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AAccording to a recent Burford Capital survey, more than half of in-house lawyers say their firm has uncollected awards and judgments, often to the tune of $20 million or more. That’s a staggering number of successful cases that aren’t satisfied, from a collectability standpoint.

The role of a judgment enforcement team is to advise clients and lenders on the feasibility of collecting an award or judgment, and to overcome a variety of obstacles that hinder or prevent a successful recovery. Asset tracing, evidence gathering (digital and document) and intelligence gathering all fall under the purview of law enforcement. The lawyers and researchers leading the team seek actionable leads on debtors and then employ a collection strategy (or series of strategies), often in multiple jurisdictions.

Earlier this month, Litigation Finance powerhouse Omni Bridgeway announced the launch of a US judgment enforcement branch. Omni already had the world’s largest judgment enforcement team with over 50 dedicated professionals, as well as a strong track record of global enforcement success since 1986, covering over 100 jurisdictions. The 2019 merger with IMF Bentham, which had maintained a US presence under the Bentham IMF banner, strengthened Omni’s presence in the US market. And this recent announcement has further solidified the funder’s position as an attractive option for litigation funding and enforcement in the United States.

Burford Capital, another leading third-party litigation funder, has maintained its own in-house judgment enforcement team since 2015. such as London, Turkey and Dubai, in an effort to seize assets including the Luna: a superyacht valued at over $200 million (with its Eurocopter and torpedo boat).

From a funder’s perspective, collectability is integral to the decision whether or not to fund a claim. After all, there is no return on investment by simply winning a deal. Donors must therefore consider the risk of collectibility in each case they finance. Given this, we at Litigation Finance Journal wondered if Burford’s success and Omni Bridgeway’s recent expansion of its Judgment Enforcement division could predict an industry trend. Will other funders start moving application teams in-house? What exactly are the advantages of doing this, as opposed to working with third-party law enforcement companies?

We did our own research to find the answers.

May the app be with you

Enforcement is a complex and laborious process that follows what is often a long and drawn-out legal process. This allows defendants to deploy tactics simply intended to exhaust a plaintiff. Many complainants want to focus on growing their business, as opposed to the specific details of finding assets. Thus, debtors will go to great lengths to hide assets – sometimes legally, sometimes not so much – in the hope that a creditor is not ready for the daunting task of finding those assets.

The goal of judgment enforcement is to combine data-driven analytics with human experience and intelligence, to uncover actionable insights to locate assets and ensure funds reach deserving parties. . This is often achieved by putting pressure on defendants, essentially making it so difficult to continue hiding assets (also an expensive and complex process), that they simply choose to pay the judgment or award. Essentially, the job of an enforcement team is to make a defendant feel like defendants often try to make plaintiffs feel – eyes tired and ready to throw in the towel.

“Enforcing judgment can be an uphill battle,” says a representative from Omni Bridgeway. “Although we prefer to solve problems quickly, we are here for the long haul.”

Since each case is bespoke, there is no playbook for how the application plays out. Typically, however, enforcement involves several key strategies:

  • Research the defendant’s historical behavior (what types of claims did the defendant have before? Have those claims been paid or unpaid? How has the defendant responded to past enforcement actions, if any?).
  • Identify a subset of jurisdictions where the defendant’s assets are located and where enforcement actions can be used to recover those assets.
  • Structuring of a multi-district, often cross-border enforcement and recovery strategy.
  • Highlight additional pressure points, outside of litigation, that can be exploited to induce a defendant to repay debts.

Of course, with the proliferation of new technologies such as crypto and other blockchain-based innovations, the game is getting trickier, as more opaque avenues for protecting assets emerge. Thus, the ability of an execution team to be agile, flexible and adaptive is paramount. Much like a chess player anticipating his opponent’s next move, a strong execution team must have both a plan of action in place and a desire to break from that plan should the process take an unforeseen direction. Omni Bridgeway, for example, has assembled a strong team that can comfortably navigate a multitude of scenarios, made up of lawyers from a variety of legal backgrounds and researchers from a multitude of disciplines, including banking, science and economics.

Bring it in-house

Third-party funders outsource a range of legal and financial services, including research, training and preparation of experts, Legal Tech development, and more. For some, especially smaller funders, it makes sense to also outsource judgment enforcement. But for larger, more established funders and their clients, an in-house judgment enforcement arm offers many benefits:

  • A judgment enforcement team can be as useful at the start of a case as after the case has been concluded. Input from law enforcement professionals can help determine the defendant’s ability to pay, which can then be used as a factor in whether or not to fund a specific case. If the case is funded, this same information can be used when estimating a budget with a clear eye on what steps need to be taken to enforce a judgment.
  • An internal enforcement team acts as interlocutor for claimants and lawyers. These teams are intimately familiar with funder people and processes, case types and workplace culture. This helps establish an internal knowledge base that can provide a seamless transition from one aspect of the case to another.
  • Multidisciplinary collaboration. In-house teams have the advantage of being able to rely not only on the in-house legal resources of many jurisdictions, but also on a research team with additional capacity and language skills, whose members can provide ongoing advice on assets and asset movements, and enable the enforcement team to act quickly on opportunities if and when an asset is identified.
  • Litigation funding is an increasingly competitive business. When funders are vying for clients, having a judgment enforcement division helps establish a funder’s commitment not only to the case, but also to ultimate recovery. Having an in-house enforcement team shows clients that the funder is able and willing to do the hard work necessary to trace assets and collect those unpaid judgments or awards.

One of the most overlooked benefits of an in-house law enforcement team is expanded access to justice. While the enforcement team’s assessment of a defendant’s collectability risk can be used to avoid cases classified as high risk, it can also be leveraged in the opposite direction, to help lenders fund cases that might otherwise seem too risky. Internal teams are intimately familiar with their organization’s risk appetite and can therefore make recommendations to the investment committee based on the particularities of that specific appetite. The end result being that funders with in-house teams can fund cases that would otherwise not be funded due to high collectability risk. Omni Bridgeway has confirmed that it has a specific appetite for enforcement or collectibility risk. Having an internal team with a deep understanding of this risk appetite benefits potential clients, as the internal relationship can help fund their cases.

Omni shared this summary of the benefits of having an in-house enforcement team: “Omni is a wonderful ally to everyone involved, sharing both recovery and risk, and only getting paid if true recoveries are This alignment of interests with clients means that once we intervene, clients know we believe in their case and will only advise a strategy that directly increases the chance of recovery. [enforcement] is our core business.

Look forward

Two of the largest litigation funders have successfully created and maintained in-house judgment enforcement teams. While it’s hard to know what the future holds for this fast-evolving industry, it’s possible this could spark a trend among large and medium-sized third-party funders, as competition for clients is fierce and backers should do everything they can to stay in shape. This, in turn, is likely to assist not only in the enforcement of awards, but also in the selection of cases and how funds are deployed.

As an Omni representative points out, “Judgment enforcement capabilities not only benefit clients with an existing judgment or award, they help us fund new ‘merits’ cases that might otherwise be viewed as too risky (due to perceived collection risk), with the client knowing the matter is in safe hands from start to finish, should active enforcement be required.”

Our job is not to forecast, so we will not predict what the future holds. We will point out, however, that the methodologies adopted by a funder can often become industry trends (portfolio funding, secondary investments and the push towards defense side funding are all examples). In-house enforcement of judgments has been shown to lead to increased client satisfaction and, as third-party legal funding has always focused, improved access to justice. After all, a favorable judgment is of little value if it is not cashed. As such, a proliferation of in-house law enforcement teams (should this indeed occur) would be a boon to the clients, attorneys and funders who use them.

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About John Freud