Litigation Finance Firms Now Ranked By Chambers And Partners

Litigation funding has become an important part of the legal profession — so important, in fact, that the sector has attracted the attention of Chambers and Partners, a U.K.-based organization that ranks corporate lawyers and litigators worldwide. It was just last year that Chambers rolled out its first-ever ranking of litigation funders, and not long ago, its second annual ranking of litigation funders was announced. Click here to see the latest ranking.

I recently had the pleasure of speaking to Boaz Weinstein, one of the cofounders of Lake Whillans, a firm that’s been ranked by Chambers since the inception of its new litigation finance listing. Here is a (lightly edited and condensed) write-up of our lively conversation about litigation funding and starting and building a career from the ground up in this constantly developing industry.

Staci Zaretsky (SZ): Congratulations on Lake Whillans being included in the Chambers and Partners ranking of litigation funders for two years in a row. It’s quite the achievement for you and your firm.

Boaz Weinstein (BW): Yes, so it’s a big honor for us. Obviously, we’re very enthused and pleased with the recognition. And I was individually ranked both years as well. I think the Chambers ranking overall is kind of an important development for the litigation finance market. It just goes to show how mainstream the litigation finance community has become. I think we’ve seen increasing consensus among law firms and now that we’re at the point where Chambers has started to weigh in on the category, it just gives another stamp of approval — it’s kind of an endorsement, a recognition that this is a significant part of the industry and one that’s here to stay.

SZ: Exactly. The concept of litigation finance went from being somewhat of a novelty to being ranked by Chambers — it’s a big deal. It shows how much litigation finance has become an established part of the legal world.

BW: It shows that there’s now increased acceptance and increased traction for people who are interested in litigation funding, and being included in the Chambers ranking shows that not only is Lake Whillans a reputable organization, but it’s one of the most reputable organizations. That’s something very special, and we’re certainly humbled and honored by the recognition.

I think it’s very helpful for people to know who the reputable players in the industry are, what their various strengths are, and how they differentiate from one another. It’s an important resource for the practitioner who’s thinking about using litigation finance.

Some people in the past have had some bad experiences dealing with less reputable funders, so I think having an organization like Chambers say that these are these are the major players is a helpful starting point for practitioners to make sure that they’re that they’re working with the right people so they’ll have the best experience.

SZ: What kind of practices and trends are you seeing in the industry?

BW: One of the trends that’s become apparent is the growth in the types of users that we’re seeing. It used to be that litigation finance was more predominantly used by smaller to medium-sized companies for whom either it would not be possible to fund a litigation or if it was possible, it would come at significant cost to the company’s business because litigation is quite expensive, and these companies often weren’t well resourced to do it. And while that continues to make up a significant portion of the user base, the place where we’ve seen a lot of growth over the last two years or so has been in larger companies coming to recognize the utility of litigation finance as a financial tool.

This has increasingly become part of the user base and I think it’s a trend that is strong and is helping to broaden the demand for litigation finance quite significantly, so it is in some sense a frontier that has been opened. I would say it’s not all the way there, but I think that’s maybe the biggest development as we move forward in the litigation finance market.

I think a second trend in this sector is portfolio financing. There has been a sizable uptick in in recent years in the number of law firms that are looking for portfolio financing, although it’s been tempered somewhat by the recent opinion of the New York City Bar Association about nonrecourse financing. [Ed. note: Please click here to read an excellent piece about the Bar Association’s decision.] It’s an opinion that has generated a lot of heat and a lot of ethics professionals and other litigation funders have decried the logic of the opinion, which rests on a formality that even the opinion itself recognizes. I should note that NYCBA opinion doesn’t have the force of law, and there’s actually significant case law in New York and elsewhere around the country enforcing these types of arrangements. It’s an opinion that itself suggested that a legislative fix might be in order, and I know that the Bar Association is itself looking at that issue afresh even as we speak.

The other bigger trend is the diversification of litigation funders. We like to think of ourselves as providers of financial solutions, and so that can take a lot of forms at law firms. I think there is a broadening scope of products that are on the market and this is going to continue to change as people think about ways that they can be useful and deploy capital in prudent investments.

