Litigation Finance as Business Development Tool to Support Advancement of Women in Law Firms

A recent Law360 article[1] discussed the implications of a New York Bar Association report finding that the percentage of women in lead counsel roles in court cases in New York state has not increased significantly over the last three years and remains stuck around 25%.  When you look at this statistic for private practice lead attorneys only, the number drops further to just 20.1%.  At the same time, studies are showing that female lawyers (particularly, mothers) have been more heavily impacted by the current pandemic than their male counterparts because of increased responsibilities at home, including managing e-learning and caring for children.  A recent New York Times article[2] pointed out that “women have carried an outsized share of the burden, more likely to lose a job and more likely to shoulder the load of closed schools and day care.  For many working mothers, the gradual reopening won’t solve their problems, but compound them – forcing them out of the labor force or into part-time jobs while increasing their responsibilities at home.”

With the combined challenges of starting so far behind their male peers even before the pandemic hit and the additional burdens related to the pandemic, how are female lawyers to increase the percentage of court cases in which they are lead counsel – and thereby increase compensation, influence, and leadership potential at their law firms? 

In order to land lead counsel roles on major litigation, lawyers must be able to develop business and bring in their own clients.  (Bringing in new business is also an important way to show value to your law firm during a time when setting billable hour records may be impractical.)  One way to do this successfully is by offering innovative solutions to corporate counsel faced with the challenge of budgeting for the significant legal costs needed to pursue litigation claims.  In today’s economic environment, many businesses may not be able to pay traditional hourly rates for legal services, while at the same time, many law firms may not be able to offer full contingency arrangements.  That is where litigation finance can come in.  Forward-thinking lawyers can propose a fee arrangement to potential clients that minimizes their legal costs, while at the same time allows the firm to get paid at least a percentage of its standard hourly rates.  This can be a win-win when presented both to the client as a way to finance litigation fees and expenses and to a law firm executive committee when proposing the addition of a new client that may not otherwise be able to pay standard hourly fees.

For women who successfully pitch clients and their own law firms on this type of third-party financing arrangement, there is the added benefit, if the case is ultimately successful, of getting internal credit for realization rates that could exceed 100%.  For example, as part of the funding arrangement, the law firm might agree to discount its standard hourly rate by 25% for the life of the case, but if the litigation is successful, be entitled to a share of the proceeds that would repay the discounted amount plus an additional percentage above the standard rates, resulting in a realization rate well over 100%.  As realization rates are an important metric that law firms consider when determining the compensation and advancement of their partners, this type of low risk fee arrangement could help promote women within the law firm partnership and within the legal profession.

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Curiam Capital is committed to developing innovative financing solutions in partnership with law firms and claimants seeking to reduce risk, limit costs, and yet still pursue strong legal claims.  For further information or to discuss options, please contact Molly Pease, Managing Director at Curiam, molly.pease@curiam.com.

Footnotes

^{[1] “In NY, Women’s Share of Lead Atty Roles Has Barely Budged,” by Aebra Coe, https://www.law360.com/articles/1277770?cn_pk=a49d605a-e905-4093-a1cb-0d1e5f1c8aa3&utm_source=newsletter&utm_medium=email&utm_campaign=custom.}

^{[2] “Pandemic Could Scar a Generation of Working Mothers,” by Patricia Cohen and Tiffany Hsu, https://www.nytimes.com/2020/06/03/business/economy/coronavirus-working-women.html.}