Last week, I presented Part 1 of my written interview with a former litigator turned legal funding founder, Lauren Harrison. That column presented her answer to the first of my three questions and focused on the lessons from her practice as a litigator that help inform her current work. What follows are Lauren’s answers to my remaining two questions. As usual, I have added some brief commentary to her answers below, but have otherwise presented her answers as she provided them.
Gaston Kroub: From your perspective as a funder, where are the biggest needs for IP groups and boutiques right now when it comes to adding talent?
Lauren Harrison: The single biggest need I see is for firms to focus on nurturing, valuing and hiring meaningful trial talent. There is a growing generational divide in the profession. When I came of age as a litigator, my mentors were seasoned trial lawyers who had come through the ranks trying dozens of cases a year. The industry has changed and those opportunities have dwindled. To say that most complex commercial and IP cases resolve before trial is an understatement. The statistics are stark. Depending on which resource you consult, figures show that 1% or fewer of federal and state court civil cases that don’t settle are resolved at trial, down from anywhere from 5% to 20% decades earlier. Oftentimes the denial of dispositive motions prompts settlement. I’ve seen materials suggesting that among litigators with at least five years’ experience, fewer than 30% have ever been to trial, and fewer than 10% have tried two or more cases. I don’t know how accurate those figures are, but they are consistent with what I have seen in my career.
From a funder’s perspective, the experience gap matters. The cases we finance require not just strong legal theories but the confidence and capability to take a case through verdict if necessary. We look for partners who have the appetite to try cases, who are comfortable with risk, and who are willing to bet on themselves and their work. Law firms and especially litigation boutiques should be intentional about cultivating that kind of talent. Encourage lawyers to take responsibility early and to seek courtroom exposure. Firms that invest in trial training and real advocacy opportunities will distinguish themselves in the market, and we already see that in both the funding world and in the corporate world, where companies scramble for new representation when it looks like their cases actually will go to trial.
GK: The decline of trial practice opportunities for litigators of all experience levels is something that should be concerning to all of us. What is striking is that even in this age of litigation funding-driven patent litigation, where cases are vetted and deemed trial-worthy by funders with a rigor that would have been considered extreme when I started my career, the numbers of IP cases that actually reach a jury is very small relative to the number of cases filed. In my view, it is unlikely that the number of patent cases worthy of funding will magically increase over time, so it may be left to funded clients taking the decision to actually get their cases before a jury for us to see more opportunities for trial practice skill development among the current crop of IP litigators. Alternatively, IP lawyers that want to try cases may need to get creative, perhaps by moonlighting as prosecutors or handling pro bono matters as a way of getting trial experience that will later make them more attractive when they submit their IP matters for a funder’s consideration.
GK: What can corporate legal departments do to maximize the benefits of litigation funding in pursuit of monetizing their company’s valuable legal claims?
Corporate in-house departments absolutely have a role to play. Too often, valuable commercial claims are resolved for pennies on the dollar and IP assets go undervalued because litigation is viewed purely as a cost center. We encourage in-house teams to think strategically about their claims, to recognize when an asset deserves to be pursued through resolution, and to partner with firms who are equipped to do that – which are the firms with the talent and trial chops to share risk with their clients. Funding plays a role here too. A facility from a funder may be earmarked to pay court costs, but cash is fungible. If a corporation retains a law firm on a contingent fee basis to pursue a commercial claim or to generate royalties from a patent portfolio, they can use litigation funding to cover expenses, and that funding facility transforms a contingent asset to cash on their balance sheet. Both counsel working on a contingent fee basis and the funder have strong incentives to vet the case’s merit before filing because both are providing resources on a non-recourse basis. This in turn provides the client with some assurance that it will not waste internal resources pursuing a frivolous claim. If the case succeeds, in-house counsel have turned their legal department into a profit center. In-house IP groups and other counsel should encourage this sort of proactive thinking around claims as assets, and litigation boutiques can help their clients to identify untapped value.
At the end of the day, a healthy litigation ecosystem helps businesses by ensuring that property and contract rights are valued and vindicated correctly. Experienced trial lawyers are at the center of that ecosystem, and I believe that capital markets that level the cost playing field are an essential part of it.
GK: Lauren’s answer should serve as food for thought for in-house counsel at all levels of the business world. If companies gave as much attention to thinking about how to deploy their IP assets as they do accumulating those assets in the first place, perhaps the sentiment that IP legal departments are cost centers can be shifted to a more balanced view among nonlegal corporate executives. As Lauren demonstrates, in-house counsel can and should be reaching out to funders and trial counsel for evaluation of their latent “legal assets,” irrespective of whether those assets consist of patent monetization opportunities or breach of contract claims, as just two examples. For their part, funders and trial lawyers can help by being more proactive about showcasing examples where their efforts have led to positive recoveries for companies that have entrusted them with pursuing their legal claims. Another benefit of highlighting those success stories is to help counter some of the anti-litigation funding narratives that still pervade the public discourse. I am sure there will be plenty of thought-provoking and diverse perspectives shared along these lines at Signal Peak’s upcoming symposium on February 26.
My thanks to Lauren for the insights and cooperation, and I wish her and her colleagues continued success with their new litigation funding venture and the upcoming symposium. On a personal note, it feels like a decade has passed since I was fortunate to join Lauren on a panel at a litigation funding conference just a few years ago, illustrating for me how intensive, interesting, and fast-moving our collective adaption as IP lawyers has been to the possibilities and challenges offered by the availability of third-party litigation funding for our clients and fellow lawyers. I have no doubt that Lauren and Signal Peak will help shape the industry’s progress over the coming years. I am always open to conducting interviews of this type with other IP thought leaders, so feel free to reach out if you have a compelling perspective to offer.
Please feel free to send comments or questions to me at gaston@k2k.law or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.
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