A legal strategy without a PR strategy is unlikely to serve the client optimally, no matter what the result of the litigation. Today even the largest commercial litigation cases are merely one part of the overall strategy of the client in defending their assets and reputation.
Domestic and international clients enjoy the transparency of the London judicial system, but open justice brings with it PR challenges. Any journalist, or agent of the other side, can sit quietly in the back of the courtroom as detailed arguments are recited and witness statements read into the court record.
You must consider not just how your client’s case will play to the bench, but also how it will play in the wider court of public opinion, and how parts of it could be seized upon by the other side and made much of in this and other jurisdictions, in the global and trade media, to harm your client.
There is wide latitude to comment on active public court cases. The strict liability rule in Section 1 of the Contempt of Court Act 1981 “applies only to a publication which creates a substantial risk that the course of justice in the proceedings in question will be seriously impeded or prejudiced”, and “only if the proceedings in question are active at the time of the publication”. And “a person is not guilty of contempt of court under the strict liability rule in respect of a fair and accurate report of legal proceedings held in public, published contemporaneously and in good faith”. Furthermore, “a publication made as or as part of a discussion in good faith of public affairs or other matters of general public interest is not to be treated as a contempt of court under the strict liability rule if the risk of impediment or prejudice to particular legal proceedings is merely incidental to the discussion.”
Reactive and proactive PR strategies
Given the media interest around court cases, it is generally important to get to the microphone first, to make sure that your narrative shapes how the case is viewed. Speed is key here. A pithy comment on a judgment will often go far and wide if it is given within minutes of the judgment being handed down. An hour’s delay and the other side will have beaten you to it, or the story will have been written, or in high-profile cases social media may have already gone off-message. Get out ahead and stay ahead in the mainstream media, and monitor it and social media closely, correcting misinformation where the readership and influence of any publication requires it.
And mobilise your friendly journalists first. Make sure they are in the back of the courtroom at important moments for your client and fully briefed on the main points of your case. You should also assist them afterwards by summarising the day’s hearing and providing them with highlighted transcripts of what was said, ideally at close of play on the day of the hearing.
Alternatively, if you wish to appear reactive in your PR, or feel that the other side is likely to rush off to the media when they are in fact in a relatively weak legal position, then it can be tactically better to wait until journalists come to you seeking balance comment on a draft story. At this point you can put your side of the case convincingly, making the other side look weak and unreliable, and preserving the appearance of being reactive in your PR, rather than being seen to make the first move.
Whether proactive or reactive, your PR strategy needs to be planned well in advance in order to be as effective as possible. Messages need to be agreed, quotes prepared and journalist briefing packs created so they can be deployed at a moment’s notice. As well as highlighting the key points in court documents for your own side, the same exercise should be undertaken internally from the opposing view, highlighting the best media points for the other side. From these you can develop your own positive messaging to journalists, but also counter-messaging to be held in reserve to nullify attacks and change the narrative, should this be required.
When the call comes in from an international broadsheet or broadcast media outlet or specialist publication, you will then be ready. Or if the attack comes under the radar, in the form of an obscure publication that is nevertheless on Google News, but whose newsroom does not have the rigour of the larger media outlets who will contact your client in advance for their comment ahead of any criticism, then that is the moment to deploy rebuttal articles and comments, hitting back with more force than the original attack carried.
Proactive litigation PR can take many forms. It might be just establishing mood music about an issue to a particular geographical or stakeholder audience, softening the ground for the way you want your client or their argument to be perceived in a particular jurisdiction. In this it is often useful to find third parties who share your client’s view or objective, and who can be deployed with or without their detailed knowledge of your media plan, to help turn the narrative in your client’s favour.
Another important tool in litigation PR is background briefings to journalists. Provided you agree it with them in advance, and always tell the truth, journalists will respect a briefing on background only. This is a useful tool for them to gain a better understanding of matters which are not yet in the public domain, but it also gives you an opportunity to weave on- and off-the-record briefings into one briefing session. In this way the journalist comes away with the full picture, but also an understanding of why they cannot yet publish certain aspects. This gives you and them a head start over their competition, and ensures they are ready to publish a follow-up story once further steps are taken in the proceedings or additional documents are released.
Partly because of the enormous cost of high-stakes litigation, we are seeing a steep rise in the deployment of settlement PR. This typically takes two forms. The first type of settlement PR might be a pre-emptive strike at the reputation or argument of the other side, long before the case comes to trial. This will alert the other side to a PR war of attrition which will ensue if the case is brought to term, and can have a positive effect on bringing the parties to the table before the public curtain is raised on the litigation itself.
The second type of settlement PR occurs after the courtroom battle has been won. Often a client will be sitting on a judgment giving them the legal right to many millions of pounds of assets from the other side. Sometimes this may even be a judgment which both sides have agreed to keep private.
Now is the time to put reputational pressure on the other side to stop evading your Order and pay up; or stop thinking about appeals and counter actions in this or other jurisdictions. Here effective PR can point up transgressions by the other side, possibly unrelated to the present litigation, which will have the effect of persuading them to comply with the Order, rather than endure potentially catastrophic reputational damage.
Protecting your reputation
Litigation PR specialists and law firms need to work closely together and, as required, with corporate intelligence firms to find the right evidence and witnesses, and to deploy these in the optimum way, both for the legal strategy and the reputation war.
