Having recently broken the news that liquidator Neil Cussen was departing the Sussex Street Sydney offices of Cor Cordis ahead of a planned foray into litigation funding, iNO this week received a call from West Australian legal entrepreneur Aaron McDonald, eager to let us know that he too was active in the dispute financing arena.
“The truth is that the Perth litigation market is very collegiate,” McDonald began.
“People from Perth want to use other people from Perth but a lot of litigation funders from Sydney or Melbourne come over here to meet for coffee but they don’t have the networks.”
McDonald on the other hand, would seem to have the network. And the connections and the access to the sort of funding sources necessary to give Hartwell Funds, his co-owned venture in the small to medium litigation funding space a decent shot.
Critical to the success of the venture is McDonald’s partner in the venture, West Australian business luminary John Poynton, who owns the other 50 per cent of holding company Hartwell Funding Pty Ltd.
Poynton, McDonald said, had been encouraging him to start something in the litigation funding space for some time, the pair having known each other for years. McDonald said his father had been a stockbroker at the same time as Poynton many decades ago.
More to the point, Poynton’s contact book will be a priceless asset for McDonald as he strikes out on a new career pathway that promises to lead him away from run-of-the-mill lawyering.
“It’s a space that’s always interested me because it’s a way to get away from billable hours,” McDonald said, while explaining why he believed there was room for a WA-born and bred entrant now that behemoth Omni Bridgeway had largely vacated the smaller end of the market.
“Omni Bridgeway has become so successful they barely look at claims less than $15 million,” McDonald said, pointing out that the firm’s head Andrew Saker is now based in New York.
“There is so much opportunity out there in respect of funding liquidators to pursue breaches of directors’ duties, insolvent trading and to conduct public examinations,” he said, adding that whilst they weren’t averse to taking on assignments of choses in action, Hartwell was more likely to fund liquidators to pursue claims.
Hartwell Funds launched late last year and has already funded its first claim, an arbitral proceeding in a construction case for about $3 million.
McDonald said Hartwell’s recoveries would depend on the duration of the matter. If for example a resolution was achieved within 12 months they’d take 30 percent on top of costs, if it took 24 months, the take after costs would rise to 40 per cent.
West Australia he said, was crying out for a litigation funder in the SME space with prudential oversight, market credibility and a commitment to sound corporate governance principles, referencing the collapse late last year of GT Capital.