It has largely been recognised that there is a clear distinction between professional and ad-hoc third party funders.
The Excalibur ruling in the UK recognised the importance of third party funding in respect of access to justice but sought to penalise ad-hoc funders who did little to no due diligence, did not even seek to meet the claimant and relied solely on the assessment by the claimant’s lawyers. In comparison, professional third party funders who assess claims, procure independent opinions and reports and offer adverse cost insurance, assist in the dispensation of justice by providing support for meritorious claims. This is a battle that professional third party funders have sought long and hard to establish and was the driving force behind the establishment of the Association of Litigation Funders, of which Vannin is a proud member.
The next battle on the horizon is between lawyer driven professional third party funders and insurance driven models of third party funding. The conditions that give rise to this battle to come is the ongoing debate in some jurisdictions in respect of whether third party funders increase the number of claims. From Vannin’s point of view, the question always appeared somewhat absurd. Why would anyone invest in a less than meritorious dispute? A bad claim is a bad investment, surely? This is the setting of the next battle to come in respect of third party funding. Are you assessing the claim or are you assessing the claims?
Vannin assesses each case on its merits, regardless of the size of its quantum/damages. Vannin is composed of highly trained, professional lawyers with many years experience from some of the best firms in the world in respect of disputes. The assessment is lawyer driven and as a consequence the investment Vannin makes in understanding the merits of any one case is arguably higher than many of its competitors. We procure quantum assessments, we work with specialist legal experts to attain independent and specific guidance. We measure the foundational issues on which each dispute will turn in terms of prospects of success and we share our results with the claimant’s lawyers as part of the confidential work product in contemplation of a dispute. Our money is private, it has not been raised and thus, we do not have the same pressures of investment that come with those funders who have greater investment pressures. A lawyer driven analysis is central to our DNA.
Insurance driven models of third party funding may very well meet the criteria of professional third party funders, but they work on numbers and volume, assessing prospects of success of not one individual case but across multiple disputes. Success is not measured on a case by case basis but across 20, 30, 40 disputes. Accordingly the investment modelling for an insurance driven model of third party funders may very well take on riskier cases for greater returns as it fits within a model that accepts more losses providing it is spread out across more disputes.
Of these two models, the insurance driven model will struggle in the next battle to come. Greater returns on riskier cases is a clear weakness in respect of answering the question that will be put to all of us – does third party funding increase the rise of spurious claims? From Vannin’s perspective the answer is and has always been, no. The value add of a lawyer driven model of third party funding is more than financing and even more than access to justice. It is also about filtering out those claims that are inherently weak. A lawyer driven funding model reduces rather than increases unmeritorious claims.
Essentially the battle to come is where brands will be compared based on the model that drives them. When Vannin funds a claim, we are proudly transparent because we want lawyers, claimants, tribunals and the judiciary to know that we provide non-recourse financing options for claimants with meritorious claims. We offer our claimants ATE coverage from an A-rated London insurer and we do not attempt to exercise subrogation through the back door. We do this because we are lawyers and the backing of our brand behind a claim should send a clear signal that the claim is meritorious and that the claimant is strongly supported.
What is driving this battle to the fore are two forces that operate in the world of commercial disputes. For commercial claimants a dispute is about the compensation of loss or the prevention of loss and often both. For arbitrators and the judiciary, a dispute is about the dispensation of justice – to right wrongs or declare that there has been no foul. These two camps co-exist like two sides of the same coin. Third party funding, when done well should assist both camps. The meritorious claimant should have access to justice and the virtuous adjudicator should not have on their docket claims propped up by greater returns for riskier, less meritorious claims. The lawyer driven model to third party funding can act as a bridge between these two camps. The insurer driven model can not.
How this battle will materialise is as yet unknown. The courts may make the distinction as it has done between ad-hoc and professional third party funders. The State may seek to legislate the nuance or quite simply the market may decide. It is the battle to come and when it does, funders must choose which model they subscribe to. There may only be room for one.
For more information on Vannin Capital, please contact: Meika Aysal, Marketing at Vannin Capital, T: +44 207 099 5180, E: firstname.lastname@example.org