Often clients’ personal or corporate reputations will be significantly more valuable than the millions being fought over in any one claim. To win the legal battle inside the courtroom at the expense of losing the reputation war outside it would then be an entirely Pyrrhic victory. On the other hand, a good litigation communications strategy can enable a client to bounce back from an unfortunate judgment and on to the appeal, with their reputation intact or even strengthened.
Today’s reputation war is a digital one. Search engines are the keepers of your online reputation and this is made up of nothing more than a stack of published material, each one more or less favourable or damaging.
Having the right communications strategy in place will add new and favourable published material to the stack of mixed search results already appearing. Highly relevant articles from good publications will generally push down older articles, leaving the latest ones on top of search results. Given that there are 10 entries per page on Google and few people ever search beyond the first three pages, your client is only ever about 30 articles away from a positive online reputation.
In choosing which media outlet to approach with your story, you need to think about which publications will give you the right search results, which is not always the same thing as which publication will give your message the broadest initial reach.
An article that is all about your client or the other side will rank much more highly in a search for that person or company than an article that merely mentions them; and an article where your client’s or the target’s name is in the headline is likely to outrank other articles about your client or the other side, even in much larger and more recent publications.
Another important consideration is whether the article will be paywalled. As well as greatly restricting readership, journalists tend not to have subscriptions to other paywalled publications and so your message will not be as well amplified to them from a paywalled article as by an open one.
On the other hand, some paywalled publications may reach sufficient numbers of a key target audience, such as lawyers, for example. And occasionally even an offline publication can be the right choice, if it will go further than any other publication in revealing the details of your message, and if its audience is sufficiently relevant and powerful.
Similar to selecting the optimum third-party voices to support your media campaign, the identification of journalists and publications who are sympathetic to your messages and who have written in depth on analogous issues or cases in the recent past is vital.
As a practical consideration, it is important to put in place on an easily identifiable public platform for your client a 24/7 media enquiries telephone number and email address. You should create this if it does not already exist. This will be your early warning radar of an impending attack by the other side, as good journalists will contact both sides of a story for comment. And if your press office is obvious enough but is not contacted by journalists attempting to write a balanced story, then you have in that call and email log evidence to leverage in your fight to quickly get your message and point of view added to online articles. One advantage of the digital media world in which we now live is that although online articles rarely go away, they can be relatively easily amended after publication in the interests of balance and factual accuracy, if required.
Bring your litigation PR team in as early as possible, and introduce them to the top table with your client. They will help you shape your client's global litigation strategy, including the detailed planning of how to handle present litigations in the media. Specialist litigation PR professionals will often provide insights that may be missed by others around the table.
And even when you get into the detail of negotiating with witnesses and expert witnesses and the drafting of their statements, and also of drafting your particulars of claim or defence and amended versions of these, your PR advisors will be able to add great value from the perspective of how these documents will be received when they become public.
Even the order of your points with which Counsel opens your claim or defence is important from a PR perspective, as the press will often fade away to attend other cases after the opening statements are made, but the Judge will (hopefully) listen equally attentively throughout. It may therefore be optimal from the point of view of the reputation of your client to make your most media-friendly points early on in the courtroom, even where these may not be your best legal points.
Sometimes you and your client might push for a case to be heard in private because there are elements of the case which it is perceived may damage your client’s reputation, but the other side may want this too, as they may have even more to fear from public scrutiny. In this situation, developing a robust PR strategy can enable you to push for this hearing to be safely held in public, enabling you to have a media field day with what it will reveal about the behaviour of the other side.
Having a good litigation PR strategy thus can embolden you to push back on privacy requests from the other side putting them on the back foot and showing them up as the only ones wishing to shroud the case in secrecy. Your client is then perceived as having nothing to hide and welcoming open justice. This will put your client on the right side of court reporters, even if they have to leave after 10 minutes because we ultimately do not object to the other side’s application for privacy. Then we can brief the press in the corridor outside the courtroom, from a position of moral and optical strength.
Utilising linked cases
No litigation is in isolation. They each live within the cultural framework of public opinion, form part of the client’s wider commercial objectives, and are related to other cases. Often the same party or practices will feature in otherwise unrelated cases. This provides additional opportunity to raise the pressure on your adversary, without necessarily promoting aspects of your present action. By highlighting the bad practices of the other side through other, analogous cases, you can also lay the PR groundwork for how your case will be perceived; and ensure that more weight is put on your points during your case, as a pattern of bad behaviour by your counterparty will then be more widely known.
Public court documents and trials are excellent ways to put evidence into the public domain, but sometimes it is important to do this before the litigation begins via third party publications and news websites, both international and niche. Achieving this is about having strong journalist relationships, and also knowing which journalists and publications will be most interested in the minutiae of your narrative, especially if these publications are on Google News, or very highly regarded in your target audience group.
Maintaining the narrative
As well as making the weather with upstream PR, it is sometimes necessary to control the downstream narrative post-publication. If articles appear where there has been an over-briefing by the other side, and lack of balance or factual inaccuracies feature in an article, then there are several ways to have misleading content removed.
The first and best thing to do is to appeal to the journalists’ better nature and professionalism, pointing out to them the minor changes that should be made in the interests of accuracy and balance.
Usually this friendly approach will succeed, but if the journalist really cannot see the importance of the change you are requesting, or is genuinely biased, or has been brainwashed by the other side; or the false narrative is just so topical and too strong to ignore, then the next best option is to appeal to their editor, when you can point out how their publication is being weaponised by the other side as part of a commercial war. The editor will then at least be more wary of publishing similar stories in future.
