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A Recap of the Opening Panel at LF Dealmakers

September 28, 2022

A Recap of the Opening Panel at LF Dealmakers

Day 1 of the LF Dealmakers conference has begun. The opening panel saw Ted Farrell, founder of Litigation Funding Advisors, moderate a wide-ranging discussion on the state of legal finance. Panelists included James Bedell, Associate Director of Legal Finance at Yieldstreet, Cindy Chen Delano, Partner at Invictus Global Management, Stephen Kyriacou, Managing Director of Aon, and Michael Nicolas, Co-Founder and Managing Director of Longford Capital. The discussion began with the evolution of the sector as a maturing asset class, away from discussions between ‘smart lawyers’ and into the mainstream. The panel underscored the range of players in the space now—3M, J&J, and others—which illustrates how far the industry has come. Additionally, the size and scope of claims—large-scale, nine-figure claims—which highlights the impact the asset class has had on the broader Legal Services sector. Additionally, the embrace of litigation funding by Big Insurance is a signal of the industry’s ongoing growth prospects. Michael Nicolas of Longford noted how his firm can now protect principal investment, and even some of the profit they’d like to return to investors, which is ‘a game changer,’ as now credit investors can consider becoming LPs because they can grow more comfortable with the risk profile of the sector. Cindy Chen Delano echoed the ‘game-changer’ remark, noting the different types of debt structures that can be originated now that insurance is on board, all the way up to high-yield bonds, which she sees coming down the pike. Stephen Kyriacou of Aon also pointed out how he was one of two insurance providers at last year’s conference, and there was no discussion of the subject. This year, there are more insurers in attendance, and the subject has already come up in the first discussion, and will continue to as the event progresses. Perhaps something unique about this conference is the encouragement of questions from the audience. The first panel took a question from an inventor who stressed the importance of funding in the inventor space, and lamented that in his experience it’s been so difficult to obtain the financing needed. The panel acknowledged his concern, and noted the industry’s emphasis on IP investment, while also pointing out that selectivity is paramount if a funder is going to survive long-term.

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Commercial Regulatory Issues

KPMG Appoints First U.S. Legal Services Chief as Arizona Alternative Business Structure Faces Scrutiny

By John Freund |

KPMG LLP has named Christian Athanasoulas as the inaugural head of KPMG US Legal Services, a newly created position aimed at expanding the Big Four firm's legal offerings in the United States. Athanasoulas, a Boston-based M&A tax practice leader with more than 25 years at the firm, will oversee efforts to integrate legal services with KPMG's broader corporate advisory platform.

As reported by Bloomberg Law, the appointment comes one year after KPMG gained regulatory approval to operate as an alternative business structure in Arizona — making it the first Big Four firm permitted to run a U.S. law firm. The division focuses on work traditionally handled by in-house legal teams, including post-merger contract cleanup, entity dissolution, and vendor consolidation.

The expansion, however, faces growing regulatory pushback. Arizona's Committee on Alternative Business Structures has recommended rule changes that would require ABS firms to serve Arizona clients and provide direct legal services rather than operate as national referral networks. The Arizona State Bar has warned that some entities may be exploiting the framework without meaningfully benefiting Arizona residents.

The development is significant for the legal industry's evolving competitive landscape. KPMG operates globally with more than 3,000 licensed attorneys and has already expanded legal services in the UK and Australia. Traditional law firms view the firm's entry with caution, recognizing that its established corporate client base, substantial resources, and technology investments present a formidable competitive challenge to conventional legal service delivery models.

Case Developments Commercial

U.S. Government Sides with Argentina in Discovery Dispute Over $18 Billion YPF Judgment

By John Freund |

The U.S. government has intervened in the long-running battle over an $18 billion judgment against Argentina, urging a federal judge not to hold the country in contempt for allegedly failing to produce official communications. The filing adds a significant layer to one of the largest litigation finance-backed disputes in history.

As reported by Bloomberg Law, former shareholders of YPF SA — Argentina's state-owned oil company — are seeking discovery of text messages and emails from Argentine government officials. The shareholders, backed by litigation funder Burford Capital, obtained the landmark judgment in 2023 after a court found that Argentina violated their rights through the 2012 nationalization of YPF.

The discovery effort is central to the shareholders' collection strategy. Plaintiffs argue that the communications could demonstrate that Argentina's state-owned banks and national airline function as "alter egos" of the government — a legal theory that, if successful, would allow them to pierce corporate structures and pursue assets held by those entities to satisfy the judgment.

The U.S. government's decision to back Argentina in the discovery fight underscores the diplomatic sensitivities at play. Sovereign discovery disputes of this scale raise complex questions about foreign government immunity and international comity. For the litigation finance industry, the case remains a closely watched test of whether third-party-funded enforcement actions against sovereign nations can ultimately yield meaningful recoveries on judgments of this magnitude.

Commercial

UPC Court of Appeal Rules Litigation Insurance Can Replace Multimillion-Euro Security Deposits

By John Freund |

The Unified Patent Court's Court of Appeal has issued a landmark ruling that could reshape how patent disputes are funded across Europe. In a decision overturning four million Euros in security for costs orders, the court held that properly structured litigation insurance policies can fully satisfy a defendant's right to costs recovery — eliminating the need for cash deposits or bank guarantees.

As reported by McDermott Will & Schulte, the ruling arose from the case of Syntorr v. Arthrex. McDermott partners Hon.-Prof. Dr. Henrik Holzapfel and Dr. Laura Woll represented Syntorr in the appeal, successfully arguing that the plaintiff's litigation insurance policy contained sufficient protections to address the court's concerns.

The court identified several features that satisfied its requirements for adequate security, including non-voidability provisions, direct rights for the defendant to claim against the insurer, straightforward payment triggers, and placement with an EU-authorized Solvency II insurer. Together, these anti-avoidance endorsements provided the court with confidence that the defendant's interests were adequately protected.

The decision carries significant implications for the litigation finance industry. By establishing that well-structured insurance products can substitute for cash security, the ruling creates a clearer pathway for patent holders — particularly smaller innovators — to pursue claims in the UPC without immobilizing substantial capital. The court's framework effectively balances defendant protection with access to justice, signaling that the UPC is open to modern funding mechanisms in patent enforcement proceedings.