Third Party Funding
The Third Party Funding industry is early-stage and dynamic. In perhaps overly simplified terms, the industry involves a third party who pays, on a non-recourse basis, the legal and other prosecution costs of pursuing a meritorious commercial claim, with a return to the third party on success.
No other financial or investment industry, such as banking, is interested or equipped to address the risks and other complications inherent in litigation. In a global economy fraught with financial distress and economic unsteadiness, third party funding fills a void.
Claimants’ Use of and Challenges with Funding
Because of the industry’s youth, the claimant market is mostly unaware of the industry. Even those aware of it, often do not sufficiently understand its many subtleties, complexities and ongoing rapid changes, nor how to best understand and access funding.
The problems are especially acute because institutional capital supply appears acutely less than market demand. That gap is growing as demand growth outpaces institutional supply growth.
Challenges and issues therefore abound, and are often daunting. The market needs help.
Fulbrook was created to offer help. We are an independent expert on and in the industry. We are dedicated to representing claimants in learning about, understanding, and sourcing, the advantages available in the industry. We also try to improve various aspects of the industry’s capacity to better serve the claimants. We are — we believe and hope — a unique beneficial addition.
Fulbrook deploys a skilled team of internal and external specialists. Our specialists are assembled from various national and international disciplines. We receive requests to assist from claimants worldwide. We offer diversified services, explaining the industry and its opportunities, evaluating and enhancing the claims and their prospects, accessing capital from investors (which Fulbrook has relationships with and trust in), negotiating funding agreements, supporting and where appropriate improving the prosecution and resolution of the claims. We emphasize patents, international arbitrations, insolvency and related matters, and claims which are in their essence breach of contract cases (regardless of classification).
Fulbrook Founder and Chair
Fulbrook’s Founder and Chairman, Selvyn Seidel, is an experienced, diversified, and respected professional in the area. He spent over 40 years managing and conducting complex commercial litigations, much of that as a distinguished international litigator and manager. Four years ago, in 2009, he co-founded, and then chaired, Burford, a public third party funding company that (while he was chair) within a couple of years became the largest in the world. He writes and teaches widely on Third Party Funding and high stakes litigation — at Foundations including the RAND Institute of Civil Justice, and at law schools including Harvard, Columbia and its Center for International Arbitration, Berkeley, NYU, and Oxford University. In a study published at the end of 2012 that included a chapter on Third Party Funding, he was described as “probably the front-runner in the industry.”
Purpose and Structure of Homepage
Because the market and industry are of recent vintage and complicated — each in their own right and even more so together — our homepage is more detailed than most. We have prepared it to assist in explaining with somewhat more rather than fewer words, and with graphics and other visuals.
We have tried to tailor the homepage to be useful to a wide spectrum of reader interest and need. Hopefully this introduction, with our stated purpose, will assist in achieving the goals of the homepage.
Third Party Funding
The Third Party Funding industry advances capital to support the heavy legal and other prosecution costs of valid commercial litigation claims. If the claim is successful, the Funder is compensated under various formulae tied to the claim’s success. If unsuccessful, that is the Funder’s loss. The industry is young, complex, expanding, and dynamic. It is changing daily; has unsurprising growing pains; and sees an array of issues being debated and queued up that demand attention.
Claimants, and Their Challenges
Claimants thus face daunting challenges. Claimants’ concerns are compounded because the challenges of each are unique; each claim differs from the next, as does one funder from the next, like fingerprints. In the end, there is the over-arching problem that one size does not fit all. Indeed, each claimant and funder has its own personality, its special needs, its special solutions.
For the claimant world, there is a further problem. Demand for funding exceeds supply, by far.
Coupled with these problems is the undeniable fact that the claimants, as a market and individually, need help in understanding a complex industry, navigating its rough waters, and finding the best solutions that the industry has to offer.
Fulbrook’s creation was inspired by the claimants’ challenges. We are an independent expert advisor committed to supporting the market and, within the market, various individual claimants. Before Fulbrook, no other known comparable independent expert advisor was available to look after the claimants’ genuine interests. Our mission is thus to be a claimant-centric force.
Within this general framework, Fulbrook specializes in specific types of claims: patents, international arbitration, bankruptcy (or other dire financial distress situations), and breach of contract. On exceptional occasions, we accept claims in other areas. In all our activities, we encourage and arrange funding for mediation, if appropriate. To further focus our activity, we identify and emphasize specific zones (a) within a practice area, such as International Trade Claims, in the patent area, claims against certain Sovereigns in the international arbitration treaty area, and insolvency and bankruptcy claims in the financial distress area, and/or (b) within a particular jurisdictional area, such as New York, D.C., California, London, and Hong Kong.
