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Announcements Case Developments Commercial

Mishcon de Reya Announces Opt-In Claim Against OneCoin Cryptocurrency Scheme

At the European Litigation Funding Conference in March of this year, it was notable that one of the first panels of the event focused on the potential growth of litigation targeting cryptocurrency companies that have allegedly defrauded customers. Whilst it is still uncertain how viable these claims can be, given the difficulties around the valuation of the underlying assets, the announcement of a new claim being brought in the UK suggests that the appetite for these lawsuits is still present. In a press release, Mishcon de Reya LLP have announced that it will be bringing a claim in the High Court in London against those behind the OneCoin cryptocurrency scheme, which allegedly defrauded investors from around the globe. The opt-in claim will allege that OneCoin was not a legitimate cryptocurrency offering but instead “operated as a Ponzi scheme”, taking in over £4 billion in investment and resulting in the founder and their associates “pocketing vast sums of misappropriated investor funds.” Rhymal Persad, partner at Mishcon de Reya, stated: “The fraudulent OneCoin scheme concocted by Ruja Ignatova and others greatly impacted the lives of its victims who ranged from sophisticated to lay investors. The forthcoming claim in the High Court in London aims to achieve at least partial redress for those investors who were taken in by the deception and who suffered losses as a result". In the announcement, the law firm revealed that it had already secured financing from an unnamed third-party litigation funder. OneCoin investors who feels they are victims of the OneCoin scheme are encouraged to join the claim at: https://www.onecoinvictims.com/  
Commercial Deals

CMS’ European Class Actions Report Shows Continued Market Growth

Despite litigation funders facing an array of challenges in Europe, from the UK Supreme Court’s recent PACCAR decision to the European Parliament’s Voss Report, many are still keen to pursue the funding of class action claims within Europe. A new piece of research on class actions in Europe suggests that the market is still healthy and growing, with plenty of opportunities in a variety of jurisdictions and sectors. A partner article in Emerging Europe highlights the findings from CMS’ 2023 European Class Actions Report, which takes a sweeping view of class actions on the continent including current trends, individual country spotlights, and future risks. The top-line data from the report demonstrates how the class action market in Europe has remained strong, with 121 claims filed in 2022, demonstrating a slight increase from 120 claims in 2021, and 119 claims in 2020. As we approach the final quarter of 2023, CMS’ report puts a particular focus on member states’ implementation of the EU’s Representative Actions Directive (RAD). Kenny Henderson, partner at CMS, highlighted that although not every member has completed implementation yet, “the overarching message remains unambiguous: no sector remains unaffected to the far-reaching impact of mass litigation.” He also noted that whilst it is no longer part of the EU, the UK is still “the highest risk jurisdiction in Europe for class actions.” Whilst the report does not offer specific data on litigation funder involvement in these claims, as most funder participation remains anonymous and unreported, CMS’ report notes that “as EU MSs transpose the RAD into domestic legislation, we are likely to see litigation funding expand across Europe.” However, the report notes that the role of third-party funding in each jurisdiction will likely depend on the specific limits that are set out in the individual implementation bills for member states.  Looking at the distribution of these class action claims, CMS’ research found that over the past five years, 48% of claims in Europe have been filed in the UK, with the next highest being 12% in the Netherlands and 7% in Portugal. The class actions in 2022 were also widely distributed across different sectors with ‘financial products / shareholder / securities’ claims making up 31% of the total, competition claims comprising another 26%, and ‘product liability / consumer law / personal injury’ claims accounting for 24%.
Commercial People Moves

LCM Announces Appointment of Adam Erusalimsky to London Office

In a post on LinkedIn, Litigation Capital Management (LCM) announced that Adam Erusalimsky had joined the company as an Investment Manager in LCM's London office. Erusalimsky joins LCM from Woodsford, where he spent four years as a senior investment officer, having previously spent over nine years at Stewarts.  Erusalimsky has deep experience in complex commercial litigation, with specialist knowledge of securities litigation and class actions in both England and Australia. LCM's announcement highlighted that Erusalimsky's "deep understanding of the field and his track record of success will be invaluable to LCM and our funded parties,and his expertise in handling complex cases across different jurisdictions will greatly enhance LCM's offering."
Case Developments Commercial

