Investing in Legal Futures

Over the past few years, news coverage has often characterized litigation finance as an industry on the rise. Recent headlines and subheadlines include “Litigation finance … has never had a higher profile,” “Increased scrutiny and regulation are unlikely to stop the growth of this booming field,” and “Is litigation financing the next big thing for legal departments?” Available data suggests that, indeed, litigation finance is growing. As Maya Steinitz points out in this issue’s lead article “Follow the Money,” one estimate in 2018 valued the litigation finance market between $50 billion and $100 billion and another placed its growth rate at around 40 percent between 2012 and 2016.

Surveys measuring the responses of lawyers and clients appear to back up this account of growth. According to a 2018 survey of practicing lawyers conducted by Above the Law and litigation finance firm Lake Whillans, roughly three-quarters of respondents (77 percent) predicted the industry will continue growing, with nearly half (46 percent) predicting rapid growth. In a 2019 survey of more than 500 senior finance professionals from U.S., U.K., and Canadian companies conducted by litigation finance firm Burford Capital, three-quarters (74.8 percent) reported their company has increased its use of litigation finance services in the past two years. In another 2019 survey, conducted by ALM Intelligence and litigation finance firm Validity, the overwhelming majority (98 percent) of those who reported having used litigation finance for their legal matters indicated they would use it again. Of those who reported no litigation finance experience, a majority of law firm respondents (51 percent) and corporate counsel respondents (60 percent) expressed they were open to using it in the future. Law schools and law students are likewise increasingly interested in the world of litigation finance—in 2019, for instance, students hosted a major conference on the topic at Harvard Law School featuring top experts from around the world. Simply put, litigation finance has surpassed the margins of the Overton window and is increasingly the mode in the legal profession.

With the rise of litigation finance has come the rise of so-called litigation finance firms, some of which helped produce the above empirical data. At their core, litigation finance firms invest capital in legal risk the same way other financiers might approach business risk. These organizations might invest at a discrete level (a single legal claim put forward by an individual) or at a broader level (a portfolio of different cases) or both. (For more on whom these firms finance, see “The Who” breakout below.) While not the only entities engaged in litigation finance—litigation funding comes from a number of sources, including crowdfunding and private investment, among others, as Steinitz points out in “Follow the Money”—these firms are playing a critical role in the mainstreaming of the industry currently underway. Given the growing significance of litigation finance firms, in this article we take a look at their inner workings. Bearing in mind their proximity to—and, arguably, overlapping with—the legal profession, we examine the role of the lawyers who work in litigation finance firms, how they choose to invest in legal claims, and what a career in litigation finance might look like.

To help add context to these issues, The Practice spoke with two former law firm partners currently working in litigation finance: Selvyn Seidel and Elizabeth Korchin. About 10 years ago, Seidel helped create what is today one of the longest-tenured and largest litigation finance firms in the world—Burford Capital (which has recently found itself in the news)—and continues to work in the industry today as an expert adviser in the industry. Korchin, who entered the litigation finance field more recently, in 2018, is a senior investment officer at another of today’s largest litigation finance firms—Therium Capital Management. Together, Seidel’s and Korchin’s perspectives offer a full account of what these organizations are trying to do, how they do it, and what it means to be a part of one.

The litigation finance firm

In 2018 Chambers and Partners began ranking litigation finance firms operating in the United States—which, in addition to serving as a mark of the industry’s rise, is a reminder that the field is only now emerging from its nascent stages of development. Indeed, the average age of the eight firms listed in Chambers’s ranking is only 10 years. Interestingly, as we see in “A Brief History of Litigation Finance,” this is also around the time litigation funding began to take hold in legal markets like Australia and the United Kingdom. Stressing the newness of these firms, Seidel, who is now the chairman of Fulbrook Capital Management, notes that “by the time we went public in 2009, Burford had already grown rather large, and today its revenues have reportedly gone into the billions. At the outset we did not expect Burford would become, even with its recent turmoil, what it is today.”

You’re living within a context that begs you to work well with others.

