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Key Takeaways from IMN’s 5th Annual Financing, Structuring and Investing in Litigation Finance

June 8, 2023

Key Takeaways from IMN’s 5th Annual Financing, Structuring and Investing in Litigation Finance

On Wednesday, June 7th, IMN hosted its 5th annual Financing, Structuring and Investing in Litigation Finance conference. LFJ attended the event and covered various panel discussions on topics ranging from key trends and developments, ESG initiatives and insurance products. Below are some key takeaways from the event. The first panel of the day focused on broader trends and developments impacting the Litigation Finance industry. The panel consisted of Douglas Gruener, Partner at Levenfeld Pearlstein, Reid Zeising, CEO and Founder of Gain (formerly Cherokee Funding & Gain Servicing), William Weisman, Director of Commercial Litigation at Parabellum Capital, Charles Schmerler, Senior Managing Director and Head of Litigation Finance at Pretium Partners, and David Gallagher, Co-Head of Litigation Investing at the D.E. Shaw Group. The panel was moderated by Andrew Langhoff, Founder and Principal of Red Bridges Advisors. One of the most interesting back-and-forths came on the issue of secondaries, as Doug Gruener noted that ‘There were a large number of investments made five to seven years ago, so the opportunity is ripe both on the demand side and supply side.” Andrew Langhoff, the moderator, responded that there are major hurdles involved in facilitating a secondaries market, such as questions around pricing, execution and management of the claims, to which other panelists agreed. However, Charles Schmerler pointed out that this industry is like any other capital markets industry, and to the extend that a secondaries market can provide liquidity and be a useful resource, he would be surprised if five years from now we’re not all reminiscing about how we once questioned the efficacy of a secondaries market in Litigation Finance. Perhaps the most timely panel of the day was on insurance, and its impact on the Litigation Finance market. The panel consisted of Brandon Deme, Co-Founder and Director at Factor Risk Management, Sarah Lieber, Managing Director and Co-Head of the Litigation Finance Group at Stifel, Megan Easley, Vice President of Contingent Risk Solutions at CAC Specialty, and Jason Bertoldi, Head of Contingent Risk Solutions at Willis Tower Watson. The panel was moderated by Stephen Davidson, Managing Director and Head of Litigation and Contingent Risk at Aon. Brandon Deme pointed to the rapid growth of the industry: “The insurance market is expanding. We’ve got insurers that can go up to $25MM in one single investment. When you put that together with the six to seven insurers who are active in the space, you can insure over $100MM. And that wasn’t possible just a few years ago.” One interesting point of discussion was on how to engender more cooperation between insurers and litigation funders, given that the two parties are at odds on issues relating to disclosure and regulatory requirements. Jason Bertoldi of Willis Tower Watson noted that almost every carrier who offers this product will have some sort of interaction with funders, either directly or indirectly. And while there is opposition to litigation funding from insurers around frivolous litigation and ethical concerns, there are similarly concerns amongst insurers around adverse selection and information asymmetry. So the insurance industry has to get more comfortable with litigation finance, and vice versa. The panel on ESG consisted of Viren Mascarenhas, Partner at Milbank, Nikos Asimakopoulos, Director of Disputes at Alaco, and Rebecca Berrebi, Founder and CEO of Avenue 33, LLC. The panel was moderated by Collin Cox, Partner at Gibson Dunn. This discussion touched on the opportunities afforded to funders by ESG efforts, as well as the challenges this emerging sector presents, such as diligence problems and confusion around how multinational ESG initiatives might impact state and local laws. Examples were provided around whistleblower claims, international arbitration efforts, supply chain issues in foreign jurisdictions. Other panels included discussions on the economics of the Litigation Finance market, strategies for mass torts investments, regulatory issues, and a small group meeting on women in Litigation Finance. Overall, IMN’s 5th annual Litigation Finance event highlights the growth and maturation of a nascent industry, and the range of interested parties in attendance (from funders to law firms to insurance providers to asset allocators) underscores the sector’s long-term sustainability.

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Commercial

Perpetual Lifts Omni Bridgeway Stake to 15.4% After Months of Buying

Perpetual Limited has increased its holding in litigation funder Omni Bridgeway to 15.403%, according to a substantial holding notice lodged with the ASX, consolidating its position as one of the funder's largest institutional shareholders.

