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An LFJ Conversation with Neil Purslow

By John Freund |

Neil Purslow co-founded Therium in 2008 and is a director of Therium Capital Management Limited and the firm’s Chief Investment Officer. Neil is a solicitor with over 26 years’ experience and was previously Litigation Counsel in-house for Marsh & MacLennan Companies, Inc. (MMC). Prior to this he was in practice in the City of London with US firm Reed Smith and Withers.

Neil is Chair of the Executive Committee and on the management committee of ILFA, he is also a board member of the Association of Litigation Funders, the self-regulatory body for the litigation funding industry in England and Wales. Neil has given expert evidence on litigation funding and speaks regularly at conferences and is often quoted in the media on issues related to the industry and asset class. He gained an MA in Jurisprudence from the University of Oxford (1995). Neil Purslow was ranked as a Tier 1 individual in litigation finance by Chambers and Partners, Leaders League, Law Dragon and other directories.

Below is our LFJ Conversation with Neil Purslow:

As the PACCAR situation continues to develop, how do you think this will ultimately play out?  Will the litigation funding industry face enhanced regulation in the UK going forward?

The steps the Government has taken in response to PACCAR have been very positive and reaffirm the Government’s recognition of the importance of the litigation funding industry in supporting access to justice and the UK legal sector.

The Litigation Funding Agreements (Enforceability) Bill (LFA Bill), which is presently going through Parliament, will reverse the PACCAR decision and reestablish the Government’s original policy intent, ensuring continued access to third-party funding in the UK.  The Bill is expected to be passed before the summer recess at the end of July.

The benefits of funding were highlighted throughout the recent debate on the Bill in the House of Lords, in particular that funding enables access to justice and upholds the rule of law, enabling ordinary individuals and SMEs to bring claims against better resourced companies and institutions, such as the Post Office. Several Lords even made the point that funders’ returns were fair, given the significant risks involved in funding litigation, especially against large and deep pocketed defendants.

This week, the Civil Justice Council (CJC) published the terms of reference for its review of third party litigation funding. It is extremely encouraging that the CJC is committed to making litigation funding more accessible in order to improve access to justice and fairness for all, so that claimants like the sub-postmasters, can seek redress against large corporations.  The litigation finance industry shares that aim.

Whatever the outcome of the review, regulation will need to align with the government’s goals of furthering access to justice. The risk with any regulatory regime is that it can have unintended consequences, which could ultimately disadvantage claimants by limiting the availability of funding and curtailing access to justice.

How should the industry respond to calls for regulation? Some stakeholders are suggesting that litigation funders should lead the charge here. Do you agree or disagree, and why? 

The industry has always taken a proactive approach to regulation through the UK’s Association of Litigation Funders (ALF) and its Code of Conduct which has been influential in setting standards in litigation funding, both for members and non-members alike in the UK and elsewhere.  Litigation funders are already subject to Court’s oversight.  The industry has nevertheless rightly welcomed the CJC review as an opportunity to take a fresh look at the sector and the positive role that it plays in the legal system and how the review can improve access to litigation funding.

Consistent with many of the speeches in the House of Lords on the LFA Bill as well as the CJC’s stated objective, the starting point for the review must be the recognition that in the absence of legal aid and with the high cost of litigation, litigation funding is an important and essential tool to provide access to justice.  Any proposals arising from the review should promote the potential for litigation finance to perform that role.

The review of the industry provides an opportunity to examine any other changes that would improve the availability of funding to claimants and also deliver better financial outcomes for claimants in litigation.  For instance, empowering the Courts to order defendants to pay successful claimants’ funding and insurance costs would result in significantly improved financial outcomes for claimants and disincentivise the defence strategy of running up costs to stifle claims, seen so starkly in the Post Office litigation.

Any regulatory proposals should seek to address a problem and there should be clear evidence that such a problem exists.  Self-regulation of the industry has worked well in practice for over 10 years and litigation finance arrangements have many checks and balances already built in, not least the involvement of lawyers advising claimants on their litigation funding arrangements.  There is an important role for the International Legal Finance Association (ILFA) and the ALF to provide the CJC with an understanding of how claims are funded in practice.

Any proposal for regulation must also be workable and effective.  The industry witnessed the impact of the clumsy and inappropriate regulation brought in by the Liberal government in Australia which significantly impeded the proper functioning of the industry for a period until the regulation was withdrawn.  The UK should be wary of falling into that trap.

ILFA and ALF are ideally placed to assist the CJC in understanding the practice of litigation finance and the opportunities that exist to make the best use of its potential in upholding the rule of law.  Both organisations will work constructively with policy makers to ensure that the review supports greater access to justice for consumers and SMEs and maintains the UK’s place as a leading global legal centre.

Has PACCAR influenced your investment thesis at all? Are you adapting your underwriting standards in any way – either in the UK, or globally? 

In common with the entire UK market, Therium has had to take steps as far as possible to mitigate the potential effects of PACCAR.  That in itself has been time consuming and there has been opportunistic satellite litigation which has both wasted Court time and cost money.  The LFA Bill however will restore the pre-PACCAR position for both existing and future funding arrangements, which will remove the uncertainties that PACCAR has created and restore the ability of funders to offer funding to as many cases as possible.  It also preserves the viability of the CAT collective proceedings regime, which is reliant on funding. The Government’s response to PACCAR has demonstrated that it understands and values the benefits that the litigation finance sector brings and that it reinforces the attractiveness of the UK as a jurisdiction in which to invest.

 From a public relations perspective, what more can the industry do to convince legislators and the general public that litigation funding is ultimately a force for positive change in the world? 

The Post Office scandal has been an important example of how civil litigation can play a pivotal role in righting a huge miscarriage of justice. In turn, the media coverage has been a game changer in increasing awareness of the vital role that litigation finance plays in providing access to justice.  That example continues to resonate with the public and with legislators, with its effects felt both domestically and also internationally.

