigation is handled and by whom and what obstacles are there might surprise you to know that this is a multi-billion dollar industry already terms of monies that are invested in matters and judgments and dispute related claims around the world I'd also surprise you to know that that is just a fraction of what this industry is capable of and the other aspect of this which I'm aware of that I'd like to share with you is that the returns that these entities are providing to their investors are higher than what you would ordinarily see from similarly sized hedge funds private equity funds crowdsourcing funds and so my question to the panel is how much appetite number one do you see in the marketplace for the services you're providing from investors and where do you see the size of the industry growing and then we'll get into what that means for the way companies and law firms operating sure I guess one word answer the short answer to that is large or large appetite we get approached all the time by folks looking to invest in us up until about a month ago month and a half ago all of our capital Bentham had come from the permanent capital of our shareholders in the US where the wholly owned subsidiary of our parent company which is a public company traded on the Australian Stock Exchange so our capital came from from the shareholders from from doing some bond offerings every once in a while but in the US as we've grown in the u.s. we opened in the u.s. about six years ago and every year we've added we've become ten percent greater of our overall company's portfolio we were eating up a lot of the public company's capital and we needed more capital for all the opportunities we're seeing here in the US and so we went out in the market here to raise capital in the US and pretty quickly we were able to raise up a facility with a large loss lodge hedge fund here in the US fortress which I understand investing in other funders as well and and we put together two hundred million dollar facility for the next few years of our us investments which hopefully will be just the first of many notwithstanding that I get approached all the time by folks looking that to find out if we have room for further investment in us so so to circle back to my initial response the appetite seems large yeah I would I would underscore the large Burford has now almost a billion dollars under management and our public fund and we recently acquired Girton Keller Capital which has over a billion dollars under management and a private fund structure and I think there is essentially a very large I hesitate to say limitless but a very very large appetite for this capital sorry this investment from particularly institutional investors all of our main investors in the UK where our fund is traded are very large institutions and pension funds and the same is the same can be said for our LPS in our private fund there is just a tremendous especially in this low interest rate environment tremendous demand for the kind of uncorrelated returns that we've been able to provide for our investors and so you know we continue to provide funding there are hedge funds and lots of other players out there looking to get in this space I've tried to get poached recently by a hedge fund I'm sure they call Dave - who wants to start up their own new fund and so there's a lot of interest in getting in here and I think the bigger challenge is being able to scale putting that kind of capital out quickly enough to accommodate the amount of capital that there is yeah and just to underscore what Emily said it you know the word on the street that we're all hearing is there are multiple hedge funds and money managers looking to stand up funds in the space so we expect to probably see some competitors more competitors coming down the pike shortly yeah I completely agree actually have an interesting point of view on the capital side both from the institutional side as well as the retail and general credit and investor point of view so like the two you just mentioned we were also talking to a group of ultra high-net-worth family offices who wanted to guarantee us a half a billion dollar fund for commercial litigation and a more diverse strategy but I can tell you that esquire Bank on their side has been actively pursued from institutional capital growing but yield streets a really interesting place a yield Street almost exclusively takes retail capital okay and the types of investment opportunities in litigation itself that we have launched in the last number of months have been large portfolios of pre-settlement law firm loans complex commercial litigation with upside receivable financial law firms now I will tell you a few quick stats so on December 29th there was one deal for just under 20 million dollars that was oversubscribed by 38 investors from New York to Hawaii in 8 hours there was a complex commercial litigation deal for five million dollars that sold out in six hours about a month and a half ago last week we had two pre settlement offers both with two million dollar range 100 120 seconds and one 110 seconds both with over 50 people in it so we have grown in investor size from customers in April of about 600 to about 12,000 today all through digital marketing and the general idea is that the investment process is completely seamless which for the first time allows people at any size to come in so you really get to see the appetite when like Emily said we're looking at environment that's low interest rate it's non-correlated returns is a huge mistrust in public markets say from individual investors hedge fund performance is down we're looking at people getting uncomfortable with where we are in the credit cycle today where we are in real estate valuations today and finally over the last two three years there has been a lot more transparency into the litigation finance arena so guys like us who were walking around touting the returns that we had in a very closed circuit environment has