While dispute finance or litigation funding is so often associated with class actions, for corporate legal teams it can be a strategic option for not only undertaking costly litigation but also potentially generating revenue.
In an environment where all spend is watched closely, dispute financing can provide value and benefits to corporates, their legal teams and law firm partners. However, it isn’t a well understood concept.
Recently, we were fortunate to speak with Leanne Meyer, Investment Manager and Legal Counsel at Omni Bridgeway, a global dispute financing organisation. Before taking on this role in February, Leanne was General Counsel for RSL NSW and prior to that a private practice commercial litigator, so she has a wealth of experience working across different roles and wearing different hats.
“I come to this concept of dispute financing and how it can be used and how it can be a useful proposition for an in-house legal function with very fresh eyes – I still look at the dispute financing concept through the lens and perspective of a General Counsel,” said Leanne.
Much more than class actions
Whilst Omni Bridgeway is certainly well known for class actions in Australia, according to Leanne, class actions are becoming a smaller proportion of funded cases and is only one of many types of claims that are suitable for funding.
“Finance is being sought out and utilised in a diverse range of dispute areas including … all facets of single-party commercial litigation: contract disputes, competition and consumer disputes, breach of fiduciary duty claims, [and] intellectual property matters,” said Leanne.
Leanne’s appointment to Omni Bridgeway is testament to the shift away from funding class actions to a focus on commercial litigation and dispute finance.
“My particular remit is a focus on these matters, matters where dispute finance can be used and used well, outside the traditional area of class actions,” she said.
With pressures increasing on legal teams to do more with less and have greater control over their external spend, there might be a tendency for companies to conserve their cash and not pursue a claim.
Leanne proposed that legal teams can present a number of options to senior management and that some claims may be revenue-generating and deliver profit, and that dispute finance can allow businesses to unlock valuable litigation assets that may not otherwise be available.
“Dispute financing allows the legal function to take this asset and to present a solution to the business in terms of tapping into this asset while preserving capital and addressing all the usual and understandable reticence businesses have, and the questions that are put to the legal team in terms of pursuing good legal claims, namely, why would we deploy our scarce capital resources to pursuing a claim that may or may not reap benefits and has attendant risks?” she said.
Essentially, with dispute finance a business can pursue a claim without bearing the cost burden of paying for legal expenses and still financially benefit from a successful outcome.
Three heads are better than two
One of the advantages about involving a litigation funder is that they have in-house experts, like Leanne, with very senior experience across a range of areas and they bring their wealth of knowledge to the table, which is of benefit to the claimant and their law firm.
“At the outset the funder also conducts due diligence and works with the law firm in assessing strengths and weaknesses and strategies and processes and often pleading points and evidentiary points,” Leanne explained.
She also pointed out that, “When settlement prospects are on the horizon, again the parties work together”.
Benefits to Funders
The basis of retaining dispute finance is subject to negotiation and are much more flexible now than in the past, Leanne observed.
“Generally speaking, the way it works is that in return for funding the costs and disbursements and taking on the adverse costs risk, the funders return is calculated as either a percentage of a resolution sum, and that means a judgment or a settlement sum, so an agreed percentage, and the percentage is to be negotiated.
“In the case of a successful outcome, the funder will receive that return and recoup its project costs. In the case of an unsuccessful outcome then it gets nothing,” outlined Leanne.
Control and who has it?
One of the most frequently asked questions about litigation funding is that of control, and whether the business and their legal team or their law firm must give up control and decision making.
“Having a funder involved does not mean that the in-house legal team or the law firm would lose control,” assured Leanne.
She further clarified by sharing that whilst a funder has involvement to a greater or lesser degree as agreed between the parties in the strategy and case management and cost management, it is the claimant from whom the law firm takes instructions.
Even with regards to settlement, the litigation funding agreement sets out a structure for a situation where there is an irreconcilable dispute about whether to settle or not to settle.
According to Leanne, this provision is rarely called on because all parties have a common interest and a common end goal.
Watch this space
Dispute finance for commercial litigation is an area that law firms are becoming more familiar with as well as their General Counsel counterparts.
Certainly, for Leanne, the sector presents new challenges and an opportunity to bring her strengths and experiences to the table.
“I was attracted by the prospect of being able to continue to use my deep litigation experience and be involved in big commercial litigation matters in a kind of new and unique and emerging area,” said Leanne.
Check out our Fireside Chat with Leanne Meyer to hear more about her career, how she came to work in dispute funding and the benefits for legal teams in exploring these options.
