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Key Takeaways from LFJs Digital Event: Litigation Finance: What to Expect in 2024

On February 8th, 2024, Litigation Finance Journal hosted a special digital event titled 'Litigation Finance: What to Expect in 2024.'  The event featured Gian Kull, Senior Portfolio Manager at Omni Bridgeway, David Gallagher, Co-Founder of LitFund, Justin Brass, Co-CEO and Managing Director of JBSL, and Michael German, Co-Founder and CIO at Lex Ferenda. The event was moderated by Peter Petyt, founder of 4 Rivers. The discussion covered a range of topics pertinent to the litigation funding space. Below are some key takeaways from the event: Which areas are you particularly interested in investing in over this coming year?  MG: There is a supposition that this industry will continue to grow in 2024. All of the indicators suggest that the industry will continue to grow--nearly all of the funders are funding bankruptcy-related cases, and three quarters are funding patent cases. Those are areas of interest to us, and I think that will continue to make sense, given the types of commercial cases they are - complex cases that require significant amounts of attorney time and defendant time,  and yield significant costs to the litigaiton. JB: We're going to see a continued expansion into the mass arbitration space. That is something that has been coming up with more frequency. Mass torts has been staying quite busy. And where we see a lot of potential is with the evolution of the secondary market. There are a lot of funders coming up with maturing cases, and it makes sense for those funders to redeploy that capital into other opportunities - not necessarily exit that case - but just sell a minority stake or a portion of it. We that in traditional fixed income classes, so we think that is going to continue in the funding market as well. Are you seeing any kind of appetite to invest in jurisdictions you haven't previously invest in? Have some jurisdictions matured to the point where you now will give them a serious look?  GK: That's a hard question to ask Omni Bridgeway as a whole, because we try to be in a lot of places. But from my own experience in Europe, we've gotten quite comfortable in the Netherlands, we have a very large investment in Portugal. Spain is next on the list. Italy is after that. The jurisdiction I've been most disappointed in - aside from the UK with the regulatory issues there - is Germany. For such a large economy, from a commercial collective redress perspective that is a dead end. As we move through Europe, I'll be watching the regulatory regimes and how those are tested over the coming years. Are you seeing many requests for monetization of judgements or awards, or is that not an area that you are particularly interested in?  DG: We're especially interested in that, largely because my partners have spent a lot of their careers making those types of investments. And just speaking from my own experience, that has always been an important part of the market, and continues to be an important part of the market. I think the availability of judgement preservation insurance makes funding more available and appropriate both on the funder's side and the client's side. In my view, it's very interesting to see the number of people in the market moving into the insurance space. In my view quite a surprising number - it's certainly indicative of a trend. LFJ just announced today that Ignite has launched a capital protection insurance resource. So there are a lot of interesting things happening here. Is it still early days for this space, because there are a lot of people moving into it with interest?  MG: I share the sentiment of having a general level of surprise with how many folks from the litigation finance industry insurance has drawn. From the Lex Ferenda perspective, insurance has proven to be a very expensive option, that ultimately my clients and I don't feel is worth the cost. But the vast majority of our investments - from an insurer's perspective - are probably the least good fit, so that's probably why it's reflecting in the price. JB: I think the insurance aspect of litigation finance is here to stay. There will be growing pains along the way. I think even as recently as last week, there were disclosures in the Affordable Care Act fee dispute where the law firm got an insurance policy related to its fee award. What was interesting there, was the law firm was seeking disclosure about the policy, and in essence how it worked. So not only is it new and here to stay, we're seeing it become public. The risk to early-stage cases is the pricing can be expensive, but what will happen over time, is like anything else, the insurers will be tracking the progress on those cases, and as funders come back as repeat customers, they'll be looking at you and factoring that relationship into their pricing, just like how a bank factors that into a credit score. I think the best path forward is figuring out how to work together and create a level of transparency and trust, because it's not going away. For the full recording of the event, click here.
Announcements Commercial People Moves

Legal Finance Firm Creates Jobs Across Manchester, Dublin and The Netherlands Amid European Expansion

A prominent litigation finance firm has marked a significant growth milestone by establishing a new office in The Netherlands to complement its existing presence in Manchester and Dublin.

