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Announcements Deals

QUINN EMANUEL AND LONGFORD CAPITAL TO OFFER LITIGATION FUNDING TO PRIVATE EQUITY CLIENTS

In a groundbreaking agreement, Longford Capital Management, LP and Quinn Emanuel Urquhart & Sullivan, LLP announced a litigation financing offering for private equity (PE) firms and their portfolio companies. Under the terms of today’s deal, Longford has committed up to $40M in equity capital to Quinn Emanuel’s private equity clients involved in litigation, funding attorneys’ fees and litigation costs and monetizing the value of meritorious legal claims.

The agreement provides Quinn Emanuel’s PE clients and their portfolio companies with an alternative method of funding litigation and enables those clients to treat meritorious legal claims as corporate assets capable of being monetized. Longford provides funding for disputes in several areas of law applicable to PE clients, including antitrust, intellectual property, and a variety of contract, tort, and fraud claims.

“Quinn Emanuel likes to innovate, and we have already partnered successfully with Longford on several occasions to produce excellent results for clients,” said Jonathan Bunge, Co-Chair of Quinn Emanuel’s National Trial Practice and Managing Partner of the Chicago office. “This latest collaboration will serve the interests of our private equity clients seeking alternatives and options in pursuing meritorious litigation.”

“We have identified a particular ability to assist private equity managers and their portfolio companies involved in commercial disputes,” said William Farrell, Co-Founder and Managing Director of Longford. “We look forward to assisting Quinn Emanuel by providing its private equity clients with attractive financial options.”

With litigation funding, portfolio companies and their private equity sponsors can pursue valuable, meritorious claims and monetize the value of those claims without risk or delay, accelerating liquidity and fueling growth, Farrell noted.

About Longford Capital

Longford Capital is a private investment company that provides capital to leading law firms, public and private companies, universities, government agencies, and other entities involved in large-scale, commercial legal disputes. Longford was one of the first litigation funds in the United States and is among the world’s largest litigation finance companies with more than $1.2 billion in assets under management. Longford offers a broad range of capital solutions to funds attorneys' fees and expenses and otherwise manage the financial risk of pursuing meritorious legal claims in return for a share of a favorable settlement or award. The firm manages a diversified portfolio and considers investments in subject matter areas where it has developed considerable expertise, including, business-to-business contract claims, antitrust and trade regulation claims, intellectual property claims (including patent, trademark, copyright, and trade secret), fiduciary duty claims, fraud claims, claims in bankruptcy and liquidation, domestic and international arbitrations, claim monetization, insurance matters, mass actions and class actions, and a variety of others.

About Quinn Emanuel

Quinn Emanuel Urquhart & Sullivan, LLP is a 1000+ lawyer business litigation firm—the largest in the world devoted solely to business litigation and arbitration with 34 global office locations. Surveys of major companies around the world have named it the “most feared” law firm in the world three times. Firm lawyers have tried over 2,500 cases, winning 86% of them. When representing defendants, Quinn Emanuel’s trial experience gets better settlements or defense verdicts. When representing plaintiffs, Quinn Emanuel lawyers have won nearly $80 billion in judgments and settlements. Quinn Emanuel has also obtained seven nine-figure jury verdicts, four 10-figure jury verdicts, 51 nine-figure settlements, and 20 10-figure settlements.

Quinn Emanuel has been named the No. 1 “most feared” law firm by The BTI Consulting Group three times in its annual “Most Feared Law Firms in Litigation” guide, in which in-house counsel named 46 firms they “want to steer clear of” when it comes to litigation. The American Lawyer named Quinn Emanuel the top IP litigation firm in the U.S. and the firm as one of the top six commercial litigation firms in the country. The UK legal periodical, The Lawyer named us “International Firm of the Year.” Law360 has most recently selected us as having Banking, Class Action, International Arbitration, and Trials “Practice Groups of the Year.” Managing IP twice recognized us as having the “Best ITC Litigation Practice” and honored us with the “Patent Contentious West” award. Legal Business has named us “US Law Firm of the Year” three times, and our German offices have twice been named both “IP Litigation Firm of the Year” and “Patent Litigation Firm of the Year” by JUVE, Germany’s most prestigious legal publication. Global Investigations Review, a leading legal periodical covering global white-collar investigations, named us the “Most Impressive Investigations Practice of the Year.” Global Arbitration Review named us the 3rd best arbitration practice in the world. Global Competition Review named our antitrust and competition practice among the “25 Global Elite,” and has included us in their list of the world’s top 10 competition litigation practices.

