On a recent episode of the Litigation Finance Podcast, Grant Farrar of Arran Capital discussed his firm’s value proposition as the only litigation funder focused solely on public sector financing. Grant explains why public sector funding merits its own categorization, what the sticking points are in convincing politicians and others of litigation funding’s value, and what his expectations are for future growth in this rapidly-evolving space.
Below are key takeaways from the interview, which can be listened to in its entirety here.
LFJ: What makes litigation financing for public sector entities so unique? Why does this type of funding merit its own differentiated category?
GF: In terms of public sector affirmative litigation, one of the undeniable and very interesting trends that’s going on across the country with every shape and size and jurisdiction, is the uptrend in affirmative litigation. So, it really started off with, as you recall, the tobacco litigation in the late 90s and early 2000’s, and now has evolved into some different issues areas, so it can be a public nuisance, relative to environmental or other quality of life issues that affect constituents around the country. It could be the opioid litigation which everybody is very familiar with, a related offshoot of that would be the Juul litigation which is being maintained right now. And a whole host of other issues that relate to consumer fraud or antitrust. One of the things about public sector entities is they are the intersection of every piece of public policy and business.
As litigation continues to increase, certainly in the time of COVID-related budget strain and stress on entities across the country, the core issue of ‘okay, how do we find funding’ and ‘how do we pay for this legal representation’ is certainly at the forefront. And this is where Arran Capital comes in, with our value proposition that we’re real excited to talk about today.
LFJ: In terms of public sector financing more broadly, what are some of the key drivers of growth that this sector of the industry is facing?
GF: It really boils down to a concept which is being discussed in public sector circles with respect to rethinking revenue models and finding ways to generate revenue in different and creative ways that will assist public entities across the spectrum. So one of the drivers on that is chief financial officers in public sector organizations and their chief legal officers that work hand-in-hand with those who set the policies. They’re coming to the realization that it’s more than just across the board budget cuts or trying to lean operations. They’re trying to find different and creative ways to manage that revenue strain while also dealing with the growing expectation and the demand on behalf of their constituents and their public sector leaders for affirmative litigation to address the issues.
LFJ: ESG—this is a hot buzz word at the moment across the investment landscape and across Wall Street. It stands for Environmental, Social, and Governance, also known as Impact Investing. The idea is that investors are starting to look beyond just profit at how companies they invest in are impacting those various metrics. A lot of institutional players are starting to mandate ESG allocations from their partners. How could this trend impact public sector financing?
GF: Great question. I’m glad you asked that. Just this week we’ve seen the largest asset manager in the world speaking to the tectonic shift in the investment space with respect to funds flowing into ESG-related investments and ESG-related approaches. And at Arran Capital, we view ourselves as part of that component and part of that wave, because if you think about what ESG stands for, one of their core case matters or case areas that we seek to invest in is with respect to the environment; those public sector / public nuisance actions. So investing with our fund that can then invest in cases that address environmental issues, that’s part of our core focus and mission.
Going to social and governance, it’s also about investing in cases that promote access to justice for citizens across the country, and ensuring that citizens and their public servants have a role as constituents and representatives of government having a responsive investment approach and a responsive and good outcome on the litigation side. So we’re really excited about how we can tie into ESG, it’s one of the main drivers in our value proposition and one of the things we seek to focus on and execute.
