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  • An LFJ Conversation with Rory Kingan, CEO of Eperoto
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Case Developments Commercial

Pogust Goodhead Seeks Interim Costs Payment

By John Freund |

Pogust Goodhead, the UK law firm leading one of the largest group actions ever brought in the English courts, is seeking an interim costs payment of £113.5 million in the litigation arising from the 2015 Mariana dam collapse in Brazil.

According to an article in Law Gazette, the application forms part of a much larger costs claim that could ultimately reach approximately £189 million. It follows a recent High Court ruling that allowed the claims against BHP to proceed, moving the litigation into its next procedural phase. The case involves allegations connected to the catastrophic failure of the Fundão tailings dam, which resulted in 19 deaths and widespread environmental and economic damage across affected Brazilian communities.

Pogust Goodhead argues that an interim costs award is justified given the scale of the proceedings and the substantial expenditure already incurred. The firm has highlighted the significant resources required to manage a case of this size, including claimant coordination, expert evidence, document review, and litigation infrastructure. With hundreds of thousands of claimants involved, the firm maintains that early recovery of a portion of its costs is both reasonable and proportionate.

BHP has pushed back against the application, disputing both the timing and the magnitude of the costs being sought. The mining company has argued that many of the claimed expenses are excessive and that a full assessment should only take place once the litigation has concluded and overall success can be properly evaluated.

The costs dispute underscores the financial pressures inherent in mega claims litigation, particularly where cases are run on a conditional or funded basis and require sustained upfront investment over many years.

Case Developments Commercial

Litigation Capital Management Faces AUD 12.9m Exposure After Class Action Defeat

By John Freund |

Litigation Capital Management has disclosed a significant adverse costs exposure following the unsuccessful conclusion of a funded Australian class action, underscoring the downside risk that even established funders face in large-scale proceedings.

An article in Sharecast reports that the AIM-listed funder revealed that the Federal Court of Australia has now quantified costs in a Queensland-based class action brought against state-owned energy companies Stanwell Corporation and CS Energy. The court ordered costs of AUD 16.2 million in favour of each respondent, resulting in a total adverse costs award of AUD 32.4 million. The underlying claim was dismissed earlier, and the costs decision represents the next major financial consequence of that loss.

While LCM had after-the-event insurance in place to mitigate adverse costs exposure, that coverage has now been exhausted. After insurance, an uninsured balance of AUD 19.9 million remains. LCM expects to contribute AUD 12.9 million of that amount directly, with the remaining balance to be met by investors in its Fund I vehicle.

The company has emphasized that the costs awarded were standard party-and-party costs, not indemnity costs, and stated that the outcome does not reflect adversely on the merits of the claim or the conduct of the proceedings. Nonetheless, the market reacted sharply, with LCM’s share price falling by more than 14% following the announcement.

LCM also confirmed that it has already lodged an appeal against the substantive judgment, with a two-week hearing scheduled to begin in early March. In parallel, the funder is considering whether to challenge the costs quantification itself, alongside an appeal being pursued by the claimant. The company noted that discussions with its principal lender are ongoing and that its previously announced strategic review remains active, with further updates expected in the coming months.

Commercial Special Features

An LFJ Conversation with Rory Kingan, CEO of Eperoto

By John Freund |

Rory is the CEO of Eperoto, championing the use of decision analysis to improve clarity around litigation and arbitration risk. Originally from New Zealand, he's worked within legal technology for decades, delivering innovative solutions to the top global firms, government, as well as specialist legal boutiques.

Below is our LFJ Conversation with Rory Kingan:

Eperoto’s approach emphasizes using lawyer judgment rather than AI or data-driven models. Why is that distinction important, and how does it build trust among lawyers, funders, and other stakeholders?

At Eperoto, we believe that lawyer judgement is the foundation of credible litigation and arbitration analysis. High-stakes disputes aren’t like consumer tech problems where large-scale historical data exists and small inaccuracies are insignificant. They're unique, context-dependent situations where experience and nuanced legal reasoning are irreplaceable. In most commercial cases, AI simply doesn’t have the training data or contextual nuance to make defensible predictions. Right now it also struggles with the complexity of jurisdictional variation and the role of precedent. No funder or sophisticated client should rely on a generic model to value a multi-million-dollar dispute.