The LFJ Podcast

Episode 86: Luke Darkow

Hosted By Luke Darkow |
In this episode, we sat down with Luke Darkow, Principal on Victory Park Capital’s Investment Team. Luke discussed Victory Park's credit-like approach to litigation funding, why the asset class is so attractive to investors and LPs, how Victory Park can benefit law firms specifically, and the evolution of the asset class under a stricter regulatory regime. [podcast_episode episode="12778" content="title,player,details"]
Announcements Commercial Deals

Legal Finance SE Announces Acquisition by Nakiki SE

Legal Finance SE, which has been aiming for an IPO for some time, has been acquired by the listed company Nakiki SE. The shares of Nakiki SE have been traded on the Frankfurt Stock Exchange since 9 April 2024 under ISIN DE000WNDL300 / WKN WNDL30. Nakiki SE will soon operate under the name Legal Finance Holding SE. In a strategic decision, Legal Finance SE, a pioneer in litigation Finance, announces its acquisition by the listed company Nakiki SE (ISIN DE000WNDL300, WKN WNDL30). This acquisition is not only a significant step for both companies, but also marks the indirect IPO of Legal Finance SE, which will take the company to new heights. Legal Finance SE, known for its innovative approach to litigation Finance, will significantly expand its reach and influence through this acquisition. The acquisition by Nakiki SE not only provides Legal Finance with access to the capital markets, but also opens up new avenues for innovation and growth in the ever-changing world of litigation Finance. This acquisition is in line with the company's vision to make legal protection more accessible and fairer and sends a strong signal for the future of the industry. For clients and partners of both companies, this development means increased support and expanded services aimed at facilitating access to quality legal services worldwide.
Case Developments Commercial

Italian Supreme Court Provides Ruling on Registration Requirements for Litigation Funders

In jurisdictions where litigation funding is still in its early stages, it is instructive when the courts are forced to deal with questions around the legality of third-party funding. A recent decision published by Italy’s highest court has offered some insight into the country’s legal system and its current attitude towards litigation funders. In a post from RP legalitax, Paolo Grandi examines a judgement handed down by the Italian Supreme Court last month, which found that litigation funding firms are not required to be registered under Article 106 of Legislative Decree No. 385/1993 (‘Testo Unico Bancario’ “TUB”).  The Supreme Court’s judgement related to a case from the Justice of Peace in Busto Arsizio, where a claimant seeking compensation from an airline had sold their claim to a funder. The Justice of the Peace ruled that the purchaser of the claim was not entitled to the compensation, as the agreement between it and the claimant was invalidated by the fact that they were not registered under the TUB regulations. The claimant appealed the decision to the Court of Appeal in Busto Arsizio which upheld the appeal in July 2021, only for the airline to then bring a challenge of the decision to the Supreme Court. The Supreme Court rejected the airline’s challenge and, in its decision published on March 19 2024, stated that the ““the Court of Appeal, in solving this case, was compliant with what this Court has already affirmed in the different hypothesis of the assignment of the credit for compensation for road accident damages, namely that it is possible to assign such credit pursuant to Articles 1260 et seq. of the Italian Civil Code.” The Supreme Court went on to clarify that this kind of transaction “does not even imply any financial activity subject to authorization pursuant to Article 106 TUB.”
Commercial People Moves

ALFA Welcomes Litica as Newest Associate Member

In a post on LinkedIn, The Association of Litigation Funders of Australia (ALFA) announced that it is welcoming Litica as its newest Associate Member. Litica becomes the 11th Associate Member of ALFA, joining the likes of FTI Consulting, Piper Alderman, and William Roberts Lawyers. Since its launch in 2019, Litica has grown to become a leading provider of commercial ATE insurance in the UK and has since built a global footprint by expanding its operations to Australia in 2022. As part of this expansion, Litica appointed Philip Lomax to the position of Managing Director for Asia Pacific, with Lomax leading Litica’s Australian offering from Sydney. As LFJ reported in November 2023, Litica followed its expansion to Australia by establishing a European presence through a new office in Cologne (Köln) Germany, with Ed Yell appointed as Managing Director of Litica Europe GmbH.
Commercial Special Features

Key Takeaways from LFJ’s Special Digital Event “Litigation Finance: Investor Perspectives”