As reported by Kalkine Media, the Form 604 shows Perpetual and its related bodies corporate now control 44,613,540 ordinary shares carrying 15.403% of voting power in Omni Bridgeway, up from 41,291,970 shares and 14.256% at the time of the previous notice in April 2026. The change in relevant interest was recorded on September 18, and company secretary Sylvie Dimarco signed the notice on September 22.

The annexure to the filing sets out a two-stage pattern of trading by Perpetual Investment Management Limited between June 12 and September 18. Perpetual was a net seller through June and July, with disposals executed via custodians Citicorp Nominees and HSBC Custody Nominees (Australia). From late July onward the direction reversed, with purchases recorded on multiple dates including August 27 and 28 and across September 15 to 18, executed through both custodians.

The accumulation comes during a period of pronounced volatility for the ASX-listed funder. Omni Bridgeway reported record FY26 commitments and investment proceeds alongside a 89% fall in net profit, and was recently dropped from the S&P Global BMI index. A sizeable institutional shareholder adding to its position against that backdrop is a notable signal for a sector where public-market sentiment has lagged operational performance.

Omni Bridgeway has not commented on the change in Perpetual's holding.

Commercial

Funder’s 20% to 25% Cut Draws Scrutiny in Macquarie Shield Class Action

A funded class action filed against Macquarie Investment Management over the collapse of the Shield Master Fund is drawing criticism from within the Australian advice industry, with questions being raised over whether litigation funding is the right route for investors who have already been partially compensated.

As reported by ifa, the action was served on September 17 on behalf of Rachelle Dessent and roughly 2,800 account holders who lost superannuation in the Shield collapse. Gordon Legal, which is running the case, alleges investors have not been fully compensated despite the $321 million Macquarie paid out last year covering total amounts invested, after the firm admitted failures related to Shield. The claim seeks the growth those savings might have achieved had they remained invested elsewhere, together with damages for distress. Netwealth was served with draft documents for a separate potential class action on September 21.

Central to the criticism is the cost of the funded route. Save Our Super advocate Melinda Kee, who told ifa that Gordon Legal approached her last year and that she "wasn't interested," pointed to the firm's own disclosure that the litigation funder is entitled to between 20% and 25% of any settlement fund if the action succeeds, with legal costs also payable from the group's award subject to court approval.

Kee argued that pursuing claims through AFCA and the Compensation Scheme of Last Resort is free and delivers compensation directly to investors. With average losses around $120,000, and lower for many Macquarie and Netwealth investors following the return of capital, she suggested many residual claims could fall within the $150,000 CSLR cap.

The case turns in part on so-called "but for" losses. Financial Services Minister Daniel Mulino recently confirmed that only actual losses will be compensated through the CSLR from July 1, 2027.

Commercial

Court of Appeal Rules Clients Cannot Force Disclosure of Secret ATE Commissions

The Court of Appeal has ruled that former clients have no mechanism under the Solicitors Act to compel their solicitors to reveal commissions earned on after-the-event insurance, even while criticising firms that refuse to answer the question as behaving unwisely.

As reported by The Law Society Gazette, the judgment in Turner v Coupland Cavendish upheld a challenge brought by the solicitors and found there is no route through a Part 18 request for further information to force disclosure in a Solicitors Act costs assessment. Lady Justice Andrews, giving the lead judgment, said there was no "shortcut" for former clients seeking information about secret commissions on ATE premiums.

Andrews nonetheless made clear her discomfort with the position. As a fiduciary, she said, a solicitor ought to tell a client about any commission if asked, and where a firm refuses there appears to be no easy or cost-effective remedy. She described the solicitors' conduct as "unattractive," "unwise" and "unedifying," and acknowledged the unfairness of requiring a client to produce evidence that a commission was paid in order to obtain the evidence needed to prove it, when that evidence sits with the solicitor. She stopped short of proposing a fix, flagging it instead for those able to change the rules or the law.

The sums at stake in the underlying matter were modest. The ATE premium on the original personal injury claim was £245, with any commission likely to be no more than £25. Andrews observed that the principal beneficiaries of a successful challenge would be those who have built an industry out of challenging solicitors' costs. The claim was led by Leeds firm JG Solicitors.

At first instance, Costs Judge Rowley refused the Part 18 request. Mr Justice Sweeting reversed that decision in the High Court, and the Court of Appeal has now restored the original position.