Insights on Litigation Funding in Australia from Hartwell Funds
There is no doubt that the litigation funding industry is largely dominated by established global funders whose years of experience and vast reserves of capital allow them to take on the largest and highest value cases. However, it is always important to understand the perspectives of new and growing funders who are finding solid returns for their investors in local or regional markets. On a new episode of Talk Ya Book from Ticker News, John Poynton and Aaron McDonald of Hartwell Funds discuss the intricacies of litigation funding in Australia, explaining their company’s approach as one of the emerging funders in the market. Discussing Hartwell’s investment strategy, McDonald reinforced the value of being prepared for all outcomes, explaining that “97 per cent of the time cases are resolved by consensus, and 3 per cent of the time cases go to trial, so we’re certainly targeting the 97 per cent not the 3 per cent, but you need to make the investment as if you are one of the 3 per cent.” Discussing the impact of litigation funding on cases, Poynton highlighted how “it’s interesting to see how quickly things move to settlement because of the existence of the funder”, as defendants swiftly realise they can’t bet on a plaintiff lacking the funds to see the case through to completion. McDonald further emphasised this “psychological benefit” of funder involvement, stating that defendants understand that “there’s no way that the case is going to capitulate, it’s either going to go to trial or it’s going to settle.” Explaining how the funder pitches opportunities to investors, McDonald acknowledged that there was an aspect of litigation funding that is speculative, but if “you’re measuring the risk and the prospects of the case carefully, getting independent advice about it, you can invest your money wisely in this sector and do well.” He also discussed the key aspects that Hartwell looks for in prospective cases, highlighting that the cases they have been most confident in are those where “the lawyers have come to us and said, ‘here’s a written opinion from a Silk who says that the case is viable’, that really underwrites the investment.” However, both Poynton and McDonald acknowledge that there is a lack of visibility and transparency for third-party funding in cases, and that defendants rarely know when litigation funders are involved in a case. McDonald notes that this is not always true as some courts require lawyers to disclose the presence of third-party funding, and that “those obligations of disclosure are becoming far greater.”
