For Daniela Raz, fresh from her role as a general counsel and long-time litigator, litigation finance presents an unmatched opportunity for companies to turn their in-house legal departments into something more than a cost center focused on risk.
“Funding can be transformative for a corporate legal department. It gives GCs the ability to run their departments like any other department in the company that is accessing external capital,” Raz says. “In this case, it just happens to be litigation that is the collateral.”
Raz joined Bentham IMF in November as an investment manager and legal counsel based in the company’s New York office. There, she is focusing on identifying and evaluating litigation investment opportunities for the company.
Her unique experience as a GC and company executive—as well her long and successful career as a litigator—gives her an insider’s perspective into the potential benefits of funding for prospective clients. In fact, she has direct experience on the other side of the funding relationship. While serving as GC and chief operating officer of LightRay Companies, a distressed asset investor, she helped the company explore funding opportunities for complex commercial litigation matters.
Among the key advantages Raz sees is funding’s ability to help enterprises ease the impact of litigation spending on the bottom line—a particular problem for public companies that face intense investor scrutiny over earnings. “A savvy GC or CFO understands how legal expenses impair earnings. Funding can completely remove that problem from the balance sheet,” Raz says. “Moreover, if you’re pursuing litigation and you have a recovery, that has to be accounted for as an extraordinary income and can also affect your earnings adversely. These problems can be alleviated with funding.”
Reputable funders like Bentham take extensive measures to fully evaluate the merits and potential for success of the cases in which they invest. For its part, Bentham deploys a large team of highly experienced litigators who conduct deep due diligence into potential cases. This, too, “is a tremendous resource from a company’s perspective,” Raz says. “And the fact that Bentham does that on its dime is a huge advantage to a company that’s looking to validate an existing litigation strategy or pursue a new one.”
Prior to her work with LightRay, Raz spent 15 years as a partner and associate at Kasowitz Benson Torres LLP, a law firm focused exclusively on litigation matters. At Kasowitz, Raz says she had the unique experience of working at a firm that took on plaintiffs-side cases, but had resources more commonly associated with a defense firm. “Funding feels like that to me,” Raz says. “You get to help clients take on plaintiffs-side matters, and they are funded in a way that allows the merits of the case to determine if it goes forward—not the level of resources.”
Many companies don’t have that luxury. They struggle to bring affirmative litigation because it’s expensive, risky, or it presents a potential drag on corporate profits. “Funding can give them options,” Raz says. “It can incentivize outside counsel to put skin in the game, and it can allow companies to run their balance sheet in a way that doesn’t affect the company’s earnings.”
Raz started her career as a public interest lawyer after earning her J.D. from UC Berkeley’s School of Law. She clerked for Judge I. Leo Glasser at the U.S. District Court for the Eastern District of New York before joining Kasowitz as an associate in 2001. She became a partner at Kasowitz in 2007 and moved in-house to LightRay in 2016.
Joining Bentham, Raz says, gives her an opportunity to “do something more creative and entrepreneurial. I’ve followed litigation finance for many years, and it’s a great time to join the industry. It’s more established now, and yet it still feels very innovative. With Bentham in particular, it’s a very exciting time, as I’m arriving just as we have raised a half a billion dollars of new capital to deploy.”
And with her extensive law firm and in-house background, Raz says that she can relate to the corporate legal departments and CFOs who are just now discovering litigation finance: “I view my role as helping inform those people about what a game-changer funding can be.”