Lara Melrose on navigating the litigation funding market

Lara Melrose, Litigation Finance Portfolio Advisor at Orchard Global, joins Shieldpay's Daniel Dunne to clarify what the litigation funding engagement looks like for law firms, provide her advice for legal teams navigating the market, and explore what is happening in the UK and globally for this fast-growing area of financing.

Lara Melrose is a Litigation Finance Portfolio Advisor at Orchard Global.

Prior to joining Orchard Global in 2020, she was a Managing Associate at Mischon de Reya LLP in their litigation practice, where she handled complex and high value commercial and financial disputes. Previously, she worked in the Commercial Litigation department at Addleshaw Goddard LLP and started her career at Freshfields Brukhaus Deringer LLP. 

Lara holds a BA in Law with French from Nottingham University and a Post Graduate Diploma in Law from Nottingham Law School. She is a qualified solicitor in England and Wales.


In this Class Actions episode of Shieldcast, Lara and Daniel discuss:  

• The four key stages of engagement with a litigation funder 
• An outline of the key information claimants and law firms need to prepare and present to successfully secure funding
• How to choose a funder: assessment considerations for law firms seeking financing
• Regulation and the legitimacy of players in the market 
• The global outlook and emerging areas of growth in the market

Listen to this Class Actions edition of Shieldcast to find out more!


Learn more about Orchard Global: 

Website: orchardglobal.com

LinkedIn: Orchard Global

Thank you for listening. 

Find other episodes in the series on our website: Shieldcast library

Podcast brought to you by Shieldpay - learn more: shieldpay.com

Transcript

Dan: Hello and welcome back to this episode of Shieldcast, where Shieldpay friends, partners, and clients come to tell us about their product, their industry insights, and talk generally about all things that we think, and we would hope, that you find interesting. 

In this series of the Shieldcast, we're taking a deep dive into the class action market. The Shieldpay team will be inviting key industry leaders to join us for new episodes, to discuss key challenges, opportunities in the market, share best practice, and explore the latest developments in this fast-evolving space. 

I’m Daniel Dunne, Head of Legal Sales at Shieldpay, and your host for this episode of Shieldcast. I'm joined here today with Lara Melrose, Litigation Finance Portfolio Advisor at Orchard Global, to take a deep dive into the world of litigation funding, have a look at where the market is and the key trends to look out for, as well as doing some myth busting along the way. 

For a short introduction, Lara is a qualified solicitor, turns finance professional. She has worked at some of the UK's top law firms, but it was at a position at Mischcon de Reya where Lara was involved in mass class action cases ranging from shareholder group actions through to working on the Lloyd vs Google data claim. 

Lara made the move to Orchard Global in 2020, start her career in litigation funding, and now works closely with legal teams to take on commercial and civil claims. 

Like I said, just an abridged summary of her career to date, and there's plenty more to cover. Well, let's get into the episode and speak to Lara all about it.  

Lara, welcome to Shieldcast.  

[00:01:43] Lara: Thank you. Thanks for having me.  

[00:01:45] Dan: You're very welcome.  

So, I think a really good place to start would be jumping back into a little bit more around the detail of your career to date. 

For the people that don't know you and your background, it'd be great if you could give the audience a little bit more of a flavour as to why you decided to make that transition from legal practitioner to portfolio advisor. It'd be great to get some background if you wouldn't mind. 

[00:02:06] Lara: Yeah, sure. So, I had been in private practice for about 15 years and during that time, I'd worked in three different firms, which had had given me a pretty varied experience of the rollercoaster that is commercial litigation. Something I always really enjoyed about being a litigator was the variety it offered and the opportunity to become involved in a subject matter that was sometimes entirely new. 

As a commercial litigator, my practice had covered some very high-profile fraud disputes, shareholder litigation, banking disputes, and laterally group litigation.  

But it wasn't until I joined Mishcon that I had my first experience of a funded claim. First with a shareholder group action, and then with the Lloyd vs Google claim that you mentioned. I enjoyed that new perspective that funding brought to the claims. Principally looking at cases down a more commercial lens than one purely based on merits.  

