Posted by Christopher Deadman, sales director at Litigation Futures sponsor Augusta Ventures
Augusta celebrated its first birthday last week. Amidst tin mugs of Buckfast Abbey Tonic Wine (no rubbish) and arrowhead sized wedges of partially defrosted Black Forest gateau, I began to ponder the lessons of the past 12 months.
Being a funder is sometimes like being Estragon in ‘Waiting for Godot’. Gnawing turnips aside, we are often told by lawyers that opportunity will be coming “surely tomorrow”. The funder can therefore wait for opportunity to knock (or not) or go out and try and make it happen. In the segment of the market in which Augusta operates, fine words butter no parsnips (or turnips). Unless we are out in front of fee-earners on a regular basis, opportunity will pass us by.
We have also learned that we still have much work to do in educating solicitors not only about the nature of litigation finance but also how it can be used as a means of attracting new business. Many solicitors continue to regard third-party funding as an option of last resort rather than as perfectly rational business decision for the claimant who wishes to reduce or eliminate their downside risk.
After-the-event (ATE) insurance is also routinely confused with funding. If I had a pound for every time I was contacted for an ATE quote, I would have £14 to my name. The reason people call me for their ATE needs is that they do not understand either the nature of ATE or funding. They know, however, that they need to look after their client’s position so they pick up the phone looking for some kind of risk protection with actually knowing what they need.
Funders and ATE insurers will have to work harder to get their message across if they are to have any hope of making case financing a mainstream option.
Lawyers too need to think harder about recoverability, not just for the purposes of making applications for finance but also for their clients’ benefit too. It is true that many firms have built hugely successful practices on the basis of ‘taking a punt’ on a case. The funder, however, has no such freedom to choose. Because it is playing in hard cash as opposed to time, it needs to be as sure as it can be that the proceeds of the litigation will be realised in the event of success.
As highlighted in previous posts, there are many accountants and similar who are prepared to undertake this type of investigative work on a conditional fee basis, so there is no excuse for not getting this aspect locked down before making an application.
In conclusion, the amount of news copy devoted to funding remains inversely proportionate to the amount of business being written. It is the responsibility of funders to continue to educate lawyers and for lawyers to explain the all the available options to their clients. We must make it happen – there is no deus ex machina to guarantee a happy ending.