Key Takeaways from LFJs Podcast with Elena Rey of Brown Rudnick

Earlier this week, LFJ released its latest podcast episode, featuring Elena Rey of Brown Rudnick. Elena discussed her effort to introduce model documentation to the litigation funding industry, including the founding of the Litigation Funding Working Group, which brings together litigation funders, insurers, legal experts and others to help formulate model documentation for use in the UK, EU and elsewhere.

Below are some key takeaways from the podcast:

JF: Can you highlight the specific benefits of model documentation? How do you see this impacting the industry going forward?

ER: I think the big benefit of model documentation is that it will speed up the development of the secondary market. On a practical level, the Working Group has become a platform where issues facing the market can be discussed such as the relevance of consumer credit legislation, DBA arrangements, and funder fees.

JF: With regard to the Working Group, how will this documentation be originated? Who’s on the working group, what will the process be for taking suggestions—and also, how do you expect this documentation to come into widespread use in the industry?

ER: The group consists of professional funders, both the core members of our fund and others, like Harbor, Therium, LCM, etc., as well as private equity funds, distressed debt funds, and other litigation funders. Also insurance providers and a number of leading law firms and barristers.

The drafting process is based on our experience. The draft is revised as everyone provides feedback and that is worked through. The goal is to provide a balanced draft that reflects feedback from the whole market. That is really important to us. 

JF: How much room for flexibility is there in model documentation? It seems like funding arrangements can be so bespoke.

ER: Any funding opportunity is bespoke. The idea is to provide a solid and helpful boilerplate provision, which has been tested by discussion in the Working Group, reviewed by lawyers and counsel, and players in the market from different angles. Parties can use it in their negotiation process so they can focus on the finer points. It streamlines the negotiation process and allows the deal to be closed.

JF: Which aspect of funding do you see this having a bigger impact on—financial terms or the legal side, in terms of communication between parties?

ER: I think it’s both. We’re obviously targeting to improve the legal terms. But hopefully this will benefit the negotiation process. The boilerplate language can be used to address commercial issues. When the parties know they’re protected, the negotiation goes more smoothly. We think it’s important to streamline the negotiation process because deadlines are often tight.

JF: How far along in the process are you? What has the response been from the Working Group? What’s the ETA for when this documentation will be complete?

ER: The response has been amazing! We launched in October with 15 core members. We now have about 80 Emails on my recipient list. The first set of provisions will focus on insurance. The first draft of the Working Group should be finalized in the next few weeks and could be available to the market by the end of the year.

For the full podcast interview, visit this link.