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Commercial Deals

Singaporean Bondholders Seeking Funding for Class Action over Credit Suisse Rescue

Last month saw the dramatic collapse of a trio of mid-size U.S. banks including Silicon Valley Bank, and in the aftermath, Credit Suisse found itself in dire need of rescue via its sale to UBS. However, the emergency deal to save Credit Suisse did not come without negative consequences, and in the ensuing weeks, it has appeared increasingly likely that bondholders will be pursuing several lawsuits across various jurisdictions. Reporting in Reuters covers the potential scope of the upcoming litigation, which has been prompted by the $3.4 billion rescue plan’s arrangement to write down around 16 billion Swiss francs of Additional Tier 1 (AT1) Credit Suisse debt. Bondholders in the United States, Switzerland, and Singapore are all reportedly exploring claims, with law firms including Quinn Emanuel Urquhart & Sullivan, Pallas Partners and Korein Tillery, all seeking to represent the claimants. Additionally, there are a number of class actions being proposed in the U.S. that would be brought on behalf of Credit Suisse shareholders. Additional reporting by Business Times zooms in on the bondholder litigation in Singapore, with lawyers representing Singaporean Credit Suisse AT1 bondholders looking to bring a class action lawsuit against the Swiss Government. Jonathan Lim, partner at WilmerHale, stated that the class action was seeking outside litigation funding to support a claim which alleges the bond write-down violated rules against ‘unfair state actions’ codified under the 2003 Singapore-European Free Trade Association.
Commercial

Providing Budgetary Certainty to In-House Counsel Through Litigation Funding

It has become increasingly clear that as the commercial litigation funding market continues to grow more competitive, funders are looking to broaden their client base with a focus on offering services to in-house counsel. Among the advantages that outside capital can provide to legal departments, one funder is stressing the value of providing budget certainty amidst the always unpredictable timing of litigation spending. In a feature in Legal Dive, Burford Capital’s co-COO, Aviva Will, highlights the common issue faced by general counsel that whilst they have a set quarterly budget to account for, outside law firms cannot always make those litigation costs reliably fit within quarterly constraints. As a result, Burford is looking to support GCs where possible by covering legal costs that would exceed the department’s litigation budget, allowing clients to have ‘certainty around when they [are] going to spend their capital’. Another solution which Burford Capital provides to CFOs and general counsel is a form of factoring, where a company expects to receive an award, and Burford will pay a portion of that award in advance, in return for being first in line for any payment if the award is granted.  Will also points to the value Burford can offer clients from a strategic perspective, arguing that it’s not simply about providing lump sums of capital in one go, but instead finding out what the pain points are for the legal department, and then Burford can ‘think creatively about how we can support the company.’
Commercial Regulatory Issues

Is Litigation Funding Responsible for Rising Insurance Settlements?

Many insurers claim that litigation funding is a major contributor to so-called ‘nuclear settlements’, which are large settlements and damages awards that are based on intangible factors. However, a new article interviewing industry experts suggests that there is less consensus on the topic than might be expected. An article by PropertyCasualty360, looks at the issue of rising insurance settlements and the associated rising cost of civil litigation, known as social inflation. Examining litigation funding’s ties to these increases, the author found that there were those who do see a link, such as John C.S Pierce who investigated a social inflation task force at the Defense Research Institute. Pierce argues that the presence of third-party funders and the huge amount of capital they bring, naturally increases costs overall, stating that as the funding industry grows ‘we will see more of these big verdicts and […] more big settlements.’ However, there are experts who disagree with this assessment, including Tom Baker, professor of law at the University of Pennsylvania, who argues that even if social inflation is real, ‘there is no solid evidence, and certainly no published, peer reviewed research, showing that litigation funding is the cause.’ Baker also criticized a publication by insurer Swiss Re, which claimed third-party funding had increased costs in commercial trucking litigation, but failed to note that lawyers in this area do not regularly engage litigation funders. Anthony Sebok, professor at Cardozo School of Law, goes even further and suggests that when looking at litigation funding and social inflation, ‘there are so many reasons to think that the two have nothing to do with each other’. Instead, Sebok argues that industry leaders should look to the wider socio-political conditions at play here, namely the rise in populism that will naturally lead to an environment which is increasingly hostile to corporate defendants. 
Case Developments Commercial

Funder Files Lawsuit Against Another Funder, Alleging Fraud in Law Firm Financing Dispute