SZ: On a more personal note, how did you get into litigation finance? Please tell me more about your career journey.

BW: In late 2010, I believe I heard of litigation finance for the first time. My wife is a partner at an Am Law 200 firm, and she had had a client who needed litigation funding at the time. And so from afar, I thought to myself, “Oh, litigation finance, what an interesting concept.” It really piqued my interest, and as I delved into my own cases at work, I wondered if it would catch on in the United States.

Fast forward approximately six-to-eight months, and one of my colleagues at the firm where I was decided to open up a litigation funding company in New York. I decided to jump in headfirst and give it a go. It was at that firm that I met my current business partner, Lee Drucker, and both Lee and I were largely tasked with figuring out how to run a litigation finance business, which is to say that the partners at the firm spent a lot of their time trying to raise capital for the company and largely delegated to us, to a significant degree, everything else — dealing with the claim holders, negotiating terms, underwriting cases, doing transactions — basically all the nuts and bolts of running a litigation finance company.

In late 2012, Lee and I looked at each other, and we were big believers in the business. We’d seen over the course of time that we’d been in the business a kind of increasing traction. We’d worked side by side for 18 months, thinking about what we were doing right, what we were doing wrong, what we could be doing better — and so we took a leap into the unknown in some sense, and in 2013, we started Lake Whillans.

From there, we’ve always sought to build a company that could be defined as human; a company that is professional, a company that is smart, but also is one that’s fair, that’s transparent, that’s responsive. People come to us for all sorts of reasons, so we’ve always felt it’s important to know you’re dealing with people’s lives to a certain extent, and make sure we’re taking the appropriate care and helping them through the process as best we can. And it’s on the back of that ethos that we have built the Lake Whillans brand.

For Lee and I, it’s been a journey. I have three children of my own, but this company is also like my baby, and I make sure I take great care of this baby in every way possible.

SZ: Is there anything else you think people need to know about the litigation finance world, or how to become a part of it if they’re interested?

BW: I think there are predominantly two skill sets that funders are looking for right now. One is judgment and one is business development. From my perspective, the two keys here are number one, you need to have good deal flow to make sure that you’re getting a good pipeline of opportunity and having a selection to choose from, and number two, you have to be picking the right cases.

On the business development side, people who have relationships or just have the ability to go out and attract or find new claim holders or find claims, that is a significant skill.

As far as judgment is concerned, how do you show a funder in advance that you have that skill? As you can imagine, the reality of this industry is that there aren’t a ton of companies and the companies aren’t enormous, so there are only a few really good positions available. Each of the top companies probably gets a lot of résumés coming in relative to the number of positions they have, each saying, “I went to XYZ top law school and I come from XYZ brand name law firm. You should hire me.” But if those are the only things you’re promoting yourself with, how do we know if your judgment is good? It’s a hard thing to pick up from a résumé.

You need to think about ways that you can demonstrate that judgment. Think about things that you’ve done; think about specific instances. If you think you have relationships that could help you find cases, show that to a funder. How would you handle due diligence? We’d like to see your way of thinking on display. Have you interacted with litigation funders in the past? Tell us about that. To the extent people can go from saying litigation funding seems like a great idea to being able to show they have experience with funders, it’s a worthwhile investment of your time or at least something to think about doing.

Lastly, you should definitely let a funder know if you have any ideas about innovations — we’re always looking for creativity and entrepreneurialism. We’re looking at all of these things when making a hiring decision.

*****

On behalf of everyone here at Above the Law, we’d like to congratulate Lake Whillans on its inclusion in the Chambers and Partners litigation funding ranking. It’s clear that litigation finance is here to stay, and this is an accomplishment worth celebrating.

(Disclosure: Lake Whillans is an Above the Law advertiser.)

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Staci Zaretsky is a senior editor at Above the Law, where she’s worked since 2011. She’d love to hear from you, so please feel free to email her with any tips, questions, comments, or critiques. You can follow her on Twitter or connect with her on LinkedIn.