Litigation funding is an increasingly-popular tool for attorneys and clients to share the risk and reward of litigation with third-party investors, and for investors to capitalize on the uncorrelated returns generated by legal-driven revenue. However, the term "litigation-" or "legal-" funding actually encompasses a handful of products, which vary based on borrower profile, stage and sector of litigation, use of proceeds, and ultimately, cost of capital and risk-reward profile. This webinar examines three funding products -- case fundings, law firm loans, and portfolio fundings -- and aims to inform attorneys on best solutions for their firms and clients, and provide an overview for institutional investors looking to allocate capital to litigations. To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/a-menu-of-products-for-investors-and-lawyers-2021/

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Practical and entertaining education for
attorneys, accountants, business owners and
executives, and investors.

4. Disclaimer
The material in this webinar is for informational purposes only. It should not be considered
legal, financial or other professional advice. You should consult with an attorney or other
appropriate professional to determine what may be best for your individual needs. While
Financial Poise™ takes reasonable steps to ensure that information it publishes is accurate,
Financial Poise™ makes no guaranty in this regard.
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5. Meet the Faculty
MODERATOR:
Evan Fried - Greybridge Capital LLC
PANELISTS:
Dai Wai Chin Feman - Parabellum Capital
Jeffery Lula - GLS Capital, LLC
David Perla - Burford Capital
Jeremy Waitzman - Sugar Felsenthal Grais & Helsinger LLP
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6. About This Webinar
A Menu of Products for Investors and Lawyers
Litigation funding is an increasingly-popular tool for attorneys and clients to share the risk and
reward of litigation with third-party investors, and for investors to capitalize on the
uncorrelated returns generated by legal-driven revenue. However, the term "litigation-" or
"legal-" funding actually encompasses a handful of products, which vary based on borrower
profile, stage and sector of litigation, use of proceeds, and ultimately, cost of capital and risk-
reward profile. This webinar examines three funding products -- case fundings, law firm loans,
and portfolio fundings -- and aims to inform attorneys on best solutions for their firms and
clients, and provide an overview for institutional investors looking to allocate capital to
litigations.
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7. About This Series
Commercial Litigation Funding 101
This webinar series discusses advanced topics in the field of litigation funding. Once a fledgling
industry predominantly used in the Commonwealth nations, litigation funding has over the past ten
years becomes a well-accepted and prevalent practice in the United States. As the industry has
evolved, so too have the menu of available products, strategic decisions made by funders and
practitioners, and types of investors. This three-part series is geared towards educating attorneys
and clients on legal/ethical, strategic, and business decisions when considering litigation
funding, and investors seeking to learn about an increasingly mainstream asset class. Panelists
include preeminent experts in the field of litigation funding, including academics who have written
on the topic, investment managers at preeminent litigation funders, litigators who have used
funding products, and independent litigation funding advisors.
Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and
executives without much background in these areas, yet is of primary value to attorneys, accountants, and other
seasoned professionals. Each episode brings you into engaging, sometimes humorous, conversations designed to
entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes so that
participants will enhance their knowledge of this area whether they attend one, some, or all episodes.
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8. Episodes in this Series
#1: An Introduction to a New Yet Old Funding Alternative
Premiere date: 3/11/21
#2: A Menu of Products for Investors and Lawyers
Premiere date: 4/8/21
#3: Three Case Studies
Premiere date: 5/6/21
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9. Episode #2
A Menu of Products for Investors and Lawyers
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10. Litigation Funding: A Broad Definition
Litigation or legal funding is the “funding of litigation activities by entities other than
the parties themselves, their counsel, or other entities with a pre-existing
contractual relationship with one of the parties.”