I think the litigation funding industry has been through a period of marked growth over the last few years, and there's a real range of players and market entrance. It seemed like a fascinating industry to be involved in. Ultimately, my experience at Mishcon led me to explore that as my next career move. So, one that would allow me to continue to use my skills as a litigator, but also provide an opportunity to develop new skills and see disputes from a different perspective. 

[00:03:27] Dan: There'll be people that will be listening to the podcast that would've had experience in engaging with litigation funders previously. But equally, there may be people that have not. It'd be really helpful if you could give us some insight, or you could walk us through what that engagement looks like essentially between a litigation funder and a law firm. 

What typically do the stages look like?  

[00:03:49] Lara: Yeah, so, Orchard Global has been investing in litigation, since 2015 and since then we've made over a hundred investments. Our focus is UK and Europe, but we also invest in US, Australia and other common law jurisdictions. 

My role is a pretty broad one. Like my colleagues, I'm involved in the entire litigation funding life cycle.  

Before I go into some more detail on that, it's probably worth just pointing out first that litigation funding can take many different forms. Traditionally, it's been used to fund a claimant who cannot pay the costs of bringing the claim themselves. So, it's very attractive to them because the finance is non-recourse. Meaning if there's no recovery, then there's no obligation to repay the funder. It's a tool that's available to claimants, whether that's individuals or corporates, to provide access to justice and level the playing field between well-resourced defendants and claimants who would otherwise lack the financial capacity to bring a meritorious claim. 

And I think, as the market has evolved, the different products available have also developed. Now litigation funders offer financing to law firms to service their working capital needs, or they might provide a facility that can be used across a portfolio of claims belonging to a corporate. That allows corporates to have books of claims that it might not have otherwise pursued because of the risk and the costs involved to monetize those claims and turn them essentially into a profit center.  

So, it depends what aspect of the various different forms investigation funding can take, but that will inform the relationship between the funder and the lawyer on the other side.  

[00:05:36] Dan: Sorry Lara, when you're talking about the core product, which would be funding the cases, were you talking about an extension of services to law firms? Are we talking about financing across the book? Litigation funding is one part of the financing options that you would offer to a law firm as a whole. Is that accurate?  

[00:05:57] Lara: Yeah, so I think what I was referring to there was…you take a start-up law firm, a litigation boutique, for example. They may have working capital needs, particularly when they're first starting up, that that require funding. 

And so, funders can provide that kind of working capital to them and allow them to offer different fee arrangements to their clients. But ultimately, the return that the funder will make from that investment will usually come from the litigation that the firm is running and the recoveries that it makes in respect of that litigation. 

[00:06:32] Dan: Understood. That makes sense. Sorry to interrupt your, flow there. I just wanted to be clear on where else a litigation funder adds value to law firms. 

[00:06:42] Lara: No problem. 

So, my role has four main elements to it. The first is origination, so that's going out to the market and finding the cases that require funding.  

I'm constantly meeting with law firms and other entities in the legal market might be economists, insolvency practitioners, brokers, insurers, and talking to them about their investigation funding needs. It means I get to drink a lot of coffee, but also means I get a really good insight into what is going on in the legal market. And if our team has done its job properly, we should generate a strong pipeline of cases to review.  

That brings me on to the second element which is due diligence and pricing of deals. 

Once we've received an inquiry, we are provided with some materials about the case to review. That usually comes from the law firm but sometimes it comes directly from the claimant. Usually that will, in an ideal world, include a summary of the claim prepared by the law firm - you know, key underlying documents, any pleadings, a legal opinion prepared by a barrister and a quantum report or analysis. 

I think it's fair to say that the quality of the materials provided really varies, but the clearer and more comprehensive the presentation of the case is, the more likely it is to be funded, and the process is likely to be more efficient.  

I sometimes use the analogy of a child at Christmas opening a big Christmas present, which looks like it's going to be really exciting, only to find that it's a pair of socks inside. Coffin cases are presented to us lacking key information, which just really slows down the process.  