Selvyn Seidel, founder and chairman of Fulbrook Capital Management

While Burford is among the larger firms in terms of both revenue and head count in the litigation finance space, there is a significant degree of variability among the top firms. For instance, head counts among the top-tier firms range from as little as a handful of people to numbers nearing the century mark. Two litigation finance firms of note are publicly traded (Burford and IMF Bentham), while many others, particularly in the United States, are private. A number of top firms also approximate minimum amounts of estimated damages per case to be considered for funding. According to publicly available data, while one firm suggests a claim minimum of $4 million in expected damages, another suggests the figure should exceed $20 million. And, characteristic of a relatively new market, there remains a significant degree of fluidity even at the top. Vannin Capital, one of the few firms to make Chambers’s ranking, was recently bought by a U.S.-based investment group.

The firms themselves, of course, are made up of people. And many of those people are lawyers. Both Seidel and Korchin were partners at major law firms before moving to litigation finance. Indeed, both stress that being a lawyer—in fact, being a litigator—has been extremely helpful. Virtually all the “notables” listed in Chambers and Partners’ 2019 Litigation Finance Report are former litigators—as were both Seidel and Korchin. Korchin confirms this macrotrend. “If people ask me what I do, I say I’m a lawyer by training, but now I’m in finance,” she says, noting that her office is primarily composed of former Big Law litigators. “While some of my colleagues came from the finance world, the vast majority of us are lawyers.” As Korchin explains, there are clear reasons behind this strong connection. She continues:

After all, we very much are operating like lawyers in that we’re looking at legal claims. We have to use our experience of having tried cases to try to figure out what we think the reasonable value of a claim is. And to do that, we have to understand things like, What are the specific causes of action alleged? How do those types of claims typically play out in practice? What are the potential pitfalls, given what we know about the case? Even if we think there is a strong likelihood of success, when will the matter likely succeed and for how much? And that’s something that only a lawyer can do.

At the same time, and despite the linkages to the law, there are differences. Seidel, whose more than 40 years of litigation experience includes 25 years as a senior litigation partner at Latham & Watkins, suggests that one adjustment for lawyers coming over from law firms is the emphasis on collaboration in finance and business. “You’re living within a context that begs you to work well with others that are important to investment decisions,” he emphasizes. A large part of this is based on who is in the room—not just lawyers. In addition to lawyers there are a diversity of backgrounds including finance, business, accounting, and even engineering, among others. “The litigation finance firm is unique in that it has integrated law and finance and business,” Seidel adds.

How a claim becomes a deal

All this sketches a helpful outline of what litigation finance firms are on a basic level. To color that picture in, we examine how litigation finance firms decide to fund cases. We asked Seidel and Korchin: What does a litigation finance deal look like from start to finish?

With an industry growing this quickly, it’s just impossible in a normal world to keep up with it.

Selvyn Seidel

Intake. As a senior investment officer, Korchin works with litigation finance deals at virtually every stage of the process. The beginning of that process, she explains, comes in roughly one of three ways:

1. Cold calls: Sometimes the litigation finance firm will get a call from someone who has simply seen them in the news or online or heard of them from some other source. This could be an individual with or without counsel already attached. In any case, they need funding.
2. Lawyers: Litigation finance firms might see a potential investment through a lawyer—perhaps one they have worked with before but also possibly one who is cold-calling. In this instance, the lawyer has a client who needs funding and he or she will reach out to reputable litigation finance firms to see if they will consider taking the case.
3. Brokers/advisers: There are also instances where third parties will connect clients looking for funding with potential funders and recommend cases to a firm. These entities often use expertise to identify “good” cases for funding and connect them with financiers in exchange for a

