Key Takeaways from The LFJ Podcast with Ben Moss, Portfolio Advisor at Orchard Group

The latest episode of the LFJ Podcast features Ben Moss, Litigation Finance Portfolio Advisor at Orchard Group. Ben discussed the benefits of Orchard’s asset manager model, how Orchard is approaching the market, the types of claims it is looking to fund, and outlined his predictions for the industry as the global legal landscape emerges from COVID-induced lockdowns.

 Below are some key takeaways from the episode, which can be found in its entirety here. 

LFJ: Let’s start by discussing Orchard’s foray into Litigation Funding. When did Orchard first enter this space? Why don’t you tell us what the investment strategy is, and how that strategy has evolved over time?

BM: Sure. Orchard was founded back in 2005, and has a presence not only in the UK but also across North America and Singapore, and currently has assets under management of around six and a half billion US dollars.

Since its inception, the business has consistently demonstrated very strong performance across its multiple funds. And that meant it really was an attractive platform from which to launch a dedicated Litigation Finance strategy as part of its existing specialty lending business. It did that in late 2015. Since then, we’ve invested in more than 100 opportunities across the UK, the US, mainland Europe, and Australia.

 Our approach is really very finance-led. These are financial products to us at the end of the day, but of course this approach is then coupled with legal analysis and deal structuring expertise. What we’re committed to at Orchard, is we want to build a portfolio that is diverse, that’s granular but also that is grounded in these financially driven insights into the investment selection and the overall portfolio design. We also believe that funding these mid-market-sized claims ensures quite a highly diversified portfolio of assets. Because it consists of a large number of separate claims. 

LFJ: Broadly speaking about the industry itself, this is a very crowded space right now…how is Orchard positioning itself within that market? What is the differentiation strategy? 

BM: Good question. It’s definitely getting more crowded. One way of looking at it is to say that growth increases competition, innovation, they’re all linked. So new entrants don’t necessarily concern us. Actually we would say they’re symptomatic of an attractive industry and perhaps one that’s yet to reach its peak. 

In any event, we hope that we are uniquely positioned in the market as a multi-strategy asset manager with its own dedicated and well-established Litigation Finance team. If I can just highlight a few elements of our offering that I think are relevant:

• Firstly, one big differentiator is that we can point to our existing and very positive track record. Our experience in the market over the last five years or so has allowed us to establish a reputation in providing innovative financing solutions to claimants, to law firms, and also to develop very strong origination networks.
• We lead with the finance-forward approach that I’ve spoken about in my response to the first questions. And that’s perhaps different to the strategists on the dedicated pure play litigation funders, founded by litigators rather than finance professionals. I have a financial background myself which postdates my initial legal practice.
• We also have access to top-tier financial instruction expertise at Orchard as part of the wider business. If you combine that mindset with the legal expertise of our team, we think we can bring an unparalleled mix of both the financial and legal expertise to each case that we consider for investment.
• Finally, repeat business is important to us. It represents roughly 70% of our claim origination. It’s so important to us to focus on these strong, sustainable, and collaborative relationships with law firm partners and also with our co-funders.

LFJ: The previous guest on our podcast, Elana Rey of Brown Rudnick, is working on standardizing documentation for litigation funding agreements for the UK and also the EU. So I want to get your take on this as a UK-based funder. What is the need for standardized documentation? How helpful will something like that be in optimizing the funding process and potentially bringing down costs as well?

BM: I enjoyed listening to that episode. Of course I would absolutely support any move toward transparency to assist claimants in understanding the operation and the effect of the funding arrangement. I think Elena said that the model documents hadn’t yet been produced, that they were on call for Q2 this year. As Orchard is not part of the Working Group, I can’t comment on any working draft.

But in our industry, the funding and security arrangement are typically concluded in advance of the claim, and in some cases they may not be referred to for four to five years afterward. In the most basic single case financing structure, there are already three counter-parties: funder, claimant, and lawyer. It’s just not helpful for anyone to be scrutinizing an opaque funding agreement years later.

There’s plainly a requirement for clear drafting that insures that you capture the rights and obligations of each party clearly at the outset.