ILFA plays an essential role in helping legislators and policymakers to understand litigation finance and in countering misinformation about the industry pedalled by corporate lobbyists such as the US Chamber of Commerce and their proxies like Fair Civil Justice and its forerunner, Justice Not Profit, which unsuccessfully tried to derail the introduction of the collective proceedings regime in the CAT in 2015. Their objective is to limit access to justice and frustrate litigation against big corporate wrongdoers.

It is also important that the benefits of litigation funding to upholding the rule of law are appreciated more widely. Lord Sandhurst made the point in the House of Lords that the absence of legal remedies damages our economic system and the society in which we live.  Finding funding mechanisms to achieve legal remedies for individuals and small and medium sized businesses who do not have the resources to achieve this is of social value and in the public interest. Being able to enforce legal rights is essential for a functioning market economy.  According to Bain and Co’s Transatlantic Confidence Index, the rule of law remains one of the most appealing reasons to invest in the UK. At an event at Gray’s Inn that was supported by The Law Society and the Bar Council, Shadow Justice Secretary, Shabana Mahmood made her first major speech since assuming the role in which she expressed her desire for the UK be home to the fastest growing legal sector in the world. The availability of litigation funding will undoubtedly help to ensure that the UK retains its position as a leading global disputes hub that currently contributes £34 billion to the UK economy each year.

About the speaker

John Freund

John Freund

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An LFJ Conversation with Michael Kelley, Partner, Parker Poe

By John Freund |
Parker Poe traces its roots to 1884, when it was founded by a future North Carolina Supreme Court justice. In the early 1950s, World War II veterans Francis Parker and Bill Poe became partners. Their names and commitment to public service have been part of the fabric of the firm ever since. ‘LFJ Conversations’ is an original content series produced by the editorial team at Litigation Finance Journal and featuring the leading thought leaders from throughout the global litigation finance community.’ For more than a century, Parker Poe has represented many of the Southeast’s largest companies and local governments in transactions, regulatory issues, and complex litigation. The business law firm has more than 250 attorneys serving clients from eight offices in Charlotte and Raleigh, North Carolina; Charleston, Columbia, Greenville, and Spartanburg, South Carolina; Atlanta, Georgia; and Washington DC. Parker Poe uses a cross-disciplinary, collaborative approach to provide comprehensive solutions to their clients. What led you to make the move to Litigation Finance? My move to Litigation Finance was coincidental. In 2012, a litigation funder retained me to assist with the structuring and formation of its second international fund. Shortly after, they offered me the opportunity to work on all their litigation funding transactional work. In the past ten years, my litigation funding practice has grown exponentially, representing over 90% of my professional time. Litigation funding allows me to practice and use both areas of my background in finance and law. Moreover, the bespoke nature of litigation finance transactions requires creativity to achieve the right mix of aligned incentives for all parties involved in the transaction. I appreciate this remarkable opportunity to foster the growth of and to help define this maturing asset class. And I love working with all my clients, whether they are litigation funders, law firms, or claimants. How does your experience in non-profits and social impact investments inform your work in Litigation Finance? People frequently ask me about the corporate-related work I rely on for structuring litigation finance transactions. More than M&A, I rely on my investment funds formation background for finding creative solutions to unique structuring challenges. I have especially drawn on my work with social impact investment funds and transactions. For example, I have created mini-funds of pooled capital that play a first-loss capital tranche role, providing those investors an opportunity for out-size return while paving the way for raising traditional litigation finance. Traditional litigation funders have appreciated having that first-loss cushion to mitigate the risk of loss on their investment (a form of insurance). For the funded party, the first-loss pooled capital tranche unlocked the door to receive an aggregate of $60 million for financing a portfolio of claims. I have also drawn on my fund formation work for structuring innovative waterfall structures to balance incentives among participants in the litigation funding transaction. Can you talk about the interplay between Litigation Funding and social justice? It is often cliche that litigation funding provides access to justice. However, every day I see highly meritorious claims that would otherwise not be able to be advanced but for litigation finance. I have seen this in individual claims and portfolios of claims across a wide range of cases, including intellectual property, international arbitration, corporate disputes, and, of course, in the personal injury and mass tort space. Money alone should not be the sole barrier to pursuing meritorious claims. Litigation Finance helps level the financial playing field for claims prosecution/monetization. How do you think GCs can be convinced to utilize Litigation Funding? I was a GC for over 17 years and wish I had access to litigation finance during that time. The value proposition for GCs and in-house legal departments is clear: legal claims are assets that can and should play a vital role in a company’s financial health and growth. Litigation finance permits GCs to turn dormant claims or claims they cannot otherwise pursue due to financial budgets into sources of revenue. Instead of in-house legal teams being viewed solely as cost centers, those departments can become revenue and profit centers for the companies without adding any additional legal risk to the company. In addition, the GCs can become heroes inside their companies! I would even go so far as to say that GCs not taking advantage of litigation funding to pursue their company’s claims are not acting responsibly. I would further argue the same for law firms who need to understand litigation funding and what it can do for law firm clients and build contacts in the industry to properly service law firm clients. Michael P. KelleyPartner, Parker Poe Kelley is a thought leader in the industry with more than ten years of experience assisting US and International litigation funders, law firms, and claimants. He is one of Lawdragon’s “Top 10 Global Advisors in Litigation Finance” and a frequent speaker on key industry issues. Kelly has over 25 years of experience in the legal finance industry. He is the former general counsel of EMP Global, overseeing $8 billion in assets across different investment funds in emerging markets. He has a JD from Antonin Scalia School of Law, George Mason University, and a Ph.D. from the London School of Economics and Political Sciences.
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