Litigation and arbitration are inherently grey-zones. Outcomes turn not only on points of law, but also on credibility assessments, witness performance, tribunal psychology, and how fact narratives are perceived. These are areas where AI is weak and where judges and experts routinely disagree. Research across behavioural psychology and negotiation theory shows that human reasoning is still essential in these environments. Lawyers will often use an AI tool as a sounding board to explore different ideas and arguments, but ultimately they rely on their own judgement and reasoning to assess how different elements of the case are likely to unfold.

Eperoto is therefore built around a simple principle: Lawyers make the judgement; the platform helps them to structure and quantify it.

This distinction builds trust for three reasons:

  1. It reflects how top practitioners already work. Clients retain leading counsel for their experience, intuition, and ability to form a reasoned opinion, not for machine-generated answers.
  2. It avoids “false precision.” AI-driven confidence levels often create a misleading impression of certainty. Eperoto keeps the human experts in control.
  3. It aligns with stakeholders’ expectations. Funders, insurers, GCs, CFOs and boards want a lawyer’s professional assessment, but expressed in a structured, decision-analytic way. Eperoto strengthens, rather than replaces, that judgment.

The result is a decision-analysis workflow that is transparent, explainable, and fully grounded in legal expertise. Precisely what stakeholders need to trust the numbers behind a funding or settlement decision.

When litigation funders assess potential cases, they often rely on intuition and experience. How does Eperoto help them quantify risk and likely outcomes in a way that strengthens those investment decisions?

Every litigation funder knows that a case is a contingent asset, and valuing that asset depends on understanding the likelihood of outcomes at trial or arbitration. Yet the process used to reach those views is usually unstructured, highly subjective, and difficult to defend when presented to an investment committee or external partner.

Eperoto addresses this by helping lawyers to apply decision-tree analysis. This is a method used for decades in energy, pharma, finance, and indeed litigation. Instead of relying purely on intuition, lawyers:

  1. Map the key uncertainties. What issues drive liability? Likely quantum outcomes? How might damages be reduced? Where do procedural or evidentiary risks sit?
  2. Assign probabilities grounded in legal judgment. No AI predictions: purely the lawyers’ professional view expressed clearly rather than implied.
  3. Estimate costs & cost-shifting, interest, and any enforcement risk.

From this the tool calculates a visual quantitative risk report, showing funders the likely outcomes, expected value, downside scenarios, tail risk, and more.

This sort of analysis:

  • makes an investment case more rigorous,
  • dramatically improves internal and external defensibility, and
  • surfaces insights impossible to see from narrative memos alone.

Funders, insurers, and counsel repeatedly tell us that this level of clarity is transformative. It sharpens decisionmaking, strengthens underwriting discipline, and improves alignment across stakeholders. Over time, a consistent, structured approach creates a more disciplined portfolio and generates a feedback loop that measurably improves investment decisions.

Clearer communication of risk and value benefits all stakeholders. What are the biggest barriers to achieving that clarity in practice?

The biggest barrier is language ambiguity. A typical merits opinion reads something like:

“It's most likely the defendant will be found liable for X, with only an outside chance the court will accept the argument Y. Damages could be as high as Z.”

Terms such as “very likely,” “little chance,” or “low risk” are interpreted wildly differently by different people, even among seasoned professionals. Research consistently shows a huge disparity in how people interpret such terms. For example "unlikely" can be interpreted as meaning anywhere from below 10% to over 40% likely to occur. Your investment decisions shouldn’t be subject to this margin of error just from internal communications.

A second barrier is complexity overload. Lawyers often present lengthy written analyses where different legal issues are explained sequentially:

“X might happen, but if not then Y. In that case Z will determine…”

Decision-makers are left to combine all these uncertainties mentally, plus litigation costs, insurance, interest, enforcement risks, appeal probabilities, and timing assumptions. Even highly experienced professionals can't intuitively do this correctly.