One such litigation finance broker—often referred to as an expert adviser to claimants and investors—is Fulbrook Capital Management, founded and chaired by Seidel. “With an industry growing this quickly, it’s just impossible in a normal world to keep up with it,” Seidel says. “On top of that, it’s a young industry and it’s so confidential. All these things make it very hard to understand litigation finance. That’s where expert advisers come in—to offer expertise and help facilitate deals that benefit all sides.” While no two brokers or advisers may adhere to the same workflow, deciding whether a case is worth referring to a litigation finance firm is a complex, methodologically driven process. For example, the individual litigation finance broker or adviser will typically begin by identifying a case that may have potential—a process itself linked to one’s experience in litigation finance but also potentially as a litigating lawyer and the basis of knowledge that provides. Next, the broker or adviser most likely runs the case by others in the “brokerage” firm to see if it fits into the firm’s larger portfolio and, namely, to ensure that it would not throw off the balance of the firm’s overall risk and exposure. If the case passes that level of scrutiny, it might then be escalated again to an outside law firm that can confirm whether they believe the case is likely to win from a litigation perspective. Of course, for a veteran litigator like Seidel, the expert’s own expertise is often valuable in this respect as well. If the determination of the litigation outlook is positive, the broker or adviser can play matchmaker and connect the case to capital—often, a litigation finance firm or other investor.

The Who

Leaving aside the complex regulatory regimes at play, including bar regulations and the Model Rules of Professional Conduct, who receives funding from a litigation finance firm has been an evolving issue. On the simplest level, there is financing individual clients and their cases. While this has most often been associated with the plaintiff side of the equation, funders are beginning to take an interest in defense work as well. And, in addition to case-specific funding, litigation funding has increasingly taken on “portfolio” and “firm” funding, whereby, as Steinitz notes in “Follow the Money”, litigation funding is applied to a whole set of cases (see examples here and here) or even an entire firm, respectively. And in these cases, the funding is often provided directly to law firms as opposed to clients. As Korchin notes, “Litigation finance is expanding well beyond the single-case model of funding.” She explains:

For example, we frequently see requests for funding from law firms that have portfolios of contingency cases and they need a cash infusion. It could be for any number of reasons—maybe the cases are going on longer than they anticipated and they have higher out-of-pocket costs, or they need to pay associates’ bonuses to retain the talent that is going to get them across the finish line to a successful resolution. Firms like ours can get involved in that way.

Indeed, from her perspective, funding portfolios and firms in addition to standalone cases has some advantages because, as she notes, “cross-collateralized portfolios mitigate risk.” Seidel adds that smaller cases—such as, for example, those needing $100,000 to help support a meritorious claim for $2 million—are also beginning to attract more attention, and he expects that community to grow along with the larger cases and portfolios. At the same time, Korchin is clear that while litigation finance firms like hers may fund portfolios of cases or entire firms, as with individual cases, there are no assurances of success. Put differently, a litigation finance deal is not like a loan where the client is required to pay it back. Korchin continues:

We’re not expecting our capital back unless the matters we fund succeed, which is why it is so critical that we accurately assess the likelihood of success. And our return, of course, is calibrated to the risk inherent in that type of nonrecourse financing. But other than the fact that the financing we offer is not a “loan,” it may be helpful to think of us almost like you might think of a bank. We offer financing, much like banks offer mortgages to buy homes or auto loans to buy cars, but we’re looking to a legal asset as collateral rather than taking a lien against a house or a vehicle. To take the analogy a step further, the capital that a client obtains from a legal financier doesn’t necessarily have to go toward funding the cost of a litigation or arbitration itself, just like banks allow people to take out home equity lines to give them liquidity to do any number of things that they might want to do. I think this broader view of legal finance is where the industry ultimately is heading. We’ll still participate in traditional single-case funding, at least on the Therium side, as we view that as an important part of our business, but as time goes on and more people choose to access capital for purposes other than pursuing litigation by using their legal assets as the collateral, the sky’s the limit.

When a litigation finance firm has received a case with potential, they route it through due diligence of their own. “At Therium, we start by having initial conversations with each client to first understand if the case is something that’s suited for funding,” says Korchin. Likelihood of a victory in court is not all that makes a claim a good investment, she explains. Korchin also needs answers to other questions. How likely is the opponent to pay if the client wins the case? If the opponent has no means of paying the anticipated damages, for example, that would make the case much harder to consider for investment even before the funder gets into the merits. There also are at least two other key data points needed before Korchin might be willing to advance a case in the process—the investment amount and the potential returns on investment.