gotten out over time there are more people that have opened up shop since then so people have started to see investors has started to see what this industry is and Canale cuts or tails of it so I would say I agree I couldn't say limitless but I don't think there is any shortage of capital in this industry any time and I also don't think that like I mentioned before I think we're in the second hour there are going to be uses of litigation finance that none of us are going to expect over the next couple of years I'm excited to see where it goes I'm sort of it I'm a specialist here so I have to answer my I agree with everything that everyone else says but my own practice area things are a little bit different I totally agree that there's there's a lot of demand for investment in even in my in my asset collection funds they're mostly due to a lack of correlation with the markets when markets are low people look for lack correlation when markets are toppy they look relaxed correlation so it seems like in any environment it doesn't seem too difficult to raise money collection risk is a little a little slower of an investment to manage then straight commercial disputes so my investors are either institutional or sort of high net worth Rigby investors but I they're highly vetted I only have 13 LPS because I need to know that they understand that collection risk takes time and so I need patient capital and one of the concerns that I might have about the industry as a whole is that usually whenever there is a limitless appetite for investment that means you get a lot of different kinds of investors and litigation funding is even if you get lucky is a slow burn at best and if what we call hot money starts to enter the market that's going to get more complicated because it's an industry where you just can't guarantee short-term returns because you're susceptible to the the whims of a court and and these things just take time that said I'd be curious to see I also am very careful in vetting my investors because we have to deal with a lot of confidentiality issues you know Lytton funding still has this kind of veneer to it where you know people can file nuisance suits and go after the funder that I'm sure that will come up in this in disclosure discussing that we will have later on but I also just need to know that my investors are comfortable with me investing in claims without necessarily fully disclosing the nature of the claims I know that's a an issue that Burford had when they first went public in in Jersey because it was start with Guernsey but yeah because you know they have reporting requirements for their investors and rightfully so but it's difficult to be privy to litigation and and not have those concerns about confidentiality we don't want the claimants done with their litigation strategy to be disclosed just because we happen to be funding it so I'm actually kind of curious how yield Street deals with that whenever they're putting claims to the retail investors and how they get uncomfortable with the claims without necessarily disclosing too much information sure so I think that it goes back to the point of the demand and the desire to be invested in this asset class yield Street obviously can't go out and blast to the public world hey we're funding you know this specific case with this global law firm etc so what we've done is describe the nature of the cases and the suits and talk a little bit about the character and general biographical information of the firms we'd say hey at the top twenty four over the world they're doing you know ten cases like so it's fraud recovery or its complex litigation small companies suing big compan
because the company you know lied and stole and cheated etc and we try to give information but we never disclose specific plaintiffs in those cases with regards to mass tort litigation or some other you know law firm type of litigation we may say hey we're investing in a law firm we're providing capital to a law firm that has a large book of business across seven litigations g.b.m yes etc and walk them through what the general litigation is without being specific to plaintiffs or necessarily to the law firm and I think that that was kind of a really big learning curve for us a yield Street understanding really the right measure of curation to get your investors I think Burford does a great job actually the other day finally got around to reading the annual report and while you don't necessarily have to go and speak about the individual case the giving of your investors a sense of comfort that there's a level of transparency that you're explaining to them what's happening is really what's key I don't think there are more than five of my investors who if I said to them in this case a or case B would know the difference and that would make a material difference to them in investing the case unless they have a personal connection to the defendant necessarily thank you let's let's do turn to good you need the planning yes yes yes yeah and I think you know the difference between what Burford and and Bentham and drum eclipses do and what yield Street is doing is that when you invest when an investor invests in a share of Burford stock you are investing across a very large and deep pool of varied litigations and jurisdictions across the world and I think what yield Street is doing is providing a much more specific litigation pool or single litigation that an investor can sort of pick and choose what they want to be invested in of course yeah I was going to move on to that next so thank you for the for the said way I would before that just want to circle back on some of the disclosure developments that are coming up I think both from a governmental perspective as well as between the actual party and litigation and the funder and so first there have been a number of states that have enacted laws which require the disclosure of third party funding and the sense is that's to try to limit those types