Chris Young – Omni Bridgeway
High stakes commercial litigation moves slowly—and ever so expensively. It takes time to resolve patent disputes, trade secrets cases, international arbitrations, breach of contract and more. To paraphrase the late Tom Petty, the waiting may be the hardest part.
For Chris Young, general counsel for North America with Australia-based litigation funder Omni Bridgeway, patience is not just a virtue in this business; it’s key to the business model.
Omni Bridgeway provides financing to law firms and companies to prosecute large-scale commercial litigation. The funders advance monies for legal fees, costs or working capital on a non-recourse basis with a view toward receiving an investment return. But if the underlying litigation is unsuccessful, the funder loses its investment.
Young has no background in litigation; he’s the company’s lead corporate and transactional lawyer for the U.S. and Canada, and he structures, drafts, negotiates and closes large financings for his team of investment managers.
Young’s letterhead recently changed when his then employer, IMF Bentham, completed a strategic merger with Netherlands-based Omni Bridgeway Holdings BV in November 2019 (with IMF adopting the Omni Bridgeway name globally). The merger enhanced the company’s merits-based funding model with a robust global enforcement and collection business—Omni operates across Australia, EMEA, the U.K., Canada and the U.S., with 160 professionals experienced in legal and recovery systems.
A risky proposition
“We embrace risk in our business,” the affable Young tells Vanguard from his Westport, Connecticut home. “We handicap what might happen in litigation, which is inherently speculative. There are so many layers of a claim to be examined carefully to ensure the investments we are making involve acceptable levels of risk.”
Young is clear that Omni is an investor, not a lender, as recovery is wholly contingent on outcome of litigation. “We are not charging an interest rate on a quarterly basis or requiring recourse from a client’s assets,” notes Young. “The litigation is our sole asset, and we are underwriting the merits, claim size, amount of prospective damages, collectability—and we only recover if and when the litigation is successful.”
Given the large dollars at stake, due diligence is paramount and led by investment managers who are former litigators with a decade or two of experience with large law firms.
One thing that separates Omni Bridgeway from other players, Young says, is the specificity of its U.S. investment team’s expertise. In addition to general commercial litigators as investment managers, Omni touts a patent litigator to underwrite IP and patent matters, an insurance litigator to handicap insurance disputes, an international arbitration expert to analyze international arbitration claims, and three restructuring attorneys considering funding opportunities in the bankruptcy space.
Bigger deals for a larger company
As the company has grown since he joined in 2017, Young has seen explosive growth in the size of deals, Omni now reviewing investment opportunities up to $150 million.
“The largest deal I papered in 2017 was for $12 million, which was a bit unheard of back then,” says Young. “We have funded two $40 million deals in the last two years and have portfolio deals in place that may grow to over $100 million. The larger dollar amounts are where it gets exciting for a deal lawyer like me.”
The risks are greater with larger deals—especially when some companies seeking capital are in financial distress. Since COVID-19, Omni has been approached by clients that need capital, not only to prosecute claims but to survive.
When working with these companies, he considers not only the risk of the underlying litigation, but whether Omni’s client may restructure, file for bankruptcy, liquidate or strike a deal with equity holders or creditors. He undertakes due diligence and determines whether a transaction needs to be structured to cover insolvency risk through consents or indemnities from lenders or private equity owners.
Insurance for litigation risk
Given the risk associated with the business model, the question becomes whether a hedge is available to cover Omni’s downside. Insurance companies have begun to underwrite this risk, serving as evidence of how the litigation finance world is evolving.
“The insurance coverage is an incredible value add for a funder,” he says. “Insurers do their own due diligence, often with the help of their own outside counsel, before agreeing to cover our downside. And we can ensure that our ‘at risk’ capital for a deal is much lower.”
For an upfront premium, insurance companies may cover a percentage of a litigation finance investment. Young notes that they have recently developed rapport with CAC Specialty, a division of Cobbs Allen, which arranged coverage from an insurance tower on a $9 million judgment purchase by Omni.
“The CAC Specialty team is responsive, creative and client focused,” Young recounts. “I couldn’t be happier with their service.”
With the insurance coverage come robust policies that must be carefully crafted. “I have to make sure that if the case is unsuccessful, our insurance coverage will not be subject to an exemption,” he says.
A growing role
Young handles not just U.S. and Canadian transactions, but other matters that come with the territory of an expanding enterprise.
During his Bentham years of 2017 to 2020, Young assisted in assembling a $500 million U.S. investment fund and registering as an investment adviser with the SEC. He serves as the chief compliance officer for the investment adviser and stands ready for additional capital raising, something he thinks may be on the horizon with the increase of overall ticket size.
“Investors like litigation finance because it is an alternative asset not correlated to the traditional markets, and returns can be handsome,” he says. “And we have the right team to underwrite these risks and handicap a successful outcome.”
Young’s creds make him the right teammate. After obtaining his BA from Yale University in 2004 and graduating from New York University School of Law with his LLM in taxation in 2008, he cut his teeth with two law firms before transitioning in-house with Royal Bank of Scotland from 2012 to 2017.
Litigation finance was a new concept to Young when he joined Bentham, but he has come up to speed. “This role is fantastic, because I cover a variety of types of work in a burgeoning market and no single deal is the same. I am very lucky to have a different type of transaction to work through every day.”
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