In extreme circumstances you can speak directly to the newspaper’s legal team, often via defamation lawyers. If all else fails then a complaint to the Independent Press Standards Organisation will often result in a corrective paragraph being added, or the article being removed.
In the case of defamatory material being published online by an irresponsible publisher or private individual, one can also appeal directly to Google, to ask them to delist defamatory material; it is also possible to attempt to force their hand in Europe via the Information Commissioner's Office.
All of these options should be exhausted before any legal action against the publication is taken, because such action can be more damaging to your client’s reputation in the media than the offending article itself.
What goes around comes around in the media, as in life. So it is far better to keep your powder dry and win the journalist over for the next development in the case, rather than win this battle at the cost of falling out with the publication and losing the public opinion war in the longer term.
Tim Maltin, Arthur Maltin, James Lynch, Fenella Maudslay
Overview to Litigation Funding in the UK, contributed by Burford Capital [H0]
Christopher Bogart, Chief Executive Officer – New York
Christopher Bogart co-founded Burford and has helped lead its growth from startup to a publicly traded company with a market capitalisation of over $3 billion. In 2017, FT named him one of the 10 most innovative individuals in law in North America. Before founding Burford, he was Executive Vice President & General Counsel of Time Warner Inc., where he managed one of the largest legal functions in the world, and a litigator at Cravath, Swaine & Moore.
Craig Arnott, Managing Director – London
Craig Arnott leads Burford’s London office as well as its underwriting and investment activities in the UK, continental Europe and Australasia. Mr. Arnott has over 20 years of experience in large and complex commercial litigation and advisory work and across multiple jurisdictions, especially in relation to antitrust matters. Prior to joining Burford, he was a barrister at Sixth Floor Selborne and Wentworth Chambers in Sydney, and a Partner and Head of Competition/Antitrust Law in London at the international firm Fried Frank Harris Shriver & Jacobson.
The continued presence of legal finance in a Chambers volume is a milestone that reinforces this important fact: Litigation finance is unquestionably an accepted reality of the legal marketplace and therefore an essential tool for in-house and private practice lawyers to understand and embrace.
In the spirit of ensuring that lawyers develop that understanding, we offer the following overview of legal finance, focusing on definitions, uses and benefits, types of financing available, the process for securing financing, what to look for in a finance partner, and what we envision for Burford and the litigation finance industry in its second decade.
Some may assume that legal finance is so well-known as to obviate the need for such an introduction. True, 2018 research affirms that 96% of lawyers at law firms and in client legal departments in the US, UK and Australia have heard of it, with the total number of respondents who reported being very familiar with litigation finance grew from 24% in 2017 to 50% in 2018—a 47% increase. But it’s important to understand how much legal finance has evolved and is still evolving. Consequently, even those who have some experience with 'litigation funding' or 'third-party funding' may not fully grasp its myriad applications and benefits. As we explore below, a broad range of financing solutions and models are available, significant differences separate funding providers, and differing levels of sophistication persist in the use of legal finance in one jurisdiction versus another.
Thus, without neglecting to define basic concepts and terms, our emphasis below is on painting a picture of legal finance that addresses its variety and that purposefully emphasises its evolving, innovative uses. We encourage lawyers to be ambitious in their use of this tool—and to assume that their competitors are also thinking ambitiously. And of course, we welcome readers to contact Burford for further detail about this essential component of the legal industry.
Definitions and growth [H2]
There’s no question that legal finance is continuing to grow: in 2018 there was consistent high demand for Burford’s capital with $1.3 billion in new investment commitments, demonstrating that the explosion in demand for its financing from law firms and corporates in 2017 was not a one-off event. Consistent with this, a majority (70%) of lawyers whose firms and companies have not used litigation finance say that they are likely to use it in the next two years.
So, what exactly do we mean by 'legal finance'?
At its core, a litigation dispute is an asset, and legal finance is the provision of capital collateralised by a single or multiple litigation assets. Typically, the assets involved are specific commercial litigation or arbitration matters, but they may also take other forms, unrelated to specific disputes. For example, legal finance may provide capital secured by outstanding law firm receivables or by success fees related to transactional or M&A work. Further, while most lawyers assume that legal finance applies only to the pursuit of meritorious claimant matters, it works just as well for the defence of weak claims, and indeed defence funding is a growing area of interest in the legal market.
Most legal finance transactions occur on a non-recourse basis, with the financier losing its investment if the underlying matters are unsuccessful. This is a key point: Legal finance is typically an investment, not a loan, with the financier bearing downside risk instead of the client or the law firm. A simple way to understand non-recourse financing is as similar to a law firm’s contingency arrangement with a client, in that the financier recovers its invested capital and the related return only upon a successful resolution of the underlying matters; none of the recipient’s other assets are affected.
It’s also important to understand that:
• Legal finance providers are nearly always passive investors without control over the legal assets in which they invest. For Burford, the only exception is when we expressly purchase a claim.
• Financing can be provided at any stage of the proceeding—from before filing to after judgment or appeal, for legal receivables awaiting payment and for matters requiring enforcement.