Woodsford Awarded $1.8MM in Hosie Rice Claim

In most cases, the relationship between law firms and litigation funders is mutually beneficial, as they work together to help clients reach a successful conclusion to their lawsuit. However, the resolution of a long-running dispute between Woodsford and Hosie Rice over unpaid fees acts as a reminder that a breakdown in this relationship can lead to fresh litigation between previously allied entities. An article in Bloomberg Law provides an overview of the decision from Judge Colm Connolly in Delaware, who ruled that Hosie Rice ‘failed to establish a basis for vacating the $1.8 million award’ to Woodsford, thereby concurring with the previous ruling by a magistrate judge. Steven Friel, CEO of Woodsford, expressed that the company was “pleased but not in the least surprised” by Judge Connolly’s decision, and stated that Woodsford would “continue with enforcement efforts until we have recovered the full amount of the debt owed to us.” The origins of this dispute date back to Woodsford providing around $800,000 in funding for Space Data’s case against Google, with Space Data refusing to pay Hosie Rice after it reached a settlement with Google in 2020. After an arbitrator ruled that Space Data owed the law firm up to $4 million in costs but no contingency fee, Hosie argued that it was not required to award Woodsford any additional fee beyond the original loan repayments.  This $1.8 million award is the result of Woodsford’s subsequent lawsuit against Hosie Rice, in which the funder argued that it was owed additional remuneration as the $4 million client payment constituted a ‘revenue event’ for the law firm. The $1.8 million award was given by an arbitration panel, which Hosie Rice unsuccessfully appealed before US Magistrate Judge Sherry Fallon, before finally bringing their latest appeal to the District Court of Delaware.
Announcements Commercial Deals

Equine Capital Solutions LLC Selects DealBridge.Ai’s DRM Solution to Revolutionize Litigation Finance

DealBridge.ai, the first Deal Relationship Management (DRM) platform, is proud to announce its strategic partnership with Equine Capital Solutions LLC (ECS) to transform the complexities of Litigation Finance. ECS, a prominent provider of specialty finance solutions, has chosen DealBridge.ai's DRM solution as the central technology to modernize its business, incorporating the platform into every aspect of their client, deal, and operational needs. Litigation Finance poses unique challenges that require sophisticated technology solutions to effectively navigate. With the integration of DealBridge.ai's DRM solution, ECS aims to revolutionize the Litigation Finance landscape by streamlining and automating critical processes, thereby enhancing efficiency and improving outcomes for their clients. DealBridge.ai's cutting-edge DRM platform provides a user-friendly interface that seamlessly handles origination, due diligence, and distribution of private assets. By automating tedious tasks, DealBridge.ai empowers users to focus on building valuable relationships and maximizing revenue potential. The collaboration with ECS marks a significant milestone in the private markets industry, demonstrating how DealBridge.ai's advanced technology can be tailored to address the specific needs of Litigation Finance. Pat Shannon, Managing Partner of Equine Capital Solutions LLC, highlighted the importance of this partnership, stating, "After an extensive evaluation process, we have chosen DealBridge.ai's DRM solution as the central piece of technology to modernize our Litigation Finance business. By incorporating DealBridge.ai into our workflow, we are confident that we can streamline our processes, enhance our deal management capabilities, and deliver superior services to our clients." Joshua Masia, Co-founder and CEO of DealBridge.ai, expressed enthusiasm about the collaboration, saying, "We are thrilled to partner with Equine Capital Solutions LLC in their mission to transform Litigation Finance. DealBridge.ai's DRM solution is specifically designed to optimize deal management processes, and we are excited to see how ECS will leverage our platform to enhance their operational efficiency and drive growth in the industry." Jon Burlinson, Co-founder and CEO of DealBridge.ai, further emphasized the significance of the partnership, stating, "By choosing DealBridge.ai's DRM solution, Equine Capital Solutions LLC is embracing the power of automation and innovation in Litigation Finance. Our technology will provide ECS with the tools and capabilities necessary to overcome the complexities of the industry, enabling them to provide superior financial solutions to their clients and stay at the forefront of the market." With the integration of DealBridge.ai's DRM solution, Equine Capital Solutions LLC is taking a bold step towards modernizing their business operations in the Litigation Finance sector. By leveraging the power of automation, ECS aims to enhance deal management processes, improve client experiences, and achieve greater success in the market. To learn more about DealBridge.ai and Equine Capital Solutions LLC, please visit their respective websites: DealBridge.ai : https://www.dealbridge.ai   Equine Capital Solutions LLC: https://www.equinecapital.solutions
The LFJ Podcast

Episode 78: James Bedell, Yieldstreet

Hosted By James Bedell |
In this episode, we sat down with James Bedell, Director of Legal Finance at Yieldstreet, a platform that offers retail investors the opportunity to access alternative investments, including litigation finance. James discussed investor attitudes towards litigation finance, how the sector performs vs. other asset classes on the platform, and what the benefits are for funders who launch deals on the platform. [podcast_episode episode="11913" content="title,player,details"]
Case Developments Commercial

Delta-Funded Arbitration Against Tanzania Reaches Conditional Settlement Agreement