As LFJ recently covered, there is growing enthusiasm among litigation funders to invest capital in portfolio and law firm financing, in addition to the single case funding that is a staple of the industry. However, such engagements do not come without their own risks, as has been demonstrated by a dispute where one funder is suing both a law firm and another funder over allegations of fraud. An article by Bloomberg Law provides an overview of the lawsuit in the Supreme Court of the State of New York, where Contingency Capital has brought a complaint against ACAP Litigation Fund. Contingency’s lawsuit alleges that ACAP and the Houston-based Dunken Law Firm defrauded the funder, by using an $8.8 million loan provided to pay off Dunken’s entire existing debts to ACAP. Contingency claims that ACAP lied that this loan would cover the debt, only for ACAP to claim that Dunken was ‘in default of a new loan that it had agreed not to extend’. Whilst Dunken is not the target of Contingency’s lawsuit, they are simultaneously facing another lawsuit from ACAP in Texas, and Bloomberg Law’s reporting found that Dunken has been the target of multiple lawsuits, including allegations of ‘fraud and breach of contract over its handling of transvaginal mesh and talcum powder cases.’  Rebecca Berrebi, CEO of Avenue 33 and a litigation funding broker, stated that the case demonstrates that due diligence cannot always prevent these situations, and that in every litigation funding agreement ‘you presume good faith and fair dealing and that people aren’t lying.’
Case Developments Commercial

District Judge Denies Sysco’s Request to Bundle Burford Dispute with Antitrust Claim

Whilst public conflicts between funders and clients are a rare sight, when a major dispute erupts between the two parties it is sure to be a drawn-out affair. The dispute between Burford Capital and Sysco Corporation is proving to be just such a conflict, as Sysco has failed to bundle its motion to vacate Burford’s existing injunction with one of the antitrust lawsuits at the heart of this dispute. Reporting in the Cook County Record gives us another update on this dispute, highlighting the decision by U.S. District Judge Thomas Durkin to deny Sysco’s reassignment motion. Sysco had argued in its request that resolving its primary dispute with Burford would allow it to settle its ‘Broiler Case’ chicken pricing lawsuit, but Judge Durkin refuted this argument and stated that ‘the two cases are as different as night and day.’ He went on to explain that as Sysco’s dispute with Burford was wholly concerned with the financing agreement, whilst the antitrust litigation still contains ‘unresolved questions of law and fact’, there was no relation between the two cases. Judge Durkin also refuted the idea that bundling the disputes together would create no efficiencies, as he was not even familiar with the details of the litigation finance agreement and its related dispute in the first place. Judge Durkin’s decision included a strong rebuke of the assumptions made in Sysco’s request, stating: ‘While district judges sometimes mediate settlement, it is never appropriate to presume settlement. And it is certainly inappropriate to decide whether Case 1451 should be reassigned on the assumption that Sysco’s claim in that case is meritorious.’
Commercial Regulatory Issues

European Union Explores Regulation of Third Party Funding and International Arbitration 

As litigation finance continues to expand worldwide, political factions look to regulate the sector. New guidance from the European Parliament aims to foster "responsible private funding of litigation."  Mondaq reports that the European Union aims to create an independent supervision body to regulate third party funding activities, creating universal terms and conditions for litigation finance in Europe.  The overarching premise is that EU funders who sponsor agreements may be on the hook for adverse effects related to the litigation. The directive also looks to ensure that litigation investors have enough liquidity available to support both their enterprise and their litigation finance agreements, proven on an annual basis. Transparency is central to the EU directive, along with capping potential litigation funder awards at 40%. If litigation funders look to meddle in the decision of a case, the directive's oversight body may elect to terminate the litigation funding agreement. The European Commission is debating the incorporation of these rules. Further scrutiny will be applied by the European Parliament and European Council. Ultimately, each member state of Europe will need to ratify the rules before they can be enforced.
Announcements Commercial

Burford Capital releases latest issue of its Burford Quarterly journal of legal finance

Burford Capital, the leading global finance and asset management firm focused on law, today releases its latest Burford Quarterly, a journal of legal finance exploring the practical applications of legal finance across a broad spectrum of businesses. The latest issue of the Burford Quarterly 2 2023 includes: The ACC's DEI Maturity Model: Veta T. Richardson speaks with David Perla ACC President and CEO Veta T. Richardson discusses key challenges facing in-house lawyers, diversity in the legal profession and her new book "Take Six" with Burford Co-COO David Perla. How health insurance companies used legal finance to manage risk: A case study Burford Director Andrew Cohen highlights a case study demonstrating how legal finance enabled several health insurers to continue to serve their customers and to manage their balance sheet risk by monetizing their claims in the risk corridors litigation. Key takeaways from securities litigation symposium In-house counsel from some of the world's largest asset managers and partners from leading global law firms participated in Burford's 2022 Securities Litigation Symposium, and Burford Director Michael Sternhell shares key takeaways. Speakers included representatives from Franklin Templeton, Norges Bank Investment Management, Charles Schwab & Co., The Vanguard Group, Stradley Ronon Stevens & Young, LLP, Pallas Partners, Scott + Scott LLP, Quinn Emanuel Urquhart & Sullivan, LLP, Bartlit Beck LLP and Financial Technologies. Legal finance helps a medical device company protect its patent rights A recent publicly disclosed Burford funded matter illustrates the importance of legal finance as a tool to help companies protect their patent rights, in a case study by Senior Vice President Joshua Harris. For law firms, legal finance can help offset a downturn Burford's Co-COO Aviva Will explains how funded litigation practices offer law firms a better alternative to offset the loss of transactional work than layoffs as the economy slows. Perspectives from leading APAC insolvency practitioners and lawyers Insolvency experts from Singapore, Hong Kong and Australia share their insights on the latest trends and developments within the field of insolvency law. Roundtable: Expert insights on enforcing non-performing loans Non-performing loans (NPLs) consume bank capital, decrease profitability and require time and attention that divert from core activities. A panel of legal experts explain how banks can enforce or otherwise monetize their NPL portfolios.
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Announcements Commercial Legal Innovation

