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Commercial Finance

From the Words of Litigation Funding Company Bentham IMF

July 10, 2015
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3min read

Commercial legal funding giant Bentham IMF has announced the formation of an advisory panel to provide input on matters of regulation, ethics, and “tactical considerations.” The panel includes a cadre of trial lawyers from high-profile law firms – including Kirkland & Ellis, Sidley Austin, and Pillsbury Winthrop – as well as legal ethicist Bradley Wendel of Cornell Law School.

I spoke with Ralph Sutton, Bentham’s Chief Investment Officer and a former litigator in the entertainment industry, who explained briefly the impetus behind this panel. Bentham’s chief aim, he told me, was to “advance the sustainability and fairness” of the industry.

“Because litigation funding is so new,” Sutton said, “it needs to be transparent, it needs to be simple… In order to have a genuine reality check, you want to have the very best advisors, and you want to have a mix of different kinds of advisors.”

Of chief importance to Sutton is that decisions be made in dialogue, rather than an echo chamber. Toward this end, the panel will hold “quarterly calls and an annual meeting,” according to a press release. Panelists will provide counsel on individual strategic matters as well as broader ways to grow the legal funding industry.

Bentham’s careful approach to its investments has so far reaped enormous success: in its thirteen years of operation, it has seen a 95% success rate in funded cases and yielded $1.5 billion in recoveries. Selectivity appears to be the secret ingredient. The company has its own capital, and freedom from investors means the freedom to be fastidious. Three years into US operations, Bentham has funded roughly a dozen cases.

Also crucial is fairness to the plaintiff. “We won’t do a case,” Sutton said, “where we don’t think the client will get 50% of their recovery.” He went on to report (with deserved pride) that during its thirteen-year tenure in Australia, Bentham has seen its clients receive at least 65% of their settlements.

“It’s very important for us at Bentham to think about access to justice,” he said. “One of the graces of our democracy is our legal system… [but] it’s not a great system if you’re a small company or a medium sized company, you can’t handle three to five years of the Big Law rates.”

It is for this reason – the high cost of justice – that Sutton believes legal funding will ultimately see widespread acceptance in the US. His advisers appear to be on the same page. “Litigation finance,” said Kirkland & Ellis’s Reed Oslan, “has the potential to be a game changer in making the US litigation landscape more equitable.”

Stephen Susman, of Susman Godfrey, agreed:  “Litigation finance is an absolute necessity for leveling the economic playing field in our judicial system – it is a powerful tool to help qualified claimants, plaintiffs and defendants, assert their legal rights and gain access to justice.”

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