Let’s say, with this claim I’m bringing to you, I’m a law firm, so I still charge my fees. The risk that I’m putting in, is it purely on my fees and my time? How do you look at the risk balance between you, as a funder, and me, as a law firm?

That differs according to jurisdiction and what is permissible. In the US, for example, where contingency fees are permissible, law firms can also share in the risk of the case. In those circumstances, law firms may already be funding cases themselves and they have the taken the risk onto their own balance sheet, in terms of how much of their fees they are being paid up front and how much they have deferred, on a contingent basis. They might then wish us to step in, at a later point, to de-risk that case or to free up some capital so that they can take on more cases or various other scenarios.

Those type of arrangements are not permissible in much of Asia. It is allowed in China but in Singapore and Hong Kong, for example, you can’t have contingency fees. Typically, yes, the firm will be being paid, usually on an hourly rate, or it might be on some kind of capped fee arrangement or there might be stages and certain payments applied to the various stages of a proceedings. There are any number of different fee arrangements that might be agreed upon and we can work around whatever those arrangements are.

How does the difference in the structure of contingency fees in the US and Asia impact the pricing and competition in the market?

In terms of pricing, if you’ve got a law firm that is acting on contingency, it means, typically, we are not being asked to provide as much capital, which means it will then be less costly to the client. But that is equally the case in Asia if you have a well-resourced client who simply wants us to provide 50% of the ongoing costs and they will cover the rest. It’s not necessarily determinative of the price, in terms of competition.

I think the biggest difference it makes is that, in places where contingency fees are allowed, we can fund law firms themselves and we will be funding a portfolio of claims, with a particular law firm. In Asia, we can’t do that. We can fund portfolios, but they would be portfolios for the same client or cases on a standalone basis for the client, but we are not actually funding law firms.

Does the fact that you are funding law firms in the US mean that the potential value add is lower? How does the value add that you are providing differ?

No; I think the value add is still the same. The proposition is just simply where the risk is allocated. In a case where you have a firm acting on a contingency basis and we are also funding, the client has managed to shift the risk to the law firm and the funder. Whereas if it is a contingency only arrangement, the risk has only been shifted to the firm. If it is a funded only case, with no contingency fee, then the risk has just been shifted to us. That’s the real difference, I think.