of cases presumably what's your view on where that jurisprudence and legislation is heading and do you see a groundswell of an effort to try to limit third party funding of litigation or is the evolution of litigation funding into supporting those companies that you would typically see as defendants a hedge on that well I guess I would you know I think there is an overwhelming trend in states across the country except for some very limited small jurisdictions in favor of allowing litigation funding and that there really isn't a by and large any kind of groundswell of movement towards regulation of it there is some discussion about whether there should be disclosure just like there's disclosure of insurance policies under the federal rules so the judges can assess whether they have a conflict in in deciding a case I think it would be an odd thing for a judge to own stock in Burford but you know clearly there should be you know the purpose that we have in the US for disclosure yes exactly you know around disclosure both of insurance of you know of equity holdings of a certain amount in companies to courts is for courts to make sure that they are impartial and we draw lines around that there are some movements for there to be disclosure of litigation funding to I personally have no objection to that as long as we also have protection that there isn't a you know you know sideshow of and delay of litigation trying to discover communications between funders and litigants you know with there has been and we haven't touched on it yet but overwhelmingly strong jurisprudence developed across the country around providing work product protection for those communications so in general I think overwhelmingly there is movement towards getting rid of old temporary statutes and allowing litigation funding and you know disclosure issues I think will will come up and you know I think it's appropriate to allow courts to assess and you know to draw some lines around what must be disclosed for courts to determine whether they have an improper conflict of interest in overseeing a case do you see that I'm outside the United States as a developing area as well or was where the jurisprudence and those other countries that you all operate in different in this regard well there's certainly a lot of activity around this right now in the international arbitration space the IBA just promulgated new rules a touch on disclosure for arbitrators a little bit different in the arbitration context where arbitrators are also practitioners or still partners of law firms in many cases that litigate cases but there's there's activity there I think in the UK litigation funding is just it's a matter of course it's not really a big deal and it's just you know what there are fee applications at the end and disclosure of funding and after the event insurance is part of that yeah I would really echo most of what Emily said I mean at Bentham we really do believe in transparency when our parent company you know started off in the industry in Australia 16 17 years ago made a decision to disclose all of the matters that they funded and the terms that they were funding under when we came to the US we took the opposite tack basically just because of the way the discovery regime operates here and we didn't want to get in broward in Satellite litigations here over correspondents that was sent back and forth to to the Thunder and what the terms of the funding agreement would be which would potentially ratchet up the cost of the underlying litigation and perhaps make the funding impractical to begin with and if a balance can be struck between between the issues of what gets disclosed then then we don't really have a problem with you know coming out of the shadows and being disclosed as a general rule though we stay in the background right now unless there's an agreement with the client and the lawyer to come out of the shadows because of the discovery regime here now can be beneficial to disclose that a funder is involved in a case to the underlying case itself because it can be a nice leverage point in the case actually so we're happy to come out of the shadows if we can be assured that it's not going to ratchet up the costs in a case on the state level I would just mention that what we've seen mostly is targeted legislation to protect consumers and often that legislation will impose rate caps which if they were to apply to our cases we wouldn't be able to fund those cases because of how risky they are we seek high returns in our cases and we don't fund a whole heck of a lot of consumers some of our funding does bleed into consumer funding where we might fund an individual in a whistleblower case or a high net-worth individuals as a complex commercial claim but most of our funding to answer an earlier question that you had really goes to small midsize and large businesses so we're not really funding consumers and that's been the target of most of the state legislation what's been on the forefront recently is you may have seen the Northern District of California enacted a rule required that any funding of a class action firm affirm that that is litigating a class action case it might be getting funding needs to disclose that to the court and and I would submit that that's because there's some unique issues with respect to class actions as opposed to other general commercial cases and that provision has now been picked up in the recent class-action bill that passed the House of Representatives on a party-line vote and you know we'll see what happens to it in the Senate but but there is a difference I think between class actions and general commercial litigations I don't have a fully developed thought I've been thinking about it a lot lately my issues it's kind of an interesting issue the transparency side of it we're totally fine with very much like you both of you said personally I think there's a lot of posturing I don't I don't understand why we're moving away from