Litigation finance is expanding well beyond the single-case model of funding. We frequently see requests for funding from law firms that have portfolios of contingency cases and they need a cash infusion.

Elizabeth Korchin, senior investment officer at Therium Capital Management

“We usually start at about $1 million of investment,” Korchin explains. “That’s not to say that we can’t make exceptions, but there is a minimum amount of time that we need to spend on diligence no matter the investment size, so we have to think about the opportunity cost of using resources to look at smaller deals that are likely to have smaller returns.” On the other side, there are questions regarding return on investment. Korchin notes, “We look at what the potential damages are and we’re usually looking for a 10:1 damages-to-budget ratio, meaning if you want a $1 million investment, we need to see at least $10 million of potential recovery. Because, even once we factor in our return on our $1 million investment, we still want the claimant to take the lion’s share of the recovery.” She continues:

We don’t want to walk away being the winner and have the claim holder walk away disappointed—we want everyone to win together. There’s no one-size-fits-all pricing, but for these purposes, let’s say on a $1 million investment, we’re looking to get our capital back, plus a 3x return. So on a $10 million recovery, we would take $4 million and the claimant would take $6 million. The claimant would be getting more than half of the recovery, with no risk of loss if the case fails. That’s also more or less what a contingency fee might look like, but it allows the client to choose any firm it wants, rather than being limited to firms that are prepared to proceed on a full contingency basis.

Korchin also notes that there are no guarantees and, unlike a bank loaning out money, sometimes cases do not pan out. “In some cases, we’ll fail,” she notes, which makes the intake and alignment processes so critical. “The important thing is to properly identify and assess the risks,” she says. “Don’t forget: even if a matter has an 80 percent chance of success, that means that the case will lose two out of 10 times. If we lose a case because there was an issue we should have seen and didn’t, that’s a problem. But by taking a disciplined, rigorous approach, we can tolerate risk and we have been very successful notwithstanding the level of risk inherent in what we do, because that risk is spread across a large portfolio.”

Terms. If a claim with potential for funding has passed these checkpoints, the next step is to negotiate and agree to terms. As Seidel notes, it is possible that negotiations begin—and that financial terms are even reached—before due diligence is completed. “At some point they will sign a large financing document where they agree finally to advance this money,” he explains. “But perhaps even more important is the document that comes before.” Seidel continues:

The prior document—this whole funding processes, it’s all very important. But the prior document may be even more important than the final financing documents. It’s a document signed early on, which is called a term sheet or a letter of intent. It’s nonbinding, but it gives the investor a period of exclusivity for the funding, and it maps out what the economics will be, what the relationships will be should due diligence and negotiations go as expected, and it’s something that provides the blueprint for what is to follow in the due diligence and the negotiations. And if things work the way they should, it’s usually followed to a tee in terms of what the terms ultimately turn out to be. These are hard negotiations, and perhaps even more difficult than the rest, even though the rest takes longer.

“Sometimes when we propose terms, we just get the signed term sheet right back and move on to diligence,” says Korchin. “But it’s also often an opportunity to learn more about our client’s goals.” Perhaps the plaintiff raises new concerns once financial terms are in view. Perhaps the client needs additional operating capital to keep a business afloat while litigation proceeds. “We work with claimants to tailor the financing to their particular needs, and we can come up with any structure that works for everybody so long as there are sufficient legal assets to collateralize the investment on the back end,” she adds.

Korchin stresses that a key part of reaching terms on any litigation finance deal is the alignment of interests. The way the deal is structured needs to anticipate numerous outcomes and still work for all parties involved. In the $1 million investment example above, the total anticipated recovery would be $10 million, with $4 million going to the financier and $6 million going to the client. But what happens if the opportunity arises for the case to settle early? If the $4 million return were guaranteed to the firm in any scenario apart from a loss in court, a rational client—the importance of rational counterparties is something litigation finance firms emphasize in any investment—would be unwilling to resolve the case at any sum below (or even near) the $4 million mark, even if likelihood of resolving the case for more than that amount was significantly diminished. A court might dismiss certain aspects of a case, for example, or key documents might be excluded from evidence. In the event of a litigation defeat, the client would be no worse off than if they had settled at $4 million. In that case, why not gamble for a payout?