Eperoto solves these issues in three ways:

a) It forces clarity through quantification. “80% likelihood the contract is valid” is unambiguous, whereas “very likely” may be understood as 65% by one person and 95% by another.

b) It combines the factors automatically. No one needs to mentally integrate legal issues, damages pathways, costs, or conditional dependencies.

c) It presents the analysis visually. Charts and diagrams let stakeholders see the shape of the dispute, rather than reading dense text.

Together these remove unnecessary complexity, leaving stakeholders to focus on the true strategic questions rather than being stuck in ambiguous details.

Many lawyers hesitate to provide quantitative estimates because they fear being “wrong.” How do you encourage practitioners to engage with uncertainty in a more structured, transparent way?

This is a common concern, but it fundamentally misunderstands what quantification achieves. Providing estimates numerically doesn't remove uncertainty, it communicates it transparently. The alternative isn't "not being wrong"; it's being vague, which is far worse for the client or investor.

Sophisticated clients, funders, and boards understand that litigation outcomes are uncertain. What they want is clarity, not perfection. Yes, you should still make clear that a percentage estimate is not a promise; it is a transparent reflection of professional judgement, less ambiguous than vague adjectives. But once everyone accepts that, it allows for greater clarity and indeed honesty.

We encourage lawyers to adopt a mindset similar to experts in other industries:

  • Quantification is not about being right; it’s about making uncertainty explicit.
  • A structured model allows you to compare multiple scenarios, e.g. optimistic vs pessimistic or comparing different counsel’s assessments.
  • Visual decision-trees help practitioners and clients see how different issues interact without needing to commit to one “correct” narrative.

Lawyers often find that once they begin using numeric estimates and decision trees, discussions with clients become easier, expectations align more quickly, and advice becomes more defensible. Many even rely on the visual component alone when presenting paths, strategy, and what truly drives the dispute.

How can tools like Eperoto help bridge the gap between legal reasoning and financial analysis, bringing dispute resolution closer to the standards of decision-making seen in other business contexts?

Business-critical decisions in energy, pharmaceuticals, and corporate strategy have used quantitative decision analysis for decades. A pharmaceutical company wouldn't greenlight a $50M clinical trial based on phrases like "good chance of success" or "strong scientific rationale". They'd model probabilities, conditional outcomes, and expected value. Yet litigation decisions involving similar amounts often rely on purely that kind of qualitative language.

The gap isn't from a lack of judgment. It's that legal reasoning and financial decision-making speak different languages. Lawyers think in terms of arguments, precedents, and likelihoods. Funders think in terms of expected values, downside risk, and portfolio returns. Eperoto translates between these worlds.

Here's a concrete example: A law firm presents a case with "strong liability prospects" and "substantial damages potential." The investment committee sees an attractive headline but struggles to assess the risk. Using Eperoto, counsel maps the decision tree and reveals that while liability looks good at 70%, the real value driver is a secondary issue: whether a contractual damages cap applies. If the cap doesn't apply, a 40% likelihood, it would triple the recovery. The investment thesis becomes clear: this isn't a simple 70% bet on liability; it's a case where the upside scenario creates most of the expected value. That fundamentally changes how you price the funding, structure the terms, and think about settlement strategy.

This kind of insight can easily be buried in a narrative memo but obvious when properly structured.

Specifically, Eperoto enables:

1. A common analytical framework - When counsel says "we have a strong case but quantum is uncertain," Eperoto forces that assessment into a structure funders recognize: probability-weighted scenarios with costs, timing, and enforcement risk factored in. This isn't dumbing down legal analysis; it's making it actionable.

2. Proper treatment of uncertainty - In portfolio management, no one expects point estimates: they expect distributions, scenarios, and sensitivity analysis. Eperoto brings that same rigor to litigation assets, showing not just expected value but the shape of the risk distribution. What's the 10th percentile outcome? How sensitive is the return to different assumptions? This is standard practice in all other asset classes.

3. Defensible investment decisions - Just as a PE firm documents the assumptions behind an acquisition, funding decisions should have the same analytical discipline. Eperoto creates an audit trail showing why a deal was approved or a settlement accepted, based on structured analysis rather than gut feel. Critical for investment committee scrutiny and stakeholder confidence.

