Quentin Pak is a Director at Burford, responsible for running our office in Singapore and expanding Burford’s presence in Asia and Australia.
As an Ambassador for the ICC International Commission of Arbitration for China’s Belt and Road initiative, how do you foresee litigation finance playing a role in this initiative in the future?
The Belt and Road initiative is an immense undertaking of construction and infrastructure projects. Given the scale and complexity of the venture—which involves convoluted cross-border elements and complex legal factors—disputes will inevitably arise. Many of these disputes will have considerable financial impact on the parties involved, and litigation or arbitration may be the only ways to resolve them. Legal finance can play an important role here, enabling parties to shift potentially extraordinary legal costs and risks to third parties that are better placed to bear them.
In the ICC Belt and Road initiative, you have one of the world’s leading arbitral institutions seeking to provide an efficient dispute resolution mechanism for a project of global significance. Burford Capital is honored to be involved and looks forward to sharing our experience and best practices in legal finance in the region.
You joined Burford shortly after litigation finance had been legalised in Singapore—what is the biggest (or most unexpected) change in the market since then?
I was fortunate to have joined Burford at a very interesting time in the industry, with the two major global dispute resolution hubs of Singapore and Hong Kong both opening up for legal finance. We, of course, financed the first Singapore-seated arbitration quite early on in July 2017.
One very encouraging observation from the past year is the pace at which awareness of legal finance as a risk-diversification tool has grown— not just among dispute resolution lawyers, but among the legal community generally and finance departments of large companies. The impact of this has been felt beyond the confines of Singapore-seated international arbitrations. We have worked with clients in Singapore and other Asian countries that are considering external funding for proceedings brought in other international dispute resolution centres, such as the United States and England. We also see growing interest among the insolvency legal and liquidator community to seek funding for liquidation proceedings. These developments will greatly contribute to the sophistication of Singapore companies in disputes management and help enhance Singapore’s profile as a global dispute resolution centre.
In the wake of Hong Kong implementing its Code of Practice for Third Party Funding of Arbitration on 1 February 2019, what is the most important impact you foresee this having on the market?
Since the Singapore Parliament passed similar legislation in early 2017, we have had a slew of funding inquiries from the region, and we expect a similar response from Hong Kong. Hong Kong is a key international arbitration hub, and there is a growing demand for arbitration funding due to escalating costs associated with arbitrations—which threatens to erode the value of corporate balance sheets by diverting capital into the arbitration that could otherwise be deployed to grow the business. By permitting a financing tool in demand by businesses operating in the jurisdiction, the framework will consolidate Hong Kong’s position as key global seat of arbitration.
From your perspective, what distinguishes Burford from other Asia-Pacific litigation finance providers?
There is a whole spectrum of litigation finance providers in Asia, from experienced professional funders like Burford, to multi-asset investment funds and family offices that see litigation finance as an alternative asset class for investment.
There are many factors that have contributed to Burford’s leading market position. First, the size of our capital base (being a publicly listed company since 2009 with a market capitalisation in excess of US$5 billion) allows Burford to commit capital to high-value, long-duration matters. Second, we pride ourselves in the calibre of people we hire, many of whom are experienced litigators, investment bankers and law firm veterans. I cannot overemphasise the value this wealth of expertise and experience brings to clients and their businesses. Nor can I overstate how problematic it can be to seek financing for commercial litigation or arbitration from a partner that doesn’t understand or can’t commit to its long timescale, or whose interests aren’t aligned.
A former lawyer and financier, what is the one thing you want lawyers in Asia to know about legal finance?
Legal finance is relevant to almost every party that pays legal fees and is not limited to impecunious parties. By removing the cost of litigation from corporate balance sheets and improving company cashflow, legal finance has considerable accounting and risk management advantages and is increasingly used by corporate GCs and CFOs as a powerful corporate financing tool. This aspect of legal finance may be underappreciated by lawyers in the region and is something they should talk to their clients about.
Top five… things lawyers don’t understand about bankers and vice versa
- Bankers want to get things done quickly. Lawyers focus more on getting things done correctly.
- Bankers see lawyers as the solution to all their problems. Lawyers see bankers as their sources of revenue.
- Having a conference call at nine o’clock in the morning is very late for bankers, but very early for lawyers.
- Bankers think about the next deal they need to get. Lawyers worry more about the last advice they gave.
- All being said, the two industries are not dissimilar to each other. Both are client-focused businesses seeking to provide solutions to complex problems.