How Litigation Finance Went From An ‘Undiscovered, Untapped’ Legal Concept To A Booming Industry

How Litigation Finance Went From An ‘Undiscovered, Untapped’ Legal Concept To A Booming Industry

How Litigation Finance Went From An ‘Undiscovered, Untapped’ Legal Concept To A Booming Industry

(Impression via Getty)

Around the course of the earlier decade or so, litigation finance has undergone a transformation of sorts, starting off in the market as a very little-known, novel lawful notion prior to becoming a broadly acknowledged and typically heralded part of the occupation which is helped to stage the taking part in discipline in the civil justice technique. Litigation funding is now so mainstream that it’s rated by Chambers and Partners. 

This built us surprise: What has it been like to navigate the entire world of litigation funding as it is expanded to a flourishing, billion-greenback sector? We not long ago had the satisfaction of speaking to Lee Drucker and Boaz Weinstein, the founders of Lake Whillans Cash Partners (Lake Whillans and Boaz are rated by Chambers), about their journey in the litigation finance industry. Listed here is a (flippantly edited and condensed) generate-up of our energetic discussion about 3rd-bash litigation funding and what it’s been like to start off and create a vocation from the ground up in this constantly building industry.

Staci Zaretsky (SZ): Explain the route that you took from regulation faculty to litigation finance. What led you below?

Lee Drucker (LD): My path to litigation finance was in essence a direct shot. I was a JD/MBA scholar at NYU.  In my initial summertime, I took a position with a retired companion from Latham & Watkins. He employed me that summer season to support set alongside one another small business options and glimpse at assorted possibilities at the intersection of legislation and company for a corporation called Burford Advisors. The option I labored on most extensively associated litigation finance. I helped him do study and put alongside one another a business enterprise program about it. This was the summer months of 2008. My next summer, I interned at a regulation firm, my third summertime, I interned at an expenditure bank. 

On graduation in 2011, I was nevertheless pretty eager to transfer back into litigation finance. The spouse I experienced labored for had considerably innovative the ball in the field litigation finance had grown a bit, but it even now was not pretty large or developed out.  A a little unique iteration of the business I had worked for went public about a 12 months and a 50 percent later. That corporation, Burford, is now the largest litigation funder in the planet. The Latham partner that I labored for remaining Burford and began his own shop, and he helped me get my footing in litigation finance appropriate out of the gate when I graduated.

Boaz Weinstein (BW): So, as opposed to Lee, I experienced a lengthier path as a law firm in advance of moving into litigation finance. I graduated from Harvard College and Columbia Legislation School. I did two clerkships next regulation school. 1st for the Main Justice of the New Mexico Supreme Court, and then later on for a federal district court choose in the Southern District of New York. I begun my vocation in a classic way, doing work for Cleary Gottlieb as a litigator, and spent 6 decades there prior to selecting I preferred a little something additional entrepreneurial. That led me to shift around to the plaintiff-facet business Bernstein Litowitz, which is the leading plaintiff-facet securities litigation firm, the place I represented traders in significant course steps. I was there for three decades right before I ever listened to of litigation finance, which was nonetheless pretty nascent. 

In 2011, I identified my way into the subject when a person of the associates at Bernstein Litowitz, who I experienced worked with closely and who had recruited me into the agency, determined to open a litigation finance company, a single of the first corporations to plant its flag in the U.S. I considered it was a special prospect to get in on the ground ground of an industry that served an essential will need. The lawful field is probable the only field in The united states exactly where cash cannot movement in as equity in the usual system for the reason that nonlawyers just can’t personal pieces of regulation corporations and so firms just can’t increase equity in the usual way. I determined that I would give it a go. And that’s the place Lee and I met — we both  labored at this agency for a year and a 50 percent before we made the decision to strike out on our possess and begin Lake Whillans in 2013.

SZ: Let us speak about the development that this marketplace has manufactured in recent a long time. Inform me about what it was like when litigation finance really begun to capture on, and what is going on now.

BW: When we first started off in the small business, all-around 2011 to 2013, litigation finance was not well acknowledged in authorized circles. A ton of the queries we got when we were attempting to teach men and women on the room were alongside the traces of, “Can you do that? Is that authorized?” It took a quantity of a long time for the market to take the follow and to go from “Can you do that?” to “How do we do this?” 

From about 2015 to 2018, we experienced a key shift in the market where by it felt like litigation finance had really develop into embraced by the major regulation corporations in the land. In its first phases, litigation finance was typically used by modest to medium-sized firms, which desired funding, and generally, smaller firms that represented these corporations. It took some time for the greatest corporations to agree to use litigation finance and turn into effectively versed in it. And now we’re at a level in which it genuinely is typical for substantial regulation firms and lawyers across the U.S to be utilizing litigation finance in a single form or yet another. 

The frontier of the field — and I don’t simply call it the frontier to imply it is automatically wild, relatively it’s the position where most of the motion is taking place right now —  is at the more substantial corporate level. I would say we are in the midst of an adoption similar to the adoption by big regulation firms, where huge firms are significantly starting to be consumers of litigation finance, not always mainly because they never have the resources to bring a assert, but because it is a valuable tool. Every single calendar year, we do more bargains with more significant-name companies, and you can see that it is turning out to be increasingly acknowledged. I would not however say it at the identical put the place the regulation firm market place is, but it is adhering to a very similar trajectory. 