4. Portfolio-level insights over time - Applying decision analysis consistently across a portfolio creates compounding benefits. Funders develop better calibration of their judgment, identify patterns of cases that outperform or underperform expectations, and build institutional knowledge about what drives value. Over time, this disciplined approach strengthens underwriting quality and improves portfolio returns. Just like how data-driven decision-making in other industries creates feedback loops that enhance performance.

The result is that litigation funding can be managed with the same analytical rigor as any other alternative asset class. Lawyers retain their essential role as expert judgment-makers, but that judgment gets expressed in a framework that investment committees can understand, stress-test, and defend to stakeholders.

 
Commercial

Avoiding Pitfalls as Litigation Finance Takes Off

By John Freund |

The litigation finance market is poised for significant activity in 2026 after a period of uncertainty in 2025. A recent JD Supra analysis outlines key challenges that can derail deals in this evolving space and offers guidance on how industry participants can navigate them effectively.

The article explains that litigation finance sits at the intersection of law and finance and presents unique deal complexities that differ from other private credit or investment structures. While these transactions can deliver attractive returns for capital providers, they also carry risks that often cause deals to collapse if not properly managed.

A central theme in the analysis is that many deals fail for three primary reasons: a lack of trust between the parties, misunderstandings around deal terms, and the impact of time. Term sheets typically outline economic and non-economic terms but may omit finer details, leading to confusion if not addressed early. As the diligence and documentation process unfolds, delays and surprises can erode confidence and derail negotiations.

To counter these pitfalls, the piece stresses the importance of building trust from the outset. Transparent communication and good-faith behavior by both the financed party and the funder help foster long-term goodwill. The financed party is encouraged to disclose known weaknesses in the claim early, while funders are urged to present clear economic models and highlight potential sticking points so that expectations align.

Another key recommendation is ensuring all parties fully understand deal terms. Because litigation funding recipients may not regularly engage in such transactions, well-developed term sheets and upfront discussions about obligations like reporting, reimbursements, and cooperation in the underlying litigation can prevent later misunderstandings.

The analysis also underscores that time kills deals. Prolonged negotiations or sluggish responses during diligence can sap momentum and lead parties to lose interest. Setting realistic timelines and communicating clearly about responsibilities and deadlines can keep transactions on track.

Commercial Regulatory Issues

Labour MP Comes Out Swinging Against Litigation Funding

By John Freund |

Litigation funding has become a fixture in modern civil justice systems, designed to open the courts to claimants who lack the means to pursue meritorious claims. But a recent opinion piece by Labour MP Oliver Ryan argues that in the UK, the industry is increasingly drifting from that core purpose and instead serving the financial interests of investors and funders at the expense of real victims.

An article in City A.M. states that while third-party litigation funding has a legitimate role in enabling access to justice, market incentives are now skewing the system. Ryan highlights examples including the UK government’s move to “protect litigation funding” and reverse the Paccar ruling—a Supreme Court decision that had cast doubt on traditional fee structures—arguing that policy solutions must reflect how the market actually operates on the ground, not just how policymakers hope it will.

Ryan points to the handling of the Post Office scandal as a stark case in point. Despite grievous harms suffered by sub-postmasters, he notes that approximately 80 percent of damages paid eventually flowed to funders and lawyers rather than victims—an outcome he says “cannot be right.” He also cites the collapse of a cavity insulation claim and management upheavals in a multi-billion-pound class action against BHP as examples of how funder-centric incentives can undermine claimant outcomes and system integrity.

Rather than calling for an end to litigation funding, Ryan urges reforms centered on capping excessive funder returns, enforcing capital adequacy protections for claimants, tightening marketing oversight, and rebalancing incentives so victims—not investors—are the primary beneficiaries of successful claims.

Case Developments Commercial

Private Investors Eye Profits in L.A. County Sex Abuse Settlements

An investigation reveals that private investors are positioning themselves to profit from the enormous pool of money flowing from Los Angeles County’s historic sex abuse litigation. The county has already agreed to spend nearly $5 billion this year resolving thousands of claims related to alleged sexual abuse in its juvenile detention and foster care systems, including a $4 billion settlement—the largest of its kind in U.S. history.