LegalPay launches Contract Defense, a free service protecting businesses from disputes arising through BNPL

LegalPay, India’s first and largest litigation funder and interim financier, has launched a feature that protects businesses against disputes arising from contracts paid for using its BNPL product. Recognizing the increase in contract disputes, LegalPay has introduced Contract Defense, a free-of-cost service that covers the legal costs associated with contract-related disputes. This applies to all contracts paid for using LegalPay Max. This development means that LegalPay now offers full-stack financing for all types of legal expenses, and has further strengthened its position as the dominant player in the legal financing industry. Kundan Shahi, CEO & Founder of LegalPay, said, “Contract Defense is designed to assist businesses with obtaining legal guidance and expertise in disputes arising from contracts that have been paid using LegalPay Max. By onboarding on LegalPay Max, founders, and CEOs can rest easy and not worry about their legal expenses. Attorneys and lawyers will review the situation & relevant documents and provide support with enforcing the contract, allowing businesses to focus on their work.” By utilizing Contract Defense, businesses gain an additional layer of security for their contracts, which provides peace of mind and allows them to focus on their core operations without worrying about the costs associated with legal disputes. For instance, companies facing a dispute arising with a contract that was paid for using LegalPay Max can review the situation with one of LegalPay’s partnered law firms without any additional charges. With LegalPay Max, businesses can avail of a credit line of upto Rs 50 lakh for all types of legal and professional expenses such as transaction, regulatory, advisory, arbitration, and other legal costs, and the same can be spread over a tenure of up to three to six months with no extra charge.
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Announcements Commercial People Moves

Omni Bridgeway launches in Italy, welcomes Giacomo Serra Zanetti 

Omni Bridgeway is pleased to announce the company's continued European expansion with the addition of permanent operations in Milan, Italy, and welcomes Giacomo Serra Zanetti who joins as Investment Manager and Senior Legal Counsel. Based in Milan, Giacomo will leverage his background in finance and law to deliver non-recourse legal financing and legal recovery solutions to clients with an emphasis on the Italian market. Giacomo brings two decades of legal experience in structuring and executing cross-border transactions, with specific expertise in restructuring, insolvency and the acquisition of litigious and distressed claims gained while working for leading Italian law firms Grimaldi SL LLP, BonelliErede, and most recently, Advant – NCTM where he was an Equity Partner, as well as direct experience with an investor in insolvency actions and claims against distressed debtors. He is both admitted to the Italian bar and a solicitor of the courts of England and Wales.   "Omni Bridgeway has been successfully funding and supporting clients with legal proceedings in Italy for more than a decade," notes Raymond van Hulst, Executive Director, Managing Director and Co-Chief Investment Officer EMEA. "With our expansion into Italy, following France and Spain recently, we now have permanent operations in seven European jurisdictions and are funding proceedings in more than 15 European jurisdictions. Omni Bridgeway is now even better positioned to provide on-the-ground resources and expertise for corporations, law firms and claimants across Europe. Giacomo brings a stellar track record and is an excellent addition to the Omni Bridgeway team." Managing Director and Co-Chief Investment Officer EMEA, Hannah van Roessel, added, "I look forward to working with Giacomo and am thrilled to launch our permanent operations in Italy. Giacomo's unique expertise, coupled with his deep knowledge of the Italian market allows Omni Bridgeway to provide a comprehensive offering to clients to address their legal finance, enforcement, and recovery needs within Italy and Europe, as well as internationally." Giacomo Serra Zanetti commented, "I am truly excited to join Omni Bridgeway, a world leader in the legal finance industry. Italy's legal market, with its high level of complexity and sophistication, represents a compelling market for legal finance and risk management. With operations based in Milan, Omni Bridgeway is perfectly situated to deliver innovative litigation financing and recovery solutions for a broad range of business and legal matters, including the most complex local and cross-border situations. With its truly diversified, global team, Omni Bridgeway adds value for stakeholders in a broad range of situations with underlying legal complexity (in both solvent and insolvent scenarios). I look forward to playing an instrumental role delivering capital and expertise in such circumstances."
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