I was delighted to have the chance to put a few questions to Susan Dunn, co-founder of Harbour Litigation Funding, and a founding director of The Association of Litigation Funders in the UK.
In part 1 of my interview with Susan, she talked about her career and interests. In part 2, she gave some perspectives on litigation funding. In part 3, Susan considers what the future might hold for litigation funding. Finally, in part 4, Susan discusses the key challenges facing civil litigation in England and Wales, and the skills required to be an effective litigator.
There have been some important decisions recently on funders’ liability for costs – notably in the context of Excalibur Ventures LLC v Texas Keystone Inc and others. According to the Court of Appeal case tracker, the Court of Appeal will be grappling with the issues again in July 2016. Getting your crystal ball out, what do you think some key funding developments might be over the next 5 years or so?
I’ve been doing this for 13 years now and I look back and think, “What have been the key changes?”.
It has been exponential. For the first five years, it was so slow. It was really hard work getting lawyers to engage in discussing funding. Then suddenly, or so it seems, we are funding in 12 jurisdictions and five different arbitral forums. How did that happen?
I think we will see the remaining key jurisdictions such as Hong Kong, Singapore, and probably Ireland, all adopt funding in some way, albeit they might do so in a different way than we do in England.
I don’t think we are going to see a move to the Australian model, where the funders get to have more control over the way cases are run and, frankly, I‘ve got no great desire for that model, as things stand.
I don’t think we want that sort of control (although, interestingly, the Excalibur judgment did suggest, in part of the judgment, that the funders should have more input into the case).
I’m still amazed how often I’m asked about this “new” thing I’m doing and how often I’m still asked to speak at conferences and talk about what we do. In fact, the arbitration community is especially interested in it as a topic and frequently run sessions on funding at their conferences.
I hope that there are developments in finding ways to run litigation more cost effectively. It is a shame we can’t fund smaller cases, but the basic costs of any piece of commercial litigation seems to preclude funding cases worth less than several million pounds, currently.
Will we see many more funders? Possibly a few more. One has to be both a good litigator and have a good track record as an investment manager to be a successful funder and to secure investment capital. It is not good enough to simply say one has been a good litigator in order to raise money.
But I hope that it becomes just “more of the landscape” – that the whole language becomes more familiar to lawyers – that they are not intimidated by this “new” thing, and that it becomes normal to say to a client, “Do you want to pay for it, or do you want a funder (whatever that word means in its broadest sense), to pay? They’re going to take a share – what do you want to do?”. We’re still not there yet, by quite a distance.
Some have suggested that champerty and maintenance might be a dying concept. It has been suggested that Clarke LJ’s decision in Excalibur Ventures LLC v Texas Keystone Inc and others might even encourage funders to take more control. Do you think that funders might take on more of a role in managing cases that they are funding (as, I understand, is possible in Australia)?
We’re not set up like a law firm so that we can manage cases. That is the job of the lawyer running the case.
We want to take part in the strategic decisions that take place – after all, given the number of cases we review and then ultimately fund, if we can pass on tips about strategies that worked well in other cases, why wouldn’t we do so to benefit the case? But we’ve got no interest in controlling things on a day to day basis. It is just not what we do.
We are, understandably, interested in knowing that our investment in a case continues to be the right thing to do. There is no point in us continuing to fund a claim if it clearly no longer has good prospects of success. That would be a bad use of court time.
But you have counsel reviewing the prospects?
Yes, of course. We perform a thorough review up front and continue to monitor the prospects throughout the life of the case
In terms of day to day, we are not writing correspondence, drafting pleadings or interviewing witnesses – that is just not our job at all. With the number of cases we look at each month, and the number of cases we manage, we’d never go home if we did.
We do however spend a lot of time drilling into the budget for a case. There remains a lot of room for improvement in this area, in the legal profession. For some reason, lawyers still don’t seem to be able to bring to bear their experience when it comes to providing budgets and yet we are able quite accurately to predict what a case will cost (and that it is almost always more than the budget provided to us). I think lawyers are often surprised that we put budgets up to cover all eventualities, as those eventualities invariably seem to arise!
Have you seen any improvements, as a result of the new costs budgeting regime?
At least the conversational tone has gone from, “I don’t want to fill that budget document out” to accepting that they have to.
It is still staggering to me that there seems to be no connection between however many cases you have done previously and figuring out how much you are going to charge for this one. It is as if is all brand new every time. The staffing and costs of a case really shouldn’t be that difficult – all other service providers manage to figure it out
And if you look at the training that we were given when we qualified, it hasn’t changed much. If you talk to young solicitors nowadays, it sounds very similar to what I was doing in 1989. That is a bit staggering. In addition to legal analysis and strategy, training should be all about the project and costs management of a dispute, but it still isn’t, despite costs budgeting being an increasingly mandatory part of the litigation process.
I think there has been a steep learning curve, but lawyers are having to do it now…
And that is the nudge theory, which comes from introducing costs budgeting into the court process. As imperfect as the budgeting process for the court is at the moment – if it gets people to a place where they have to do it as part of the case strategy, then eventually behaviour changes.
I think many firms are introducing project management teams and training now…
Which is fantastic and long overdue.