the merits of cases and focusing on the financing relationship we're businesspeople we're here to make money if you can't make money we probably won't find that case at least Creek Inc will make money the idea of creating a ton of noise around litigation finance listen our returns are public look at Beaufort's right they do really well I don't think they're funding I don't think there's like a section in the new business development that says let's fund bad cases it just doesn't make any sense so I'm a little challenged to understand why you know they're pushing legislation like this I think similar to what David said if I stand up and say hey I have ten million dollars behind this case be sure is that I did a ton of due diligence more diligence than any of you probably consider doing by a number of people so I feel very strongly about that case so do you really want to make that public is that something defense counsel wants to know going into it it's something that helps the case does it hurt the case I'm not entirely sure where the thinking in general is going with regards to financing cases but I think more importantly it can hurt the people that don't get litigation finance whether they need it or not if the thinking becomes the cases that have a financial partner that has deep pockets like it would stand a long litigation then maybe you want to think twice before you do that whereas the cases and plaintiffs that don't have that financial partner don't necessarily mean they don't have a claimants as meritorious maybe they don't want to give up or share on the risk because they think it's a simple plan so I think it I'm a little bit challenged by the necessity for it and the point the transparency issue I'm totally fine with but I don't want to see us litigation start deviating from where we're supposed to be which is in court and working on the merits of cases and long dealings that have happened I think that by and large the plaintiff bar is really the only one holding you know fraudsters or corporate wrongdoers feet to the fire and I think that's important but that's where I'm up to about definitely agree it's going to say that there's been a push recently by certain constituencies to amend the federal rules to make any funding - if you have funding to make it an automatic disclosure in your initial disclosures like you would have to do with an insurance contract and while in some senses funding is the mirror image of insurance on the plaintiffs side the analogy for why you need to disclose the insurance policy doesn't really hold you know there you want to know whether your case should keep going or not if you might not have sort of the pot of gold of the insurance contract on the other side it doesn't really hold the same way that the defendant needs to know whether the plaintiff is fun there or not whether he's going to go forward or not the defendant has to go forward one way or the other and it shouldn't be the case that a defendant only it gets to win if they have the deep work it should be only be the case that the deeper pocket you know gets to win a case you'd really be decided on its merits the only thing I like funny thing is that if an insurance company wouldn't exist or there wouldn't be capital to pay a claim then that would I wouldn't necessarily be a frivolous lawsuit by merit but it would be a very large waste of time of court lawyers because if you know money at the end of the case and it's kind of the opposite direction great that's right and the final point I would just make is courts already have the treaties that they need if there's a reason to disclose the existence of a funder there's gonna be a panel tomorrow talking about the ace case for example where you know the court you know compel the disclosure of the funders involvement so there really doesn't need to be additional rules enacted in order to get at that question if it's relevant in particular case sorry I kind of my own views on this in the space in which I deal it's actually sort of negative for my own personal safety to disclose the fact that we're investing in certain litigation just because a lot of people who we go up against for collection risk or people who in one way or another sort of sociopathic and I think if they were able to find about out about the disclosure of a funder behind a claimant they would use any means that they that they could to frustrate that that litigation so you know I'm susceptible to what the market forces are but in my own from for my own funds strategy disclosures and necessarily a great thing for me I also I think kind of a temporal view of the of this kind of disclosure concept where I feel that when the litigation funding was in its first hour that the requirements for disclosure of financing for for litigants was really used by defense counsel to frustrate litigation that's my view of it and I think that as the market matures it's going to have the sort of deleterious effect of having those those people getting what they wish for and like you said finding out that now that these that litigation funds are larger and that they have a lot more capital under management that the disclosure requirements are actually going to show that while a plaintiff you know his or her self might not necessarily have a lot of financial resources if the funder behind them has you know almost limitless financial resources then that's not going to it's not going to help to try to frustrate the litigation because they're going to have a really serious funder behind them and they can't as we take they can't Bigfoot the plaintiff and just try to outspend them so I think it will make the market more efficient if there are disclosure requirements thank you but you know what's interesting is major corporate firms always had substantial lines of credit right so if you're whoever just named one or you say you're Reed Smith and you have a hundred million dollar line of credit from Wells Fargo or whatever the purpose is