Andrew Saker is no stranger to Asia and its endless potential. Before assuming the post of IMF Bentham’s CEO and Managing Director in 2015, he spent five years in Jakarta, from 1999 to 2004, establishing Ferrier Hodgson’s Indonesian practice. Now he leads a business with more than 74 employees in 11 offices worldwide.
An ASX-listed firm since 2001, it became the first internationally based litigation funder to open an office in Singapore, and has recruited a senior international disputes specialist from a leading arbitration practice in Hong Kong.
“From our base in Singapore, we are actively exploring opportunities across the region to fund commercial parties, law firms and insolvency practitioners, including in economies where the concept of litigation finance is new or emerging, such as India, Japan, China, the Philippines and South Korea,” Andrew says.
“There are many international organisations doing business across Asia that find themselves in a multi-jurisdictional dispute and contemplate funding to pursue their rights.” Intrigued, The CEO Magazine had the opportunity to speak with Andrew to find out more.
The CEO Magazine: What are some of the key attributes you need in order to undertake your role?
Andrew: Being a financial services business, the ability to negotiate worldwide investment vehicles, insurances and other financial packages for the benefit of our clients is essential, as well as a detailed knowledge of financial markets, strong negotiation skills and global contacts in the financial services sector.
You also need experience in engaging and inspiring talented people. We don’t just provide a blank cheque for clients to run cases. We contribute significant strategic insights to case strategies, and ongoing project management and oversight during the running of the case. It also helps to have an understanding of doing business in Asia.
This includes a deep respect for cultural nuances, the impact of culture, language and relationships on the ability to do business together, and the importance of having resources on the ground.
You mentioned the importance of understanding how business is done in Asia. What potential do you see for IMF Bentham in the region?
There are immense growth opportunities in providing funding to corporates who are engaged in dispute resolution, including arbitration, in Asia. We have established an office in Singapore and our on-the-ground resources cover Singapore, Hong Kong, China, Korea and India.
Demand is fast increasing, particularly in Hong Kong and Singapore, Asia’s major regional disputes hubs. Both countries have recently passed laws permitting the funding of arbitrations. We are always open to new markets and new ideas and we have an appreciation for the cultural nuances across all regions, all of which should help us identify new opportunities and stay ahead of the pack.
We have an appreciation for the cultural nuances across all regions, all of which should help us identify new opportunities and stay ahead of the pack
Aside from Asia, are there any other business goals you’re pursuing in the medium term?
Yes. IMF is resuming funding in Europe, either through the establishment of a greenfields operation or through acquisition of an existing business.
We’re also continuing to nurture and strengthen our relationships with the expert advisers we work with every day, including leading law firms, accounting and corporate advisory firms and specialist advisers in various fields. This includes working with innovative law firms as we’re exploring options such as risk sharing and containing legal costs.
What is it about the business of funding that fascinates you?
It’s a combination of financial services product accompanied by a sophisticated service, delivered by exceptionally competent people who are the best in the business. Funding is a growing industry and will become a mainstream financial option for businesses. It is exciting to be at the forefront leading that.
Also, our model is very differentiated in that we are hands-on and engaged throughout. We work hard to ensure cases are run strategically and commercially, costs are monitored and settlement or resolution is negotiated well in the best interests of clients.
We are a significant user of legal services and see many cases across various fields of law. We bring a unique perspective to the cases we fund. Every case is fascinating.
How does IMF Bentham raise funds, and what are the challenges involved?
Historically, we used debt, equity and internally generated cashflow to fund litigation investments. However, with the growth opportunities we have, such as the expansion of our geographic footprint and our desire to diversify risk, we have launched various fund structures, raising more than A$400 million in the past 12 months to fund future investments.
In February last year, we partnered with Fortress Credit Advisors in launching our US fund. This fund will deploy up to US$200 million for American litigation investments over the next three years.
We also recently launched two additional investment vehicles, with an aggregate committed capital of A$150 million, to fund future investments in Australia, Asia, Canada and Europe. In addition, we’ve secured a world-first after-the-event insurance policy to cover adverse costs claims.
How do you decide how and where to invest your funds?
We have investment managers who review opportunities every day, and undertake rigorous due diligence alongside clients and their legal advisers as well as expert consultants. We’re able to deploy funds across the globe and assess hundreds of cases every year. In fact, we assessed close to 1,000 cases last year.
Each case, or portfolio of cases, is evaluated on its own merit. We consider the strength of the claim, the client, the capacity of the defendant to meet any obligations, the estimated claim size and how much funding is required.
Then the final decision to invest is made by one of our various investment committees comprised of senior internal resources and two former judges: Vaughn Walker, former Chief Judge of the US District Court for the Northern District of California, and John Sulan QC, former Justice of the Supreme Court of South Australia.
Give us a few examples of the cases you’re funding and why you think they are important.
One of our cases is a class action against UGL for alleged breaches of the continuous disclosure provisions of the Corporations Act. The case is being run by Phi Finney McDonald and the lead applicant is ASX-listed Clime Capital.
Clime’s decision to be the lead is a reflection of the important role class actions play in helping to improve the standards of corporate governance. Another case we’re funding is against Ashley Services Group. That’s being run by law firm William Roberts and, somewhat similar to the UGL case, is another class action alleging breaches of the continuous disclosure and prospectus provisions of the Corporations Act.
Then there are two environmental class actions against the Commonwealth Government (Department of Defence) over its use of PFAS chemicals in fire retardants on air force bases in Williamtown, New South Wales, and Oakey, Queensland.
We’ll also be funding a third case for similar contamination in Katherine in the Northern Territory. Shine Lawyers is running the Oakey and Katherine cases, while Dentons is running the Williamtown one.
In these cases, our funding provides access to justice for affected people – homeowners, farmers, fishermen and other small businesses – who would otherwise be unable to pursue their rights.
What’s the best piece of advice you could give to a decision maker looking for corporate funding?
Talk to us, of course. All businesses are under pressure to do more with less. We all need to innovate to reduce risks and expenses while at the same time build a sustainable organisation, improve profits and maximise value for stakeholders.
If a company is not pursuing legal claims because of the resources and risks involved, our funding options can remove both of those concerns.
Funding will allow them to pursue legal claims while reserving capital for business-as-usual growth, as well as to leverage legal claims as assets akin to traditional asset classes, such as property. In addition, funding can bring value to their business by unlocking potential revenue in their claims.
Have you implemented any new strategies recently to ensure you remain ahead of your competitors?
In July 2015, following an extensive internal review process, we initiated a five-year business plan to reduce risk through diversification. That strategy sought to embrace systemic risk by mitigating the unusual risks that define our industry.
This is done through expanding our geographic footprint, increasing the number and types of matters we fund, sourcing alternative forms of capital, expanding our talent pool, and executing an operational and organisational restructuring.
As a result, we have established the platform for our future growth in an appropriate risk-managed approach. The plan is now in its third year and, while we remain exposed to some degree of idiosyncratic risk, we continue to migrate away from that exposure.