Question 1

What Is Dispute Finance?

Accepted Answer

Dispute finance is a way for parties with a financial interest in legal disputes — like lawsuits and arbitrations — to get funding before the dispute is resolved.
 
A large and growing number of investors are actively looking for opportunities to invest in disputes. Typically, these investors provide a plaintiff or plaintiff's lawyer with capital, and in return they share in the recovery from the lawsuit. The funds provided often can be used for a variety of purposes: paying for litigation expenses, paying down debt, and shoring up working capital are just some of the possible uses.
 
While dispute finance is often called "litigation finance" and "litigation funding," it isn't just for lawsuits. Arbitration claimants, judgment creditors, and a variety of other interested parties to legal disputes (including defendants) may be able to use dispute finance as a financial tool.
 
Dispute finance has existed for nearly a quarter-century in the United States and has been available even longer in other jurisdictions (e.g., the United Kingdom and Australia). But in the past decade, dispute finance has gone mainstream. Businesses large and small, colleges and universities, and people from all walks of life have benefited from litigation funding in recent years. Dispute finance makes access to the legal system more equal and fair.

Question 2

Why Should I Use Syndicase?

Accepted Answer

Syndicase exists to help you navigate an opaque market.
 
Many litigation funders promise the same things: quick decisions, competitive pricing, and fair terms. How will you choose the right funder for your case? Where should you start?
 
Syndicase can help. Syndicase has a deep knowledge of the dispute finance industry: we know which funders run an efficient due diligence process, which offer the lowest cost of capital, and which stick to their proposed terms. We have studied term sheets and funding agreements from dozens of funders and have experience negotiating and structuring these complex agreements. We stay current about funders' appetite to deploy capital and the types of cases different funders prefer to fund. We know the market and can be an invaluable resource to you in navigating it.
 
We can help parties to legal disputes at virtually any stage of the dispute. Whether you are just beginning to think of filing a lawsuit or arbitration, need funds before your case reaches a resolution, or are a judgment creditor having difficulty collecting, Syndicase can help you explore your options.
 
Syndicase also works with law firms to achieve their funding needs. Whether you're a solo practitioner or a large, established firm, disconnects can arise between the value of the cases on your docket and the cash flowing into your firm. We can help your firm secure  funding to better serve your clients, win new business, and grow your practice.

Question 3

What Services Does Syndicase Offer?

Accepted Answer

Syndicase offers services in two main areas:
 
First, Syndicase acts as a broker. In this role, we work with clients who are actively seeking funding. We work alongside our clients through the entire lifecycle of the deal, from the initial diligence and marketing to funders through funding agreement negotiations and structuring, and ultimately to deal close and the deployment of funding.
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Second, Syndicase acts as an advisor. In this role, we provide highly tailored advice on issues related to dispute finance, including but not limited to deal pricing and terms, case strategy and management, and potential future uses of funding (such as claim investigation). Law firm and investor clients who have yet to identify a specific funding opportunity are best positioned to benefit from Syndicase's advisory services.

Question 4

What Claims Are Eligible for Financing?

Accepted Answer

A wide variety of claims are potentially eligilble for financing. Disputes related to contract rights, investor rights, intellectual property rights, torts (personal injury, product liability), and bankruptcy cases are just a handful of the claim types that can be financed.

No matter the type of claim, it is critical that the potential recovery from the claim be able to support the desired investment. In terms of deal economics, the rule of thumb is that for every $1 million in funding sought, an investor will require the expected recovery (often a judgment, award, or settlement) to be $10 million.
 
For example, say your company has a large breach of contract claim where expected damages are $45 million. Based on the industry rule of thumb, this claim could support $4.5 million in funding, which could be used for a variety of purposes, from litigation expenses to your company's working capital needs.
 
Syndicase works with a range of investors: pure-play litigation funders, hedge funds, and even family offices are in the market for dispute assets. Some of these investors are able to invest as little as $300,000 in a single claim, while others can support more than $15 million in funding for larger claims or portfolios of claims.
 