But, assuming we have the right materials, we do some preliminary due diligence. If we think the case is a good fit for us, we'll have a conversation with the law firm, perhaps the client, to address initial queries before we do work on modelling the economics of the case. 

And put very simply those two key elements: the first is assessing the risk associated with the claim and then pricing the funding that's required according to that risk.  

And then also very important is ensuring there's enough room between the quantum estimate (so the ultimate recovery you expect to make) and the budget for the claim so that all stakeholders can be paid out and a sufficient proportion of the damages remains for the claimant. That's really critical to the case.  

Then at that point, we may make an offer of funding based on that modelling and if that's accepted, that's recorded in a term sheet, which we agree with the law firm or, and the client.  

And then we have a period where we conduct more detailed due diligence, a deeper dive into the details of the case, you know, the legal, technical, financial elements of the claim. And that may involve us instructing, for example, a barrister at that point to assist us with that part of the process.  

[00:09:39] Dan: Do you have to work with the cadence and timeline of the case in this scenario? So, do you get within your due diligence process, you'll get law firms coming to you, with a case, like you say, that need to move exceptionally quick? 

Or would you get, a law firm coming to you giving you that information or that background due diligence where it could be a case in two or three years time? Does it vary actively with regards to that?  

[00:10:04] Lara: Yeah. Generally, we are approached before the proceedings have been issued, so usually that means we've got enough time to work with the law firm to properly understand the case and determine whether it's a good investment decision for us. 

But that's not always the case. It's quite often that they want to issue the proceedings really quickly because, for example, there might be a limitation deadline upcoming, or they might have already issued the case. The case could be proceeding and the claimants either run out of money or decided that it no longer wants to fund the case itself, and we could be brought on at that point. 

So again, there's likely to be some urgency there because you need to continue the case, the lawyers need to keep doing the work that they're meant to be doing, and they need funding in order to do that. So often we are working up against deadlines and we need to make sure that we're nimble enough to be able to agree the funding and execute on the deal in a timeframe that works for the lawyers and the. 

[00:11:12] Dan: To your point there, it's not unusual that it could be a case that a law firm and client may take on proceedings themselves, funding themselves. Yeah. And then get into a position where either the proceedings have taken longer, the costs have not necessarily been…that due diligence process that you would do prior to funding a case maybe wasn’t done as accurately as possible, and then they come into some level of financial difficulty, and you could come in midway through that funding process as well.  

So, it's not always right at the start, you could come in at different stages.  

[00:11:45] Lara: Exactly. And I think then the question for us is why has the budget grown? Why can't the claimant fund it anymore itself? 

But also, sometimes it's easier to make our decision at that point because you've already got the pleadings, you've already seen what the defendant's going to say in defence of the claim, and you can make a more informed decision on the merits. So, there's advances and disadvantages to coming in further into the process. 

[00:12:15] Dan: Understood. So, two of your key areas is the origination piece, the price and the due diligence. Moving on from there, what would be your other two areas that you would be looking at?  

[00:12:25] Lara: Yeah, so to use a financing term, the next stage is deal execution. 

Alongside our detailed due diligence, we negotiate what we call the transaction documents with the client. So, they are typically the litigation funding agreement which sets out all the terms in which the funding is being provided, and then a priorities agreement, which sets on recovery the order that the proceeds from the claim will be distributed between the funder, any adverse costs, insurer, the law firm and the claimant. 

And then the other element of deal execution is, we take the opportunity through our investment committee. At Orchard this can be constituted quickly and on an adhoc basis. So, they'll interrogate the case and make the ultimate decision as to whether we… 

[00:13:16] Dan: So, you have a committee that you bring all the information to post due diligence, bring the whole case to that committee for essentially final sign off to form the case. 

That's right. Yeah, that's right. Interesting.  

[00:13:28] Lara: And then, assuming all is well and we've done our job properly, and the investment committee wants to invest in the claim, once the claim is funded, the final element of my role is that we manage work with the legal team and monitor the claim. 