Consider another scenario in which a litigation finance deal might inadvertently split the client’s and the funder’s incentives. Suppose again the deal involves a $1 million investment, only this time it doesn’t guarantee the financier any minimum return, instead stipulating that the client gets 60 cents and the funder gets 40 cents for every dollar of award or settlement. Even if the case was considered strong on its merits and a $10 million resolution was likely, the client might grow impatient for reasons external to the case and decide to settle at $1 million. Meanwhile, the funder may have already invested their full $1 million, making the funder’s 40 percent return ($400,000) a loss of more than half their investment. But to the client, with the costs coming from the funder’s pocket, $600,000 is still $600,000 more than the claimant had at the outset of the case.

The point of both these examples is that aligning the interests of all parties at the outset is key in assembling a litigation finance deal. “There almost always needs to be a preferred return to the funder off the top to protect our invested capital, but we also don’t want that initial hurdle to get in the way of a rational settlement,” Korchin explains. “One way we avoid that is we often tranche our investments, dividing them up into pieces. Tranching allows the funder’s anticipated returns to be lower earlier in the case, allowing room for early settlement, and then they step up as the case goes on—and as the inherent risk goes up,” says Korchin. She continues:

We think about this both from an administrative perspective as well as from a legal strategy perspective. For the former, we think about a case’s capital needs at various stages and the amounts that make sense to call down and have ready to pay the lawyers when they send us an invoice. And for the latter, we think about the likely pressure points in the case. Most importantly, when is the case most likely to settle? We want the tranches to correspond to that timing rather than having the client jump into a new tranche, triggering a higher return rate, right at a critical moment where the additional cost of capital might deter rational behavior. We want to enable the plaintiff, if they’re presented with a reasonable settlement offer, to take it. But we don’t control the case, and we don’t tell clients when, or if, to settle. That’s for the clients to decide, in reliance upon the sound advice of their counsel. As passive investors, we provide the capital that makes the successful outcome possible, and then we get out of the way so that the clients and their counsel can achieve it.

The best litigation finance deal is one that benefits all parties that sign onto it, and accomplishing that comes down to balancing risk and return across as many scenarios as one could imagine. “Our business is risk,” Korchin adds. “We aren’t afraid to put large sums of money into good investments, and in fact we want to invest as much capital in strong cases as we can, but we also want to make sure that we have rational counterparties. And because we’re passive investors and we don’t get involved in a claim once we’ve committed to make the investment, we want to make sure that we have structured the terms so that our incentives are aligned.”

Ever the lawyer, Seidel stresses that many deals can also involve conflict-of-interest concerns among the claimant, the investor, and the lawyers. While some of this can be dealt with by ethics rules and contracts—and some may even be “good conflicts,” as he puts it—the key is to understand the situation and the conflicts that may exist, and then determine the best course forward.

Ongoing relationship. Of course, even once a basic agreement on financial terms is reached, the arrangement has only just begun. At Therium, Korchin explains, they typically request an exclusivity period of 45 to 60 days following the agreement to ensure they have rounded out their due diligence. Much of this depends on the details of the case, the responsiveness of the parties, and how far along the clients are in the process. In addition to a few rounds of parsing through documents and details—up to and including considerations like how a client might play as a witness during the litigation itself—Korchin adds that it is equally important to establish a rapport with the claimant and counsel, typically with at least one face-to-face meeting. “We do it because we want to get to know the party we will be financing, but we also want them to get to know us, and for them to see that we have a wealth of experience here,” she explains. Korchin continues:

It’s not uncommon for claimants or their counsel to call to ask, “What do you think of this potential strategy?” They’re not asking because they’re required to get our sign-off; they’re asking because we have experience in these matters that can help confirm, or refine, the path forward. If we did our job right in properly aligning everybody, they know that we’re all pulling in the same direction and there’s no reason for us to tell them to do anything that isn’t in their best interest. We’re all on the same team.

