The Barrister talks to Co-founder and Head of Litigation Funding for Harbour Litigation Funding, Susan Dunn, about the evolution of third party funding (TPF) and how Harbour played a pioneering role.
Susan, we understand Harbour is celebrating its 10th Anniversary in 2017? Isn’t that ‘ancient’ in funding terms?
(laughs) Well, maybe not quite ancient but definitely mature in that we were present from the very start and I have been funding since 2002. Harbour has been at the forefront of many developments ever since and is solely focused on TPF; always has been. The evolution of funding with just £1 million and a team of two from a converted carpet factory in Kidderminster, into an international activity with £410 million to fund large commercial disputes and a team of 25 talented individuals seems like an amazing journey.
So what does that mean for Harbour as a business?
We can truly say that we have seen it all. Our litigation experience, funding expertise and track record is, in my view, unrivalled. We have funded in 13 jurisdictions and, currently, 5 different arbitral forums. So far, we have reviewed well over 2,300 large claims and funded a wide range of cases in a number of jurisdictions, from large arbitrations, shareholder disputes, fraud claims arising out of insolvencies to class actions, offering access to justice.
How has third-party funding evolved since you started funding in 2002?
Funding is now adopted by more types of claimant, not just by those without the means to litigate. It is finally regarded as a finance tool in that the claimant may want to hedge their legal costs or may need working capital for other purposes. More law firms and chambers now instinctively consider TPF as part of the process when dealing with a claim. We also find they are less coy to admit that they are not so familiar with TPF. Globally, jurisdictions have made tremendous headway in embracing TPF. Hong Kong and Singapore being the most recent examples.
And where is it going?
In short, we believe TPF will be used globally as we expect the remaining few countries who have not yet endorsed it, will do so, and the profile of the funded party will include all types. I predict an increase in the ‘large corporate’ use, on both the claimant and defendant side of a matter
Are there any hurdles you need to overcome?
Everyone who approaches us think they have a winnable case and it is sometimes hard for them to accept that we may not agree. Some struggle with the concept of us taking a share of the proceeds which in our portfolio varies from 7.5%to 50% depending on the risk, budget size and length of the claim. In our considerable experience, statistics for success at trial on what we are advised are ‘strong cases’, are no better than 50-50. In essence, the losses need to be absorbed by the gains as losses result in a 100% write-off.
What are the most common misconceptions about funding Harbour encounters?
People believe we drive the claim but nothing could be further from the truth. The claimants and their lawyers fully control the litigation. As we pay the legal bills regularly throughout the life the case, we will be kept informed of its progress. If the claim is unsuccessful, neither the claimant nor their legal representatives need to repay the legal costs. That is our risk. This is why due diligence is key for us; it explains why an in-depth review process takes place at the very beginning, as that is our only opportunity to decide on the merits of a case. We only back cases we believe will win, but we all know, even good cases don’t succeed. There is a misconception that corporates are less interested in TPF but some of our team, previously in-house counsel at large corporates, confirmed that they did not always ring fence huge legal budgets.
Which 3 questions should anyone considering funding ask?
- How is the claimant and funder going to get paid if this case is successful and how much will they realistically get paid? (Enforcement issue)
- How can I be sure the funder I use has the funds to see my case through to conclusion?
- Have I thought carefully about what assumptions lie behind the budget for the case?