A Front-Row Seat To The Rise Of Litigation Finance: An Interview With Marla Decker

Three years ago, Marla Decker left her career as a complex commercial litigator at Cleary Gottlieb to become Managing Director at Lake Whillans Litigation Finance. She went from being a senior associate at one of the world’s most prestigious and established law firms to the first full-time employee of a promising but young firm in a still-emerging field.

It was a big risk — and it paid off. Both litigation finance and Lake Whillans have grown tremendously since 2015. At the end of 2017, Lake Whillans closed a $125 million round of funding. In May 2018, the firm won recognition as one of the nation’s top four litigation funders, in the inaugural ranking of litigation-finance firms by Chambers and Partners. And Lake Whillans has expanded its stable of top talent, adding Chris Hagale, formerly of Bartlit Beck, and Garrett Ordower, formerly of Wachtell Lipton.

Three years later, how does Marla Decker feel about her momentous move? Last week, I met up with her at the Optimistic Cafe — a fittingly named venue for discussing a booming industry — to find out.

DL: Back in 2015, you took a risk, leaving a thriving career at a leading law firm to become the first full-time employee of one of the first litigation funders. Are you glad you made the jump?

MD: Very glad. My colleagues at Cleary were great, but so are my colleagues here at Lake Whillans, some of the smartest people I’ve ever met. I appreciate our process for evaluating cases, which is both organic and methodical, and our supportive, collaborative environment.

DL: Even if you’re glad you made this move, what do you miss about either practicing law or practicing law in Biglaw?

MD: There are people I miss working with, and I miss some of the accoutrements of law-firm life, from robust secretarial support to wine and cheese on Fridays. They’ve been made up for in other ways, but perks are certainly a draw of Biglaw.

In terms of practicing law, I miss the unpredictability of being on my feet in a courtroom or in the middle of a deposition, having just one moment to get it right — a definite adrenaline rush. But I do find my current role more intellectually engaging on a consistent basis.

DL: That might surprise some people. Practicing law at the highest levels is very intellectually challenging, isn’t it?

MD: Absolutely, and I had a broad and fulfilling practice at Cleary. But the types of cases we review for possible funding at Lake Whillans are so diverse across subject areas, and they come from around the country and even around the world. The factual and legal issues run the gamut; I might be looking at a pharmaceutical-licensing dispute on one day and a supply-chain dispute on the next. This differs from law-firm practice, where lawyers tend to specialize and where, if you’re staffed on a major case, you could be living and breathing that case for the next 18 months.

DL: Which skills from your Cleary years have carried over well into your current work?

MD: Certainly legal analysis, inquisitiveness, and big-picture thinking about cases and strategies. Coming into litigation finance after having been a litigator helps you understand the process and pace of a case, where parties might gain and lose leverage, and which legal issues are more significant than others.

Client management skills have also proven helpful, in terms of dealing with claimholders in a positive way. People come to us as funders like clients approaching lawyers: they have a problem, they need help, and they’re trusting us with a matter of great importance to them. Good communication is essential to getting on the same page and building mutual trust.

DL: Let’s turn to the process of evaluating cases, aka underwriting. How does Lake Whillans decide whether to fund a case?

MD: In general, for an incoming inquiry, one of the principals will have a phone call to screen the case and see if it fits our parameters. After that threshold review, we’ll execute a nondisclosure agreement (NDA) and have a deep-dive call, with most if not all of us at Lake Whillans on the line, to learn in detail about the case or opportunity (if it’s a portfolio of cases). We’ll want to learn about the facts, the potential damages, the procedural history (if any), and what the claimholders might be seeking in terms of a financial transaction.

If we’re interested, then we’ll generate an investment hypothesis and propose a term sheet. We might then negotiate over the terms, but we want to float terms early in the process so we don’t waste time on diligence if we’re too far apart on terms.

If we reach agreement on terms, then we go through full diligence, trying to prove out the investment hypothetical. Do the facts and the law support the thesis? Can the facts be established with admissible evidence? Is the investment hypothesis’s timeframe right? This involves a careful review of documents and discussion with the claimholders and their counsel.

DL: Speaking of diligence, we know you did your homework before making the jump into litigation finance. Now, a few years in, what has surprised you about your current job or field?

MD: I’m surprised by how litigation finance has already been through multiple iterations in such a short period of time. When I first entered, most users of litigation funding were Davids in David v. Goliath battles — small or midsized companies, often cash-strapped, up against much larger entities. But so much has changed since then.

First, there’s more demand from law firms for portfolio funding, or funding for a collection of cases. Imagine a law firm has a contingent interest in some number of cases, all at various points in the litigation life cycle, and it wants to accelerate monetization of those interests. It can do that through funding, instead of waiting 12 or 18 months before seeing any money.

Second, the types of corporates using funding are different. Large-cap companies are using funding to take litigation costs off their balance sheets, to monetize an asset — a claim in litigation — that they might not have pursued but for funding.

Third, there’s much greater demand for funding of international arbitrations.

Finally, the volume of incoming leads is exponentially larger today compared to three years ago.

DL: You mentioned increased use of funding by large companies. What’s driving that trend?

MD: A few factors. First, law departments and in-house lawyers face constant pressure to reduce expenses. If you can shrink your budget by moving litigation costs to a funder, you’ve achieved that. Moving expenses off your balance sheet is especially desirable if the company has some transaction coming up where the value of the company will matter. If you have expenses going out for litigation, that’s taking away from your EBITDA and lowering your valuation.

Second, awareness about financing has grown dramatically. People are coming to understand how litigation finance can change our legal system for the better, by leveling the playing field between plaintiffs and defendants, helping companies to pursue their business objectives, and bringing meritorious cases before the courts.

DL: So I understand Lake Whillans doesn’t have any openings right now, but what advice would you offer current Biglaw litigators thinking about following your footsteps into litigation finance?

MD: First, research the funders — who’s growing, hiring, and raising money. Identify the funders whose target investments align well with your skills. For example, at Lake Whillans we don’t handle patent cases, so if you’re a patent litigator, other funders might be a better fit.

Second, develop a broad litigation practice, where you’re exposed to many different cases within your firm. This will be useful when analyzing a diverse range of cases for possible funding. If there are cases in your firm that have been funded, try to get involved. It’s helpful to have a lawyer’s perspective on how litigation financing works.

Third, follow the funding industry closely — for example, by reading our blog!

DL: Besides litigators with broad experience, what other types of lawyers might thrive in litigation finance?

MD: Lawyers who are entrepreneurial, such as partners who have built up books of business and developed strong client relationships. Litigation finance is entrepreneurial. It attracts lawyers who are willing to take risks, tackle novel challenges, and go on new adventures.

DL: Well, it sounds like you’re enjoying this adventure, three years in. Congratulations on your success so far, and thanks for taking the time to chat!

Earlier: Introducing Marla Decker: From Litigator To Litigation Funder

---

David Lat is editor at large and founding editor of Above the Law, as well as the author of Supreme Ambitions: A Novel. He previously worked as a federal prosecutor in Newark, New Jersey; a litigation associate at Wachtell, Lipton, Rosen & Katz; and a law clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at dlat@abovethelaw.com.