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Announcements Consumer

Pegasus Secures Warehouse Facility with a Leading Bank

Pegasus Legal Capital, LLC ("Pegasus") (mylawfunds.com), one of the preeminent pre-settlement legal funding companies in the U.S., announced today that it has recently closed a senior debt transaction with East West Bank. This marks another significant capital market transaction for the company and proceeds from the transaction will enable Pegasus to continue its growth across the United States. Pegasus Managing Director, Max Alperovich commented, "With the addition of the new facility Pegasus will now be able to further expand its business in the personal injury market all while maintaining its industry leading service." East West Bank Managing Director, David Hough, commented, "As the leading bank lender to the litigation finance market, East West Bank is pleased to engage with the Pegasus management team, and provide a senior, secured capital facility that will fuel their continued future growth. The entire Pegasus management team has a deep, demonstrated commitment to their customers and to the broader personal injury market." GreensLedge Capital Markets LLC acted as financial advisor to Pegasus in connection with the transaction. Pegasus is a proud member of the American Legal Finance Association (ALFA), which is comprised of companies nationwide that provide non-recourse funds to personal injury victims. One of the goals of ALFA was to create industry standards within the legal funding industry regarding transparency in each funding transaction with upfront clear disclosure to consumers. East West Bank provides financial services that help customers reach further and connect to new opportunities. East West Bancorp, Inc. is a public company with total assets of $68.5 billion. The company's wholly-owned subsidiary, East West Bank, is the largest independent bank headquartered in Southern California, and operates over 120 locations in the United States and in Asia. The Bank's markets in the United States include California, Georgia, Illinois, Massachusetts, Nevada, New York, Texas, and Washington. For more information on East West, visit www.eastwestbank.com. Max Alperovich can be reached at Max@mylawfunds.com.
Case Developments Commercial

Apple Lawsuit Raises Familiar Issues Around Third-Party Funding

The disputes over disclosure in patent litigation funding continue to roll on, with certain judges taking steps to proactively requiring disclosure, and individual state legislatures enacting legislation that mandates a level of transparency for funders. An ongoing case involving Apple in California has once again shown the many issues that may arise where the court feels that funders are not sufficiently forthcoming about their involvement in cases. An article in the Northern California Record looks at the increasingly prominent issue of disclosure for third-party funding, and highlights an interesting development in the case of Taction Technology, Inc. v. Apple Inc. in the US District Court for the Southern District of California. Whilst the Southern District, unlike the Northern District, does not have any standing orders regarding the disclosure of third-party funding, the involvement of funders in Taction’s patent infringement lawsuit has become a prominent issue.  On July 18, District Judge Jill Burkhardt ordered Kenosha Investments LP and Gronostaj Investments LLC to offer explanations as to why they should not be sanctioned for allegedly misleading the court about the scope of their involvement in the litigation. Judge Burkhadt stated that both funders, who are affiliates of Burford Capital, may have broken their “duty of candor” to the district court, with a follow-up hearing scheduled for August 15.  Dennis Abdelnour, IP partner with Honigman LLP, highlighted the issues at stake in the Taction case as an example of a common problem stemming from funder involvement in patent litigation. Abdelnour explained that: “Discovery relating to third-party litigation funding presents difficult privilege questions, which means that disputes will often end up in motion practice and before a Court for resolution.”
Commercial Legal Innovation

