A leading litigation funder has pleaded with law firms to be more honest about the substance of the cases they are trying to finance. Susan Dunn, chair of the Association of Litigation Funders of England and Wales and the founder of Harbour Litigation, said there is often an ‘enormous distance’ between the stated value of a claim and what it is really worth.
Speaking at the Dealmakers conference in London this week, Dunn urged firms making funding bids to apply ‘data and massive cynicism’ to their cases. ‘I want lawyers to be better at being honest about their track records of budgets, durations and returns – tell me what you really think this is worth,’ said Dunn. ‘Lawyers consistently, completely overstate claim values and understate durations [of cases].’
She added: ‘We turn down more and more [cases]. I wish we funded more, but you can’t, given what we see… you scratch the surface and it all tumbles down because the numbers don’t add up.’
Several funders have either folded in recent years or reduced their exposure to the legal market. Dunn revealed that few law firms ever ask if the funder actually has the money to finance the cases they are putting forward.
Dunn said her business had built up a vast amount of data and experience that help to make informed decisions about which cases should be funded. She added that the same cannot be said for recent entrants that have been more inclined to take law firm promises at face value and pledge funding for uncertain caseloads.
‘A newcomer will come in and charge less. They last a year or two before they realise they are not going to make any money,’ said Dunn. ‘I worry that new entrants are wooed by the people who can present something that looks really compelling and they don’t know what questions to ask.’
Elsewhere this week, litigation funders voiced their disappoint after promised legislation to reverse the Supreme Court judgment in PACCAR was absent from the King’s speech.
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