Last week, Brown Rudnick hosted its second European Litigation Funding Conference, which brought together a crowd of international thought-leaders from across the industry, and provided attendees with an agenda filled with insightful discussions on a wide array of issues. The conference proved to be a beneficial experience for all, with Augusta Ventures co-founder Robert Hanna describing it as ‘the pre-eminent litigation funding conference in Europe, if not the world’.
Following a successful inaugural showing in 2022, this year’s event reinforced the maturation of the litigation funding industry, with panelists keen to dive into the opportunities and challenges that funders, law firms and other industry participants are facing. In addition to the high-level topics that continue to shape the market such as ESG and collective action litigation, the conference featured panels on areas that are still maturing within the litigation funding space, including crypto litigation and opportunities for a secondary market.
After an introduction from Brown Rudnick partner Elena Rey, the conference kicked off with a keynote address delivered by Anya Neistat, Legal Director of The Docket initiative at the Clooney Foundation for Justice. Having recently returned from conducting research and investigations in Ukraine, Neistat spoke of the importance of litigation which can help provide justice for victims of atrocities and war crimes. Highlighting the fact that survivors and NGOs often lack the means to take on complex litigation, Neistat emphasised that ‘litigation funding can be absolutely critical to allow survivors to get on the offensive.’
The first panel of the day featured a unique discussion of the emergence of crypto litigation, with the panelists discussing the primary challenge of accurately valuing this bespoke practice of litigation, as well as the underlying crypto-related assets. Moderating the panel, Stephen Palley of Brown Rudnick pointed out that despite the relatively new state of crypto litigation, he has found that courts are adapting well, and has ‘yet to find a judge who just says, “I don’t get it”’. Whilst members of the panel disagreed on whether all cryptocurrency is fundamentally ‘snake oil’, all agreed that valuation was the most important hurdle to overcome, with BDO’s Simon Greaves stating that a major issue is ‘how do you value it at the point of recovery’ when the worth of these assets can vary so wildly over time. James Collins KC of Essex Court encouraged industry participants to take a broad view of what crypto litigation might entail, suggesting that the future will see ‘claims in almost every area of law’.
Steven Friel, CEO of Woodsford, kicked off the discussion by defining the current environment as one where ‘opportunities vastly outweigh challenges’ and praised the CAT’s willingness to ‘have an expansive definition of what is a competition claim’.
Whilst the speakers expressed some concern about the ongoing Supreme Court appeal, which, as part of the defence strategy, is attempting to call into question certain aspects of the claimant’s funding agreement in the CAT – that strategy has failed at first instance and in the Court of Appeal. There is a high level of sophistication among the judiciary in this area and significant support for funding as a part of the landscape of collective actions in the UK. Without funding, good claims simply are not viable.
After a short break, the next panel looked at the investor perspective on litigation funding as an asset class, with Chad Clamage of Victory Park beginning the discussion by reinforcing the central principal that litigation funding remains ‘attractive as an uncorrelated asset class’. Robert Hanna stated that ‘there has never been a better time to be a funder’ with demand at an all-time high, and that ‘in the current economic environment, liquidity is going to be king’, as a wider investor base for funding emerges. D.E. Shaw’s Sarah Johnson cautioned that duration still remains an obstacle for many investors, highlighting that durations that start to approach 7 to 10 years can block investment ‘even if all the other factors are there’. Nick Moore of AON put the spotlight on the increasingly beneficial relationship between funders and insurers, describing it as a situation where ‘two industries with a history of mutual cynical disregard, are now coming together’.
The morning’s final session touched on the in-house perspective on litigation funding, with Suber Akther of Siemes Energy describing the difficulties faced by legal departments where they are ‘always under pressure’ to reduce costs and increase efficiency. Rocco Pirozzolo from Harbour Underwriting advised that whilst it may not always be viable for in-house teams, the best approach is for them to ‘look at the options out there, be open to it’. However, he also noted that work still needs to be done to counter the narrative that funders will control litigation, stating that ‘this myth has to be dispelled’. Andrew Jones of Fortress Investment Group reframed the issue at stake for in-house counsel, arguing that ‘a general counsel is an investor in litigation just like a funder, the only question is whose money you are going to use’.
The hot topic of portfolio and law firm financing kicked off the afternoon’s agenda, with Burford Capital’s Leeor Cohen emphasising that one of the core fundamentals for this approach is that a ‘portfolio is not worth more than what is actually in the portfolio’. Looking at the factors that funders must consider in portfolio deals, Tom Steindler from Exton Advisers highlighted four key considerations: open versus closed portfolios, the identity of the borrower, what the capital will be used for, and the method of repayment of proceeds. The panel closed its discussion by looking at future trends with Cohen and North Wall Capital’s Alex Garnier agreeing that we may see the less-specialised and opportunistic financiers exit the market, whilst Chris Neill of Pogust Goodhead predicted more collaborative efforts in the industry.
The penultimate panel for the day saw a fascinating discussion around collective redress in Europe, with panelists representing firms in France, Germany, the Netherlands and Spain. Emily Woolcott from Woodsford stated that ‘the Netherlands is the most attractive EU jurisdiction,’ which was widely echoed by the other panelists. Paul de Servigny from IVO Capital contrasted the French market’s unwelcoming environment for class actions with Spain, which stands out as a market ‘becoming an attractive location’. Discussion around the EU’s new collective redress directive featured interesting insights into the differing routes toward implementation in each country, with Tobias Glienke of Greenfort arguing that its introduction ‘could be a real gamechanger in Germany’, where the draft law looks to go beyond the directive by allowing small business participation and also include civil claims. The panel also discussed the crossover between the directive and the prominence of ESG litigation in Europe, with Frank Peters from Bureau Brandeis highlighting that environmental cases will be a major feature in the Netherlands, particularly around ‘polluter pays’ and greenwashing claims.
To close out the day, the much-awaited panel on secondary market opportunities provided attendees with an overview of the state of that market, as well as the potential routes for growth in the future. Patrick Rode from Deminor differentiated between jurisdictions, and stated that where countries have a more mature primary litigation funding market, we are also seeing the development of a more ‘advanced secondary market’. Therium Capital Management’s Ben Smyth highlighted that the very concept of secondary deals still faces challenges, as there is ‘a lot of cynicism why the seller wants to get rid of the asset’. The issue of transparency was also one of the main challenges raised, as Ben Moss from Orchard Global asserted that for trust in sellers to exist, ‘the reasoning needs to be visible’. In looking to further develop the market, David Vanaskey from Wilmington Trust Company suggested that lessons can be learned from outside the industry and that there is a ‘need to use technology solutions that are utilised in other secondary markets’.
Overall, Brown Rudnick’s second European Litigation Funding Conference once again demonstrated the breadth of experience in the industry and managed to deliver a full day of engaging content with speakers bringing current and relevant insights to each discussion. Attendees across the event remarked on the quality of panelists, which was facilitated by Brown Rudnick’s team of moderators who skillfully guided each discussion across interesting and impactful topics.
