Patrick Dempsey is a Director with responsibility for originating new business with US law firms and companies.
What led you to make the switch from being a Big Law litigator at Hogan Lovells to legal finance as CIO of Therium Capital Management?
I’ve always struggled with the efficiency of the billable hour model. That approach is often focused on inputs and not necessarily on outputs or results. Ultimately, billable hours have no correlation whatsoever to the final results achieved, as lawyers are rewarded for working longer, not smarter. I saw funding as the catalyst to fundamentally change the way the legal market works or at least to arbitrage the disconnect between clients looking for results-based engagements and firms structured around the billable hour model. When I had the opportunity to enter the legal finance space back in 2016, I jumped at it—and haven’t looked back.
Writing in Law360 in 2020, you predicted a rise in trade secret and patent litigation as a result of the pandemic. You were right: Patent litigation grew by 13% in 2020 and shows no sign of slowing. What factors led to this increase?
A rise in patent litigation has happened in other periods of economic uncertainty when companies looked for ways to create value or otherwise monetize assets to gain more capital to run the business. In this current cycle, there have also been some developments specific to the patent landscape that have made enforcing patents through litigation more attractive. Examples include the increase in denials of IPR institutions and greater clarity on what it takes to survive a section 201 challenge, at least at the motion to dismiss stage. Furthermore, given the greater access to legal finance for IP disputes, it’s no wonder there has been an uptick in patent litigation filings.
The patent industry witnessed a surge of mega-verdicts—large damage awards valued at $50 million or higher—in cases that went to trial in 2020 and 2021. Is this pandemic related or a trend that will continue?
This is absolutely a trend that will continue, separate and apart from the pandemic. Intellectual property plays a critical role in driving innovation and economic growth as well as in the disruption or creation of entire industries, ways of working, ways of communicating and entertainment. As a result, IP is incredibly valuable, and one need only look at the explosion of tech start-up valuations to see just how much so. So, when that IP is infringed, of course the resulting damage is significant. Given some of the favorable changes in patent law for patent holders, patent infringement verdicts will continue to be large for the foreseeable future.
How can legal finance help organizations protect their IP assets?
Companies spend incredible amounts of money developing their IP and are often then challenged to spend considerably more to protect that IP. Legal finance offers a means for companies to protect valuable IP assets while offloading the cost and risk of doing so. Instead of a company paying for expensive patent infringement litigation itself, Burford can fund the fees and expenses involved, freeing up the company’s cash flow. The company immediately benefits from the creation of available capital, which can be applied to various business needs, including further IP research and development. Burford can also accelerate a company’s expected recovery from IP litigation, extracting value from the IP assets in dispute before the enforcement process plays out in full.
What is one legal finance trend you’ve noticed since joining Burford?
Certainly the uptick in corporations using finance to monetize legal assets shows no signs of abating, and we talk to GCs on a regular basis about the benefits of monetization, which include enhancing liquidity, eliminating downside risk of litigation and increasing budget certainty. GCs and CFOs have begun to realize that pending litigation claims and awards hold tremendous—though illiquid—value. Burford pioneered monetizations, in which a legal finance provider advances a portion of the expected value of a claim, judgment or award, in 2018, and we continue to lead in this area. In fact, monetizations and claim families represented more than half of Burford’s new commitments in 2021.
5…best low-brow TV shows of the past decade?
From one to five in terms of personal preference, I would recommend the following five shows for entertaining (and sometimes nonsensical) TV watching:
- Grey’s Anatomy
- This Is Us
- The Circle