The funding of international arbitration brought by corporations against governments is not without its challenges, as funders must endure lengthy proceedings whilst taking on sovereign states who often attempt to frame these disputes as examples of corporate greed. However, where funders are able to find examples of meritorious disputes in which companies have fallen victim to state wrongdoing, significant returns on investment can be achieved. A press release by Winshear Gold Corp. reveals that the company has suspended arbitration proceedings against the Republic of Tanzania, as both parties have found terms for a conditional settlement agreement. Winshear emphasized that “there is no guarantee that the conditional settlement agreement will be concluded,” and that they will provide updates as further developments in the settlement process are reached. In December 2020, Winshear announced it had secured up to $3.3 million in litigation financing from Delta Capital Partners Management LLC (Delta) to support the legal proceedings against the Tanzanian government. The dispute began with Winshear seeking compensation for Tanzania’s “illegal expropriation of the SMP Gold Project and loss of the asset”, with the most recent arbitration hearing held in February of this year. Winshear clarified that “any settlement or judgement paid to Winshear from the Tanzanian government is subject to a formula whereby a portion of any proceeds are paid to Winshear's funders and legal counsel.” The announcement of this conditional settlement agreement with Tanzania is noteworthy, as in July of this year LFJ reported on a ruling by an ICSID ad hoc arbitral panel, which ordered Tanzania to pay over $109 million to Indiana Resources. That arbitration also received third-party funding in the form of $4.65 million from Litigation Capital Management.
Case Developments Commercial

Hearings in Gutmann v Apple Suggest Potential Impact of PACCAR Decision

Ever since the Supreme Court handed down its judgement in the PACCAR case, which saw the court rule that litigation funding agreements (LFAs) should be classified as damages based agreements (DBAs), we have been waiting to see what the impact on funded collective proceedings will be. New analysis suggests that recent submissions heard by the Competition Appeal Tribunal (CAT), in Mr Justin Gutmann v Apple Inc., Apple Distribution International Limited, and Apple Retail UK Limited, may give us an idea of the short-term impact of the Supreme Court’s decision. A market insight article by Clyde & Co’s partner & chair of the global arbitration group, Ben Knowles, looks at the implications of the application for certification of opt-out collective proceedings in the Gutmann v Apple case. Knowles explains that the first day of the hearing revealed that, in light of the PACCAR ruling, the class representative had not yet reached a finalized LFA with Balance Legal Capital. Mr Gutman’s lawyers explained that discussions over this matter are still ongoing between their client and the funders, but asked the CAT to still hear the remaining points relevant to certification. Knowles highlights that this is most likely emblematic of the issue facing litigants, counsel, and funders, as they all are faced with the difficulty of how to adequately amend their LFAs to comply with DBA regulations. Knowles goes on to explain that it is possible to conclude that “there isn't a lawful way to fund opt-out claims in the CAT post PACCAR, or to put it another way, there is no proven way to fund opt-out claims in the CAT post PACCAR.” He suggests that this will not be the last example of class representatives asking for more time to finalize their LFAs. As other industry leaders have argued, Knowles argues that the only tangible solution for this issue is “primary legislation that effectively reverses PACCAR or at least excludes its application to certain sorts of cases, such as opt-out collective proceedings in the CAT.”
Commercial Legal Innovation

Darrow Raises $35M for AI Platform that Identifies Potential Class Action Lawsuits

As LFJ reported last week, the worldwide momentum behind class actions continues to gain steam, as countries like New Zealand look to implement formal class action regimes. With no signs of slowing down, legal technology companies are looking to provide tools to support law firms and funders, as they search for those cases with the highest valuations and probabilities of success. Reporting from TechCrunch covers the news that Darrow, a startup which uses AI research to find and select opportunities for class action lawsuits, has raised $35 million in funding to continue its growth and expand its services. The Series B funding round takes Darrow’s total funding raised to nearly $60 million, with the company claiming that its data insights have led to around $10 billion in claims that are being actively pursued. Darrow boasts a client base of around 50 law firms at present, with the CEO, Evyatar Ben Artzi, stating that the goal for the startup is “to be the place where they can find cases that will be impactful.”  Speaking from the investor’s perspective, Margo Wu, lead investor at Georgian, highlighted that “Darrow’s founders recognized a gap in the $63 billion class and mass action market and developed an innovative language model to transform the scale and impact of litigation teams.” Whilst Darrow’s primary client base is still lawyers, as they are one of the parties most interested in finding new viable cases, the company’s leaders clarified that they hope to expand to serve individuals who may have interests in a potential case. The company’s CTO, Gila Hayat, explained that consumers “are part of the long-term vision” and that “they are the reason we started this.”