INTERNATIONAL ARBITRATION 1/3LY
IN CONVERSATION WITH NICK ROWLES-DAVIES 03
IN CONVERS AT ION WI TH NI CK ROWLES - DAV IES MANAGING DIRECTOR OF BURFORD C AP I TAL Ben Knowles, Co-Chair Global Arbitration Group, in conversation with Nick Rowles-Davies, Managing Director at Burford Capital.
BEN Is there any forumwhere you speak directly to companies about this or do theymainly learn about this through law firms? NI CK I think it’smixed. We spend a lot of time talking to finance and General Counsel (GC) of big corporates. One of the biggest issues we face is that GCsmay or may not get it as they tend to be biased against litigation. A lot of GCs in Europe are corporate rather than litigation lawyers. I think you’ll find that in the States we get a different response because they tend to bemore focused on litigation. That might be a bit of a generalisation but it feels that way. BEN Will the UK be like the US in five years? NI CK I don’t think it’ll ever get there, despite what you read. The UK doesn’t have a litigation culture in the same way as the US. The biggest reason is that there are no adverse costs in the States, so a lot of cases are being brought in the States rather than in London. If you go up against a firm in the UK and they are quoting £20-£90m in adverse costs, there’s noway you can take that risk as a claimant, a claimant group, or as a funder because there just isn’t enough capacity in themarket to put up adverse costs insurance of that nature. Securities litigation is verymuch looked at from the US side now, because of the adverse costs issue and I don’t think that’ll change. The UK won’t end up like the US, but it will becomemore sophisticated. I suspect these deals will be going on in the UK finance wise for longer and there will bemore of them, but that may not be in the public domain.
T HE S T ORY SO FA R
BEN The general impression in themarket is that people are warming up to the idea of third-party funding. They are becomingmore informed and in turn, they seem to bemore comfortable with it. What in your viewhas been themain reason for companies to see this as an option?Why are corporates looking at what you do in a different light? Howbig a factor is the downturn in the economy over the last fewyears presumably leading to tighter budgets? NI CK I think it’s a combination of things. There has always been a hugemisconception as to howmuch budget corporates have to spend on claimant work. Themajority of the budget is taken up by defence work and they actually lack appetite for the other side. Althoughmost want to concentrate on their core business, which is not being a litigator, they’re beginning to see the opportunities out there. If you compare themarket to how it was five or six years ago, funding is still hidden, but it’smore common place. I think the difference is that, nowadays, everybody knows what it is, or at least thinks they do. The reality is there is still a lack of awareness of its potential. Their typical view of third-party funding ismiles away from the sophisticated bespoke products now on offer. It’s going to take another fewyears for people to become familiar with it and understand that it is not a panacea for all litigation finance ills. Ultimately, some people are not going to like it and they are never going to want to do it for all sorts of reasons.
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