An article in the Los Angeles Times explains that proponents of this investor involvement argue such financing gives plaintiffs’ attorneys the capital they need to take on deep-pocketed defendants and helps victims who lack resources access justice. Records reviewed by the Times show that several law firms bringing these claims receive financial backing from private investors, often through opaque out-of-state entities and Delaware-based companies.

Backers contend the arrangement can level the legal playing field and expedite case filings and settlements. However, public officials and critics express alarm over the lack of transparency surrounding these investments and the possibility that significant portions of settlement money intended for survivors could instead flow to private financiers. Some county supervisors reported being contacted by investors asking about the potential profitability of the sex abuse suits, raising ethical concerns about treating human trauma as an “evergreen” revenue stream.

The backdrop to this investor interest is a surge in litigation following changes in California law that revived long-dormant abuse claims and spurred widespread advertising by plaintiff firms seeking new clients. Government scrutiny has heightened amid reports of questionable recruitment practices and potential fraud in some claims, and the county’s district attorney has launched an investigation into parts of the settlement process.

Commercial

JurisTrade’s Koutoulas Maps Litigation Finance to Capital Markets

By John Freund |

Litigation finance is entering a new strategic chapter as innovators seek to bridge legal funding with broader capital markets and institutional investment. At the forefront of this evolution is James Koutoulas, co-founder of JurisTrade, who draws on his unique blend of hedge fund management and securities law experience to rethink how legal claims can be structured as investable assets for large pools of capital.

An article in Lehigh Valley Business explains that JurisTrade has built the first institutional marketplace for litigation finance, where legal claims are converted into structured financial products like insured bonds, litigation index funds, and private credit vehicles—mechanisms designed to attract pension funds, hedge funds, and other institutional investors traditionally absent from the space. Koutoulas, noted for leading pro bono recovery of $6.7 billion for MF Global customers, argues that litigation finance can offer compelling risk-adjusted returns—sometimes in excess of traditional private credit yields—especially when backed by insurance or securitization features that mitigate downside risk.

The piece also highlights how managed service organizations (MSOs) could reshape law firm economics by outsourcing non-core functions—bringing a level of operational efficiency and capital-raising sophistication more typical of private equity into legal practice. Koutoulas emphasizes the impact of regulatory changes in jurisdictions like Arizona and Washington, D.C., where alternative business structures now allow non-lawyers to hold ownership stakes in law firms, further blurring lines between legal services and traditional business models. He also connects the boom in LegalTech to broader FinTech dynamics, pointing to venture capital interest and technological innovations as catalysts in transforming how legal assets are financed.

Koutoulas recognizes transparency and risk management as ongoing industry challenges, advocating for disclosure standards to protect both claimants and investors.

Consumer

New York Enacts Landmark Consumer Legal Funding Legislation

By Eric Schuller |

The Alliance for Responsible Consumer Legal Funding (ARC) applauds New York Governor Kathy Hochul for signing into law Assembly Bill 804C/Senate Bill 1104, a landmark measure establishing thoughtful regulation for Consumer Legal Funding in the Empire State.

Sponsored by Assemblymember William B. Magnarelli and Senator Jeremy Cooney, this legislation creates a clear framework that protects consumers while preserving access to a vital financial resource that helps individuals cover essential living expenses—such as rent, mortgage, and utilities, while their legal claims are pending.

“I am pleased that the Governor signed this important bill into law today.  It is the culmination of 8-years of hard work on this issue.  This law will provide a sound framework to regulate financing agreements and provide protections to consumers.  I want to thank the Alliance for Responsible Consumer Legal Funding and its President, Eric K. Schuller for working with me to get this bill over the finish line.  I would also like to thank and acknowledge my late colleague, Assemblyman Michael Simanowitz, who was the original sponsor of this legislation.”  -- William B. Magnarelli, 129th Assembly District 

For many New Yorkers, Consumer Legal Funding provides a critical financial lifeline while a legal claim is pending, often for months or years. Injured consumers frequently face lost income and mounting household expenses at the very moment they are least able to manage financial strain. Consumer Legal Funding allows individuals to cover essential living costs, such as rent, utilities, transportation, and groceries, without being forced into an early or unfair settlement simply to make ends meet.

