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Day One of LF Dealmakers Concludes

September 29, 2021

Day One of LF Dealmakers Concludes

Day one of the two-day 2021 LF Dealmakers conference has officially concluded. The day included a keynote address from Judge Shira A. Scheindlin, six panel discussions, and a host of networking opportunities. The initial panel discussion was titled “State of the Litigation Finance Industry: Innovations & Outlook.” The panel was moderated by Annie Pavia, Senior Legal Analyst at Bloomberg Law, and featured the following panelists:
  • Brandon Baer, Founder & CIO, Contingency Capital
  • Fred Fabricant, Managing Partner, Fabricant
  • Michael Nicolas, Co-Founder & Managing Director, Longford Capital
  • Andrew Woltman, Principal & Co-Founder, Statera Capital
The discussion began with big picture trends regarding the economic downturn, which a lot of people posited would result in a boost to Legal Services and the Litigation Funding industry. The panelists all weighed in: Brandon Baer explained that the case pipeline has been extremely robust. There is strong origination, and a lot of need from law firms for capital. Fred Fabricant explained that from law firm side, it’s been the busiest time in his career in terms of case load. More opportunities have come to his attention in last year and a half than ever before, with things being very active in the Eastern and Western Districts of Texas. And the quality of the opportunities is higher. New players are in the market, and existing players have raised more money than ever before. Michael Nicolas added that he’s seen an increase across all different sectors – law firms (both those who have used funding previously and those who have never used funding before), and clients (facing extreme demands stemming from COVID-related issues). Longford manages over $1Bn in AUM, so they have a lot of flexibility in terms of investment potential. Andrew Woltman ended the discussion by noting how comfortable law firms and clients are becoming with litigation finance. Structurally they are being more proactive about approaching fund managers than ever before. The panel all agreed that demand is strong across the board when it comes to case types. Capital deployment is not a problem here, and the panelists expressed hope that this trend would continue, and that clients will continue to recognize the value that funders bring to the table. In terms of current challenges the industry is facing, duration and collectability are obvious issues, but these are leading to certain efficiencies–like courts learning to be more efficient in order to address duration risk. So there is a silver lining here. At this point, Annie Pavia, the moderator, switched gears and asked Michael Nicolas about Longford’s $50MM funding deal with Willkie Farr. Nicolas acknowledged the longstanding relationship between the two firms, and how that developed into a $50MM financing arrangement. Willkie also brings a lot of commercial matters to the table, which helps Longford diversify away from its core focus on IP matters. Nicolas also mentioned that they went public with the deal in order to be fully transparent to Willkie’s clients, and make them aware that Longford’s funding is possible for their claims. The question of disclosure then popped up.  Will the disclosure of the funding relationship lead to unnecessary discovery sideshows in Willkie claims?  Nicolas does not believe the publicity of the relationship will hamper any Willkie claims, and that the trend line favors courts finding discovery irrelevant, where litigation funding is concerned (in most cases). While he understands this may prompt some questions, Longford isn’t particularly worried about the consequences here. Of course, most funds still keep their partnerships private, so Longford’s decision to publicize its relationship with Willkie may perhaps be a turning point for the industry—could less opacity be around the corner? Nicolas believes we will see more transparency as the asset class continues to grow. The rest of the day featured panels across a range of topics, including legal and regulatory challenges in the U.S., and changes in law firm and contingency fee models. One discussion on “How CFOs View Legal Assets: Data & Insights from a Recent Survey,” featured Kelly Daley, Director at Burford Capital, and Bruce MacEwen, President of Adam Smith, Esq. MacEwen asked an interesting question regarding law firms’ attitudes–law departments and finance departments typically don’t talk to each other. So how do conversations with law firms go, compared with conservations with corporate CFOs. Daley explained that conversations with law firms are different than those with corporations, because the assets at law firms are human labor, so it can be harder for law firms to leverage that than it is for corporations to leverage abstract assets. Law firms take their time more personally, so the conversation with law firms is more about risk shifting than with cash flows. Legal finance does both of these, but there is different value applied to each depending on what specific assets you value. MacEwen agreed, and followed up with the note that it can be tough for clients to define the value they get from a law firm, and therefore they are always looking for ways to get discounted rates. Litigation funding can play a part in that… in ameliorating the concerns clients have about overpaying for legal services. All in all, there was a lot of ground covered in the first day of the LF Dealmakers conference. And with the plethora of networking opportunities (both digitally and in-person), the event surely struck a powerful chord with all those in attendance.

