Why Clients Choose Litigation Financing and a Particular Company
One continuing important question for litigation finance firms is on what basis do clients decide who they will get to fund them? In other words, what are the important considerations from the client’s perspective? The answers to these questions can be gleaned from a recent extensive survey of attorneys conducted by Lake Whillans and Above The Law.
The survey posed the question: “what are the most important considerations in choosing a litigation financier” and asked respondents to rate various factors. Unsurprisingly, the economic terms of a proposed arrangement were ranked as the most important factor by a substantial margin. The cost of an item is usually of primary concern to a consumer especially when the transaction is what amounts to a conditionally secured loan.
Well below the first factor, the second highest rated consideration was the financier’s right to influence/decide strategy or settlement. This is also unsurprising in that attorneys are well known for having high ethical standards, and a primary concern of theirs would naturally be ensuring that control of a case remained with the client. This helps to ensure in a lawsuit, that the interests of their clients are being protected and represented.
Third on the list, but only slightly behind the second consideration, was the flexibility regarding the structuring of financing arrangements. This should come as no surprise given the first consideration, apparently clients want some room to negotiate the proposed arrangement. Fourth, and not far behind the second and third items, was the financier’s reputation/track record. This is of course important as how a company has treated its customers in the past is a strong indicator of how it will treat them in the future. Everyone wants to know prior to entering into an arrangement with another party how ethical that party is, and how they can expect to be treated.
Fifth and well below the first four factors was the financiers subject matter or industry-specific expertise. This comes as somewhat of a surprise as many litigation financing companies pride themselves on hiring top legal talent with the ability to understand and dissect complex legal cases in their area. Indeed one of the benefits touted by litigation financing promoters is the neutral outside opinion they offer on a cases merits. It seems that this is an area where attorneys value their own expertise over other peoples. This is natural as they have worked long and hard to be able to develop that expertise and may regard outside opinions as interference. It is worth noting here that this survey was given exclusively to attorneys and perhaps if it were given to litigants themselves the answers would have been different.
The sixth consideration was just below the fifth indicating many respondents disagreed as to which was more important was the speed and responsiveness of the litigation financing company. This is not a surprise as lawyers are used to things moving at the speed of the court system which is substantially below that of other areas of life. The last consideration was marked as “other” and was as far below the sixth choice as the sixth was to the first. This indicates that almost all the respondents felt all important considerations were covered in the survey and these are the factors clients currently weigh when considering litigation financing.
The responses were relatively stable across the board with the largest differences being between partners and associates in their views as to the importance of speed and subject matter expertise. This can be attributed to time spent in the legal marketplace the differing points of view represented at different experience levels. Interestingly sole practitioners also rated speed as more important, their eagerness may be a result of their bearing the sole responsibility for the success of their firm.
Differences of opinion aside there was a relatively strong agreement as to what is important in a litigation financing company with emphasis being place on financial terms and company reputation as opposed to more traditional areas of customer service such as speed or subject expertise. The companies which learn to cater their services to this breed of customer may gain market share or perhaps customers will learn a new appreciation for the unused services financiers provide. Regardless of how the market changes up this survey makes one thing abundantly clear, namely litigation finance is on the rise and it is likely to remain that way.