Senator Jeremy Cooney stated: “Today marks a historic step forward in protecting everyday New Yorkers from opaque and often predatory litigation financing practices. For too long, vulnerable plaintiffs have been left in the dark about the true cost of third-party funding, only to see the majority of their hard-earned legal recovery eroded by fees and unclear terms. I'm proud to sponsor this bill that brings transparency, accountability, and basic consumer protections to this industry, ensuring New Yorkers can pursue justice without sacrificing financial security."

Because Consumer Legal Funding is non-recourse, consumers repay funds only if they recover proceeds from their legal claim, if there is no recovery, they owe nothing. This structure protects consumers from taking on debt, preserves their financial stability, and ensures they retain full control over their legal decisions. By enacting this legislation, New York affirms that Consumer Legal Funding supports financial stability and access to justice.

“This law strikes the right balance between consumer protection and financial empowerment, by establishing clear rules of the road, New York ensures that consumers retain freedom of choice, transparency, and access to funds that help them meet their immediate needs during one of the most difficult times in their lives.” said Eric K. Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC). “We thank Governor Hochul for her leadership and Assemblymember Magnarelli and Senator Cooney for their commitment to fairness and consumer choice. This new law affirms that Consumer Legal Funding is about funding lives, not litigation.” 


Under the new law, Consumer Legal Funding is defined as a non-recourse transaction in which a company purchases a contingent right to receive proceeds from a consumer’s legal claim. The law contains several key consumer safeguards, including:

• Clear Contract Disclosures: All terms, charges, and cumulative repayment amounts must be plainly stated and initialed by the consumer.
• Right to Cancel: Consumers have ten business days to cancel a contract without penalty.
• Attorney Oversight: Attorneys must acknowledge reviewing mandatory disclosures and are prohibited from accepting referral fees or having a financial interest in funding companies.
• Prohibited Practices: Funding companies may not influence settlement decisions, mislead consumers through advertising, or refer clients to specific attorneys or medical providers.
• Registration and Reporting: All funding companies must register with the State of New York and file annual reports, and meet bonding and disclosure requirements.

The act takes effect 180 days after becoming law and marks another milestone in advancing consumer protection and responsible business practices across the nation.

About ARC

The Alliance for Responsible Consumer Legal Funding (ARC) is the national trade association representing companies that provide Consumer Legal Funding—non-recourse financial assistance that helps consumers meet everyday living expenses while their legal claims proceed. ARC advocates for policies that protect consumers and ensure access to fair, transparent, and responsible funding options.

Commercial Regulatory Issues

France Issues Decree Regulating Third-Party Funded Collective Actions

By John Freund |

France has taken a significant step in codifying oversight of third-party financed collective actions with the issuance of Decree No. 2025-1191 on December 10, 2025.

An article in Legifrance outlines the new rules, which establish the procedure for approving entities and associations authorized to lead both domestic and cross-border collective actions—referred to in French as “actions de groupe.” The decree brings long-anticipated regulatory clarity following the April 2025 passage of the DDADUE 5 law, which modernized France’s collective redress framework in line with EU Directive 2020/1828.

The decree grants authority to the Director General of Competition, Consumer Affairs and Fraud Control (DGCCRF) to process applications for approval. Final approval is issued by ministerial order and is valid for five years, subject to renewal.

Approved organizations must meet specific governance and financial transparency criteria. A central provision of the new rules is a requirement for qualifying entities to publicly disclose any third-party funding arrangements on their websites. This includes naming the financiers and specifying the amounts received, with the goal of safeguarding the independence of collective actions and protecting the rights of represented parties.

Paul de Servigny, Head of litigation funding at French headquartered IVO Capital said: “As part of the transposition of the EU’s Representative Actions Directive, the French government announced a decree that sets out the disclosure requirements for the litigation funding industry, paving the way for greater access to justice for consumers in France by providing much welcomed clarity to litigation funders, claimants and law firms.

"This is good news for French consumers seeking justice and we look forward to working with government, the courts, claimants and their representatives and putting this decree into practice by supporting meritorious cases whilst ensuring that the interests of consumers are protected.”

By codifying these requirements, the French government aims to bolster public trust in group litigation and ensure funders do not exert improper influence on the course or outcome of legal actions.