There are times, Timothy Mayer concedes, when he misses the cut and thrust of a courtroom skirmish, the adrenalin rush, the wielding of logical and linguistic agility to outduel the opposition. Especially when the stakes are high.
But then the U.K. barrister realizes, once again, that litigation finance – the industry he’s now worked in for a longer period of time than he spent practicing law – offers the same thrill, albeit in a boardroom rather than a courtroom.
“You still have the cut and thrust of presenting in terms of your investment committee, the cut and thrust of negotiating a variation in the deal because there are some pressure points on the economics of the case you're funding,” says the London-based senior investment officer at Therium Capital Management. “And you've got very, very clever lawyers in front of you. You've very clever clients from a financial background. So you are always on your toes.”
Mayer has advised on claims valued at more than $15B at Therium, a firm organized in 2009 that’s now one of the world’s oldest litigation funders and boasts business on five continents.
Entering the industry when it was still in its infancy in the UK has afforded him singular influence on its development.
Mayer served as a director of the Association of Litigation Funders of England, an early - and voluntary - self-regulatory group, and was a member of the Third-Party Funding Working Party that drafted the Code of Conduct for Litigation Funders in England and Wales after Lord Justice Rupert Jackson’s review of civil suit costs in 2010.
“I was quite lucky, really, because the funding market was a really new place,” he says. “There were very few players, and of course that leads to all sorts of positives in terms of your exposure. You're building your reputation because you're involved in so much.”
Today, the industry’s growth has surpassed even his wildest expectations, mushrooming from a business that underwrote simple disputes for parties that lacked the funds to bring suit on their own to a sophisticated provider of funds for huge, multi-claimant cases with a variety of financing models.
“One of the reasons there are more of these cases now, is not simply because defendants are misbehaving more than they ever did, it’s because there are means available for claimants to bring their claims and to spread their risk,” Mayer says. “Along with the claimants and the skilled lawyers specialized in their particular fields, we're pushing the envelope to develop a system which one hopes will deliver access to justice.”
Lawdragon: The industry really has leveled the playing field for plaintiffs. Tell me what drew you into the law in the first place. Did you know lawyers growing up? Why did you go to law school?
Timothy Mayer: I didn't know any lawyers in the family. My father was a professor, my mum was a teacher, and my grandparents had either been down the pit [miners], or delivered agricultural products around the North Midlands’ countryside. I did OK at school and, I don’t remember why, but I thought that law might be quite interesting. And then of course, as soon as you have the idea, there are always helpful contacts locally who can help you in terms of your career. You can spend time with them, which is what I did. We have a bifurcated legal system in England, with barristers being specialist advocates, and solicitors managing cases on a day-to-day basis. I went down the advocacy route and spent most of my time in court, arguing cases. And I turned my hand to a broad range of commercial disputes for all sorts of different clients.
I'd been doing that probably for about 10 years, I think, when I saw an advert in a professional publication saying, "Litigation funding, looking for an in-house barrister," and I thought, "Ooh, it sounds interesting." It was right at the beginning really, of the industry in the U.K. It had been around of course, in Australia and, funnily enough, in central Europe, particularly in Germany. And it was a German funder – a division of Allianz, the large insurance company - that I was talking to that wanted to support a business that it had just set up in the U.K., in London. The rest, as they say, is history. I later moved to Therium, and I will have been here for seven years in October.
Because the industry was small, I became known and was co-opted onto the board of the Association of Litigation Funders. I did that for a number of years and, oddly enough, met Neil Purslow, one of Therium’s founders. I just happened to be in the right place at the right time and was learning as I went.
LD: The association seems like, in hindsight, such a good idea, because of the various interests that were pushing litigation funding at the time. I really do think that it paved the road nicely for what's now such a booming business.
TM: Yes, it was sensible. One, we had to do it because the Ministry of Justice wanted us to do so, but it was pioneering, because there was no equivalent around the globe, nothing in Australia, nothing in Europe.
LD: From the U.S. perspective, it conferred more legitimacy on the U.K. funders and helped propel litigation finance to its current popularity in the U.S.
