fivehundred magazine > Interview with: Paul Martenstyn > Funding can create value

Funding can create value

From clerking to funding, Paul Martenstyn explains how his time in chambers prepared him for a new challenge in litigation funding and what the future holds for the market

Paul, you spent ten years as a clerk and deputy senior clerk at Fountain Court. Tell us why you decided to leave chambers for Vannin Capital and what your responsibilities will be as the litigation funder’s new UK managing director.

I had a tremendous time as a clerk, especially at Fountain Court, where I was very happy to work with some of the brightest minds, and best barristers, in the business, alongside great colleagues like senior clerk Alex Taylor. However, the opportunity to work with a market-leading litigation funder was too good to turn down; building upon the skills and knowledge I’ve learned across my career.

It’s a challenge I’m really relishing. My primary focus is on cultivating and further developing the strategic relationships I have developed with law firms, corporate clients, and barristers both in the UK, and globally, while also applying my overall management and marketing skills to the business of litigation funding.

How has your experience in chambers prepared you for this new challenge?

What I am known for at the Bar is client service, professionalism, and innovation, all combined with the personal touch, which ensures the strategic experience I bring to Vannin has a solid management grounding.

Those experiences, whether in terms of commercial insight, people skills, strategic fit, cultural understanding, and, crucially, strong business development and people management skills, are central to the work I did at the Bar; I wrote in a recently published book that: ‘The game is changing, and those who don’t adapt quickly will be left behind.’ That is as true of funding as it is of the Bar. It’s a challenge I am keen to meet.

There are a number of litigation funders active in the market. What is Vannin’s USP and where do you see your competition?

What sets Vannin apart? Our global expertise in legal finance is exceptionally strong, for one thing. The bench strength of our people and our ability to support law firms and corporations in the successful resolution of high-value commercial disputes is, in my view, second to none.

Our team comprises both leading lawyers and finance professionals, who work seamlessly together. As such, we have people with superb insights into not just law and business, but the business of law and the funding of disputes.

What else? Global coverage, active in all the areas you would expect us to be, with deep national, regional, and local knowledge and expertise. Like many of our friends and rivals in the Association of Litigation Funders (ALF), we see our competition working to ensure work is done to the highest standards – only ours are that bit better!

We recently addressed the issue of funding at a general counsel roundtable, and the sense was that this was something for their law firms. Why should GCs be more aware of the value of litigation funding?

This is a really important issue. Part of the fun of the job is showing the value that funding can bring not just to law firms, but also general counsel within corporates and – critically – the finance functions within those organisations. I have really enjoyed explaining to corporate clients how funding can enable the in-house legal team to create value, by taking the cost of litigation out of their P&L and the risk of litigation off their balance sheet, and how the funder and client can work effectively together to achieve a common objective: to maximise the value of a litigation portfolio.

What else can you tell us about Vannin’s future growth plans? What types of disputes and value of claims are you targeting?

We have ambitious growth plans, which are focused on looking at commercially strong business propositions for funding that meet our robust due diligence requirements, in a range of commercial litigation and arbitration contexts. These include sectors such as energy, commercial contract claims, cartel damages actions, and investor-state disputes. That said, we do not limit ourselves to specific sectors or types of claim; if the case is strong and the economics work for us and the client, we will look to fund it.

The funding market has more than tripled over the past six years. What do you place this growth down to and what does it tell us about the UK’s litigation landscape?

I can only speak for Vannin, but would say this goes down to our positive outlook on managing risk; our strict adherence to market standards and reliance on strong legal advice; our excellent relationship management skills; and the fact that if you choose the right cases for the right clients that are run by the right lawyers, ours is an investment proposition that works.

What effect (positive and/or negative) do you see this growth having on the Bar?

For those who are willing to advise and take risks, the Bar, which has developed its approach from initial resistance to modest acceptance, and now widespread adoption, can act both as neutral guardian of legal opinions, in assessing the third-party risk involved, or active participants in a funded case, as counsel in the usual way. The number of counsel familiar with costs and funding issues, as a specialist niche, has also grown in recent years and will continue to do so.

Some claimants – and lawyers – are still sceptical about funders as they fear the exertion of undue influence on how a case is run or that the eventual cost of funding a claim would be prohibitively high for most claimants. How do you respond to that criticism?

I don’t accept that. As a professional funder and member of the ALF, we are not allowed to exert undue influence over the running of a case. This is why choosing cases with the right team is so important to us. That said, the law firms and clients that we work with often recognise that we can add genuine value as part of the team, and we therefore find ourselves welcomed into the key strategic discussions throughout the life of a case.

As for the cost, I think it is important to bear in mind that these are non-recourse investments, so there is a complete transfer of financial risk from the claimant to the funder. And when people take the time to consider the benefits that funding can bring, whether accounting benefits for corporates or driving better and quicker settlement outcomes, they will generally conclude that the terms that we offer represent excellent value.

There have been calls for UK funders to be regulated by the Financial Conduct Authority, rather than self-regulated. What impact would such a change have on the funding market?

At the time of the publication of the Jackson Review, the FSA (as it was then) indicated that regulation of litigation funding was not required as it was not aware of significant risks to consumers. Nonetheless, the industry has moved forward and established the self-regulatory body, the ALF in England and Wales and I would not be surprised if we see similar self-regulatory bodies being established in other parts of the world. The establishment of ALF has been a good thing as it has weeded out the weaker players in the industry and it ensures that claimants are working with funders who can fulfil their promises and fund cases all the way to trial. At Vannin, our view is that regulation will be a positive for the leading funders, ensuring best practice takes place across the industry, a win-win for funders and claimants.

Finally, for those lawyers still on the fence about whether third-party funding is right for their case, what advice would you give them?

Pick up the phone, and give Vannin a call, or better still, send us a case and let us explain how we can help you and your clients.

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