There are riches in niches and Tom Davey has found gold in the unique space of legal risk management. In the costly and complex world of litigation, Davey helps to bridge the gap by providing both insurance and cash-flow solutions for his clients. “The law is a fundamental part of society and business,” Davey says, “but it is expensive and uncertain, so it’s rewarding helping clients gain access to justice.”
In the late ‘90s in the UK, the Woolf reforms were introduced to the Civil Procedure Rules, to help simplify dispute resolution by reducing the cost and time that courts spent on civil proceedings and making the system more accessible. At the time Davey was establishing his career in the financial services and insurance sector, so when he was offered the role of Director at one of the first ever after-the-event insurance brokers, he jumped at the chance.
After-the-event insurance policies offer certain financial protections that help liberate people looking to pursue a personal injury or negligence claim. Clients are covered if they get hit with unforeseen legal costs – either their own or their opponent’s. Now co-founder and director of Factor Risk Management, Davey guides clients to mitigate uncertainty and works to innovate solutions as a global advisor and broker. Davey believes wholeheartedly that, “You can never do enough to help others.”
Davey is a member of the 2023 Lawdragon 100 Global Leaders in Litigation Finance guide.
Lawdragon: Tell us about the types of services you provide within the legal industry and to whom?
Tom Davey: I am a co-founder and director of Factor Risk Management. We are specialist advisors and brokers of litigation finance and after-the-event legal expenses and contingent legal risk insurance. I help a wide range of clients including law firms, and other professional service companies such as insolvency practitioners and litigation funders, to navigate the complex world of litigation insurance and litigation funding. It is all about mitigating the pinch points of litigation such as legal cost risk, protecting client’s assets, and easing cash flow pressures.
LD: How did you first become interested in risk management?
TD: With the advent of the Woolf reforms, litigation insurance became a fundamental element of the UK legal industry. To be involved in a new market some twenty years ago, which is rare within the insurance industry, was a fascinating and fantastic opportunity for me. I was lucky to be in the right place at the right time. Litigation funding came to prominence in the UK later and addressed the gap in the market where clients needed a solution to cash flow their cases off balance sheets. The law is a fundamental part of society and business but it is expensive and uncertain so it is rewarding helping clients gain access to justice.
LD: What do you like about working with lawyers?
TD: It is a privilege to work with some of the UK’s, and indeed, the world’s best lawyers. I am in a unique position where I can see the skills and expertise of lawyers in action and really get under the hood of the issues and challenges they deal with. Ultimately, the FRM team I and are here to identify problems, find solutions and be effective dealmakers. The professional satisfaction comes from overcoming challenges, and providing clients with the solution they need, as litigation is a stressful and financially draining experience.
LD: What would you say has been the most interesting matter you’ve worked on for a legal client?
To be involved in a new market some twenty years ago, which is rare within the insurance industry, was a fascinating and fantastic opportunity for me.
TD: Litigation that emerged from the Rust Belt industry where workers sued former employees who suffered life changing consequences from working with asbestosis. The dangers of asbestosis were known to the Romans and yet in the 21st century people were still paying the price. The hugely important cases of Fairchild and Maguire helped claimants massively in the face of the defendant insurance industry running a series of cynical defenses.
LD: What trends you are seeing currently in your space?
TD: Collective actions against large corporations are currently keeping me busy. These claims are seeking redress for consumers, or shareholders, where industry bad practice has disadvantaged people, often in significant ways. I worked on a matter recently where retirees lost their life savings by investing in a scheme offered by well-known insurance companies where some of the underlying funds included a fraudulent company. The common theme is that litigation can provide redress to victims in cases where regulators failed to prevent problems arising.
LD: Does Factor Risk Management have any new products or services that have you excited?
TD: Judgment preservation insurance and other contingent risk products are a keen focus for us as a business. We see an increase in clients seeking to lock in the value of hard fought for awards, either by monetizing judgements or insuring the downside risk of appeals.
LD: Interesting. And how is it being received in the industry?
TD: The feedback that we’ve had from some insurers is that our deep understanding of litigation risk and financial structuring gives us an advantage over others. Judgment preservation and contingent risk insurance have significant crossover with the work we already do. Our platform, expertise and markets are already in place.
This family of products is aimed mainly at corporates and professional services firms, and it enables clients to isolate and insulate against specific known legal contingent risks. These are particularly valuable in the context of M&A transactions, without which many deals could not proceed or at a greater cost, or indeed as protection against future litigation.
LD: Let’s go back a little. Can you tell us about your path in this industry? How did you arrive at your current place in the profession?
TD: I entered the insurance industry via a graduate training program from a large international general insurer. I was interested in insurance as one of the three large industries that underpins business in general, the other two being banking and the law. I moved to the broking side fairly quickly and at a time that saw the introduction of litigation insurance. That gave me a career path in a growing sector that quickly included litigation finance.
I completed a Geography BSc, with honors, at Manchester University but did as much of the human geography side as possible, particularly economics. This gave me a helpful understanding of business and industry but not in a way that an MBA might be more immediately applicable to running a business. I enjoy my geography degree as it is all about people, places, and ideas which broadens minds, and that is never a bad thing. My colleagues joke that I have excellent navigational skills.