TM: There's a constant positioning required, because at the end of the day, the funders, whether they're fund managers or whether they are the funds themselves who are investing in disputes, are looking to make a return for investors.
The Jackson Review, of course, talked about the benefits of funding and acknowledged that funding was important to facilitate access to justice. There was a very positive air around funding at the time. While funding is still recognized as a part of the litigation landscape here, more recently there’s been a shift in the judicial perception, an acknowledgment that access to justice is not the primary driver of a fund investing in a dispute. It's about making are turn on investment. And that influences the Court on occasion.
LD: It is interesting that litigation funding certainly increases access to justice at the same time it is premised on making a financial return. Is there a tension?
TM: Are they competing? No, I don't think they are, but you can't view access to justice solely through that lens. You have to accept that funders are looking for a return. The problem is that if that aspect of funding becomes the main focus, then of course, people start to get worried about control and whether the funders are influencing the management of the dispute and will unreasonably impose their views on settlement. These are all points that have been taken by the likes of the U.S. Chamber, who appear to be very worried – wrongly in my view – about the impact of funding without really strict regulation. That’s just the nature of the beast, and you'll always have to deal with those arguments.
But, frankly, when I think of the kind of disputes that Therium is funding now, in the U.K. and in Europe and the U.S., it underpins the access-to-justice argument, especially in securities litigation, in competition and antitrust claims and consumer litigation.
The issues at stake in cases such as the Volkswagen emissions scandal, data-breach claims and so forth are not really economically viable when you’ve got just one claimant; they have to be run on a ‘class’ basis. The funders are taking a significant risk, not only in terms of the cases themselves and whether they win or lose, but also because, for instance in our jurisdiction, you have an incipient class-action process which is being developed, unlike in say the United States or Australia, to a lesser extent.
We've seen cases where the judiciary has pushed back on using certain procedural rules as a means to bring class-actions. So, of course it's peaks and troughs. We've suffered a few losses.
LD: Can you tell me a little bit about your focus at Therium now and the kinds of cases that you're overseeing or managing?
TM: I’m a Senior Investment Officer. My experience in the market sees me involved in all sorts of different claims. I do some class-action work, a sizeable chunk of international arbitration work, and insolvency and bankruptcy work, both in our jurisdiction and internationally.
At Therium, our approach is for individuals to take cases ‘from cradle to grave’, so to speak. I’m very much involved in deal origination, diligencing claims and structuring the funding, papering the deals, managing them through their lifespan, and then, of course, dealing with their – hopefully successful - conclusion.
Given the nature of this asset class, the asset management can be very involved, whether it be cases needing more funding or defendants seeking security for costs from funders, when we’re actually involved in the dispute as a party for that purpose and have to respond appropriately.
Of course, management also involves dealing with the clients and the lawyers on the one hand and the investors on the other. You're reporting to your investors. You're talking to your investors.
Some are relatively passive, others want to be involved a little more. And understandably they will have their own preferences and risk appetite. They will have their own committees to report to. So you have to be on your mettle. I think it helps, the fact that I have the experience I have. And I suppose that's why I sit where I do in the business, because I'm able to deal with all of the issues and all the topics that I've just described, really.
LD: Are you surprised at how important litigation funding has become in legal disputes?
TM: It’s been quite a journey. In the beginning, it was pretty much single cases, maybe one or two defendants on the other side, but generally you might have just a bilateral dispute, one claimant and one defendant. Now, in terms of the class-action system, it has driven new rules and the funding is vital to the learning in that particular area. So that's a complete sea change, I think. There's a real maturity now about the space there. I think, also, it's more sophisticated.
You're sitting behind a law firm. You're funding the law firm. You're sitting behind a corporate. You've got a portfolio deal. It's a combination of debt and equity. And then it becomes a corporate finance tool. I'm more front and center on the disputes. When it's turning more into corporate finance, that's a slightly different area. But again, is it surprising? No, because finance just deals with everything, doesn't it?