At the same time, Korchin stresses that funders understand that not every case is going to work out in their favor and that that is just the nature of the business. Even if you look closely at the facts and the law and you conclude that you have a very strong case, she explains, there are uncertainties in litigation for which you can’t underwrite, no matter how diligent you are. Korchin harkens back to her time as a Big Law partner when clients would ask her about their likelihood of success on a given matter. “And I’d say, ‘Look, even imagining a completely straightforward case with legal authority that is squarely on point—which these high-stakes cases rarely are—you still have human decision makers who ultimately are going to need to understand your case and see it the way that you do,” she recalls. Korchin continues:

There always are things out there that are outside of our control, and there always are things that we don’t yet know. So even in a case that I might otherwise consider airtight, my rule of thumb still would be to peg the likelihood of success at maybe 70 to 80 percent. You can never be certain about what a judge, tribunal, or jury will do. You can rely on your experience and your knowledge to make the best possible determination of what probably will happen or even what should happen, but a litigation is a drama with many plot twists. Decision makers get it wrong sometimes. There’s a reason that appeals courts exist.

The litigation finance career

This workflow illustrates what a legal career in litigation finance can look like, which is to say a blend of law and finance. Lawyers working in litigation finance may be just as likely to work with financial models as they are to work with the law. Indeed, both skill sets are needed in a litigation finance firm. “You have to have a fundamental understanding of the legal claim to understand how to value these investments,” says Korchin. “But it’s one thing to come up with what you think are likely litigation outcomes. It’s another thing to figure out if it’s a good investment. You need both pieces.”

I more or less knew what the best-case scenario could look like in a large law firm. But I didn’t know what the best-case scenario could look like in legal finance.

Elizabeth Korchin

Korchin’s own career trajectory speaks to some of the possibilities for lawyers within the litigation finance firm. In 2018, Korchin earned the achievement sought by countless young lawyers: partnership in a Big Law firm. After a multifaceted tenure as a litigation and arbitration associate at Hogan Lovells, she had established herself as a firm leader in her practice area. And yet, half a year later, Korchin made the jump to litigation finance firm Therium as a senior investment officer. “It was completely unexpected—certainly not what I had ever anticipated my career trajectory would look like after nearly a decade working toward getting to the partner level,” explains Korchin. “But on the other hand, I think I had always made a name for myself as an out-of-the-box thinker, and legal finance just fit so nicely with the entrepreneurial aspect of my legal career. I couldn’t pass up the opportunity to get into this developing industry.”

Indeed, Korchin describes her transition from Big Law to litigation finance as a high-reward, low-risk move. While the industry was young, Therium was nevertheless established as a major player, having been around for nearly a decade and having recently exceeded the $1 billion milestone in funds raised. “I more or less knew what the best-case scenario could look like in a large law firm,” recalls Korchin. “But I didn’t know what the best-case scenario could look like in legal finance, because it’s such a high-growth area. And for me, that was super exciting.”

She highlights her curiosity and tenacity as key drivers of her career trajectory—which is perhaps unsurprising for someone thriving in a burgeoning industry—but she cautions that a career in litigation finance today also requires a degree of experience. While her success in litigation funding came without formal training in financial modeling, it did follow nearly 10 years of litigation practice and a knack for Microsoft Excel, which gave her a unique skill set as a litigator working with damages experts on her cases. “This is a very hard industry to get into at this time, unless you have real on-the-job experience, in large part because a lot of the things we see are things that don’t have a clear answer,” she says. Navigating this type of ambiguity requires good judgment built on experience.

Seidel echoes Korchin’s caveat to fresh law school graduates looking to jump right into litigation finance. “I would certainly recommend against coming out of law school and going straight into litigation funding without getting that crucial learning experience at a law firm,” he says. “There is value in practicing and providing legal services, and a law firm can give you that valuable experience.” Seidel notes, too, that increasingly firms are becoming what he calls “funder friendly,” or more open to using litigation finance in their normal legal function. Thus, by his estimation, law firms are perhaps a more suitable training ground for future litigation finance professionals now than ever before. “Careers in litigation finance are likely to continue to open at law firms themselves,” he says. “Law firms are not only becoming more funder friendly but are starting to work or ‘partner’ with funders and other investors, and those firms need lawyers who understand the industry. Law students and young lawyers should realize that there is a growing need for such professionals in the legal service industry.” (For more on large law firms entering the litigation finance space, see “Risky Business.”)