At this stage we are hands off. The funder's role is not to control the case. We remain relatively passive in the disputes. We fund ensuring that the claimant has control over the decision making informed by their legal team. That, I think, is something that's really important to us. 

We only invest in cases that are being run by legal teams who we rate really highly, in whom we can trust to advise the claimant in the best way forward. That partnership is critical for us. It's a key part of our due diligence as well.  

We do keep a careful on budgets as claims progress, because obviously we want the claim to be managed according to the budget that we've agreed.That’s a key part of our management role.  

We have a lot of in-house expertise as well on disputes. And so, when we're invited by the legal team, we can offer support and strategic suggestions regarding how the claim is run, for example. 

[00:14:37] Dan: Yeah, that makes a lot of sense. 

Moving into the next stage of it. Once you've recognized an opportunity believe it meets all the relevant criteria, strong legal case, you're confident it'll stand up in court.  

What else is it that you would need to know about the case as a whole to allocate the funding? Just an overview of what other things that you would need to know as part of your process. 

[00:15:00] Lara: Yeah. So obviously it does depend on the particular case. But, I think if we take a collective or group action as an example.  

The vast majority of group claims are funded because individually claimants can't fund the claim themselves. Perhaps because the individual damages amount is in is entirely disproportionate to the cost they'd have to incur on an individual basis. And so, by grouping together and obtaining third party funding that the groups of claimants can fight against well-resourced defendants. Those claims are really attractive to funders because they're high value. 

They provide an opportunity to deploy large amounts of capital, given the size of the budgets. And where they are follow on, which essentially means there's been a regulatory finding of liability, for example, against the defendant, they benefit from strong merit.  

So, they're attractive, but I think, group actions are all also, complex, high risk, and typically of long duration. Whilst they're ripe for funding, there are a number of aspects we have to think about when we're assessing these claims. Obviously strong legal merits are really important.  

We are looking for a promising fact pattern, which bears out the legal analysis and is supported by evidence.  

We need a well thought out and realistic budget, usually one that contains contingencies for unforeseen developments in the claim. 

We'll look at the defendant profile. You know, are they well-resourced so that they can meet a judgment against them? Are they likely to fight to the bitter end or is there a settlement dynamic? One metric of funding returns is the claim duration. The longer a defendant is likely to fight, the riskier the case becomes for us, and therefore the cost of the funding usually increases. 

And then actually claimant profile is also really important. For a group claim, which involves a book build, we spend a lot of time scrutinizing the book build strategy. You know, book builds are inherently risky, they're typically expensive. A funder will want to ensure that the risk of it failing is minimized as much as possible. We do that by interrogating the size of the potential claimant group and considering whether there's likely to be competition from other offerings for those claimants.  

Then you've got to think about, does the law firm that you are backing have key relationships it can leverage to build the book? Does the initiative have the support of a consumer association or a trade body or prominent industry representative that will make it a credible offering in the eyes of the claimant class? 

We also think about what story will be told to engage class members. Is it a follow-on action where there's a regulatory finding you can hang your hat on? Is the defendant's behaviour particularly egregious? What does the per claimant quantum look like? Or, is this all about holding bad actors to account? You need to have a compelling story and a strategy that you can communicate to your target class members.  

I think the final piece of that is, are there efficiencies that can be achieved in the marketing and onboarding of claimants? And that's where technological tools and specialized platforms are really important to help streamline the book build process. 

[00:18:26] Dan: Okay. So, yeah, that was going to be one of the questions I was going ask actually around how does a litigation funder engage with its partners, associates within this process and what level of importance do you put on technology within this process and where does that fit? 

[00:18:42] Lara: Yeah, I mean, I think there's a massive role for technology, particularly in the group action space, and that's probably at all stages of the litigation process.  

It's about using technology to target your class through social media and advertising, digital advertising. 

It's using technology to ensure that you've got a good funnel for bringing on board those claimants and that they can sign up easily. They don't have to send back lots of paperwork, that's all digitalized as well. And that there's a process sitting behind that where you can verify your claimants and ensure that they've provided what they're supposed to have provided. 

And then, once the claim is up and running, you can use technology to communicate with your class, give them the information they need, get the information you need from them.  