 Source: American Bar Association Commission on Ethics 20/20, “White Paper on Alternative
Litigation Finance”
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11. How firms and companies use legal finance
Law firms
• Maintain hourly clients and expand into new areas
• Manage risk on large-dollar contingency or
alternative fee matters
• Use going-forward portfolios to offer faster, more
flexible financing solutions to prospective clients
• Leverage financing as a marketing and new
business tool
In-house legal teams
• Reduce cost and risk of litigation
• Monetize litigation assets at beginning of a
case, or after judgment or appeal
• Secure corporate debt facilities
• Finance, sell, or collect uncollected judgments
• Secure litigation-related insurance and risk
solutions
• Trace assets and enforce judgments against
litigation debtors
74%
Three quarters of lawyers
whose firms have not used
litigation finance expect to do
so in the next two years
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12. Typical Litigation Funding “Parties”
• Plaintiffs
• Attorneys and Law Firms
• Funders
• Investors
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13. Litigation Funding: Segmentation
• Consumer vs. Commercial Funding
• Early vs. Late Stage Funding
• Domestic vs. International Funding
• Funder Structures
• Lawyer & Law Firm Characteristics
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14. Metrics for Analysis
• Risk
• Use of Proceeds
• Alignment
• Costs of Capital
• Funded Party Profile
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15. Metrics for Analysis: Risk
• “Risk” is the probability of occurrence of losses relative to the expected return on any
particular investment
 Litigation is an inherently risky underlying investment
 Risk varies dramatically based on type of litigation -- e.g., contract, intellectual
property, antitrust
 Litigation risk is not constant, but rather fluctuates based on litigation
developments
 Funded parties may own diversified litigation risk, depending on the circumstances
 Risk also includes headline and regulatory risk
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16. Metrics for Analysis: Use of Proceeds
• “Use of Proceeds” -- for purposes of this presentation -- will refer to how the funded
party (the plaintiff or the attorney) intends to use the funding
 Proceeds may be used for direct litigation costs, i.e., attorneys’ fees and/or costs
 “Hard costs” includes discovery costs, experts’ fees, filing costs; basically anything
other than attorneys’ fees
 Funding arrangements may be used for non-litigation needs, such as operational
needs of plaintiff or so that plaintiff can recognize revenue
 In other situations, attorneys may seek funding for use across firm-wide activity, not
just one specific litigation
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17. Metrics for Analysis: Alignment
• “Alignment” is the extent to which investor and investee have parallel incentives:
 Popular new “buzzword” in investing world
 Investors’ desire to protect downside by not dis-incentivising funded parties
 Protection against information asymmetry between buyer and seller
 Preserve upside in high-end, best-case scenarios
 Create opportunity for recurring or repeated business
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18. Metrics for Analysis: Cost of Capital
• “Cost of Capital” is the required rate of return on a portfolio’s existing securities
 Used to evaluate new projects
 Minimum return investors/funders expect for providing capital--thereby setting a
benchmark
 Impacts the types of investments palatable to institutional investors
 Impacts the “pricing” of individual funding products offered to clients
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19. Metrics for Analysis: Funded Party Profile
• “Funded Party” -- for purposes of this presentation -- will refer to the party, i.e., the
attorney or the plaintiff, ultimately liable to repay the funder
 Decision is driven by a variety of factors
 Volume and diversification of litigation risk owned by Funded Party
 Appetite for risk-sharing by the Funded Party
 Willingness to contribute additional collateral to funding arrangement
 Legal/ethical considerations--including champerty and attorney fee-splitting
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20. Types of Products
• Single case fundings
• Portfolio fundings
• “Other”- e.g. Loans, “insurance like” products, factoring
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21. Product #1: Case Funding
• “Case Funding” is providing capital for a case (or group of cases) owned by one
particular plaintiff (or group of plaintiffs).
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22. | 22
L A W F I R M
Invest Portion
of Fee Budget
Portion of
Recovery
Client Recovery
Pays Portion of Costs
Invest Portion
of Fee Budget
Agreed upon
Contingency
Single-Case
Risk Sharing
H O W D O E S I T W O R K ?
Funder
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23. Case Funding Example
• XYZ, a failing technology company, seeks $5M in litigation funding, potential damages of
$50M
 Alternative Fee Arrangement: $3M to support attorney, who is working under
“hybrid contingency fee arrangement”
 Hard costs: $1M for out-of-pocket expenses associated with litigation
 Operational costs: $1M as an “advance” to plaintiff, secured by litigation proceeds
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24. Case Funding: Risk
• Two assumptions: (i) client is requesting funding before complaint and (ii) litigation
is “bet the company” intellectual property and trade secret litigation
 Type of litigation
o Risky issues relating to intellectual property
o Early phase of litigation means no benefit of defendants’ discovery
 Phase risk
o Litigation has not passed any substantive or procedural litigation hurdles
o No meaningful track record of litigant behavior
 Opportunity for diversification
o Litigant not likely to be a repeat litigant
o Each claim is likely correlated to first litigation; litigation may be scalable, but not
diversifiable
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25. Case Funding: Use of Proceeds and Alignment
• Use of Proceeds & Alignment tend to be analyzed together
 Alternative Fee Arrangements
o Attorneys may invest in (take on contingency) the cases they “love,” and have
funded the cases they “like”
o The greater the attorney contingency, the greater the alignment
o What is the optimal “skin in the game”?
