In a blockbuster battle between entertainment industry giants, litigation is merely a cost of doing business, but it doesn’t have to be with the use of litigation finance.
Funders like Bentham IMF finance meritorious commercial litigation and arbitration cases on a non-recourse basis worth millions of dollars. Our requirements are that funding in a single case must exceed $1 million, with an anticipated judgment of $10 million or more (exclusive of punitive damages). Funding in a portfolio of cases must exceed $2 million and in practice, the average investment tends to be much higher. A defendant must also have a clear ability to pay a judgment and the case must have strong indicia of success.
For instance, litigation finance could have been helpful in the famous battle of the ”Brothers,” where the Weinstein Brothers sued Warner Brothers for $75M in damages over a dispute relating to profits from The Hobbit trilogy.[i] In short, the Weinsteins alleged the contract they entered into with Warner Brothers for the sale of the rights to The Hobbit called for a payout of profits from all three movies, whereas Warner Brothers contended they were owed profits only from the first movie in the series. An arbitrator eventually sided with Warner Brothers.
At the time the Weinsteins brought suit, their company was making millions (as was Warner Brothers). At the time, both companies surely had the capital to cover the dispute (though perhaps not simply sitting unallocated in their respective legal department’s budgets). However, with litigation funding, either studio could have used it to create a revenue event for accounting purposes rather than taking a hit against their legal budget. How would this work? For example, Warner Brothers could have used portfolio financing to cover their legal defense expenses and in return, the funding investment would be cross-collateralized by two or more plaintiff-side matters. Upon a successful recovery in any one of the matters in the portfolio, the funder would receive a return on its investment.
As another example, a funder might also help reduce out-of-pocket costs and improve the bottom line in a cast insurance battle. Cast insurance provides extra dollars should a cast member fall ill or die, allowing the company to finish a film or t.v. show. If the insurer rejects a claim or provides a low settlement amount, the studio may need to sue to enforce its policy—but that lawsuit will take time. Because funding is non-recourse, the financing is flexible and can be used for any purpose. Working with Bentham IMF, the studio may even be able to free up capital to help finish its film while simultaneously pursuing claims against the insurer.
Developing a relationship with a funder that is adept at financing entertainment industry claims can be a boon for outside counsel as well. Most law firms are looking to attract high-profile clients. If they want to be competitive, they can use litigation funding across a portfolio of cases, enabling the firm to offer alternative fee arrangements and creative solutions for reducing client risk.
To discover more about litigation financing for entertainment-related claims and how your company or law firm can benefit from our scale and experience to unlock the value of litigation assets, contact us for a consultation. Also, visit our Litigation Finance Education Center to learn about the CLE seminars we offer as well as take a minute to review our recent client podcasts, blog posts, and videos.