Louise Trayhurn, Executive Director of Legis Finance, sat down with LFJ to discuss a broad range of industry topics, including Legis’ bespoke approach to managing client relationships, the various funding and insurance products her company offers, the growing trend of GCs and CFOs extracting more value out of their legal assets, and what trends she predicts for the future of the industry. Below are key takeaways from the conversation, which can be found in its entirety here. Q: How does Legis approach the issue of pricing transparency and consistency? A: At Legis, we share with the client, the law firm, and the funder all of the returns listed. It’s very transparent. Every party can see what’s going on. If they don’t like model scenarios...then we can adjust it. ‘Pivot’ is a word that’s used frequently in our office. We’ll constantly amend, adapt, and make changes here and there to try and get everybody comfortable. Q: In the US, contingency fees have long been used by lawyers to share risk with their clients. Can you explain the benefits of DBAs as opposed to conditional fee arrangements and the billable hour model? What has Legis specifically been doing to press for this transition to DBAs? A: We formed a working group for those interested in DBAs. The idea behind it was to...discuss the possibility of a standard damages-based agreement. I, having a background as a litigator, thought this was fairly ambitious. We got a whole group of litigators together, and as well as looking at the broader picture of a standard form document, we had a more urgent task, which was to work together to provide feedback to the team looking at amending the DBA regulations. Q: In the wake of COVID, we’re seeing a mindset shift that’s been talked about for years. What have you been noticing in terms of how GCs and CFOs are considering litigation finance? What do you see happening out there? A: GCs are sitting in their board rooms and they’re acting as cost centers. They take their seat and the first thing they’re asked is ‘okay, how much is legal spend going to be this month?’. There are numerous companies out there committed to spending a certain amount each month on their litigation. It’s just money going out the door, and it’s hard for those GCs to show their value other than reducing the amount of legal spend this month for the same results. Now, you can use litigation finance to generate revenue. Instead of being a drain on the company’s cash, you can in fact add; you can be a profit center, if you use your litigation assets to make money for the company instead of costing them money. You have funders willing to do the due diligence in an independent manner—I mean, we don’t get paid for picking bad cases—and GCs have in their hands a very powerful independent check on their cases, and that can help in all kinds of ways. Q: Broadly speaking, what predictions do you have in terms of the maturation of the Litigation Finance market. What can we expect this year and down the road? A: Certainly I’m going to say increased use of funding. And apart from that, there may well be a consolidation of existing funders, or funders standing behind funding. Increased use of different financial products to back funding—insurance or other entrants to the market. Or a secondary market of products available to funders to manage their own risk, and possibly a secondary market available to investors to package these litigation assets, standardize the documentation, and buy and sell risk. That should help open the marketplace for these institutions that want to create secondary markets.

Exton Advisors, a leading financial advisory firm in litigation, is launching a unique range of ‘special situations’ services designed to help companies look at their disputes in an entirely new way. The move is in response to the increasing economic uncertainty brought about by the global pandemic and sees the firm creating a range of advisory service lines designed to help corporates and their legal teams find the right funding products to support their litigation and unlock potential working capital at a critical time. Established in 2018, Exton Advisors is comprised of consultant practitioners from litigation finance, law, insurance, insolvency and financial structuring. Responding to the rapid growth of litigation funds in the UK in the past few years, the firm was created to offer financial advisory services for in-house lawyers, many of whom need real guidance when it comes to assessing the growing array of funding options available. Many corporate legal teams have significant levels of capital sunk into work-in-progress disputes, but simply don’t know where to start when it comes to funding these cases or how the transactions should be structured. Exton’s special situations advisory service is geared towards turning those disputes into assets, flowing working capital back into the business. John Astill, founder and director comments: “Litigation finance is poised to enter a golden era, but the reality is that the asset class remains opaque and complex. We’ve seen a number of recent judgements highlighting the danger companies and their private practitioners face should transactions not be structured correctly, including adverse costs protection in relevant common law jurisdictions. We’re designed to simplify that complexity and help clients make informed choices.” Whilst corporate legal teams are 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. They also rely heavily on their roster of law firms for advice, many of whom have limited relationships with the funding community. Exton’s team provides them with an independent view on the whole market, which is increasingly seeing new and unfamiliar entrants with significant capital to deploy. Astill continues: “Working directly with one or two funders can result in cookie-cutter solutions. As a result, in-house counsel have historically deferred to their private practitioners to help them arrange funding for their business critical disputes, but that doesn’t always make sense – litigators are appointed for their ability to come out on the right side of a dispute, not their financial advice, and in some circumstances there is a risk they can have divergent interests.” The firm is now working with a number of UK corporates and private practices on new mandates, including many that are springing up as a result of group claims, post-Covid-19. Whilst the independence and insight that the firm provides is important, building trust is the key. Tom Steindler, director, concludes: “Now, more than ever, the organisations we work with require a trusted partner to help them ease balance sheet pressure and realise the asset value locked up in their portfolios of claims and awards. In many ways litigation finance is still a nascent force and we want to provide a true corporate finance advisory service to help companies expertly navigate the asset class and make the most of the opportunities it provides; for us it’s all about simplifying and improving the experience for everyone.” About Exton Advisors Exton Advisors is a specialist litigation finance and insurance advisory business. Its advisory services concentrate on the assessment of the availability of specialist litigation finance across a broad network of capital sources, advice on the preparation of proposals, price and structure comparisons, negotiation of the terms on which finance will be provided, and advice on the structure of finance agreements. This applies to single case or portfolio funding, right through to the monetisation of a claim, award or judgment. Exton provides a variety of pure advisory services too, such as second opinions on deal pricing, support on costs budgeting, pricing and even asset tracing. It also acts as a specialist litigation insurance broker, providing advisory and placement services to meet the complex and challenging needs of businesses, their private practitioners and funding partners. When it comes to disputes finance, businesses need true expertise, deep relationships and often require bespoke, game changing solutions. Exton has a unique perspective and a track record of delivering.