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Thought Leaders

Thought Leaders

Isabelle Berger

Isabelle Berger

Nivalion AGTurmstrasse 28SteinhausenZugSwitzerlandCH-6312
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Thought Leader

Thought Leaders - Third-Party Funding 2020

Q&A

WWL Ranking: Thought Leader

WWL says

Isabelle Berger is a legal finance specialist known for her impressive experience spanning arbitration and litigation proceedings.

Questions & Answers

Isabelle Berger heads Nivalion’s activities in Switzerland, France and the Benelux countries, and is responsible for marketing and PR. Before joining Nivalion in 2018, Isabelle was in private practice for over 10 years in the dispute resolution teams of leading Swiss law firms Homburger and Schellenberg Wittmer. Isabelle holds a bachelor’s degree and a PhD from the University of Berne, and is admitted to the Swiss Bar.

How does your experience in private practice enhance your current work as a funder?

My experience as a disputes lawyer was the entry ticket to Nivalion. In addition to business development, my main task is to lead a team of experienced lawyers and make sure that the cases we are reviewing are fit for funding in terms of their merits and enforcement prospects, and are a commercially sound. The skills I acquired as a lawyer transferred seamlessly into my work as a funder.

Particularly important is the ability to see eye-to-eye with the case-leading lawyers. Besides having the legal knowledge and experience to understand various perspectives and potentially competing interests, this requires a good understanding of law firm ecosystems and the functioning of client-lawyer relationships.

How is it possible to best meet the expectations lawyers and clients have regarding a funder?

In my view the best (if not the only) way to manage and meet expectations is to create a basis of trust and to communicate openly. I always strive to not only explain the funding process – including key aspects we focus on when deciding whether or not to fund a case – but also provide realistic information on our timeline. Lawyers and clients should be wary of funders who state their due diligence will be completed in an unrealistically short time, unless the case is really straightforward (which it rarely is!). They will most probably end up with one or more extensions of the exclusivity period, which is a major source of frustration. Similarly, I find it very important to address potential stumbling blocks and issues as they occur. This transparent approach is very well received by the lawyers and clients with whom we work.

Why is funding an interesting option for solvent companies?

In continental Europe, the legal market still perceives funding mainly as an offer for private individuals and companies with limited financial resources. 

However, the trend is clearly going in a different direction, driven by CFOs of medium-sized and large companies that have identified funding as a risk-management and finance tool. When a company brings a funder on board, it can outsource its litigation spend at zero risk, and instead use its financial resources for its core business. This is of course of particular relevance in the context of portfolio-based capital facilities.

To what extent do lawyers working with a funder lose control over their litigation strategy and the proceedings?  

This very much depends on the individual funder. We at Nivalion are committed to a hands-off approach. The expertise of the case-leading lawyers is an important part of our due diligence. In turn, this allows for a relaxed attitude when it comes to the conduct of the funded proceedings. While we make ourselves available if the lawyers wish to discuss certain strategic or other questions, if they prefer not to then we leave the entire proceedings in the hands of the legal team. Only at a crossroads in a case, such as a settlement discussion, do we request a say. This is to protect our investment, but our position is not determinative of whether to settle or not. In practice, if the lawyers advise their client to accept the settlement, we do not interfere with this advice.

Covid-19 will likely be followed by a financial crisis. Will funders that committed to provide funds in an ongoing case still be able to honour their commitments if the financial markets collapse?

The old rule that a client and its lawyers should only engage with funders that can safeguard the committed funds over the lifetime of the proceedings has become even more important. Clients should ask for respective proof that the funder will be able to honour its commitment – or look for another funder. 

Remarkably enough, many of our clients still refrain from asking about our financial firepower and do not enquire how we ensure that sufficient funds will be available throughout the life cycle of their case. I believe there will be more critical questioning concerning this going forward. Speaking for Nivalion, we are in the lucky position to say that our partners can be assured of our financial stability. In every funded case the commitment is ringfenced.

What are the most significant trends you are seeing in third-party funding at the moment?

The uncertainty and challenges that come with the covid-19 crisis fuel interest in the newer and more sophisticated, but lesser-known funding products on offer. Accordingly, we are now being approached by large corporations who previously may not have thought about funding. Those clients are particularly interested in portfolio funding solutions. Portfolio funding means that selected claims of a corporate client are pooled for funding in a case portfolio. There are basically no limits to the composition of such a portfolio. Importantly, the funder’s investment and return are spread across the entire portfolio of claims. Due to this risk diversification, the financial terms of portfolio funding are generally better for the client than several individual funding arrangements. Also, depending on the individual circumstances, cases that would fail if considered individually on the selection criteria and would not be eligible for funding can potentially also be included in the portfolio. 

We also see an uptick in requests for award and claim monetisation. Monetisation allows to advance the value of court judgments, arbitral awards and of developed claims, thus removing pending litigation risk, accelerating cash flows and optimising the timing of revenue irrespective of the progress of the judicial proceedings. 

There is also an increased desire from businesses to reduce their exposure to claims they are defending. Defensive litigation is fundable if there is a strong counterclaim, or if the defensive litigation can be included in a portfolio where the client is the claimant in another matter. Alternatively, provided that the company has enough funds available to pay the funder’s return in the event of success, a defence case can also be funded individually. 

Finally, we are seeing law firms starting to think about how they may benefit from funding. This has been extremely rare in continental Europe until now.

How do you anticipate the continental European legal market changing in the next five years?

Legal finance will become an indispensable element within the toolbox of lawyers as the commercial clientele increasingly realises its advantages, and fee pressure on law firms continues to grow. Visionary law firms will consider partnering with funders to create new business, as we are already seeing in some jurisdictions.  

What makes Nivalion stand out from its competitors?

Nivalion is the only high-end funder with civil law roots and a focus on civil law cases. The importance of this should not be underestimated. Not only do we offer civil law-based funding agreements, but we also have a different approach than common law funders in various respects. Among other things, this includes our hands-off approach and our risk perspective: our strategy is not to deploy as much capital as possible, but to invest in meritorious claims that have passed a rigorous due diligence process. Another distinguishing factor and competitive advantage is our in-house, tailor-made after-the-event (ATE) insurance. ATE insurance protects against the downside risk of having to pay an adverse costs order if the funded party loses its claim. Having this facility in-house helps to avoid, at times, lengthy and detailed discussions/negotiations with insurers, including for insurers to undertake their own due diligence. Having this in-house facility provides a one-stop shop for a full funding package.

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