Bentham has just celebrated its third anniversary in Canada. Time has flown by and much has changed from the day we opened shop. As I transition home to the Australian corporate mothership, it's a time for reflection. Here are some of my thoughts about the past year, and where I think our business and the Canadian litigation funding industry is heading in 2019.
2018 brought with it:
- Six new team members: Four rockstar lawyers - George Hendy, Geoff Moysa, PJ Bouchard, Paul Rand - and two wonderful assistants, Michelle Morgan and Marlène Binette.
- An office in Montreal where we have experienced high levels of interest and have now funded four cases.
- Six more matters approved by our Investment Committee, including patent, breach of contract, litigation in the insolvency context, and our first law firm portfolio in Canada.
- Three additional precedent setting decisions about litigation funding.
2019 promises to be an equally exciting year. While I will no longer be based in Toronto, I will visit Canada periodically and, in my role as Canadian Chief Investment Officer, I will continue to support the team and steer the business from afar. In the year ahead, I anticipate:
(Yet) More Focus on Innovation
As lawyers debate the duty to innovate, courts are emphasizing the need to use alternative tools, and clients are demanding creative solutions to their business challenges. In 2019, litigation funding will continue to be part of the innovation discussion and allow law firms and their clients to creatively resource litigation and manage risk.
More Funding of Corporate Canada
In 2018 we saw an increase in interest from corporate clients, and we expect this to continue. For both cash-strapped and well capitalized companies, funding provides clear benefits: it removes litigation costs from the balance sheet; transforms claims into recognizable revenue; and enables in-house teams to bring meritorious claims that might have been left on the table due to cost and risk concerns. Where companies have several ongoing disputes, a portfolio arrangement with a funder can help manage risk across litigation assets.
More Funding of Law Firm Portfolios
Portfolio financing has been growing rapidly in the U.S., and in 2019, we expect to see more law firm portfolio arrangements in Canada. A portfolio arrangement allows firms to take a measured risk while providing clients with more creative solutions when it comes to the fee structures they offer. In a portfolio arrangement, Bentham provides a law firm with cash flow to enable the firm to advance a group of (ideally unrelated) cases on a full or partial contingency basis. Bundling several cases together as collateral for financing makes the investment less risky from a funder's perspective, allowing the funder to offer attractive rates. Meanwhile, the law firm has the financing necessary to cover a healthy portion of its expenses during the pendency of the cases, while keeping the potential for substantial additional returns when the cases succeed. This can be particularly attractive for firms looking to meet client demand for contingency fee structures, while at the same time managing considerations of the partnership.
More Funding of Litigation Assets in the Insolvency Context
In December, the Quebec Court of Appeal heard argument about a funding arrangement within a CCAA matter, and is expected to release its decision shortly. In the restructuring and insolvency context, litigation funding has long been utilized by companies, creditors, estates, trustees and their advisors to maximize the value of claims and the returns available to creditors. We expect this trend to continue as the restructuring and insolvency community gains greater familiarity with funding opportunities.
More Geographic Expansion?
Our teams in Toronto and Montreal work with clients and lawyers from across the country. We have seen particular interest from Calgary and Vancouver, and hope to establish a western presence in the not-so-distant future.
It takes a village to raise a litigation funding business and we are grateful for a wonderful community of advocates, supporters and friends. We look forward to sharing the year ahead.
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