Nera Capital’s expansion into Europe is set to create 10 new positions across the company including at its newly minted location in Weert, Netherlands, with US expansion plans also in the pipeline.

The positions will span key areas including legal, finance, audit, origination, technology and marketing, demonstrating the company’s commitment to building a diverse and dynamic platform to support its successfully growing portfolio. 

Since the firm’s inception in 2011, Nera Capital has been a trailblazer in legal finance in multiple jurisdictions assisting over 100,000 claimants to date. Director Aisling Byrne expressed her enthusiasm at the growth, stating: "Our venture into Europe is a strategic move to better serve our clients and partners, providing enhanced access to justice through innovative funding solutions.

"Our new offices mark a geographical expansion that aligns with Nera Capital's vision for growth and accessibility. The decision to establish a presence in Europe reflects a careful consideration of market dynamics and growth potential."

With over 13 years of operation, Nera Capital is a specialized funding provider for law firms, offering support across diverse claim portfolios including Financial Mis-selling, Data Breach, Anti-trust, Personal Injury, and beyond.

In the realm of legal and financial markets, Nera Capital’s seasoned and dynamic team boasts decades of collective expertise and is dedicated to delivering profound insights and cultivating strategic industry partnerships with leading law firms across the globe. 

Byrne added “The positive outcomes from our ventures globally have not only fortified our influence, but bolstered industry relationships, enabling us to adeptly navigate and thrive in these new jurisdictions.”

“Our expansion into Europe is also about creating more access to justice. We are excited about the possibilities this brings and look forward to making a further positive impact on the legal landscape. I take immense pride in witnessing the remarkable growth of Nera Capital as it expands its footprint worldwide. It’s a testament to the hard work of our incredible team and is truly gratifying to see the firm's influence extend beyond borders, creating job opportunities and spearheading justice in Europe."

About Nera Capital

·       Established in 2011, Nera Capital is a specialist funding provider to law firms.

·       Provides Law Firm Lend funding across diverse claim portfolios in both the Consumer and

        Commercial sector.

·       Headquartered in Dublin, the firm also has offices in Manchester and The Netherlands.

·       www.neracapital.com

Past Event

Litigation Finance: What to Expect in 2024

Gain valuable insights into the forces shaping the future of litigation finance.  This webinar recording, captured in early 2024, features expert analysis of key trends, including regulatory changes, economic influences, and the rise of new case categories and technologies. Key topics explored in this webinar:
  • How will the regulatory trends of 2023 play out (PACCAR in UK, disclosure in US, etc.)?
  • How might the prospect of a recession or soft landing impact the litigation finance industry in 2024?
  • Does the rise of duration risk make LPs wary of litigation funding investments?
  • What case categories will drive industry growth? Mass torts, IP, class actions, etc.?
  • How is the evolution of legal technology influencing funder origination & underwriting strategies?
  • What new trends does the panel foresee arising in 2024? 
The LFJ Podcast

Episode 84: Sina Toussi

Hosted By Sina Toussi |
Our guest today is Sina Toussi, Founder and Chief Investment Officer of Two Seas Capital, an investment fund that focuses on litigation-driven investments arising from restructurings, bankruptcies, commercial disputes, corporate malfeasance, and regulatory events. Sina provides some specific examples of how a litigation-focused hedge fund such as Two Seas can maximize return by investing in the underlying companies that are pursuing litigation. [podcast_episode episode="12549" content="title,player,details"]
Commercial Deals

