Portfolio
Privately held litigation funder
How do you reward staff for decisions that take years to play out? This innovative litigation funding firm turned to Juno Partners to help design an industry leading approach.
Background
Our client, a rapidly growing privately-held litigation funding firm with operations in the UK, North America and Australia faces increasing competition for staff. Not only is the litigation funding industry continuing to grow strongly, but the key skills required are also highly sought after by law firms, investment banks and corporates.
In response to that competition our client offers a range of non-financial perks including opportunities for overseas placement and education and an in-house concierge service, but remuneration and particularly the opportunity to share in the success of the firm has always been seen as a vital ingredient.
The problem
The problem was how? As an unlisted entity, offering equity would be complicated:
how much of the business should they make available to participants;
how would it be valued each year;
would it be earned or gifted;
what rights would a participant have to the equity granted if they left the business; and
what say would the new shareholders have over dividend policy or even the sale of the business?
Making the situation even more complicated was the fact that the profitability of decisions made today by employees – for example whether to fund a case or not – may not play out for years to come. How do you measure performance in that instance?
The solution
The Board recognised the need for specialist, independent advice and engaged Juno Partners to work with them on this complex problem.
Drawing on interviews with directors and key staff and our deep experience in incentive plan design and implementation, we developed a new, but intuitive measure of financial performance that took into account the current and forecast performance of the business on an investment-by-investment basis. We then designed an incentive plan that transparently shared the wealth being created with key staff with safeguards that allow for the imprecision of forecasts, but still drive accountability.
Once approved, we partnered with our client to implement the new design, documenting the plan, amending reporting and educating staff. The result is an industry leading reward program for our client’s senior people that not only allows them to better understand and manage the wealth they create for owners, but differentiates them in the highly competitive market for top talent.