By Molly Pease
Litigation finance has garnered increased acceptance in the business world and many companies find themselves applying for financing for the first time. The process is not difficult, but few do it right. How can you best position your company to get approval for litigation financing? And how can you get it done efficiently? Here are five steps to follow when requesting financing to make sure litigation funders are convinced of the value of your strong legal claims and not distracted by the haphazard presentation of your request.
1. Consider Alternatives
Litigation finance firms vary in several respects: Their expertise in funding certain types of litigation, the speed and efficiency with which they process applications for funding, their user-friendliness in working with potential recipients of funding and their access to capital. With some quick research, you can come up with a short list of litigation finance firms that meet your needs. Speak with several firms and assess which may be the best fit for your needs.
Be prepared to answer certain standard questions that you are likely to receive from a litigation funder. For example, you should be prepared to discuss how much financing is needed, potential damages, the types of claims you expect to assert, the expected budget and timeline for the litigation and the ability of the defendants to pay a settlement or satisfy a judgment. If a complaint has already been filed, you also should be prepared to describe the status of the litigation, what jurisdiction it is in and whether a judge has been assigned and issued any key decisions. If a law firm has been retained for the matter, you should have that information, including some description of the lead lawyer’s experience handling similar litigation and what fee structure has been negotiated with the law firm.
A litigation funder will want to review foundational documents as part of its due diligence process. Collect the relevant court papers, key contracts or agreements, important written communications and any other documents that support an analysis of the claims. If the documents are sizable, it may be worth setting up a virtual data room through a service like Dropbox or Sharepoint for ease of sharing. Include enough documents for the funder to gain a solid understanding of the strengths — and weaknesses — of the claims, but not so many documents that they distract from the key points.
Once the litigation finance firm has had a chance to review your request and supporting documents, it is important to schedule an in-person meeting or phone call to discuss your request for funding. To the extent you may need to be a witness at trial, the litigation finance firm will be assessing your ability to communicate the facts of the case clearly and will also want to form an opinion about your lawyer’s understanding of the legal issues and likelihood of bringing the case to a successful resolution. You should also consider whether you will want to spend the next several years interacting with this litigation funding team.
It is important to understand a litigation funder’s process for underwriting a potential investment and agree on a reasonable timeline to complete due diligence and close the funding. If there is any urgency to the requested funding, make sure the litigation finance firm understands that from the beginning. It is worth noting that the declination of an opportunity often comes faster than the approval.
With adequate preparation, your request for litigation funding can stand out and be given the best chance of being decided on the strong merits of the claim.
Molly L. Pease is a managing director of Curiam Capital LLC, a private investment firm that provides funding for high-value litigation. She previously worked as executive director of Condon & Forsyth LLP and general counsel at Grais & Ellworth LLP. Pease started her career as a litigator representing both plaintiffs and defendants.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the organization, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.