In Rodgers & Hammerstein’s dazzling camp Oklahoma, Ado Annie Carnes complains to her friend Laurey Williams that when it comes to men, she just ‘Cain’t Say No’ (sic). For many litigation lawyers who have ever tried to access external finance, third-party funders are just like Annie – only in reverse.
There are loads of reasons why a funder may not choose to invest in a matter: the economics may not make sense, recoverability may be uncertain, it may be too close to trial, or it may be a type of case which the funder is prevented from considering, e.g. matrimonial finance or defamation.
All of these reasons will doubtless be disappointing to the applicant but in most cases they will not cause irreparable damage to the long-term relationship between funder and law firm. The majority of sensible lawyers accept that the funder operates within certain parameters and that each investment must satisfy certain pre-agreed criteria. If finance is refused, it is usually because one of these criteria has not been met.
Nothing causes more offence and long-term damage, however, than when the funder rejects an application on the grounds that it believes the lawyer’s legal analysis to be flawed. This goes to the very heart of why many lawyers joined the profession: because they enjoy the intellectual rigour involved in running litigation and the opportunity to pit their wits against a worthy opponent.
It is widely acknowledged that claimants often have a significant emotional investment in their case. They proceed with litigation not only to right a financial wrong but sometimes simply to be proved ‘right’. It is often overlooked that that the lawyer may have a similar non-financial stake in the case. It is their professional opinion and reputation on the line. Litigation is also their chance to be proved ‘right’.
Having a case rejected on the grounds that the funder’s internal review function believes the lawyer to be wrong in law can have seismic consequences. It is at this point that the cool, dispassionate demeanour for which many litigators are famed, fades like so many summer kisses. They can go from urbane and charming to truculent and snarling in less time than it takes to say ‘hourly rate’. This is understandable because lawyers are human beings too (who knew?). They have pride in their work. They believe in what they do. They care.
Whilst even the most visceral replies from applicants are understandable to the funder, lawyers should avoid taking rejection personally. The funder is not saying ‘you are a rubbish lawyer who would have difficulty negotiating your way out of a parking space’. The funder is simply saying that it is not sufficiently persuaded of the legal merits to justify the investment of other people’s money. It is nothing more than a judgement call on the risk reward ratio.
It does not mean that the funder believes the case to be hopeless but rather that it disagrees with some element of the legal argument. Or to put it more clearly, it does not believe you enough.
Generally speaking, funders are not fools. They employ experienced litigators from high-quality firms to assist in the analysis of applications. They are not infallible (and neither are you) but they are paid to provide a professional opinion, which may or may not be correct.
Think about any piece of commercial litigation. When you issue proceedings in a matter, do you sulk for days when the other side refuses to accept your brilliant and fluent analysis of the legal and factual position and fails to render a cheque in full and final settlement? Of course not. Because you accept that litigation is for the most part a game of opinions. It pits one set of clever people against another, both of whom think they are right.
So when the litigation funder says ‘no’, do not take it personally but rather take it in your stride and move forward with a song in your heart. Just like Ado Annie Carnes.