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A Conversation With The Founders Of Lake Whillans Litigation Finance

Observations and insights on the career path to the litigation industry, as well as trends in the field.

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In the United States, litigation funding is still a relatively novel element of complex, high stakes lawsuits. Many believe the practice of third-party litigation funding has the potential to help level the playing field in the civil justice system, as well as provide a new approach to risk reallocation for businesses. Today we speak with Lee Drucker and Boaz Weinstein, the founders of Lake Whillans Litigation Finance. Lee and Boaz describe how they came to be involved in the litigation finance, and offer observations and insights on the growth and direction of the field.

Describe the path that took you from law school to litigation finance.

Boaz Weinstein: After law school, I did clerkships for the Hon. Pamela B. Minzner, Chief Justice of the New Mexico Supreme Court, and Hon. Robert P. Patterson, Jr. in the Southern District of New York. I then spent six years at Cleary Gottlieb representing financial institutions and large corporations in complex commercial litigations and arbitrations, and three years at Bernstein Litowitz representing investors in high-profile securities class actions. In 2011, I had the opportunity to transition into litigation finance when one of my former colleagues at Bernstein Litowitz started BlackRobe. In 2013, Lee and I left BlackRobe to found Lake Whillans.

Lee Drucker: I transitioned directly from law school to litigation finance. In 2007, I was a student in the JD/MBA program at NYU; I responded to a job posting on the law school’s website to help a former Latham & Watkins partner develop various business opportunities for a company called Burford Advisors. One of those opportunities was litigation finance. The founder of Burford Advisors went on to co-found Burford Capital, a litigation finance firm currently listed on the AIM in London. Upon graduation, when I was evaluating my career options, I had the good fortune of being introduced to BlackRobe. This was in 2011, and litigation finance was still a nascent industry in the U.S., but from my brief glimpse into this space while at Burford Advisors I felt I could not pass on the opportunity.

How do you feel about leaving behind the practice of law? Are there aspects of it that you miss?

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BW: While I don’t “practice” law, I also don’t feel that I’ve left it behind. I continue to be involved commercial litigations and arbitrations, but from a different vantage point. Litigation finance allows me to combine the aspects of practice that I loved best — namely, strategic thinking and analysis and diligent factual investigation — with the ability to work collaboratively with excellent lawyers and sophisticated claimholders on a wide variety of commercial disputes nationwide.

The litigation finance industry is at a relatively nascent stage, at least in the United States. What steps that you are undertaking to help grow the market?

LD: Educating market participants. Commercial litigation finance is a product that can solve many of the problems faced by both claimholders and lawyers alike. Right now, most claimholders do not know that there is a market to both raise non-recourse capital for operations and growth and hire the very best lawyer to handle their legal claim at no cost. Meanwhile, many top litigators are facing pressure from their clients to provide alternative fee arrangements; with the introduction of litigation finance these litigators are able to provide a financing option that is less expensive than what most law firms can afford. As litigators and claimholders become more familiar with the process, litigation finance will eventually become a regular part of bringing or defending a legal claim.

What is the greatest satisfaction of working in litigation finance?

BW: We invest principally in great companies with strong management teams that have been derailed by the wrongful conduct of others. Our finance can help them level the playing field against companies with bigger balance sheets and see that they obtain just compensation. Through the diligence process we often become friendly with both the investors and managers, and it is pretty amazing to have a front-row seat as these companies transform from businesses that are struggling to survive into ones with tens-of-millions on their balance sheets and a clear road to success.

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LD: The opportunity to create. Right now the industry is open frontier and we have the opportunity to help shape a new and potentially important marketplace.

Have you observed any change in attitude toward litigation finance on the part of the legal profession?

BW: Undoubtedly. When I first started in litigation finance, people frequently had never heard of the term. Today, most lawyers have had some encounter with the concept (even if they are not familiar with how it works in practice), major bar associations have addressed it, and many of the top firms in America have either explored or sought litigation finance at one point or another.

If the practice were more widely adopted, what sort of impact could litigation funding have on the judicial system?

BW: Litigations and arbitrations should turn on their merits, not the balance sheets of the parties. I think litigation funding has the ability to level the playing field and thereby make our judicial system fairer for everyone.

LD: As the practice becomes more widely adopted, the cost of financing will continue to decrease, and financiers will have a greater ability to invest on both sides of the V. The most meritorious cases will attain the lowest cost of financing and the market will push towards a more fair and efficient resolution system.

What other advice would you give to currently practicing attorneys who are considering a career in litigation finance? Are there particular practice backgrounds or personal characteristics favorable to the transition?

BW: I would encourage practicing attorneys who are considering a career in litigation finance to think about how they might put it to work in their practice today. Going through the process as counsel for a client will give you a different view and appreciation of the process and show an ability to act entrepreneurially. As far as personal characteristics, I would say a few traits that spring immediately to mind are being a good listener (to a claimholder’s needs and the details of their story), being consistently curious and diligent, and being collaborative working with others.

LD: I do not envision litigation finance ever becoming a major center for legal employment (a handful of people can deploy a relatively large amount of capital), but just like biglaw, – the people who have an ability to find new cases to work on will be the most desirable candidates.

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