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Case Developments Commercial

King & Spalding Sued Over Litigation Funding Ties and Overbilling Claims

By John Freund |

King and Spalding is facing a malpractice and breach of fiduciary duty lawsuit from former client David Pisor, a Chicago-based entrepreneur, who claims the law firm pushed him into a predatory litigation funding deal and massively overbilled him for legal services. The complaint, filed in Illinois state court, accuses the firm of inflating its rates midstream and steering Pisor toward a funding agreement that primarily served the firm's financial interests.

An article in Law.com reports that the litigation stems from King and Spalding's representation of Pisor and his company, PSIX LLC, in a 2021 dispute. According to the complaint, the firm directed him to enter a funding arrangement with an entity referred to in court as “Defendant SC220163,” which is affiliated with litigation funder Statera Capital Funding. Pisor alleges that after securing the funding, King and Spalding tied its fee structure to it, raised hourly rates, and billed over 3,000 hours across 30 staff and attorneys within 11 months, resulting in more than $3.5 million in fees.

The suit further alleges that many of these hours were duplicative, non-substantive, or billed at inflated rates, with non-lawyer work charged at partner-level fees. Pisor claims he was left with minimal control over his case and business due to the debt incurred through the funding arrangement, despite having a company valued at over $130 million at the time.

King and Spalding, along with the associated litigation funder, declined to comment. The lawsuit brings multiple claims including legal malpractice, breach of fiduciary duty, and violations of Illinois’ Consumer Legal Funding Act.

Commercial Legal Innovation

Legal Finance and Insurance: Burford, Parabellum Push Clarity Over Confrontation

By John Freund |

An article in Carrier Management highlights a rare direct dialogue between litigation finance leaders and insurance executives aimed at clearing up persistent misconceptions about the role of legal finance in claims costs and social inflation.

Burford Capital’s David Perla and Parabellum Capital’s Dai Wai Chin Feman underscore that much of the current debate stems from confusion over what legal finance actually is and what it is not. The pair participated in an Insurance Insider Executive Business Club roundtable with property and casualty carriers and stakeholders, arguing that the litigation finance industry’s core activities are misunderstood and mischaracterized. They contend that legal finance should not be viewed as monolithic and that policy debates often conflate fundamentally different segments of the market, leading to misdirected criticism and calls for boycotts.

Perla and Feman break legal finance into three distinct categories: commercial funding (non-recourse capital for complex business-to-business disputes), consumer funding (non-recourse advances in personal injury contexts), and law firm lending (recourse working capital loans).

Notably, commercial litigation finance often intersects with contingent risk products like judgment preservation and collateral protection insurance, demonstrating symbiosis rather than antagonism with insurers. They emphasize that commercial funders focus on meritorious, high-value cases and that these activities bear little resemblance to the injury litigation insurers typically cite when claiming legal finance drives inflation.

The authors also tackle common industry narratives head-on, challenging assumptions about funder influence on verdicts, market scale, and settlement incentives. They suggest that insurers’ concerns are driven less by legal finance itself and more by issues like mass tort exposure, opacity of investment vehicles, and alignment with defense-oriented lobbying groups.

Commercial

Courmacs Legal Leverages £200M in Legal Funding to Fuel Claims Expansion

By John Freund |

A prominent North West-based claimant law firm is setting aside more than £200 million to fund a major expansion in personal injury and assault claims. The substantial reserve is intended to support the firm’s continued growth in high-volume litigation, as it seeks to scale its operations and increase its market share in an increasingly competitive sector.

As reported in The Law Gazette, the move comes amid rising volumes of claims, driven by shifts in legislation, heightened public awareness, and a more assertive approach to legal redress. With this capital reserve, the firm aims to bolster its ability to process a significantly larger caseload while managing rising operational costs and legal pressures.

Market watchers suggest the firm is positioning itself not only to withstand fluctuations in claim volumes but also to potentially emerge as a consolidator in the space, absorbing smaller firms or caseloads as part of a broader growth strategy.

From a legal funding standpoint, this development signals a noteworthy trend. When law firms build sizable internal war chests, they reduce their reliance on third-party litigation finance. This may impact demand for external funders, particularly in sectors where high-volume claimant firms dominate. It also brings to the forefront important questions about capital risk, sustainability, and the evolving economics of volume litigation. Should the number of claims outpace expectations, even a £200 million reserve could be put under pressure.