On Thursday April 4th, 2024, Litigation Finance Journal hosted a special digital event titled "Litigation Finance: Investor Perspectives." The panel discussion featured Bobby Curtis (BC), Principal at Cloverlay, Cesar Bello (CB), Partner at Corbin Capital, and Zachary Krug (ZK), Managing Director at NorthWall Capital. The event was moderated by Ed Truant, Founder of Slingshot Capital. Below are some key takeaways from the event: If you were to pinpoint some factors that you pay particular attention to when analyzing managers & their track records, what would those be? BC: It's a similar setup to any strategy that you're looking at--you want to slice and dice a track record as much as possible, to try to get to the answer of what's driving returns. Within litigation finance, that could be what sub-sectors are they focused on, is it intellectual property? Is it ex-US deals? What's the sourcing been? How has deployment been historically relative to the capital they're looking to raise now? It's an industry that is starting to become data rich. You have publicly-listed companies that have some pretty interesting track record that's available. I'm constantly consuming track record data and we're building our internal database to be able to comp against. Within PE broadly, a lot of people are talking about DPI is the new IRR, and I think that's particularly true in litigation finance. If I'm opening a new investment with a fund I've never partnered with before, my eyes are going to 'how long have they been at it, and what's the realization activity?' There is also a qualitative aspect to this--has the team been together for a while, do they have a nice mix of legal acumen, investment and structuring acumen, what's the overall firm look like? It's a little bit art and science, but not too dissimilar from any track record analysis with alternative investment opportunities. Zach, you've got a bit more of a credit-focus. What are you looking for in your opportunities?  ZK: We want to understand where the realizations are coming from. So if I'm looking at a track record, I want to understand if these realizations are coming through settlements or late-stage trial events. From my perspective as an investor, I'd be more attracted to those late-stage settlements, even if the returns were a little bit lower than a track record that had several large trial wins. And I say that because when you're looking at the types of cases that you'll be investing in, you want to invest in cases that will resolve before trial and get away from that binary risk. You want cases that have good merit, make economic sense, and have alignment between claimant and law firm, and ultimately are settleable by defendants. That type of track record is much more replicable than if you have a few outsized trial wins. What are things that managers generally do particularly well in this asset class, and particularly poorly?  CB: I don't want to paint with a broad brush here. With managers it can be idiosyncratic, but there can be structuring mistakes - not getting paid for extension risks, not putting in IRR provisions. Portfolio construction mistakes like not deploying enough and being undercommitted, which is a killer. Conversely, on the good side, we've seen a ton of activity around insurance, which seems to be a bigger part of the landscape. We also welcome risk management optionality with secondaries. Some folks are clearly skating to where the puck is going and doing more innovative things, so it really depends who you're dealing with. But on the fundamental underwriting, you rarely see a consistent train wreck - it's more on the other stuff where people get tripped up. How do you approach valuation of litigation finance portfolios? What I’m more specifically interested in is (i) do you rely on manager portfolio valuations, (ii) do you apply rules of thumb to determine valuations, (iii) do you focus your diligence efforts on a few meaningful cases or review & value the entire portfolio, and (iv) do you use third parties to assist in valuations?  CB: If you're in a fund, you're relying on the manager's marks. What we do is not that - we own the assets directly or make co-investments. We see a lot of people approach this differently. Sometimes we have the same underlying exposure as partners and they're marking it differently. Not to say that one party is rational and the other is not, it's just hard to do. So this is one we struggle with. I don't love mark-to-motion. I know there's a tug toward trying to fair value things more, but as we've experienced in the venture space, you can put a lot of valuations in DPI, but I like to keep it at cost unless there is a material event. Check out the full 1-hour discussion here.
Past Event

Litigation Finance: Investor Perspectives

Gain valuable insights into how investors are evaluating litigation funding opportunities.  This expert panel discussion explores the key metrics, trends, and considerations driving investment decisions in the evolving litigation finance landscape. This session covers topics such as:
  • What financial metrics are they most interested in?
  • How critical are issues like duration risk and regulatory pressure in their decision-making?
  • What can fund managers do to best position themselves to secure an investment?
  • And much more!
Video Passcode: nS$D6miJ
Listen to Replay
Commercial People Moves

Claimbnb Opens Madrid Office Amid 3rd Fundraising Round

Whilst the American, British and Australian litigation finance markets are largely dominated by long-established funders, individual jurisdictions within Europe offer opportunities for domestic funders to gain a foothold in these nascent markets. This is being demonstrated once again, as a new funder in Spain has opened an office and raised additional capital. An article in Iberian Lawyer covers the latest move from Spanish litigation funder, Claimbnb, which has opened an office in Madrid to support its expansion in the country’s growing litigation finance market. Claimbnb currently operates three investment vehicles and is in the middle of its third fundraising round, aiming to attract another €50 million in capital for new case investments. The funder stated that it had already achieved many successes for its clients and its investors, “having invested, to date, in more than 30 cases or situations, most of them in Spain for a nominal value of more than €150 million.” Fernando de Castro de Miguel, a member of Claimbnb’s investment committee, stated: “In an uncertain economic environment, Claimbnb offers the possibility of monetizing litigation or legal assets, providing extraordinary income, immediate liquidity and the ability to reinvest in the firm’s core business. We differentiate ourselves by investing in unique litigation that requires ad-hoc risk analysis, but we do not forgo other more scalable themes such as antitrust damages.”
Commercial Funder's Corner Regulatory Issues Special Features