How companies and law firms use legal finance
Legal finance transactions occur both between financiers and corporate clients, and between financiers and law firms. These counterparties have differing but equally compelling reasons to embrace legal finance, all of which reflect the realities and challenges of today’s legal marketplace:
Corporate clients are increasingly aware of the ever-rising cost of commercial litigation and arbitration. Those costs may be impossible for some to bear—such as start-ups or organisations facing restructuring or insolvency. But even companies that can afford robust litigation budgets likely have better uses for their cash and prefer to preserve it for investing in R&D, business development, or other functions that drive growth. And many of those companies may be troubled less by the spend than by the inherent unpredictability of setting budgets for or managing the risk associated with high-stakes commercial disputes, which stand in stark contrast to other regular corporate processes. Finally, GCs and CFOs alike may be all too aware of the negative accounting impact of legal spend, which can be particularly harmful to publicly traded companies. All these factors are causing clients to pressure their law firm partners for reduced fees or alternative fee arrangements that shift cost and risk—but firms are often unwilling or unable to meet this client demand.
Law firms are painfully aware that law remains a buyers’ market even a decade after the 2008 recession. Firms must compete harder to win business from clients who feel ever more empowered to demand discounted fees, fixed fees, capped fees or the deferred fees contingent on success. According to research, alternative fee arrangements combined with budget-based pricing "may well account for 80 or 90 percent of all revenues" at many firms. The issue is not simply that law firms are understandably exhausted by unrelenting pressure to defer payment, discount fees, or arguably worse, engage in race-to-the-bottom competitive bids. The real issue is that because of their cash partnership structure, even contingent fee firms are often unable to meet these client demands: they simply cannot assume an unlimited amount of client risk. They need a way to bridge that gap.
Legal finance addresses these challenges and provides both corporate clients and law firms a means of staying focused where they can derive the greatest value—for clients, on their core businesses, and for firms, on providing excellent legal services. For clients, legal finance means that they can preserve cash, create greater certainty around legal budgeting, resource and risk management, and avoid the negative consequences of legal spend on corporate balance sheets. For law firms, legal finance means they can be more competitive in meeting client needs and invest in new growth areas for the firm.
Some of the specific ways in which both corporate clients and law firms use legal finance include:
• Finance litigation fees and expenses, as claimant or defendant.
• Access capital using a portfolio of existing or future matters as collateral.
• Transfer or share risk in pending litigation and provide other litigation related risk management.
• Accelerate receipt of award or judgment proceeds (for corporate litigants).
• Accelerate receipt of fees and/or monetise outstanding receivables in hourly or contingent-fee matters (for law firms).
• Secure litigation-related insurance and risk solutions; for example, Burford offers adverse costs coverage to its litigation finance clients.
• Help law firms expand with new business without increasing cost.
Fundamentally, legal finance helps both corporate clients and law firms reconceptualise and unlock the significant and otherwise captive value of their legal assets. In this sense, legal finance is really corporate finance for law.
Funding types and models
Single case funding remains the most commonplace form of litigation finance, but portfolio financing has experienced dramatic growth in recent years—due in no small part to its tremendous value for law firms and corporates. This growth in portfolio financing is indicative of a maturing in the field of litigation finance more broadly. Less than a decade ago, the presumption was that third-party funding was a solution most suited to single case matters, particularly those where the defining problem was one of financial imbalance (e.g., the 'David v. Goliath' cliché). Now we know better: Many firms and clients need solutions not only for singular instances of financial need but also for reducing risk and cost across a range of litigation matters. Portfolio financing provides just such an ongoing solution.
Research affirms the relevance of portfolio financing to firms and clients. The business challenge ranked most critical by GCs surveyed in 2018 research was the need for managing legal risk and uncertainty; for private practice lawyers, the top business challenge was the pressure to be more competitive in bringing in new business. Portfolio finance addresses both obstacles—by managing legal risk as corporates can use finance to move legal costs off balance sheets, and firms can use it to enhance their readiness to pursue new business opportunities.
Crafting portfolios and other complex structures requires bespoke structuring but can ultimately create valuable time efficiencies. Additionally, because risk is diversified across multiple matters, pricing for portfolio-based finance is generally lower than for single case-based financing and provides a flexible platform for financing a mix of litigation types (claimant and defence) as well as other legal services.
The process for securing financing [H1]
Although financing models and structures vary widely based on client need, the process for securing financing generally proceeds through initial review, active diligence and investment.
1. Initial review [H2, for all headings below as well]
During this phase, the party seeking finance and the funder will enter into a confidentiality agreement, and background documents will be reviewed to confirm that the opportunity meets basic investment criteria. With a confidentiality agreement as the first step of our diligence process, Burford’s communications with lawyers and clients generally are protected by legal professional privilege. Out of an abundance of caution, we are circumspect about what we request in the diligence process to avoid any risk of waiver.
Criteria are different from funder to funder, but from Burford’s perspective the best candidates for litigation finance typically meet the following criteria:
• Type of matter: Complex commercial litigation, including antitrust, securities, fraud, contract, patent and intellectual property, trade secret and other business tort matters, as well as international arbitration.
• Strong merits: Because non-recourse financing will result in a loss of invested capital if underlying matters are unsuccessful, funders carefully assess the facts and legal merits of a claim, starting with an operative complaint or written summary.
• Counsel: Because funders do not control the litigation they fund, they rely on top-notch, experienced litigation counsel with successful track records.
• Jurisdiction: Burford invests in matters filed or that are expected to be filed in domestic courts in common law jurisdictions or in an internationally recognised arbitration centre.
• Capital requirement: Clients, firms and Burford get the best value when the amount requested is at least $2 million. Most of our investments are significantly larger.
• Damages: Damages must be supported by solid evidence of loss and should be large enough to support the funder’s investment and returns with the client keeping most of the litigation proceeds if the case goes well. Although the ratio of investment to expected recovery varies depending on the case, for an investment of $2 million, the expected compensatory damages should be around $20 million.