And then at the back end as you guys know, it's about distributing proceeds when the case has been successful, and doing that in an effective, robust format. 

There’s been lots of new developments which have all been really positive for that. I think ultimately, good news for funders because they take some of the risk out and also can mean you've got a more efficient, more cost effective process. 

[00:20:00] Dan: So is the expectation in that scenario, Laura, that a litigation funder within the due diligence process would, analyze question as part of the due diligence process about what level of capability a law firm client has? Or, would the reliance be on the litigation funder to have relationships with like claim administrators as an example, where you would refer it in? How does that work?  

[00:20:27] Lara: Yeah. I think it’s both, to be honest with you. It depends a bit on who your funder is and what model they adopt. 

There are some funders who have in-house book building capabilities, and will have those tools already available to them and work with a law firm to use those.  

But other funders, and I think we are in this category, look to the law firm to have those relationships. We also have those relationships ourselves. If there is a law firm who perhaps doesn't yet, we are happy to recommend that they use certain partners and that certain services are available to them. So it's probably a funder specific approach.  

[00:21:09] Dan: That makes sense. It's always good to understand the role of technology, you know, what value that can add and who's responsible for that. 

Whether there's incumbent relationships already in place or there's an expectation for the client to have them in place, or is there a reliance on the litigation funder to have third party relationships in place that can assist. Ultimately the end goal is to get funds to the claimant in the most efficient way possible. 

Yeah. Which is, which is the end result, isn't it? You know, that's what all parties within this process are trying to get to.  

Absolutely.  

Yeah. Some of the conversations we've been having more generally in the market, and also on this podcast around class actions in the UK are around the market undergoing a fast evolution, catalyzed by the introduction of the collective action regime in 2015.  

[00:21:57] Dan: What are the changes, if any, have you seen in this litigation space and funding, Lara?  

Lara: yeah. I think the UK has always been a first-class jurisdiction for litigation. Last year, that that continued to be the case despite Brexit and the effects of the pandemic. 

We have seen a lot of growth in the litigation funding market in the UK, which has come from new capital raises, from established peer play litigation funders and new entrants to the market. There's a lot of capital flowing into the market. I think alongside that growth is the continued development of the class action regime. 

It is no coincidence that the two go hand in hand. Particularly in the Competition Appeals Tribunal where there is a dedicated opt-out regime. We've seen a number of new opt-out actions launched, I think 12 filed and more to be filed imminently.  

There has been some concern raised that since the seminal opt-out competition claim brought by Walter Merricks against MasterCard was certified that the floodgates have opened and that there are claims being brought that either not truly competition claims or which are simply not good claims. But I think, over the last year there's also been a number of clarifying decisions and judgments some positive for the regime and some less.  

Just last month there was a judgment in a claim against Meta (Facebook), which wasn't certified by the tribunal, principally due to concerns about the damages methodology. That has meant that some in the market are now questioning if there are going to be more of those decisions. I don't have a crystal ball unfortunately, but I think these are judgements in what is still a very novel procedure. 

But they all make the jobs of lawyers and funders a little bit easier when deciding how to build and run and, ultimately, fund these claims effectively.  

Dan: I just wanted to pick up on something you mentioned earlier around jurisdictionally and I think for people that are listening and don't really know a great deal about litigation funding as well. 

Is litigation funding available in all countries? Is it limited to certain jurisdictions? Is there certain growth areas as well? Jurisdictionally that, uh, litigation funders now becoming more acceptable? 

Where, how, how does the landscape look like for litigation funding globally?  

Lara: Yeah, I mean, I think there are certainly some jurisdictions that don't permit litigation funding. Ireland is one of them. I think there's been some recent rule changes or developments in India, which mean that litigation funding is now possible there. But there are some jurisdictions where it just hasn't happened. 

The UK's been a huge growth area. I think Europe is now one where litigation funding is really active. Part of that is because of developments in the class action regimes in countries such as the Netherlands, which now has an opt-out procedure.  