Legal and Ethical Considerations When Navigating Litigation Finance

By Jeff Manley |
The following post was contributed by Jeff Manley, Chief Operating Officer of Armadillo Litigation Funding.  In litigation finance, especially in mass torts and class actions, trust and success hinge on unwavering ethical practice and legal compliance. For attorneys and financial professionals navigating this complex field, a steadfast commitment to upholding ethical standards is not just ideal—it's imperative. This article delves into the crucial considerations that must guide the intricate relationship between legal funding and professional integrity. The Importance of Law Firm Independence Law firm independence is paramount when it comes to funding arrangements, particularly within the complex sectors of mass torts and class actions. The imperative to maintain this independence while engaging with external funding sources necessitates a sophisticated approach to partnership. Firms must ally with financiers who not only understand the legal and ethical implications inherent to such cases but who also value the firm's autonomy in decision-making processes. A skilled financier can guide firms through the nuances of these arrangements, ensuring that the terms of any financial agreement bolster the firm’s ability to act in its clients' best interests without external influence. Drafting agreements with a clear delineation of roles and expectations, without compromising the firm’s command over legal strategy, is not solely a matter of due diligence—it's a strategic endeavor to uphold the integrity and efficacy of the legal services provided. Managing Conflicts of Interest Managing conflicts of interest requires a collaborative effort between law firms and their funding partners. Identifying and mitigating potential conflicts at the intersection of funders, firms, and clients necessitates a united approach. Together, firms and funders should conduct thorough reviews of funding arrangements to spotlight areas where interests might diverge, ensuring that neither the firm's allegiance to its client nor the client's best interests are compromised. Adopting a joint strategy that aligns with ABA Model Rule 1.7 on conflicts of interest can fortify this alliance. This partnership approach to conflict management might include establishing shared guidelines for conflict checks, mutual disclosures to involved parties, and embedding protective measures in funding agreements that prioritize client outcomes. A cooperative oversight mechanism, possibly in the form of a committee comprising representatives from both the firm and the funder, can serve as a vigilant guardian of ethical integrity and client dedication, fostering a proactive culture of transparency and ethical vigilance. Crafting of Finance Agreements Moving into the structuring of financing agreements, it's vital that financiers and law firms unite to craft solutions (and operating agreements) that are ethically grounded and legally sound, starting with shared due diligence. Both parties engage in a transparent exchange to ensure all legal and ethical considerations are meticulously evaluated, laying a groundwork that prioritizes the client’s best interests and compliance with regulations. The agreement's structuring phase is an exercise in precision, balancing financial objectives with stringent ethical standards. Following the execution of the agreement, a concerted monitoring effort is essential to ensure ongoing compliance and address any ethical issues proactively. This cooperative stance not only fosters trust and transparency between the financier and the firm but also upholds the dignity of the legal profession and the rights of the clients they serve. This endeavor necessitates guidance from a trusted and sophisticated financier, ensuring that the partnership is built on a foundation of expertise and integrity. Regulatory Compliance Navigating this domain requires acute awareness of both state and federal regulations. This environment demands that law firms and financiers possess a deep understanding of the legal intricacies that define their operational landscape. The diversity of regulations across jurisdictions necessitates a partnership with well-respected funders, who bring sophisticated guidance to the table. Their expertise is invaluable in steering through the complexities of compliance, ensuring that practices are not only current but also anticipatory of the legal field's dynamic evolution. The future of litigation finance hinges on adaptability to regulatory changes, which are increasingly influenced by the sector's growing recognition and its impact on access to justice. The call for enhanced clarity in regulations and the push for stringent disclosure practices indicate a trend towards standardization across the board. Law firms, guided by seasoned financiers, must remain vigilant and adaptable, ready to adjust their strategies to maintain compliance and ethical integrity. This proactive stance is crucial not just for navigating today's regulatory challenges but also for shaping the future of ethical litigation finance. Conclusion In the rapidly shifting landscape of litigation finance, the value of a partnership with a well-respected financier cannot be overstated. Such collaborations are critical not only for steering through the regulatory complexities but also for shielding a firm against potential legal liabilities, including malpractice claims. As the industry continues to evolve, the guidance of experienced financiers becomes an indispensable asset, enabling law firms to anticipate changes, adapt strategies, and maintain compliance. This partnership does more than protect; it empowers firms to thrive amidst challenges, ensuring that their commitment to justice and client service is upheld. In the end, the journey through the ethical and regulatory intricacies of litigation finance is one best undertaken with a trusted financier by your side, crafting a future where the legal profession and its principles stand resilient.