We attract many claimants. One reason is nothing more than that demand exceeds supply by a wide margin. Another is that the market needs information and help through uncharted waters. A third is that there are very few entities that the market can turn to for assistance.
An additional, all-important reason is that Fulbrook is qualified. We have the process to review and improve valid claims. We evaluate, enhance, and otherwise support claims in their quest for capital, and then in their prosecution and resolution.
Good service needs a good team. Our team structure has three layers: a core internal team, a core external team consisting of experts in a variety of fields, and working relationships and alliances with outside experts such as law firms, financial institutions, accountants, risk analysts, to mention only a few. We draw on individuals and tailor each team to the specific requirements and personality of each claimant.
Our approach from beginning to end is to actively support the claim and its enhancement towards its true value. Our teams and design are created to promote this. We work with a claimant and its lawyer at every stage, including prosecution, to try to better the claim. While we always are careful not to infringe on the claimant’s control of the claim, we are “hands on.” That is in stark contrast to the established funders who are, for a variety of reasons, “hands off.” A final factor leading to superior service: we are specialized. With specialized experience and skill comes better service.
Several basic convictions have shaped Fulbrook’s objectives and design. They include the following:
- A commercial claim is in essence an asset no different than a share of stock or other asset,
- Investing in these assets — by advancing capital for the prosecution of claims in return for a yield to the investor if the claim is successful — is an important and growing, if young, industry,
- The industry is complex, and there is confusion as to its operations and the benefits that it provides,
- Yet the industry, operating as it can and should, promotes access to commercial and civil justice,
- The market is itself young, and it needs help to best understand and take advantage of the industry,especially as demand exceeds if not dwarfs supply
- In this situation, a qualified independent expert advisor for claimants is indispensable, especially one that has the ability and attitude to be hands on.
Claimants’ lawyers are inevitably central players in the funding process. Their quality is all-important to a claim’s success. They are charged with being skilled litigators. They also are charged with knowing the third party funding industry and adequately advising their clients about it. There is in fact a legal and ethical duty on the part of lawyers to understand funding — its benefits and challenges — and to competently tell their clients about funding and funders. This capacity and service is central to enable informed client choices. Yet the market and industry are in many respects too confusing, and are changing too fast, to permit sufficient numbers of lawyers to know enough to fulfill their duties. That leaves them and their clients in a hazardous quandary. This problem is compounded by the fact that the lawyer is potentially and optically in conflict with the client. He or she owes fiduciary duties to the client’s interest, yet his or her efforts can appear to be commingled with self-interest when securing funding. For example, the lawyer can be accused of negotiating a financing deal that is less than the best for the client, in an effort to secure work or a fee arrangement that the lawyer would lose without funding. Fulbrook’s participation alleviates this concern.
Fulbrook supports claimants and their lawyers in ways not previously available. Fulbrook is able to assist with the following:
- Advice and information to enable better understandings of the industry and related choices,
- Assistance in assessing and evaluating claims,
- Enhancement of claims to their truer value,
- Identifying and attracting suitable investors in the claims, working through a network of relationships, including certain go-to investors whom we know are interested in particular types of claims, are good, and are fast,
- Packaging claims to more fairly present them to investors for funding,
- Sourcing investors from a wide population, including not only institutional investors but general investors with significant capital interested only in investing in one or a portfolio of cases —such as hedge funds, private equity entities, family offices, and high net worth individuals.
- In this connection, Fulbrook has a network of potential investors, drawn from a wide pool consisting of institutional and individual investors, thus providing access to more capital, and when appropriate allowing competition among investors,
- Also in this connection, Fulbrook has in certain situations certain go-to investors that it can source,
- Representing the claimant in negotiating the funding agreement and ancillary agreements,
- Assisting if requested in prosecuting claims, and resolving claims through settlement or trial on favorable and fair terms,
- Supporting the lawyer in supplying objective expert advice for the client’s benefit, and standing between the lawyer and typical perils that face a lawyer in the funding world,
- Speed, throughout
If at the end of the day the claim is not in our view fundable through Fulbrook, we can provide other needed advice for a case that may not be fundable, but may nonetheless be a good case. We can also assist in seeking other assistance for the claimant, if the claim merits this.