Shoosmiths Report: 31% of UK GC’s Would Consider Third-Party Litigation Funding

As legal industry analysts continue to predict increasing degrees of litigation risk for corporations, in-house counsel are being forced to develop strategies to manage their resources that are already under threat from budget cuts. New research suggests that litigation funders may find a receptive audience among these legal professionals, with GCs at large UK companies showing interest in exploring alternative funding for litigation. Shoosmiths’ Litigation Risk 2024 report provides insight into the attitudes of in-house legal professionals in the UK, surveying over 360 senior general counsels and senior lawyers. The survey covered a wide variety of topics including emerging areas of litigation risk, allocating resources for disputes, anticipating and mitigating exposures, and responding to these increasing litigation risks. In the introduction to the report, Alex Bishop, partner and head of dispute resolution & litigation, says that ‘the fallout from geopolitical turmoil and other external shocks, GCs can rightly anticipate increasing caseloads alongside escalating litigation costs.’ As a result, report sheds some light on the views of these in-house lawyers towards the use of third-party funding to manage these escalating costs. In the section of the report on ‘allocating resources for disputes’, Shoosmiths highlight its finding that ‘increasing costs associated with litigation encourage organisations to explore new methods of funding.’ 31% of respondents said that they would consider using third-party litigation funding in response to rising litigation costs. When looking at those surveyed broken down into their respective industries, Shoosmiths found that when it comes to third-party funding, ‘twice as many GCs in the technology sector likely to consider it as a tool to combat rising costs compared with those working in financial services’. As for the reason behind this divide across industries, Shoosmiths’ report suggests that ‘financial services businesses may be less inclined to adopt third-party funding because they are less likely to be in the position of claimant.’
Commercial

Speakers and Agenda Announced for Brown Rudnick’s Litigation Funding Conference 2024

The speakers and agenda for Brown Rudnick’s upcoming Litigation Funding Conference have been announced, with an impressive range of speakers from across the litigation finance industry set to engage in a day of insightful discussions. The conference will be kicking off with a keynote speech from Camille M. Vasquez, partner and co-chair of Brown Rudnick’s Brand & Reputation Management group. Vasquez is best known for her co-leadership of Johnny Depp’s legal team in the Depp v. Heard defamation trial. The morning of the event will include three panel discussions, beginning with an opening session looking at the ‘State of the Market’, featuring Susan Dunn from Harbour Litigation Funding and Matthew Lo from Exton Advisors. This will be followed by a panel focusing on UK class actions in a post-PACCAR world, and another looking at litigation funding from the in-house perspective. Following the lunch break, the conference’s focus will expand to include discussions on law firm funding and the secondary market opportunities for litigation finance, with speakers including thought leaders from Gramercy, Leigh Day, Omni Bridgeway, and Augusta. The penultimate session of the day aims to look outside the UK, with a panel discussion focusing on collective redress in Europe. A variety of perspectives from different European jurisdictions will be included, with speakers sharing insights from the Netherlands, France, Italy and Spain. The final item on the agenda for the day will be a discussion on the latest trends and challenges in the CAT regime, featuring insights from Adam Erusalimsky at Litigation Capital Management, Genevieve Quierin at Stephenson Harwood, and Anneli Howard KC from Monckton Chambers. The full agenda and details for the conference can be found here, and LFJ looks forward to reporting live from the event on Thursday, 14 March.
Commercial Deals

Maturing Litigation Finance Market Creates Opportunities for General Counsel

The benefits of litigation funding for general counsel and legal departments are regularly espoused by litigation funders, who see a huge opportunity to support companies in monetizing their claims. In addition to reducing risk and freeing up corporate cash flow that would otherwise be lost in financing these claims, a new article suggests that in-house counsel can take advantage of third-party funding in a variety of ways.  In a guest article for Today’s General Counsel, Michael Kelley, partner at Parker Poe, takes a look at the maturation of the litigation finance industry and explores the different ways that in-house counsel can third-party funding to ‘turn the legal function from a cost center to a profit center in the eyes of their C-suites and boards of directors.’ Kelley begins his article by highlighting some of the less common use cases for litigation finance, noting that when it comes to the defense side, ‘an increasing number of corporate leaders are thinking about litigation finance as an important tool in how they manage risk.’ Whilst plaintiff-side funding is more regularly used, Kelley notes that funding agreements can be structured for defense-side clients by using a ‘repayment formula based on what the projected liability of the company would be if all claims against the company are successful.’ Kelley also points out that some legal departments are accessing litigation finance services to cover the costs of judgment preservation insurance, thereby allowing the business ‘to prudently hedge its bets in case the appeals court reduces or overturns the judgment.’ Turning to the more common use of funding to pursue claims, Kelley argues that third-party financing can allow C-suite executives to ‘think about those claims as assets they can monetize,’ whilst also preserving the company’s own cash to fuel other growth areas.  Kelley suggests that the increasing maturity of the litigation finance market brings added benefits for GCs considering third-party funding, as the growing number of established funders means that ‘the competition for meritorious and financially viable deals has increased.’
Commercial People Moves

