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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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Flashlight Capital Backing Social Media Victims Law Center in Landmark Addiction Trial

By John Freund |

One of the most closely watched trials in recent memory now has a confirmed litigation funder behind it, adding a new dimension to a case some observers are calling a potential "Big Tobacco moment" for the technology industry.

As reported by Bloomberg Law, the Social Media Victims Law Center, a lead firm in litigation alleging that social media platforms have caused widespread addiction among young users, has secured backing from Flashlight Capital. Public records indicate the funding arrangement dates back to June 2024.

The case carries enormous financial stakes. Billions of dollars in potential liability are on the table for major technology companies, with testimony from Meta CEO Mark Zuckerberg regarding the company's youth-oriented strategies forming a centerpiece of the proceedings. The involvement of a litigation funder underscores the scale and complexity of the claims, which span multiple jurisdictions and plaintiffs.

For the litigation finance industry, the case represents a high-profile test of how third-party funding can support sprawling, resource-intensive consumer protection litigation. The outcome could shape both the future of platform liability and the appetite of funders to back similarly ambitious cases against deep-pocketed defendants.

The trial is being closely monitored across the legal and technology sectors as a potential bellwether for how courts evaluate the role social media companies play in youth mental health outcomes.

Commercial Legal Innovation

Edenreach Report Makes the Case for AI and Ethical Capital to Bridge the Global Justice Gap

By John Freund |

A new white paper argues that artificial intelligence and mission-aligned investment capital could help close a justice gap that currently affects roughly 5.1 billion people worldwide.

As reported by Edenreach, the female-founded justice fintech company's report identifies three primary barriers preventing vulnerable populations from accessing legal assistance: economic hardship and geographic distance, the complexity of legal matters requiring expert knowledge, and systemic discrimination targeting marginalized communities. These obstacles are compounded by shrinking legal aid budgets and insufficient resources for pro bono and nonprofit legal organizations.

The report proposes a "justice finance" model that treats legal cases aligned with United Nations Sustainable Development Goals as investable impact assets. This framework aims to combine measurable financial returns with accountability for governance failures, drawing from a largely untapped $3.33 trillion global market of capital that seeks both social outcomes and competitive returns.

On the technology side, the report cites research from the British Institute of International and Comparative Law showing that AI-powered tools — including real-time translation, simplified legal explanations, and automated resource matching — can significantly expand the reach of legal professionals to underserved populations.

For the litigation finance industry, the report represents a growing effort to position legal funding not just as a commercial opportunity but as a vehicle for social impact, potentially attracting a new class of ESG-focused investors to the sector.

Commercial

MAGA Backers Reflect Rare Split on Regulating Litigation Funders

By John Freund |

An unusual political coalition has emerged in opposition to proposed legislation that would regulate or tax litigation funders, revealing deep divisions even among close allies of the Trump administration.

As reported by Bloomberg Law, the split pits MAGA-aligned figures, progressive Democrats, and trial lawyers against the U.S. Chamber of Commerce and corporate-backed Republicans. Senator Thom Tillis of North Carolina has proposed taxing litigation funder profits, while Representative Darrell Issa of California introduced disclosure requirements for civil cases. Both efforts have drawn pushback from unexpected quarters.

Laura Loomer, a Trump-aligned commentator, publicly criticized the Tillis bill as empowering "woke corporations," while America First Legal, the organization founded by Stephen Miller, warned that disclosure mandates could create privacy threats. Conservative nonprofits have argued that funder transparency requirements could reveal donors on politically sensitive issues including religious liberty and abortion. On the other side of the aisle, Representative Jamie Raskin, a progressive Democrat, found himself aligned with the Alliance Defending Freedom in opposing the proposals.

The article also highlights financial interests that may be shaping the debate. Donald Trump Jr. has invested in patent litigation companies, and Federalist Society co-chairman Leonard Leo has connections to Vallecito Capital, which backs conservative legal cases.

Both the Tillis tax proposal and the Issa disclosure bill have stalled in Congress, with momentum fading after the initial pushback from this bipartisan — and often ideologically contradictory — coalition.