Some claimants do not need capital at all. Instead, they require advice and support in other aspects of pursuing their claims. We are happy to consider delinking services from capital, or separate some service from others, in situations needing this.
Fulbrook’s Investor Network
In accessing capital for claims and claimants that it has agreed to represent, Fulbrook works with respected, reliable investors who underwrite individual claims or portfolios. It maintains relationships with such investors — including dedicated third-party funders of commercial claims and law finance lenders, as well as individual entities interested in investing only in individual cases, such as hedge funds, private equity funds, family offices — and other entities and individuals worldwide who are interested in investing in the types of claims in which we specialize.
On various occasions, we consider adding other investors to our relationship network where they have access to adequate capital, an ability to evaluate claims in terms of risk and return, and a capacity to meet our requirements as to rates, speed, and integrity. When potentially qualified investors contact us to discuss this opportunity, we review the possibility carefully before reaching a decision as to whether and how such investors can participate.
What is Fulbrook’s standing? Although a young company, it is consistently ranked among the “preeminent” and “leading” firms in the industry. In a recent Report by two think tanks that discussed Funders, Fulbrook was identified along with four other entities, as among the “prominent third-party funders” in the industry worldwide. Additionally, Fulbrook has been awarded ACQ Magazineʼs Global Award as the “Third Party Litigation Advisory Firm of the Year,” in both 2013 and 2014, based on international surveys taken from its over 50,000 subscribers, in addition to InterContinental Financer Magazine’s “Third Party Funding Firm of the Year (2013) – USA.” In November 2013, the Lawyers World, a global publication, after polling subscribers and internally judging the results, recognition as the “Third Party Funding Firm of the Year 2013 – USA.” In 2014, Fulbrook received Corporate LiveWire’s Global Award for the “Third Party Litigation Advisory Firm of the Year,” and its Global Award for the “Evaluation of International Arbitration Claims Advisory Firm of the Year.” Also in 2014, Fulbrook was awarded Dealmakers Magazine’s Global Award for the “Leading U.S. Third Party Funding Firm of the Year,” in addition to its Annual Award for the “Third Party Funding Firm of the Year – USA.” Furthermore, in 2014, Fulbrook received InterContinental Finance Magazine’s Award for the “Leading US Third Party Funding Firm of the Year,” in addition to the Manhattan Business Recognition Award for the “2014 Best of Manhattan Awards for Management Services.” Most recently, in 2015, Fulbrook has been awarded the following awards: 2015 Corporate International Magazine’s Legal Award for the “International Finance Law Firm of the Year in New York”; Professional Sector Network’s Global Award for the “Capital and Fund Management Practice of the Year”; Corporate LiveWire’s Global Award as the “Third Party Litigation Advisory Firm of the Year”; InterContinental Finance Magazine’s Award as a “2015 Top 250 Leading Firm”; Corporate LiveWire Innovation & Excellence Award for “Most Outstanding Third Party Litigation Advisory – USA”; InterContinental Finance Magazine’s Global Award for “Most Trusted Third Party Funding Firm of the Year – USA”; M&A Today Global Award for “Evaluation of International Arbitration Claims Advisory Firm of the Year – New York, USA”; DealMakers Country Award for the “Leading US Third Party Funding Firm of the Year”; and Global Law Experts Award for “International Finance Law Firm of the Year in New York – 2015.”
For a complete list of Fulbrook’s Awards and Recognitions, click here.
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Fulbrook Founder and Chair
Fulbrook’s founder and chair, Selvyn Seidel, is one of the most experienced and recognized figures in the funding industry. He co-founded and chaired Burford in 2009, now the largest institutional funder in the world. He has related experience and skills, having been a senior litigating partner for many years at Latham & Watkins, one of the premier firms in the nation and internationally, heading Latham’s New York and international litigation and arbitration practice, as well as its international practice, while co-founding its New York office and assisting in founding its other offices abroad; having taught and lectured in third party funding and relevant dispute areas at leading international law schools, including Harvard, Oxford, Columbia, and New York University; and having written extensively and been cited extensively in the area. Mr. Seidel is frequently referred to in such ways as “a pioneer” in the industry, a “visionary.” In November 2012, he was identified by a comprehensive study as “probably the frontrunner in the funding industry [worldwide].”
Fulbrook Services and Fee Structure
Fulbrook price structure is a hybrid. It contains a retainer and fee for a limited period, typically two months, plus conditional/contingent features triggered on funding, and on a recovery. The structure is designed to be fair and flexible for the claimant, but firm in its essential components. For more information, click here.