It is being made a lot of use of by funders and law firms to bring group claims. Perhaps those we can't yet bring here, for example, in respective of data privacy claims. So, yeah. Europe's really active. There's, you know, dedicated European investigation funders. I think alongside that, there's some concern in Europe around regulation of the industry. There's a lot going on across the board.  

Dan: This leads me onto…and you'll have to keep me right on this…I was reading about a headline about the litigation funding market reaching an all-time high. I think I was reading a tenfold increase over the course of the decade to reach currently a value of £2.2 billion. 

You just mentioned, I suppose some of the jurisdictional potential trends or where they may be going. Is there, from where the market's heading, are there any other trends you're seeing with regards to the type of cases that you're involved in the jurisdictions? What would you say is something to be mindful of and be watching out for in the next few years within this space? 

Lara: Yeah. I think that there are a few things. As you mentioned, there's been a lot of new capital in the market. But the barriers to entry for litigation funders remain high. You really need to understand the jurisdiction you're investing in and the litigation process there. You need a really strong network to originate claims and you need to have a flexible and creative approach to funding cases. You also need to ensure that in an increasingly competitive market, you don't fall into the trap of backing weak claims.  

I think there will inevitably be a bit of a slowdown in growth in the market, but in terms of other trends, I think we will see increasing co-funding. Just to explain that, that's where two or more funders essentially share the risk of an investment by sharing the funding. And I think the rise of large, complex claims, like some of the competition claims we mentioned and correspondingly large litigation budgets, presents a positive opportunity for co-funding and risk sharing and collaboration amongst funders in the market. 

Dan: So where effectively you could have potentially been looking at litigation funder as a direct conflict of interest or competition, you think about it a little bit more sort of creatively and commercially around mitigating what would be the risk in more complex claims and working in collaboration with another funder. 

[00:27:24] Lara: Yeah, that's right. And I think just one other trend is, funders are becoming involved in the litigation process earlier and earlier on. I think that's a really positive development because it ensures cases are built and structured in a way that facilitates the funding and ensures a collaborative relationship between the funder and the law firm and ultimately the clients. 

I think that that early involvement could simply be a phone call to test a proposition at an earlier stage, or it could be a request for some seed funding to work up and get input from an economic expert. And I think early funder involvement means law firms have an opportunity to ensure the funder's perception of the risk is aligned with theirs. 

And from the client's perspective, it means that they've got a chance to get a second view on a case. Because, a funder has a due diligence process, even if that funding ultimately isn't provided, is usually a pretty helpful process for the client. Gives them a new perspective on their case and might identify weaknesses. 

Dan: Yeah, that leads into my next question. I think you've answered part of that already, but I'll just see if there's any further expansion, you mentioned about being involved in the process right at the start. What does that engagement look like typically, and what would you advise other law firms working or thinking about working with the litigation funder to be doing with regards to engagement? 

Lara: Yeah. As I mentioned, there's a lot of capital in the market, but not all funders are created equal. 

I think you know, as much as we conduct due diligence on law firms, law firms should also conduct due diligence on their funders and ensure that they're experienced and well suited to the particular case that they need funding for. So, they should ask questions about where their capital comes from and if the funder is a member of the Association of Litigation Funders, as we are. It'll be required to comply with a code of conduct, which requires it to maintain adequate financial resources and to meet the obligations that they've committed to. I think that that's really important. 

I would also recommend that any legal team that is looking to engage with a funder, puts together a really comprehensive, well thought through and organized package of materials. Because, as I I've said before, that will mean the funding process is more efficient because a funding process can use up resource for a law firm and it can involve fees being incurred which aren't always, ultimately paid if the funding doesn't materialize. So putting together a proper package of materials which makes the funder's job easier is only going to benefit the process. 

I would also recommend that you ask your funder what their process is and the likely timeframe so that everyone's on the same page and knows what to expect. It's all about having a good communication and relationship and partnership with your funder.  

[00:30:27] Dan: And I know we spoke about this right at the start of the conversation, but, you've accurately just described there the importance of having that engagement and relationship with the funder and coupled with, detailed information to present the package but, what does a typical timeline look like for that? What typically could I expect as a law firm as a turnaround time for that investment committee to go, yeah, we can go with it. Or, is it so varied?  