We would be delighted to help you identify claims that are appropriate for financing and identify the right investor to help you realize the value of your claims.

Question 5

How Does the Funding Process Work?

Accepted Answer

Syndicase's brokering process normally involves three phases.
 
In phase one, we work with our clients to review any claims for which funding is desired, collect all relevant factual information, and conduct a thorough legal and factual analysis of each claim. Our analysis — which addresses the liability case, expected damages, and any collectability issues — is synthesized into an investment memorandum. This memo presents a comprehensive overview of the claim and funding request, including pricing expectations.
 
In phase two, we market the claims to select funders who, in our experience, are well-suited for the type of claim and desired funding amount. Upon execution of an NDA, we provide the funders with the investment memo and access to a virtual data room. Once the funders have had a chance to review the memo and data room, we discuss the claims with each funder to determine who is interested in submitting a term sheet with headline pricing and terms. Our goal is to receive at least two (ideally a handful) of term sheets. Based on our review of the term sheets, we will select a single funder with which to proceed to exclusive talks.  
 
In phase three, we execute the top term sheet and typically enter into an exclusivity period (also called a "no-shop" period) lasting around a month where we shepherd our client and the funder through more extensive due diligence and the creation of key deal documents. Our goal is to execute the funding agreement and related documents in this period.
 
The complete funding process, from introduction to funding, often takes around three months, though some claims may fund more quickly while others may take longer.

Question 6

What Are the Advantages of Dispute Finance?

Accepted Answer

Dispute finance offers a number of benefits to claimholders, law firms, and investors.
 
Claimholders — typically plaintiffs or claimants — stand to benefit greatly from funding. Plaintiffs who otherwise would lack the means to bring meritorious cases can have a funder pay for litigation expenses.  Investors can provide capital injections for pending cases that experience funding constraints. Financial support from dispute funders can be used to attract superior legal resources and talent.
 
Beyond case-related advantages, dispute funding can be a significant corporate finance tool, allowing innovative companies to manage risk and generate revenue. Funding can be used to unlock liquidity for working capital needs, to maintain lawsuits without increasing legal spend (and thereby reducing earnings), and to convert a contingent asset into cash that can be redeployed into more productive uses.
Attorneys and law firms can provide better client service from working with funders. Among other advantages, attorneys equipped with funding may be able to bring cases on behalf of clients who could not afford their fees, pay for litigation expenses, and offer flexible payment arrangements. In providing law firms and their clients with greater financial support, dispute funding may help attorneys to achieve recoveries that truly reflect a case's merits.
 
Beyond supporting a financially stable client base, dispute finance can be leveraged by law firms to expand their practices, invest in new client acquisition, and other growth initiatives.
Investors who have yet to embrace dispute finance may wish to consider it for a number of reasons: access to a rapidly growing alternative asset class uncorrelated to capital markets, historically superior returns compared with other alternative investments, and more frequent liquidity events compared to many other alternative asset classes.

Question 7

How Do You Maintain Client Confidentiality?

Accepted Answer

At the outset of every new engagement, Syndicase enters into a broad non-disclosure agreement (“NDA”) with its client. Syndicase's NDA includes a “common interest privilege” provision and other terms designed to maximize client confidentiality protections. We further require that our brokerage clients enter into similarly broad NDAs with any funders interested in claim due diligence before those funders gain access to a client's claim file.
 
Many jurisdictions have recognized that funders and those assisting the funding process (like Syndicase) should be treated with the same confidentiality protections afforded to certain members of your trial team.

Question 8

What Does Syndicase Charge for Its Services?

Accepted Answer

For most brokerage and advisory clients, Syndicase charges nothing up front and only earns success fees if a funding deal is closed. In this way, we have skin in the game and have incentives that are fully aligned with our clients' interests.
 
For certain clients who require only advisory services, Syndicase has a variety of fee structures that are optimized for value and can be tailored to the needs of the project.

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