Julia Gewolb is Validity’s director of underwriting. Julia is responsible for ensuring an effective review process to evaluate case merits during the diligence phase of the litigation investment. With her background in complex commercial litigation, she additionally helps offer legal advice on investments to the entire Validity team. Prior to Validity, Julia was legal counsel at Bentham IMF and a litigation attorney at Boies, Schiller & Flexner LLP.
What attracted you to a career in litigation funding?
Initially, it was the opportunity to use my skills as a litigator in an innovative way. I got into funding five years ago when the industry was still fairly new. Lawyers were less familiar with funding, and there was a lot of creative thinking about how to underwrite lawsuits and structure deals. Since then, I’ve come to appreciate so much about what we do: the opportunity to work with such a diverse number of firms and lawyers, the challenge of analysing hundreds of cases a year, and the intersection between finance and law. Litigation funding lets me continue to be a litigator but in a start-up environment.
What are the most common misconceptions people have about funding?
I would say the most common misconceptions are that funders either want to control litigation or will somehow undermine attorney-client privilege. In practice, reputable funders (and this certainly includes Validity) leave litigation strategy and settlement decisions to the plaintiff and their counsel. There are also established industry practices that enable clients and counsel to share non-attorney-client-privileged information with funders so that they can underwrite the case while protecting confidential material. The entire investment team at Validity consists of former litigators who understand the importance of the attorney-client relationship. We know how to navigate the relevant rules and boundaries well.
What changes have you seen in litigation and litigation funding since you started your career?
The easy answer is that funding is much more established, and the industry has grown considerably, particularly in the USA. When I first left the practice of law to pursue a career in litigation funding, I think some people viewed it as a pretty risky move to take. But since then, funding has really proven its usefulness in large-scale commercial litigation. I wouldn’t yet say it’s commonplace, but I think it’s more and more common for litigators to consider using it. A more diverse set of law firms are getting comfortable with it, too, and courts are starting to recognise the real value it brings both to lawyers and also to clients who are facing down expensive and risky litigation. On the funder side, I would say funders are becoming more creative and sophisticated in their approach to pricing and risk.
What impact do you see covid-19 having on litigation?
The most obvious impact on litigation is that civil filings and of course trial dates have been delayed. In addition, there are going to be numerous business-to-business disputes filed in the coming year due to economic events, and my guess is that many of those will require funding. None of this is likely to fundamentally change how funders approach structuring deals because we already price risk and timing into our returns. Even without covid-19, litigation is often subject to delays in one form or another. I think funders will keep doing what we do to help clients pursue cases and manage risk.
What are some of the biggest trends you see shaping the litigation funding environment?
There have been two trends in recent years: both a proliferation of funders and, at the same time, consolidation among the top funders (particularly in the USA). As the industry grows, many lawyers are realising that there’s a lot of capital out there, and what really distinguishes one funder from another is the strategic value and partnership the funder brings to the table. Funders’ reputations and their relationships with lawyers will continue to be critical to long-term success. Also, many top US funders are growing internationally. We recently opened an Israel office, for example. As litigation itself becomes more “global” – either because foreign plaintiffs increasingly seek access to US courts or because disputes move to international arbitration – funders may start becoming more global in their thinking, too.
How would you like to see your own practice evolve over the next five years?
I would like to see some of the data-mining platforms become more sophisticated. I’m not sure we’re ever going to be able to replace experienced litigators in underwriting funding deals, but I do think we’re only at the tip of the iceberg now in terms of what’s possible. Part of the problem is that the data is so inconsistent across federal and state courts. But there is a lot of potential for new efficiencies in how funders go about identifying and underwriting cases.