The common theme is that litigation can provide redress to victims in cases where regulators failed to prevent problems arising.
LD: As a student, what type of job did you imagine yourself in?
TD: At secondary school, I wanted to be a marine biologist! I couldn’t be doing something more different. Having spent the vast majority of my career in the litigation industry, and at a senior level, the wealth of rewarding experiences means now I can’t easily imagine doing anything else. Most days, I enjoy the work. It has been brilliant being able to share the experience of setting up FRM with my two friends and colleagues Mo Patel and Brandon Deme. I learn something new every day from them, and hope they get occasional nuggets from me.
LD: What nuggets of advice do you have now for current students or young professionals who wish to have a similar type of career?
TD: Financial reward is important but you must find your career rewarding and enjoyable. Work hard, be enthusiastic, trust your instincts and be brave.
LD: How has your profession changed since the early part of your career?
TD: The litigation funding and insurance industry has become much larger, globally outward looking, with better quality insurers and funders. There is a cohort of professionals who have grown up with the industry. They now have substantial experience and the expertise to help the next generation and the industry at large to thrive into the future as a matured sector.
LD: Is there a matter or client that stands out as particularly memorable to you for certain reasons?
TD: I worked with a sole practitioner in the West Country who represented the families of women who had suffered fatal attacks by their partners. There had invariably been severe failings on the part of the police forces and local authorities. Fully at risk for his fees, he fought tooth and nail to secure compensation and recognition for those families from government bodies who were fully prepared to defend the indefensible at the taxpayers' expense often at 10 times the cost of my lawyer client.
LD: What would you say this industry has taught you?
TD: You must understand clients’ attitudes to risk and their motivations to be able to fully and properly advise them on the best solutions. Personally, and as a business, we must listen carefully to our clients, have their outcomes at the heart of what we do, and always place their interests ahead of all else.
LD: Do you have any negative experiences in advising lawyers that taught you new approaches, or caused you to reconsider working with lawyers?
TD: It would be unrealistic to say that I have never had any negative experiences working with lawyers. The negative experiences are few and often come about where there is no alignment of interest. People sometimes harbor old-fashioned views of brokers and prefer to go directly to providers. What happens if your preferred provider lets you down? We operate a disciplined and professional market exercise and expect this to be held up to a high standard. I promote a transparent way of working so that clients and lawyers can fully understand their options.
LD: What advice would you give potential clients in terms of how to most productively work with a firm like yours?
Financial reward is important but you must find your career rewarding and enjoyable. Work hard, be enthusiastic, trust your instincts and be brave.
TD: As an advisor, we are the client’s agent. I encourage them not to hold back. We need to know everything about the dispute in question “warts and all.” We have to distill complex facts into a narrative that insurers and funders can quickly understand and so see the merit of the opportunity.
LD: How important is it to be innovative when it comes to helping your clients with their business?
LD: Innovation is at the heart of FRM. Where a product or service doesn’t exist, we are well placed to address that requirement through our expertise and market connections. However, any new venture needs to come within our mission statement which focuses on dispute products and solutions.
There are interesting developments taking place within the GLO space regarding contingency fee insurance where law firms are seeking to de-risk their exposure to large collective actions and contingent fees.
LD: What compelled you and your partners to establish Factor Risk Management?
TD: I felt that no company in the industry was delivering on the potential that is out there. My colleagues Brandon and Mo had similar thoughts and we wanted to prove to ourselves and others that there is a need for a high-quality broker that is truly expert in both insurance and funding.
Our plan is to consolidate our position in the market, lock in the growth we have achieved, and build up and train our team to continue to maintain the standards we demand of ourselves and the standards that our clients rightly expect.
LD: Tell us what sets Factor Risk Management apart from competitors? How is it unique?
TD: We offer a holistic ‘one stop shop’ for funding and insurance. Our team has a powerful mix of in-depth skills across legal, finance and insurance coupled with a long track record in the industry. We respect our competitors and know that there are good people out there but very few who have the experience and expertise that we do across both funding and insurance.
LD: How has the work changed since the start of your career?
TD: The volume and rate of transactions within the litigation space has increased as a factor of the industry becoming truly global. As a brokerage you need a robust platform that quickly adapts to market changes both in terms of providers and client requirements. We are now serving clients across multiple jurisdictions which brings a regulatory cost burden. The challenges are what makes our work so interesting.
LD: What keeps you busy outside of the office?
TD: You can never do enough to help others, and I have helped on various projects over the years with a community center redevelopment in South London where I lived at the time. I am vicariously living through a second sporting career watching my children playing sports. And I recently got back into cycling – such a MAMIL stereotype! That’s an acronym for “middle aged man in lycra!”
LD: Ha! Do you have a favorite book or movie about the law?
TD: “Bleak House,” because of Dickens' somewhat jaundiced view of the law and the legendary Jarndyce and Jarndyce case. I found “The People v. OJ Simpson” to be a brilliant TV series that dramatized that seminal and divisive trial. Although I probably remember the slow-motion car chase the best.
LD: If you weren’t in your current job, what would you be doing now?
TD: Before setting up FRM I threatened my family that I would become a geography teacher. I stick by that as I have always been good at coloring.