2. Active diligence
Since non-recourse financing is entirely dependent on the successful resolution of the underlying matters, legal finance investments follow a rigorous diligence process to determine the strength of the merits and damages claims and whether the economics of an investment are viable. Some funders use outside counsel to obtain opinions about the merits and value of a case they are considering. Burford has built a robust underwriting team of lawyers and financial analysts who conduct this underwriting analysis internally. We believe we make better underwriting decisions and can add more value to clients and law firms when we understand the underlying litigation and can offer our expertise as matters proceed.
At Burford, we work hard to provide the best expertise and client experience in addition to the largest pool of available capital. Ultimately, we approach the investment diligence process as a collaboration, not as a transaction. Clients and firms seeking financing aid the process not only by being responsive but also by engaging in honest assessments of matters including:
• Budget: Matters must have sufficient funding to get to the finish line. That requires a realistic, conservative budget through trial. To confirm that the economics of the litigation investment are workable, funders rely on counterparties to provide clear budgets that account for the typical detours of complex litigation.
• Risk profile: Funders have varying levels of risk tolerance. Burford invests in matters with strong risk profiles, and we will seek confirmation of a variety of factors on topics ranging from legal theory to damages theory to investment economics. We encourage clients and law firms seeking outside financing to understand where a particular funder is on the spectrum of risk tolerance.
Once diligence has been completed, the financier will develop a term sheet that reflects the economic terms of the transaction. Some funders provide preliminary terms in advance of conducting their due diligence. Burford advises clients and law firms to treat pre-diligence term sheets with caution as terms are almost always later revised following diligence, often resulting in unwanted delays and frustration.
The timeframe to secure litigation finance depends on a variety of factors. Although we have financed cases in a matter of a few days, as a general rule, if matters are well worked up and information is provided in a timely fashion, commercial matters typically take four to six weeks from initial case review to investment. A variety of factors influence how long the overall process takes, including:
• Client and firm responsiveness: The responsiveness of clients and law firms in answering questions and providing documents is among the most significant factors.
• Stage: Matters with fewer unknowns (e.g., matters on appeal) require the least time (as little as a week to 10 days); yet-to-be-filed matters require more time.
• Case type: International arbitration and patent matters typically require more time.
• Single-case or portfolio: When a 'going forward' portfolio is in place, the diligence process for new matters can be completed extremely quickly. For law firms, that provides speed that can be a significant advantage in competitive situations.
What to look for in a finance partner
With the global growth of legal finance, numerous capital providers have emerged in the space. This is a positive development, but it also requires lawyers and clients to understand the relative strengths of capital providers and to carefully diligence their potential finance partners.
Choosing the right legal finance provider is not a matter of finding the cheapest capital available. Given the duration and high stakes nature of commercial litigation and arbitration, it is important to identify the right finance partner in the truest sense of the word. The relationship should be built not only on readily available and cost-effective capital but also experience, expertise and trust—qualities similar in nature to those clients typically seek out when selecting law firm partners.
When using legal finance, clients and law firms need to focus on two fundamental issues. First, in transactions when some capital is to be paid in the future, clients must be confident that capital will be available to them at the point when it is needed.
Second, even when capital availability is not an issue—such as when the client is receiving all the capital up front—clients need to focus on the size and structure of their financial providers to assess their stability and incentives and the materiality of the investment to them. This is important because if a transaction is material to the financier, there are inevitably contractual provisions in the arrangement that will—if it comes under pressure—permit the financier to act in a manner that may be inconsistent with the client’s or firm’s interests.
Important questions to ask include:
• How much money has the funder made? Across how many and what kind of investments? Over what period?
• How much actual cash does it have invested in comparable litigation today?
• How much available capital does it have to invest?
• How reliable are the sources of that capital?
• What happens if they do not provide capital when desired?
Clients and law firms should also assess the experience and expertise of the funder:
• Does the funder perform all of its diligence in-house?
• Does the funder have relevant expertise resident on its team?
The right legal finance partner can add value to the client or the law firm far beyond simply providing cost-effective capital and risk solutions. For example, Burford has a team of over 110, with 55 lawyers who are experienced commercial litigators drawn from the world’s top firms and corporations. When we diligence investment matters, clients gain an independent assessment of risk—insights that can give reassurance of the strengths of a case or highlight potential areas of weakness. Similarly, law firms gain an economic analysis that includes the risk/reward of taking on the case—insights that can make the firm’s practice more profitable.
Looking ahead: Burford’s second decade
Burford was launched in October 2009 to address the unmet capital needs of the business of law.
Law firms have traditionally operated with a constrained approach to capital, running large, highly profitable businesses on a pure cash basis. Corporate clients, beleaguered by ever-increasing spending burdens for regulatory compliance and litigation, need the financial alternatives commonplace in other aspects of their businesses. Burford provides these financial alternatives, through an ever-growing range of products and services, all of which build on our core competency: The assessment of legal and regulatory risk, and the offloading of that risk to us so that our clients can keep their focus on their core competencies.
As we approach the 10th anniversary of our founding in October 2019, Burford acts increasingly more like an investment bank for law than a litigation funder. Our clients value our capital, but they also the value the insights and expertise we provide beyond pure capital.
Looking ahead to Burford’s second decade, we will continue to build on that foundation and seek to invest legal capital in ways that enhance the success of our clients, their businesses and the business of law.