that is that now with disclosure it's always been that way I don't know what you do but I'm just curious why it's different when it comes to how do you even differentiate between a traditional line of operating credit and something that we do if we're giving a law firm loan I steal a line from one of your new colleague you know all cases are really financed in some way from the corporate Treasury or line of credit or you know a shareholder so this is just another way of financing cases that doesn't really call for a separate set of rules and regulations right there I mean in many common law and even civil law jurisdictions there has still in existing the the concept of tampered II which had been an old English rule we've seen Hong Kong and Singapore both recently in the last few years move away from those rules and recognized that the ability to finance a litigation whether a litigation funder any other third party that provides capital should be allowed because parties just don't have the ability to bring a case and obtain justice through the courts like they should be so we're seeing not only in the US I said earlier move away from those old champer D doctrines but also in jurisdictions around the world and actually Emily that comes back today or question two where you know one of the tenants of Champa tea was that the third party would be controlling the litigation and I think I could probably speak for all of us that while our underwriting standards are very stringent once we invest in a case we we are not controlling the litigation I mean we might have I can't say I have suggestions and a lot of times in at least in my field I have claimants who come to me who really need some suggestions because they don't know how to hire specialize that's that recovery counsel they don't know how to hire international counsel and so they might look to us to suggest it but we we don't call balls and strikes on litigation so I don't think we'd really run up ag
inst charity concerns anyway Jim thank you for that because that was place where because of time I wanted to end and to address this gentleman's question is because where does the control start or end or not exist in terms of the cases or matters that you invest in and so we heard from you Jim thank you does anyone have a different view as to the level of involvement or direction you have in a particular matter our business is in every level betting on the jockey so whether it's a pre settlement business investing alongside a firm that has a long-standing track record it's investing alongside another commercial litigation funder it's the diligence that they've done if it's providing a loan to a law firm it's because we think that that law firm has a right track record and the ability to continue to be successful so in every case in every investment with regards to the legal business that I've invested in I've had zero say whatsoever like Jim said once the money is in it's in so we don't we don't and we get updates on the general success or lack thereof in a particular investment but we have absolutely no say and never even frankly been interested in it I'm not a lawyer I don't have a law background finance guide so for me it's we run our process we do our diligence if we feel comfortable that this is the right investment to do let me take it from there similar we are all former travelers at Bentham with 15 years or more of trial experience so we do like to think we have something in a way to offer in the way of thoughts on the best way to get the case across the goal-line but it's completely advisory to take it or leave it kind of thing most of our lawyers and clients that we work with like to take us up on the notion of thinking through some strategy questions for with us because it's often useful to have someone who's not as emotionally invested as the client or is not as deep in the weeds of the day-to-day lawyer think about the best way to get to the endgame in a case but we don't take any control we disclaim any control in our contract as I believe some of our other colleagues up here do as well the only rights that we have after we invest in a case really or the right to be kept informed what's going on in a case on a regular basis kind of like you would do with an insurer on the defense side the right to be kept appraised and is real-time if possible what's going on with settlement discussions and be allowed to weigh in with our views and the right to be paid the the return that we contracted for but ultimately all the strategic decisions in the case are left to the lawyer in the client Burford has the same approach on our litigation funding investments but I will say look it's legal to buy and sell claims lots of places and Burford has a very large and public claim that we have bought a majority interest in and have control over and in fact have made a secondary market offering that you know has been incredibly successful and so you know while in most litigation certainly where we are you know providing capital for a claimant or providing capital for a law firm to do a litigation we are we are passive in exactly the way my colleagues appear have described there are investments out there where we have either purchased the claim outright or purchase majority of the claim and right to to prosecute to run the litigation so that that is out there that's happening I mean we're you know there are a lot of bankruptcy lawyers in this room claims are auctioned off in bankruptcies all the time so that you know that is an area where where we are and I would expect to see a lot more activity by professional investors thank you because of the prior panels going over time we need to wrap up and I'm hopeful this terrific group of panelists will be at the cocktail hour this evening where they can answer any further questions you might have in this really exciting and advanced developing space but for now if we can just thank them all for appearing certainly reserving [Applause]