Still, in the meantime law students and early-career lawyers lacking that critical mass of experience can do certain things to prepare themselves for a future career in litigation finance. For law students, course selection is one fairly conspicuous variable to leverage, and Korchin and Seidel recommend courses not just in litigation finance (if even available) but in broader areas like analytical methods. Beyond formal training, however, Korchin recommends lawyers and future lawyers hone other aspects of their professional lives. She explains:

If you know you want a career in legal finance, I would say pick a practice area or a subject matter that lends itself to financing—trade secrets and international arbitration are some current key areas that immediately come to mind, and either affirmative or defense-side experience is valuable. That would be one of the first steps in gaining the experience that would be helpful to assess these types of investments. The second thing is to maintain as much of a network as you possibly can. Many of our cases, often our best cases, come in through people that we have gotten to know well and that we trust. So the networks that you develop also make you the go-to for strong investments, and those relationships enable you to diligence matters more effectively and to assess risks openly and collaboratively, so that’s something we value very much here. And finally, I would say that you need to be able to see what’s on the horizon in the legal market generally, because I think a lot of the best opportunities come before everyone else realizes that a particular subject is the next big thing. You need to be somebody who is thinking ahead and thinking creatively rather than waiting for something to show up, neatly packaged, at your door. I realize these pointers may all sound generic and in that way may be unsatisfying. It would be much nicer if I could offer a three-step path to having a career in legal finance. But in a way, that’s the point. What makes legal finance so exciting is that it is an evolving industry. There is no neat way. I don’t think I could replicate what has happened in my career, even if I tried.

Per Korchin and Seidel, litigation finance may not be a career path that is clearly visible from the starting line, but there are ways to seek it out and prepare for it. One big takeaway is that litigation and finance skills matter, and young lawyers should not stress too much about lacking them at the outset, because the experience they gain as they build those skills is equally important. Another takeaway is that a career in litigation financing is not suited to all types. “You have to have lived and breathed cases and just have a good sense, but you also have to have the willingness to engage and tinker and think about a problem from all angles, including ones that never have been tried before,” says Korchin. “And you have to be comfortable that, in most cases, you’re never going to get a clean answer. That’s not necessarily the space that everybody likes to live in, and that’s OK. Nothing is for everyone.” The bottom line is that litigation finance, at least for now, is not a typical legal career. Following the recommendations of those lawyers currently in litigation finance, young lawyers should have plenty of time to consider it critically and determine if it is a good fit for them as they gain experience.

Trending upward?

Litigation finance looks to remain a viable career prospect for lawyers into the foreseeable future. While it has generated a number of recent headlines in the legal press, litigation finance has been around in Australia and the United Kingdom for well over a decade (see “A Brief History of Litigation Finance”). And, as observers have noted and the surveys at the top of this article suggest, the industry is poised to continue growing. “The story tells itself,” says Seidel. “Right now we see the capital is far less than the demand, and that gap keeps growing.”

Litigation finance firms are poised to facilitate that growth as a natural bridge between the worlds of law and investing. And that bridge has the ability to connect financers with potentially attractive investments. Indeed, as Korchin notes above, one of the key strengths of litigation finance from an investor’s point of view is that its assets are not correlated to the market or even necessarily to each other. Increasing interest in diversified litigation finance portfolios and, depending on potential future rule changes, even increasing corporate finance for law firms could point the way of the future.

As we see from the cases of Australia and the United Kingdom (see “A Brief History of Litigation Finance”), litigation finance could develop any number of ways in the United States—and indeed any number of ways in each individual state, barring federal legislation or rulings. Whichever way it falls, for lawyers interested in making a career in litigation finance, the areas in which they need to hone their skills are no mystery: litigation and finance. That and a bit of experience make for a valuable litigation finance expert.