Among our ongoing priorities
• Lead the maturation of the industry by acting as a true financial services partner and following world class standards for business transparency
• Invest in our team, offerings and infrastructure to provide clients the most robust and relevant legal finance solutions in the market
• Develop the proprietary data that enables us to provide clients with precise insights in a timely fashion
• Deepen relationships not only with leading law firms but also with business leaders whose understanding of our sector is more nascent
• Leverage our capital to inspire positive change—most immediately through The Equity Project, a $50 million pool of capital earmarked to finance commercial litigation and arbitration led by women, and to provide an economic incentive to help close the gender gap in law.
AN OVERVIEW TO eDISCOVERY & eDISCLOSURE, CONTRIBUTED BY ALVAREZ & MARSAL [H0]
e-Discovery, or e-Disclosure, is an essential phase of not just litigation, but also investigations, regulatory enquiries, compliance assessments and increasingly arbitrations. Data is the lifeblood of most modern-day organisations, and although not the only source of information relevant to an investigation, data can provide an un-biased, un-altered and accurate reflection of historic events unlike other sources. Data can be more reliable than the human mind, especially given the history of disputes, and data tends to be more pervasive and persistent than paper documents.
Given the use of technology throughout a workplace and beyond, data exists in many different forms but can be grouped into four categories: unstructured, structured, semi-structured and social.
Unstructured data refers to information where the content does not exist within a pre-defined form, is generally text-heavy and typically comprises e-mails, documents, spreadsheets and presentations.
Structured data is the opposite of unstructured data, in that it refers to information where the content does have a pre-defined form and is generally in the form of ‘databases’, for example financial & accounting systems and customer relationship management systems.
A hybrid of structured and unstructured data, referred to as semi-structured data, can also be prevalent within an organisation. This is where the content tends to be unstructured, but it is bound by a more solid structure. A typical example of this would be chat or instant messenger messages – which are becoming more widely used and pertinent in certain industries, and therefore should not be overlooked.
Social data refers to data that is shared publicly or shared within a more restricted context, e.g. within an organisation or a circle of ‘friends’. Social data is stored within a central repository and includes not only the content but also information that is linked to this content, such as ‘shares’, ‘likes’, location, time posted, etc. Although the most recognisable sources will be external to an organisation (e.g. Facebook, LinkedIn, etc.), organisations are introducing these technologies internally and thus they need to be appropriately considered.
When dealing with data in respect of a dispute, the exact way that it is managed and implemented will vary from case to case. However, there are various models available which set out some of the key stages of such exercises. The most widely used, and referenced, is the Electronic Discovery Reference Model.
Although this model was designed to meet the requirements of legal discovery under US litigation, it has equal applicability in the UK and globally.
e-Discovery is as interesting a place as ever, as new technologies try to keep up with the challenges we are facing in the prolific growth and dependency of data. The global data pool is ever expanding, with over 90 percent of all data in the world created within the last two years, and there are no signs of this expansion rate slowing down. Not only are data volumes increasing but the range and diversity of software and applications that are used to create data are also increasing, leading to other issues such as data leakage and breaches due to human error or a lack of technical security measures. Examples range from employees saving documents to cloud-based storage systems; to communications with colleagues and clients being channelled through internal instant messaging platforms as well as external applications such as WhatsApp; to having to model complex trading data and comparing an entity’s trading records with historic and market patterns. Therefore, when considering an e-Discovery project these varied data sources need to be fully considered and incorporated into the process where proportionate and appropriate.
But as technology provides these challenges it also continues to provide solutions that can be used throughout the e-Discovery process. For example: email threading, which is an essential process that groups all emails within a conversation together; near de-duplication, which extends beyond exact duplicates to look at textual similarities between documents; clustering, which groups like documents together based on textual content; and predictive coding, which utilises machine learning technology to automatically code or prioritise a dataset, either through traditional learning sets or in utilising continuous active learning. None of these are particularly new, but their usage and legal recognition continues to grow with the challenges discussed above. Similarly, none of these provide a panacea to all ills: it is through the intelligent application of these, and other more traditional techniques, that they can help reduce and prioritise the volume of documents to be reviewed, provide data-led insights into a case, and enhance quality control procedures.
The law is also changing in respect to data generally. For example, the GDPR is now well embedded in organisations, or should be, and will continue to be a factor as data breaches continue to occur and enforcement activities start to ramp up. GDPR and related laws are obviously relevant to e-Discovery matters and, therefore, the requirements of it must be considered and decisions made fully documented, covering international transfers and the seven principles of processing personal data (which is almost unavoidable): lawfulness, fairness and transparency; purpose limitation; data minimisation; accuracy; storage limitation; integrity & confidentiality; and accountability, all of which should embody data protection by design.
The way data is being managed in UK courts is also changing. From January 1st, 2019, a new Practice Direction (Practice Direction 51U), intended to reform various aspects of the document disclosure process, will run in the Business and Property Courts of England and Wales. This two-year Disclosure Pilot Scheme (DPS) redefines disclosure duties and introduces five extended disclosure models.
Whereas there are the legal and case considerations that will impact decision making in respect of the DPS, it is also essential to consider the technology dimension and how different methodologies and processes can influence the decisions that need to be made.
The DPS strengthens duties around:
• Legal hold scoping and planning: for example, the rules regarding data preservation demand that both present and future “documents which might otherwise be deleted or destroyed” be preserved in a manner that keeps all associated metadata accurate.