SZ: What measures are you getting to help increase the market place even extra?

BW: We have generally sought to boost education in the area. Early on, we determined — definitely in conjunction with Higher than the Law — to take an energetic part in writing imagined management pieces about the market to teach the current market about litigation finance. Even when people today felt like litigation finance wasn’t a soiled word any longer, there were being nonetheless all kinds of practical inquiries that lawyers required to fully grasp just before they would come to feel cozy ample to recommend it to their shoppers. To that conclusion, we partnered with Over the Regulation to publish items about the vital aspects of litigation finance. We coated concerns like: What can you be expecting in conditions of course of action when you simply call a litigation funder? How do you secure privilege when you are working with a litigation funder? What are the ethical problems for lawyers to consider when dealing with litigation finance? What are the deal structures that litigation finance may well have? What  about champerty? Are there any regulatory troubles

These are the nuts and bolts of how the market will work and we truly have been striving to demystify the field in a extremely approachable way so that lawyers would feel comfortable with introducing their shoppers to the item. We ended up placing the tone for the kind of open solution and professionalism with which we solution the sector. It is supplied men and women an opportunity to come to feel at ease in inquiring inquiries and beginning dialogues. It’s led to a number of relationships that have continued to improve and bloom around the training course of a range of several years.

SZ: Is there everything else you’ve been carrying out to teach attorneys about the gains of litigation finance?

BW: Certainly. We give CLE presentations on litigation finance and the ethics of litigation at regulation companies. We have spoken at conferences in the United States and overseas. 

The other matter that we’re recognized for in the business is flexibility and sensibility about how to get bargains done. What we finally do is present a financial products. And for that money product to be helpful, it’s received to genuinely be geared toward the demands and wants of whichever corporation we come about to offer with. And so, we really do not solution cases formulaically. We occur at them with an eye toward finding  a way that we can make a offer get the job done, even if it’s unconventional.

SZ: I recently noticed an posting in Wired about the actual Lake Whillans, which is a subglacial lake of profound scientific importance. When it came time to identify the small business, why did you make a decision to name it soon after Lake Whillans? What is the connection amongst litigation finance and this subglacial lake?

LD: Boaz and I believe of ourselves to be buyers initially and foremost. And as buyers, we are hunting for inefficient marketplaces to allocate money. In 2013, when we began this organization, litigation finance was undiscovered, untapped, and unused in litigation in the United States, as Boaz laid out earlier. It was this genuinely appealing, inefficient asset course that persons hadn’t still believed about or found out, and it was something we appeared at and assumed could be truly large — probably not the dimensions of the U.S. fairness marketplaces or the U.S. bond markets — but it could be a sizable asset course that people today just weren’t paying focus to or didn’t know existed. At the time we were being launching the company, there was an expedition in Antarctica that had just proved effective in excavating a subglacial lake. It was the first expedition to at any time do so, and that subglacial lake was Lake Whillans. Not only were being they ready to properly excavate the lake, but what they found there, which they ended up not expecting since of the lack of sunlight and oxygen, was a flourishing ecosystem with untapped opportunity that researchers keep on to investigate. We believed that was a perfect metaphor for what we were being seeking to do, which was to excavate and take a look at earlier uncharted territories in the hopes of discovering new financial ecosystems So which is why we named our company after the lake and the expedition.

SZ: On a much more personalized be aware, what is your greatest satisfaction about operating in litigation finance?

LD: For me, it is relevant back again to the Lake Whillans definition — even while it’s getting to be additional created, there’s no playbook for how to progress or how to build this small business or how to contribute to the authorized ecosystem. I locate it remarkable to be continuously navigating that entire world and remaining aspect of how we extend it and on the lookout at revolutionary suggestions and getting issues out. Some issues fall short, some issues triumph you develop on all those successes.  Devoid of a playbook, this is really about having a eyesight of what is probable and setting out to generate it. It is a different type of process, but that is what I like about it.

BW: Litigation finance permits me to pair the most effective of what I liked about getting a attorney – understanding the strengths and weaknesses of statements, assessing how claims will participate in out – with the dynamism of enterprise. We are continually working with subtle claimholders and legal professionals on new chances, doing the job to craft options that present gain-earn results for all.


Due to the fact 2017, Lake Whillans and Higher than the Regulation have collaborated on an yearly investigation report for which we ask in-dwelling counsel and law firm lawyers to share their views on 3rd-bash litigation funding. Calendar year more than yr, our study findings have tracked the explosive development of this discipline. Our conclusions show that an expanding amount of legislation corporations and their clientele view litigation funding as a valuable resource. To cite simply one particular instance, an mind-boggling majority (88%) of our respondents with prior knowledge with litigation finance would suggest the exercise to some others, and practically all (94%) told us they would convert to litigation funding yet again them selves.

On behalf of everyone below at Earlier mentioned the Legislation, we’d like to congratulate Lake Whillans on its development in educating users of the lawful career on the use of litigation finance and its achievements as a person of the best-tier litigation funders in the sector. 

(Disclosure: Lake Whillans is an Over the Regulation advertiser.)

Staci ZaretskyStaci Zaretsky is a senior editor at Above the Law, in which she’s worked since 2011. She’d love to hear from you, so remember to really feel totally free to e-mail her with any guidelines, questions, feedback, or critiques. You can observe her on Twitter or join with her on LinkedIn.

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