If you haven’t made partner, you haven’t failed

This year will be marked not only by a sweep of fresh class actions, but an increase in corporate legal battles as litigation funders bring online a range of new products.

Executive chairman Philip Kapp of listed funder JustKapital said the main area of concentration for litigation funders over the next year was an expected growth in corporate litigation.

“Businesses are becoming increasingly aware that litigation funding is open to them,” Mr Kapp said.

Major litigation funder IMF Bentham has announced the opening of an office in Canada and the rollout of new products as part of its new strategy to not only expand its geographic reach beyond Australia, Europe, United States and Asia, but to increase the number and type of cases it funds while reducing the average investment per case.

Philip Kapp from JustKapital said the main area of growth for litigation funders in the next year will be corporate litigation. Steven Siewert

“As we’ve matured we’ve realised the need not to be exposed to a small number of large cases because a one-off loss could affect your profit,” IMF Bentham’s managing director Andrew Saker said.

Lost cases cost it $20 million in profit in the 2015 financial year but the company had a net profit after tax of $10 million.

Sought-after work 

Its European arm has picked up much sought-after work, including the shareholder and consumer action against Volkswagen in Germany .

IMF Bentham investment manager Tania Sulan said product liability and consumer class actions could increase in the next year.

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IMF Bentham investment manager Tania Sulan, who is moving to Toronto in January, said it would be the only international firm with offices in Canada and the company would focus, as it did in Australia, on general commercial litigation, insolvency and class actions.

Ms Sulan said the company was rolling out new products, including consumer products that focused on funding solutions for individual cases, and broadening its strategy of investing in portfolios of cases at some US law firms, to other jurisdictions.

Potential products included providing funding for family law matters and disbursement funding which could challenge “after the event” insurance products that typically cover a defendant’s costs and disbursements as well as a plaintiff’s disbursements in litigation, as well as an extension to clients of funding for operational costs in addition to legal fees.

Ms Sulan said there was expected to be an increase in product liability and consumer class actions in 2016. To assist it to identify fresh class actions, IMF Bentham was also offering a new preliminary package that would give gave law firms initial fee funding for the investigation of claims.

Andrew Saker from litigation finance company Bentham IMF said it would expand its geographic reach, increase the cases it funded, and reduce the average investment per case. Philip Gostelow

Corporate cases

But Ms Sulan agreed a key area of growth for funders would be driven by an increase in companies using litigation funding to pursue cases against other large corporations.

“There are often David and Goliath-type situations with an inequality in resources, but we are going to see more Goliath versus Goliath-type litigation as companies use external funds to outsource the management of the litigation, external lawyers and litigation budgets,” she said.

Mr Kapp said it would be targeting patent and intellectual property claims, and business-to-business litigation presented lower risks than class actions because it involved only two parties, usually sophisticated and legally advised.

The company’s joint venture this year with major US funder Longford Capital not only gave it access to a much bigger capital base, but also strategic advice. JustKapital followed Longford’s lead in diversifying its interests by its recent takeover of expert medical reports provider, Macquarie Medico Legal.

The main challenge would come from international funding rivals such as British giant Harbour Litigation Funding.

Harbour Litigation Funding director of litigation funding Ruth Stackpool-Moore said its recent opening of a Hong Kong office was to cover the Asia-Pacific region, and become more active in the Australian market.

Ms Stackpool-Moore said it was funding nine cases in Australia but had about $A800 million in capital committed to disputes, with each typically valued at more than $A20 million.

“We will be looking to invest in a broad mix of commercial cases,” she said, referring to Australia.

IMF Bentham has a funding commitment target of $86 million for next year and a portfolio worth about $2 billion.​