• Data collection: there are explicit requirements to consider social media data in addition to the need to capture metadata and deleted files where legal hold may not be possible i.e. mobile devices.
• Disclosure Review Document: the DRD is intended to identify the issues requiring disclosure and agree on the exchange proposals for extended disclosure. A costs estimate is also required in addition to a good understanding of where the data is stored and how this data should be searched and reviewed. This goes beyond previous Electronic Disclosure Questionnaire (EDQ) requirements and early engagement with technologists will be beneficial in assisting with identifying potential data sources, accurately estimating data handling costs and translating complex technology-related concepts for the purposes of a DRD.
• Use of technology: this is encouraged throughout and the use of advanced technologies to address the challenges of disclosure is and will be heavily encouraged.
In addition, the DPS provides for a two-stage process of disclosure:
• Initial disclosure, which takes place at the stage that a party files and serves its Particulars of Claim or Defence. It has a cap of 1,000 pages or 200 documents (whichever is the larger) and is intended to include key documents relied upon, and the key documents required to enable the other party to understand the claim or defence.
• Extended disclosure, which is required if it is appropriate to fairly resolve an issue in the case. It should be noted that different issues can require different models to be used depending on the nature of the issue itself.
The five models are:
o Model A: Disclosure of known adverse documents only.
o Model B: Limited disclosure. This uses the same test as Initial Disclosure but without any limits, and also includes known adverse documents.
o Model C: Request-led, search-based disclosure. Disclosure of specific documents or categories of documents covering defined issues based on specific requests.
o Model D: Narrow search-based disclosure. Each party is required to undertake a reasonable and proportionate search. This closely resembles the previous Standard Disclosure.
o Model E: Wide search-based disclosure. Parties must disclose documents which are likely to support or adversely affect its claim or defence, or that of another party in relation to one or more Issues for Disclosure, or which may lead to a train of enquiry which may result in the identification of other documents for disclosure.
How Practice Direction 51U will play out will become apparent over time, as more judgements are handed down under the new rules. But early indications, for example UTB LLC v Sheffield United Limited  EWHC 914 (Ch), show that it is being taken seriously and that there will be an ongoing drive towards encouraging cooperation to ensure that disclosure is "...reliable, efficient and cost-effective..."
What is coming down the road?
• Ever growing and varied data volumes – just think of the Internet of Things, autonomous vehicles and the increased use of social data, never mind the ever-increasing data volumes associated with business-as-normal usage now. Data volumes are inevitably going to increase and their types evolve; although the way data is stored, and the technologies/methodologies available to analyse it, will continue to adapt to help negate the effect of increased and varied data loads.
• Intuitive technology – we are seeing the first generation of what is widely termed artificial intelligence embedded within the e-Discovery market now. The sophistication and ability of these tools will only increase, although I do not see them ever totally replacing humans in this respect, at least during my professional career. Technology will continue to become more intuitive, utilising multiple sources of data to enrich existing data and continually learning from previous decisions in a more granular and intelligent way. These technologies are now being used in a proactive manner in certain industries, for example to flag potentially fraudulent transactions or to monitor an employee’s communication for sentiment or behavioural changes. They will continue to become embedded and trusted in the e-Discovery and legal markets and potentially, in the long-term, being used at the point of creation. This would enable the automation of documents/emails/data categorisation and assessment, with appropriate processes managing onwards to the appropriate legal teams. Think of it as an automated application of information governance at the source – although this is certainly not in the near-future.
• Ethical, privacy and data protection concerns will continue to clash with the desire to use more and more data in an increasingly automated and insightful manner. We are seeing the first signs of this now, for example where prejudice becomes built into a machine-learning platform, thus reinforcing and strengthening the prejudice. The development of data protection and privacy concerns and laws, such as the GDPR, could also limit the way technology is implemented, and whereas lawyers will be key to determining how that is managed, technologists will continue to devise processes and methodologies to operationalise those decisions.
AN OVERVIEW TO BUSINESS INTELLIGENCE & INVESTIGATIONS, CONTRIBUTED BY RAEDAS [H0]
Business intelligence and investigations officially takes its place in Chambers’ pantheon of litigation support, and little wonder. Disputes today are more international and more diabolic. This is an era where a US$50 billion award is not only conceivable, it’s history. With stakes that high, every possible advantage has to be on the table.
And yet this does not explain why Chambers is for the first time ranking investigators. The investigative industry has been supporting litigators for forty years. During that time it has evolved and, along with it, its tools and resources. But the introduction of the category signals a more seismic shift.
Litigation has transformed from a sunk cost into a cash generating business. Look no further than the surge of third-party funding. Global dispute centres are awash in funders – banks, hedge funds, intrepid individuals – seeking opportunities to invest. With the freedom to cherry pick lower-risk claims, some funders have claimed success rates as high as 80-90%.
Never mind that such statistics cannot be replicated in complex disputes, consultants love a gold rush. The advent of the litigation business has created a carnival atmosphere complete with snake oil salesmen, sideshows and theatrics. Ten years ago a few well-known annual fraud conferences attracted hundreds of people. Now there are dozens of conferences and workshops on fraud, asset recovery and enforcement around the world attended by thousands. Dealers in one-click solutions, AI and the more familiar ‘cloak and dagger’ fill these events.
To an outsider this can be bewildering. The term ‘Business Intelligence’ itself is a Rorschach test. LinkedIn’s inelegant ‘Security and Investigations’ category is no more illuminating, two services which have virtually nothing in common. We invent terms like ‘Dispute Consulting’ but without an agreed lexicon they are co-opted by accountants and document processors. In many ways it is a youthful sector without a clear identity.
