A financial advisory firm that guides in-house lawyers on how best to fund litigation is urging them to see disputes as assets that they can turn into working capital for their businesses.
Exton Advisors has launched a range of ‘special situations’ services aimed at helping companies look at their disputes in a new way as it looks to move litigation funding into becoming a “sophisticated and tradable asset class”.
Director Tom Steindler explained: “We are moving away from funding being a distressed transaction to it being a finance solution.”
Established in 2018, Exton’s starting point is that many corporate legal teams have significant levels of capital sunk into work-in-progress disputes, but do not know where to start when it comes to funding these cases or how the transactions should be structured.
Speaking to Litigation Futures, Mr Steindler and fellow director John Astill emphatically distinguished what they did from the work of brokers, explaining that their role was much more than that of an intermediary.
“We bring a depth of financial expertise to the conversation,” Mr Steindler said. “We are very active in structuring and modelling deals for funders and claimants. We are bringing a corporate finance mindset and services to the market.” One of Exton’s staff is a quantitative modelling advisor.
Mr Astill, who founded Exton, said it looked to take “a holistic view of what assets you’ve got and how can we work with you on that”.
While it could be “tricky” at times to explain that litigation was an asset, Mr Steindler said companies were looking at it differently since Covid.
The opportunity to monetise claims was appealing: “They would rather not have cash going out the door and if they can bring cash in, that’s fantastic.”
Mr Astill added that, whilst corporate legal teams were taking “tentative steps” to engage with specific funds, “they currently have no means to compare options or understand the relative merits and risks locked up in the funding agreement”.
He continued: “They also rely heavily on their roster of law firms for advice, many of whom have limited relationships with the funding community.”
As a result, he said, law firms were asking Exton to go into clients “to help us help them”.
Exton works with three consulting lawyers, although currently only former City solicitor Alok Gangola’s name is in the public domain.