Zachary Krug Joins NorthWall Capital as Managing Director of Legal Assets

In a post on LinkedIn, NorthWall Capital announced the appointment of Zachary Krug to the position of Managing Director of Legal Assets. Krug joins NorthWall Capital from his position as Director at Signal Capital Partners, where he led the firm’s litigation finance and legal assets strategy through a joint venture, SLF Capital Limited.  Krug’s career in litigation funding also includes over four years at Woodsford as a Senior Investment Officer, with a focus on investment opportunities in U.S. litigation, Latin American disputes, and international arbitration matters. Prior to his move into litigation finance, Krug spent a decade as a qualified litigator, having served as a senior trial associate in Quinn Emanuel’s Los Angeles office. In the announcement, NorthWall Capital highlighted Krug’s ‘decades of experience’ and stated that he would ‘play a prominent role in the expansion of our legal assets strategy.’
Announcements Commercial People Moves

Ignite Specialty Risk Launches in the US with Litigation Capital Protection Insurance

 Ignite Specialty Risk, a leading provider of litigation risk insurance, announced today the US launch of its Litigation Capital Protection Insurance offering and the appointment of litigation finance expert and former litigator, Nicole Silver as Lead Underwriter and Head of US Operations.

Ignite’s Litigation Capital Protection Insurance enables litigation funders and law firms to deploy capital across a portfolio of litigation assets with the assurance that their underlying investment will be protected even if the portfolio does not perform as expected. It is backed by a panel of AM Best A- (Excellent) rated capacity.

Ignite was founded in the UK in 2022 by a team with deep experience in both litigation funding and insurance. Following the company’s London market success offering the most extensive range of litigation insurance products among UK providers, Ignite is now bringing its Litigation Capital Protection Insurance product to the US market.

“Litigation Capital Protection Insurance is a relatively new concept to many funders and law firms, but it is quickly gaining popularity for its ability to protect a litigation asset portfolio investment and, as a result, facilitate a more efficient and robust capital structure within the asset class,” said Byron Sumner, Ignite CEO and Co-founder. “Ignite’s US team has significant experience in the structuring of these policies, having been at the forefront of their design for several years. We are excited to bring this expertise to the US market to help litigation funders and law firms benefit from a meaningful risk-transfer in the context of litigation, and ultimately secure access to justice for claimants with meritorious disputes.”

Silver, head of Ignite’s US operations, brings a 20-year track record litigating complex disputes. She has worked at Winston & Strawn and Greenberg Traurig and has appeared before numerous courts and tribunals including the US Supreme Court, various appellate and district courts, as well as the ICDR, ICC, ICSID, UNCITRAL, and the USTR. Silver’s experience in litigation finance includes work at Validity Finance, where she supervised and advised on litigation matters including performing due diligence and underwriting portfolios of cases. As a funder, she has had exposure to all aspects of litigation insurance, including ATE, judgment protection, and litigation capital protection insurance.

“Not only is Nicole considered to be a highly skilled attorney, she brings along an excellent track record of success litigating complex disputes, and her work as a funder has given her an insider’s view on all aspects of litigation insurance,” said Sumner. “Her extensive expertise within the insurance, investment, and legal communities will be invaluable to Ignite in the US market, and we could not be more delighted to be launching here with Nicole leading the charge.”

About Ignite:

Ignite Specialty Risk provides an extensive range of insurance products to meet the growing demands of the commercial litigation marketplace. Founded in March 2022 Ignite provides litigation risk insurance with AM Best Financial Strength Rating of A- (Excellent) capacity to a range of clients including litigation funders, law firms, and other lenders.

For a full list of licenses, visit ignitespecialty.com.