[00:30:53] Lara: I mean, it is varied. And again, I can only speak for our process, but if we've received that golden package of materials as you've described, we'll look at that and we'll look to have a call with the law firm and the client, within a week of receiving that.  

If we like it, we'll aim to get terms out pretty shortly after that. And then the detailed due diligence process is typically three to four weeks. That includes taking it through the IC. So, you know, I think if your funding process is six weeks, that's pretty good. And all being well, that should be achievable.  

[00:31:33] Dan: Okay. Thank you for giving me, overview on that one. 

Just wanted to understand from a regulatory perspective, is litigation funding, is it a regulated industry?  

[00:31:45] Lara: So, no…the short answer is no.  

Some funders like Orchard are authorized by the F C A. in relation to some of our activities. As I just mentioned, there's the Association of Litigation Funders which has its own code of conduct for members.  

There’s a regulating in the UK. There are rules around shamp and maintenance, which prevent funders from seeking to control the litigation. And of course, you know, the solicitors that are advising their clients on funding arrangements are regulated by the SRA, which provides a layer of protection for payments.  

I think litigation funders are also subject to the scrutiny of the courts in many cases, particularly group claims, where often the funding arrangements are put before the court. 

There’s no formal regulation, but there are voluntary and indirect forms of regulation. It is certainly an ongoing debate regarding regulation in the industry. And I think that's to be expected as it grows and matures. I think the conversation will continue for some time, whether there's a regulator that wants to take it on, I don't know.  

[00:32:53] Dan: Do you think that leaves a bit of a gap given that the industry is not specifically regulated for bad actors, murky sort of operators within the space? 

Have you noticed anything although bad actors coming into that space as well, with it not being regulated and offering these services?  

[00:33:08] Lara: I think it's difficult if you're not a legitimate offering to survive in this industry. And as I say, I think there are enough existing checks within the industry to prevent that. 

I think that question just emphasizes the need to really interrogate who you're working with and ask the right questions in order to get a good idea as to whether the funder that you are talking to is experienced and knows what they're doing and could present a good partner for you. 

[00:33:38] Dan: That makes, yeah. There's a lot with the checks along the way, and due diligence that needs to happen before these cases go ahead, so no doubt that will be picked up within the process.  

With us being very early in adopting a class action regime in the UK, still facing some resistance to the change because of potentially the fear of the US style of mass litigation and lawsuit culture, there is a preconceived idea that class actions could be viewed as a money grabbing exercise and taking advantage of the people that are part of that class, the claimants themselves. 

Why do you think there's a misconception? Are funders really taking more than the fair share of proceeds as an example, and, do you have any views on this? 

[00:34:19] Lara: I mean, in terms of the cost of funding, litigation is expensive. It's time consuming, and it's inherently risky, and the outcome is binary. 

You either win or you lose the case. Where funders lose, they lose the entirety of their investment. So I, I can't speak for other funders, but, at Orchard, we price our investments according to our perception of the risk. And we always seek to ensure our pricing is competitive, so that the claimant should take the lion's share of the damages at the end of the case. 

I think it's often forgotten by critics that funders will have a portfolio of claims and some of those claims will inevitably lose. And so, the pricing for each claim has to reflect that risk as a portfolio risk.  

[00:35:05] Dan: Yeah. And, and ultimately the end result is to ensure that, to your point there, that within this process, regardless of whether your litigation funded law firm representing, is that the claimants themselves get think they were your words, the lion share of the claim itself. So everybody has a role to play in that. 

Yeah, that makes sense. Look, Lara, it's been really informative, from our side and I hope the people that have been listening will feel the same. Thank you for coming on and sharing your insights for a better understanding of how the funding process works as well as putting a few things straight about the role funders play in the market. We really appreciate you taking the time to speak to us today. So, thank you. 

Lara: Thanks very much, Dan. Really enjoyed it.  

Dan: Thanks, Lara.