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Commercial Special Features

Key Takeaways From LFJ’s Special Digital Event on Litigation Funding Advisory Firms

LFJ’s latest digital event featured Litigation Finance advisors Rebecca Berrebi (Founder and CEO, Avenue 33, LLC), Peter Petyt (Co-Founder, 4 Rivers Legal), Andrew Langhoff (Founder and Managing Director, Red Bridges Advisors), and moderator Ed Truant (Founder, Slingshot Capital). The panel discussed how they navigate between funders, law firms and claimants, as well as the challenges they face in this market, and the numerous benefits they provide each counter-party.

ET: Can you comment on some of the key changes you have seen in the litigation finance market since you got started? 

RB: The number one biggest change is that there is so much more money out there than there used to be. In 2016, we rarely had competition on deals. There are so many funds out there that want to allocate capital. If you have a good case, or a portfolio of cases that has merit and a good chance of winning, there would be multiple funders out there looking to fund your case. That is primarily the change I have seen over the arch of my life in litigation finance. 

PP: The change that I have seen over the last couple of years is the willingness and appetite for funders to provide capital in addition to what is necessary to run the case. What I have seen is the willingness and appetite for funders to provide working capital. That’s definitely been the development over the last couple of years. 

ET: What do you believe is your greatest value add for your clients? 

PP: It becomes clear that a very low amount of opportunities that are presented to funders are actually funded. It is in the low single digits. And I am very confident that I will achieve much better success rates than that. And I think it’s the approach that is the most important thing and value add here. 

ET: Can you talk about your origination efforts and how you find opportunities?

AL: I have been lucky over the last five years being a broker and intermediary, cases and opportunities have found me. What I have found is referral and repeat business is really the best part of the origination process for me. The trick is to find lawyers who are entrepreneurial, who are very open to litigation finance. 

RB: I am a lawyer by background. I have a pretty strong network from my whole career working at law firms and funds. And I do try to educate the market the best way I can. Frankly, I get a lot of hits that way by being out in the market and talking in the media. 

ET: When a client comes to you, what are they looking for? 

PP: I think in the vast majority of cases, plaintiffs may have never used litigation finance before.  There is no doubt in my mind that law firms are the right people to go out and seek opportunities. I think we perform a valuable role here and I think plaintiffs know that. I think it is about managing processes, but adding value. 

ET: What are some of the legal considerations as you take on a new client? 

RB: You have to start thinking about confidentiality from the get-go. Disclosure with respect to privilege we have to be careful about. There are state-specific issues related to litigation finance that you have to be careful about, specific to disclosure. 

ET: In terms of the intake, can you provide us an overview? 

AL: I think it is far more effective to take all the information, organize it, mitigate any concerns and present it to the funder. Almost in a way that you are doing the funder’s work for them. Ideally, when I give them that memorandum, I know many funders will paste it into their investment committee memorandum. And that is that idea, I am trying to make it drop dead simple for them.

Click here to listen to the entire episode. 

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Commercial Regulatory Issues

Who Could Regulate the Litigation Funding Industry after the CJC Review?

By Harry Moran |

As funders and law firms await the outcome of the Civil Justice Council’s (CJC) review of litigation funding later this summer, industry experts are opining not only on the potential direction any future regulation could take, but what body would be in charge of this new oversight function.

In an insights post from Shepherd and Wedderburn, Ben Pilbrow looks ahead to the CJC review of litigation funding and poses the question that if some form of regulation is inevitable, who will act as the regulator for these new rules? Drawing upon two previous reports that reviewed the funding of litigation, Pilbrow points out that historically there have been two main bodies identified as the likely venues for regulation of third-party funding: the courts or the Financial Conduct Authority (FCA).

Analysing the comparative pros and cons of these institutions as prospective regulators, Pilbrow highlights that each one has two core contrasting qualities. The courts have the requisite expertise and connection to litigation funding yet lacks ‘material inquisitive powers’. On the other hand, the FCA does not have the aforementioned ‘inherent connection to the disputes ecosystem’, but benefits from being an established regulator ‘with considerable enforcement powers’.

Exploring options outside of these two more obvious candidates, Pilbrow suggests that utilising one of the existing legal regulators may be viable due to the fact they are all ‘largely staffed by lawyers but have regulatory powers.’ However, Pilbrow notes that these legal regulators may have common flaw that would stop them taking on this new role. That flaw being the comparatively small size of these organisations, with the Solicitors Regulation Authority (SRA) still only boasting 750 employees despite being the largest of these legal regulators.

Concluding his analysis, Pilbrow suggests unless the government opts for an expanded system of self-regulation under an industry body such as the Association of Litigation Funders, the most likely outcome is for the FCA’s remit to be expanded to include the regulation of litigation funding.

The full article from Ben Pilbrow can be read on Shepherd and Wedderbun’s website.

Commercial Deals

Omni Bridgeway Announces Final Payment for Acquisition of its Europe Business

By Harry Moran |

In an announcement posted on the ASX, Omni Bridgeway announced that it had completed the final payment for the acquisition of the Omni Bridgeway Europe (OBE) business that took place in 2019. The litigation funder confirmed that 5,213,450 fully paid ordinary shares had been ‘issued in satisfaction of the fifth and final tranche of variable deferred consideration’ to complete the acquisition.

Highlighting the progress of the business over the past six years, Omni Bridgeway said that the European business ‘has been successfully integrated into the global operations of the group, creating the most diversified legal asset management platform globally, covering all relevant civil and common law jurisdictions and all relevant areas of law.’ 

The announcement also revealed that OBE has ‘achieved the defined five-year KPIs in full’, whilst the management team ‘has been fully retained.’

Commercial Deals

Burford Capital CEO Says Litigation Finance Market is ‘Booming’

By Harry Moran |

With the global economy and financial markets in a current state of uncertainty, the stability of litigation funding as an uncorrelated asset class for investors is attracting wider attention than ever.

In an interview with Bloomberg TV, Christopher Bogart, CEO of Burford Capital discussed the current state of the litigation finance market, explained why third-party funding is attractive to clients and investors alike, and addressed the common critiques that are levelled at the industry.

On the enduring appeal of litigation funding to corporate clients, Bogart said that for many CEOs and CFOs the truth is that their companies are “spending too much money today on legal fees”. He went on to say that money spent by companies on legal fees is “not doing anything that advances their core undertaking”, and as a result, “the ability to offload that to somebody like us [Burford] is very valuable.”

When asked about why the litigation finance market is thriving during the global economic uncertainty, Bogart highlighted that all of Burford’s “cash flows come entirely out of the outcome of litigation results and those are independent of what’s happening in the market, independent of what’s happening in the broader economy.” In terms of the future of litigation funding and the potential for the market to continue to grow, Bogart pointed out that between legal fees and litigation judgments there is a “multi-trillion dollar a year global market” and that whilst the industry is already “booming”,  there is still “a lot of room to run here” for litigation funders.

In response to a question on the criticisms of litigation funding and the suggestion that funders may look to prolong the duration of cases, Bogart pointed out that Burford is just like any other investment firm that is “looking for high quality assets that are going to produce a reasonable return in a short period of time.” Bogart emphatically rejected what he described as “false concerns” by opponents of third-party funding, and stated plainly: “we’re absolutely not in the business of being interested in prolonging duration or in bringing forward things that are not ultimately going to yield a good result for our shareholders”.

The full interview can be found on Burford Capital’s website.