For an investigative community that has grown up on the dependable – and relatively low risk – staples of pre-transactional research and Know-Your-Customer due diligence fed by the immense regulatory industry of the United States, litigation is unforgiving. The tendency is to over-promise, deliver long watered-down reports or to focus too heavily on data which has little or no probative value in a court room or before a tribunal.
Unfortunately this has fuelled scepticism among many lawyers repeatedly disappointed by investigators’ results. Combined with lingering stereotypes of men in fedoras lurking under lamp posts or hackers with no respect for the law, these experiences undermine the perceived value of investigators in legal proceedings.
To cut through the noise and misperception is to say what most in our industry do not want to say: gathering evidence is manifestly more difficult than gathering information. In litigation, knowing the answer is not half as important as being able to prove it. Ignore the casual claims of hundreds of millions of pounds in recovered assets. Enforcement is hard.
To be a specialist in litigation support is to resist the temptation to have all the answers or to claim exclusive access to a secret weapon. It is to fully understand the nature of the problem and, most importantly, what constitutes value from the perspective of a litigator.
Asset tracing, forensic accounting, computer forensics; these are tools and useful ones, but they are not solutions. Solutions combine all of these forms of investigation with legal process, public relations strategies, regulatory leverage and politics. Specialists know this.
To be a specialist is also to know the limits of traditional investigative methods and work to find opportunities to use legal mechanisms to flush out confidential information. A well-directed 28 USC Section 1782 application can deliver an extraordinary boon of legally obtained banking evidence. But a successful application starts with a keen eye and a well spotted opportunity.
Creativity is also essential. The world’s best litigators and arbitration lawyers routinely test limits and invent tactics. Knowing how to litigate in any one country is as important as knowing how to orchestrate simultaneous legal actions in multiple jurisdictions to achieve a single objective. Investigators do not need to have studied law to provide support to litigators, but they do need to understand this jurisdictional arbitrage, contribute ideas and be able to partner in tactics and strategy development.
Finally, to be a specialist is to accept risk. We cannot outsource essential aspects of our work. The standard model in which a client instruction is farmed out to a so-called “confidential source network” (spoiler: these networks are mostly subcontractors and shared among the industry) is ill suited for evidence gathering. Most of these resources are not accustomed to investigative tasks which require attention to admissibility.
This hands-on approach makes us visible. We receive threatening letters and submit ourselves to cross examination. We commit to playing an essential role in the success or failure of our clients’ claims. Their filing deadlines are our deadlines. We live and breathe our cases in the field and at 4am alike.
And so our role in litigation support is more than that of service provider. We are essentially in the trenches, embedded, a trusted strategic support available at all times and intimately familiar with the smallest of facts of each case. If you spend two years on a matter, a legal victory will feel like yours. A loss will too. This can spark a sort of obsession with the work. At the same time it warrants a cautionary note to would-be candidates: there are easier ways to make a living.
Nicholas Bortman, Partner & Co-Founder
Nicholas leads Raedas' Middle East practice. Over the last fifteen years he has participated in a wide range of private and public clashes among major corporations and regional businesses, merchant families and royalty heard in the DIFC courts, UAE courts and arbitration centres and London High Court. He has particular experience in corruption investigations, evidence gathering in jurisdictions with minimal disclosure requirements and supporting the enforcement of judgements and arbitral awards. Prior to co-founding the firm, he was partner and co-chair of the dispute consulting group of GPW. He established that firm’s office in the UAE. In 2016 Nicholas was asked to consult for the International Criminal Court of The Hague, evaluating the Court’s financial investigation practices and advising the Office of the Prosecutor on asset recovery in Africa. He serves on the expert roster Justice Rapid Response, an intergovernmental facility for the global deployment of criminal justice professionals and is a member of the UN Security Council Affairs Division’s roster of experts.
Joana Rego, Partner & Co-Founder
Joana has 13 years’ experience in investigations specialising in cross-border litigation support and asset recovery. She has assisted on a range of high-value enforcement actions across Europe, the Caribbean, US and Latin America and works closely with clients to maximise routes to recovery. She also specialises in evidence and intelligence gathering in the context of highly technical and contentious IP disputes, primarily in the pharmaceutical sector. Prior to co-founding Raedas in 2016, Joana was a partner and co-chair of the dispute consulting practice of GPW. She was previously an investigator for Diligence in Brussels and London and began her career working in international development cooperation at the OECD and the United Nations. She is a graduate of Sciences Po in Paris and studied at Université Paris X and ISCTE in Lisbon. In 2015, Joana was voted one of Management Today’s Top 35 Women Under 35, an award celebrating high-achieving women in business. Joana is fluent in Portuguese, English, French, Spanish and German.
Andrew Wordsworth, Partner & Co-Founder
Andrew has worked in investigations since 1994. Before choosing investigations he worked at AHL, the pioneering hedge fund. He believes strongly that the growth of the investigative sector has led inevitably to the growth of a specialist Litigation Support and Asset Searching profession. In his own career, he has transitioned from starting at the generalist consultancy Kroll through to co-founding the specialist Raedas. He works investigations in support of litigation world-wide although he has a particular expertise in Russia and the rest of the former Soviet Union. In the course of asset recovery he provides assistance enabling the seizure of assets, including ships, planes and works of art, on a global basis. A graduate in Law from the University of London, he has passed the New York Bar exam.