 Hard Costs
o The greater the ratio of hard costs to attorney costs, the greater the alignment
o Participation by client and/or attorney adds to alignment
 Advance to Client
o Client has final settlement authority
o Amounts funded to client raise the “optimal settlement” figure
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26. Case Funding: Funded Party and Cost of Capital
 Inherent risk requires high cost of capital
o Multiple of invested capital (MOIC)
o Plaintiff must recover at least 10-figure recovery
o Must satisfy funder’s principal plus priority return
o Attorney’s contingency: further “equity”
o Substantial “venture capital-like” risk is best suited for plaintiff, not attorney
funding
 Fee Splitting
o N/A
o “Advance” to client creates structural impediment to funding attorney
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27. Case Funding: Take-Aways
• Case Fundings -- typically thought of “Litigation Funding 1.0” -- are not perfect:
 Case fundings entail substantial risk, which (i) requires high cost of capital, and (ii) is
challenging to diversify
 Use of Proceeds makes alignment challenging, further adding to risk
 High cost of capital means case funding is best suited for investors seeking multiples
of invested capital -- i.e., equity-, not debt-like returns
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28. Case Funding: Take-Aways
• In describing a shift from 100% case funding in 2009 to 5% case funding in 2017:
• “The reason for this dynamic in the business is that single-case litigation finance is
expensive. That’s because single-cases come with a significant risk of loss, so when
you lose a single case investment, you lose everything.” -- Chris Bogart, CEO of Burford
Capital, quoted in The Lawyer
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29. Product #2: Portfolio Funding
• A “portfolio funding” is a transaction secured by proceeds from a plurality of
unrelated litigation due either to a law firm or a particular client
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Portfolio
Risk Sharing
H O W D O E S I T
W O R K ?
L A W F I R M
Legal Services Firm Receives Portion of
Proceeds
Invest Portion of
Hourly Fees/Costs in
Tranches
Recover Agreed Upon
Portion of Fees
FUNDER
Plaintiff Plaintiff Plaintiff Defense
Client Case 4
Client Case 1 Client Case 2 Client Case 3
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31. Portfolio Funding Example
• SmallBall LLP, a newly-formed firm of former BigLaw attorneys seeks $10M to support its
fees and expenses of three, unrelated cases it intends to litigate under alternative fee
arrangements
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32. Portfolio Funding: Risk
• Risk falls between Case Funding and Law Firm loan
 Litigation risk
o Litigations are typically commercial; individually, they entail risk similar to case
fundings
o But, collectively, they create a diversified portfolio
 New risks:
o Complexity of fee-splitting rules -- fundings are a “hybrid”
o It is well-established that a funder can receive a capped multiple of invested
capital
o But, what about an uncapped percentage?
o With plaintiff portfolios, no fee-splitting concern
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33. Portfolio Funding: Use of Proceeds and Alignment
• Confronting “alignment” among personalities
 Use of Proceeds
o Funds are best suited for a portfolio of cases among one or more attorneys or
plaintiffs
o Contracts can be difficult to structure--need to convene unrelated clients and/or
attorneys
 Alignment
o Litigator incentives may differ from those of other attorneys at the firm
o Funding contracts may require restructuring in the event of attorney shake-up
o Funded Party must strike a balance between ability to service funding agreement
with desire to have cash remaining
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34. Portfolio Funding: Funded Party and Cost of Capital
• Portfolio Funding is a healthy mix of risk, return, and aligned incentives
 Funded Party achieve lower cost of capital than case funding
o Uncorrelated assets provide lower risk profile, allowing lower cost of capital
o Unsecured nature of assets commands cost of capital greater than law firm loans
o Diversified portfolio means opportunity for early generation of cash to service
funding agreement
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35. Portfolio Funding: Funded Party and Cost of Capital
 Funders have found promise in scalability
o Major, mainstream funders have demonstrated some shift from case fundings to
portfolio fundings
o On law firm side, increasing acceptance of use of funding and comfort with
legal/ethical concerns
o On plaintiff side, large appetite for portfolio funding in bankruptcy and technology
litigation
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36. Product #3: The “Others”
• An “attorney loan” is a loan secured by all or a portion of a law firm’s and/or the
partners’ assets.
• Adverse Costs “Insurance” are products that cover the adverse costs (e.g., attorneys’
fees) due to a prevailing party.
• Legal Receivable Factoring is the purchase of a legal “receivable,” where the receivable
is no longer subject to “litigation” risk, just collection and timing risk.
• Litigation-driven special situations trade is the trade of a public equity
(stocks, bonds, options) on the basis of a hypothesis concerning litigation impacting that
company.
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37. About the Faculty
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38. About The Faculty
Evan Fried - efried@grbridge.com
Evan Fried is an attorney who has worked in litigation finance since 2007. He is currently a
Principal at Greybridge Capital LLC, a commercial litigation funding outfit, and Slarskey LLC,
a boutique commercial litigation firm. Mr. Fried was previously a partner at 1624 Capital, a
specialty finance company focused on investments in technology/intellectual property
litigation. He has written and spoken on ethical considerations of litigation finding. Mr. Fried
began his career in the New York office of Winston & Strawn LLP and a family office that was
an early player in litigation finance. Mr. Fried received his J.D. from New York University
School of Law and his B.S. in Industrial and Labor Relations from Cornell University.
