If you’ve already got a funder you’ve worked with before, it’s a fair question: why bring in a broker at all? Why not just call them directly?
The answer starts with what a broker cannot do. A broker doesn’t make an unfundable claim fundable. No amount of positioning or introductions changes whether the underlying merits and economics of a matter work.
What a broker can do is help identify which funders a matter is most likely to suit, run a targeted process rather than approaching the funding landscape indiscriminately, and compare what is available beyond the headline number. Just as importantly, a broker can help preserve options rather than allowing a matter to become dependent on the decision of a single funder.
What does a litigation funding broker actually do?
A broker sits between claimants or law firms and the funders who might back a matter. The core of the role is understanding a claim — its merits, value, procedural stage and funding requirement — and matching it against what funders are currently looking for, rather than sending the same claim indiscriminately to every name on a list.
Resolut doesn’t provide litigation funding, legal advice or financial advice. We identify prospective funders and facilitate introductions and communication between claimants, lawyers, funders and capital providers. The funding itself, and any advice about whether to accept it, sits with the funder and the claimant’s own advisers.
Do litigation funders really have different criteria?
Yes, and this is easy to underestimate if you’ve only dealt with one or two funders. Funders differ on investment parameters, claim types and sectors they favour, minimum and maximum deployment size, jurisdiction, the procedural stage at which they’re willing to enter, risk appetite, preferred economics, and whether they’re building a portfolio or backing single cases.
None of that is necessarily fixed. A funder’s appetite can shift as its portfolio develops, capital position changes or mandate evolves. A claim that’s a poor fit for one funder’s mandate isn’t necessarily a poor claim. It may simply be in front of the wrong funder at the wrong time.
Does using a broker improve the chance of obtaining funding?
Not in the sense of making an unfundable claim fundable — nothing does that.
It can, however, reduce the risk of a potentially fundable claim being undermined by the way it is taken to funders. An approach to the wrong funder, made too early, based on incomplete information or without a clear understanding of that funder’s current appetite can result in a good opportunity being declined for reasons that are as much about fit or presentation as the underlying claim.
Once a matter has been circulated and declined, simply approaching the same funders again with a better presentation may not provide a clean second opportunity.
That is why we would rather tell a firm plainly that a matter does not yet appear commercially fundable, or is not ready to approach funders, than circulate it widely without a clear strategy.
A targeted process is intended to identify the funders for whom the matter may genuinely fit, determine what they will need to assess it properly, and present the opportunity at the right stage and on an appropriate basis. It cannot guarantee funding, but it can reduce unnecessary approaches and avoid needlessly prejudicing the funding prospects of a claim that may otherwise have attracted interest.
What should you compare beyond headline price?
A useful principle is: don’t judge a funding proposal on the headline commission or multiple alone.
The return structure, how it behaves if the matter runs longer than expected, what control or approval rights the funder holds over settlement and strategy, the funder’s ability and willingness to meet the anticipated funding requirement, including follow-on or top-up funding, and how adverse costs or security for costs are handled can all materially affect the value of a proposal.
The headline number matters. But it doesn’t tell you the whole story.
What if you already have a strong relationship with a funder?
There will be circumstances where a law firm chooses to approach a funder directly, particularly where there is a strong existing relationship. But a good relationship with a funder is not the same thing as knowing that funder will ultimately invest in a particular matter.
A funder may know the firm well, understand the legal team and be genuinely interested in the claim, but the investment decision will ultimately depend on the particular matter and the funder’s investment process. A matter can spend months progressing through diligence only to be declined at investment committee. By that stage, significant time may have been lost and the firm may effectively be starting again with another funder.
There is also a broader consideration. If funding is being recommended to a client, the law firm should be comfortable that it has approached the process independently and can explain why the proposed funding arrangement represents a strong commercial outcome for that particular matter.
That can be difficult to demonstrate if only one funder has been considered, however strong the existing relationship may be. A properly managed competitive process allows different funding structures and terms to be tested and compared, rather than assuming at the outset that the familiar funder will necessarily provide the best fit or commercial outcome.
Where we fit
We don’t fund claims and we don’t offer legal or financial advice. Our role is to help determine which funders are appropriate to approach for a particular matter, at that particular point in time, and to manage that process so the firm is not unnecessarily dependent on the decision of a single funder.
That does not mean circulating every matter widely. Quite the opposite.
The objective is to identify a credible group of potential funders, understand their current appetite and requirements, and run a targeted process that preserves options while avoiding unnecessary approaches. Where appropriate, that can include an existing funder relationship, but alongside other credible alternatives rather than assuming that relationship will ultimately produce an offer.
If proposals are received, we can then help the firm compare materially different funding structures, economics and commercial terms.
The aim is not simply to obtain an offer of funding. It is to give the firm and its client a better basis for understanding the alternatives available and deciding which, if any, represents the most appropriate funding solution for that matter.
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