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39. About The Faculty
Dai Wai Chin Feman - daiwai@parabellumcap.com
Dai Wai is responsible for the development and execution of Parabellum’s commercial litigation
investment strategies. Prior to joining Parabellum, Dai Wai was a litigation partner at Dorsey & Whitney
LLP, where he specialized in commercial and antitrust litigation. Dai Wai has broad experience in
complex disputes concerning breaches of contract, competition, tortious interference, trade secrets,
restrictive covenants, licensing, rights of first refusal, shareholder oppression, soft intellectual property,
and securities. He has advised and represented clients ranging from Fortune 100 companies to closely-
held family businesses through all phases of litigation, from case assessment through trial, appeal, and
enforcement proceedings. While in private practice, Dai Wai was named a Super Lawyers Rising Star in
Business Litigation for four consecutive years. Dai Wai received his A.B., cum laude, from Georgetown
University and his J.D. from New York University School of Law. He is active in the Asian American Bar
Association of New York, where he is a board member, Vice-Chair of the Judiciary Committee, and
former Co-Chair of the Litigation Committee. He is also a Fellow of the New York City Bar Association
Leadership Council on Legal Diversity, a member of the New York City Bar Association’s Litigation
Funding Working Group, and a member of the New York City Bar Association’s Professional Ethics
Committee.
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40. Jeffery Lula - jlula@glscap.com
Jeffery Lula serves as a Principal at GLS and is responsible for due diligence and monitoring of commercial
litigation and arbitration-related investments.
Prior to joining GLS, Jeff was a litigation partner at Kirkland & Ellis LLP in Chicago. During his nine years at
Kirkland, Jeff’s practice focused on a wide variety of complex commercial litigation, including contract
disputes, bankruptcy litigation, corporate mismanagement, fraudulent transfer litigation, and insurance
litigation. His experience extends to all stages of litigation and appeal, and he also counseled clients during
internal investigations prior to litigation or arbitration. He has represented clients in a variety of fields, including
private equity firms, insurance carriers, and large Chapter 11 debtors.
Jeff holds a J.D. from the University of Chicago Law School, where he served as an Articles’ Editor of the
University of Chicago Law Review, and a B.S. from University of Illinois.
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About The Faculty

41. About The Faculty
Jeremy Waitzman - jwaitzman@sfgh.com
Jeremy Waitzman advises his clients on significant transactions and operational issues in
their businesses. Described by clients as “an essential business advisor” and “a partner in the
success of my business,” Jeremy has substantial experience representing businesses of all
types and sizes from inception, guiding them through significant growth, and often through
ownership’s exit. His clients include privately-held middle market and emerging growth
companies, family offices/funds, investors, C-level executives, boards of directors, family-
owned businesses and entrepreneurs. Jeremy counsels clients in the areas of corporate
law, mergers & acquisitions, private placements, general contract law and often acts as
outside general counsel for his clients. Jeremy represents individuals, closely held
businesses, start-up companies and serves as outside counsel to several large
corporations. His work with companies often includes strategies for creation of enterprise
value.
To read more, go to: https://www.financialpoise.com/webinar-faculty/jeremy-waitzman/
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42. About The Faculty
David Perla - DPerla@burfordcapital.com
David Perla is an entrepreneur, business builder and legal industry leader, with expertise in
building profitable, high-growth legal and technology-driven businesses. He is currently
President – Bloomberg BNA Legal Division/Bloomberg Law. He previously served as
Chairman and CEO of Matterhorn Transactions, and as Co-Founder and Managing Director
of 1991 Ventures. He is also a Co-Founder and former Co-CEO of Pangea3, a Sequoia
Capital portfolio company acquired by Thomson Reuters in 2010. He speaks frequently and is
quoted widely on entrepreneurship, cross-border businesses, legal innovation, outsourcing
and offshoring. David has been featured in numerous media outlets, including Inside
Counsel, the National Law Journal, the New York Law Journal, Bloomberg, Crain’s, Inc.
Magazine, Fox Business News, and The American Lawyer. He graduated cum laude from the
University of Pennsylvania, from which he also earned his law degree, and was the winner of
the school’s Keedy Cup Moot Court Competition. He am a member of the New York and
Massachusetts Bars.
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43. Questions or Comments?
If you have any questions about this webinar that you did not get to ask during the live
premiere, or if you are watching this webinar On Demand, please do not hesitate to email us
at info@financialpoise.com with any questions or comments you may have. Please include
the name of the webinar in your email and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes
only. It has been prepared primarily for attorneys and accountants for use in the pursuit of
their continuing legal education and continuing professional education.
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44. About Financial Poise
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