Four Ways Law Firms Can Use Litigation Finance

Expanding beyond the traditional scope of single case funding is a key priority for many litigation funders across the globe, with both portfolio financing and law firm funding becoming a key part of these business models. When it comes to discussions of law firm financing, it can often seem as if this is a broad and nebulous term, but there are several ways which law firms can benefit from, and make use of, third-party funding. In a blog post from Omni Bridgeway, Naomi Loewith, director of strategic partnerships – Canada, offers an overview of four ways that law firms can take advantage of litigation finance to grow and strengthen their businesses. Firstly, Loewith raises the common issue of firms who are burdened by large sums of unpaid WIP matters, where clients have been unable or late in paying their bills. In such scenarios, outside funding can be a useful remedy, benefitting the client who can now alleviate financial obligations, and ensuring that the firm is able to continue acting in these cases whilst still ensuring cash flow. Outside of clients failing to pay their bills, Loewith also raises the opportunity for firms to expand their businesses by acquiring a new line of business. Funders can provide the capital to kickstart these new operations until they are self-sustaining, with the additional benefit that funding requires firms to repay only once revenue is being generated. As a third use case, Loewith highlights that as law firm mergers are expected to increase in frequency post-pandemic, a firm that uses portfolio financing can demonstrate to partners that it has guaranteed revenue and a lower risk portfolio. This pre-existing financing option can make the merger process more efficient and even position the firm as a more attractive merger target. Finally, Loewith suggests that for those firms looking to geographically expand, the same kind of portfolio financing can act as a powerful catalyst to support expansions which are naturally capital intensive. As with the previous examples, third-party funding can provide the needed financing without forcing the firm to take on more debt.
Case Developments Commercial

Details of Nanoco Settlement Distribution Revealed

The nature of the litigation finance industry means that it is often difficult for outsiders to gain insight into the particulars of individual funding arrangements, or the intricacies of any returns on investment. However, there are rare occasions where we can find glimpses into the underlying fundamentals of the industry, and how funders find value in the long-term investments they pursue.  An article in DirectorsTalk Interviews, sheds light on one such investment as it provides an overview of Nanoco Group’s latest trading update, which includes details of highlights for the financial year.  As LFJ reported in February of this year, Nanoco reached a $150 million settlement agreement with Samsung Electronics to end the long-running patent infringement lawsuit that Nanoco had brought against the tech giant. The February announcement also confirmed that GLS Capital had been funding the case, after Nanoco had first announced its use of an anonymous third-party funder in July of 2020. However, through this update, we can now see a rough approximation of how that settlement will be distributed. Nanoco revealed that a £62.1 million tranche of the settlement was received in March 2023, with the “majority used to pay funders and advisors”. Whilst there are no details of how this sum will be divided between the funder and other parties, it is notable to see that a significant portion of the final settlement will be returned to third parties. Nanoco also stated that the second tranche of the settlement payment, totaling $75 million, will be received solely by Nanoco by 3 February 2024. This total is less $3.25 million due to Korean withholding tax.
Case Developments Commercial

Woodsford-Funded Class Action Targets Three UK Lenders

Despite the recent Supreme Court decision, class action cases still represent a prime opportunity for litigation funders in the UK, with another lawsuit having recently been filed that seeks accountability from three financial institutions over their alleged anti-consumer practices. An article by Proactive Investors provides a summary of the class action case being brought against three British lenders, who allegedly charged higher rates for motor finance customers in order to fund brokers’ commissions. The lawsuit is targeting Black Horse (a Lloyds’ subsidiary), Santander UK and MotoNovo Finance, stating that these lenders overcharged their customers between 2015 and 2021, with total excessive charges approaching £1 billion. The class action is being funded by Woodsford and is being led by the law firm Scott + Scott, who stated that the litigation would seek to “hold large companies to account” over these practices. Doug Taylor, the class representative for the action, alleged that these lenders used the commissions to “incentivise dealers” and as a result, “Customers unknowingly paid more for their car loans.” Although MotoNovo Finance and Santander UK did not comment on the case, a spokesperson for Black Horse stated that the company “continue to comply with regulatory requirements that apply in relation to the payment of commission and the disclosure of commission to customers.” After the lawsuit was filed in the High Court last month, the Competition Appeal Tribunal will now decide whether the claim can move forward.
Commercial Deals

Shareholders and Funders Find Common Ground in ESG Lawsuits

With emphasis and attention being placed on companies’ commitment to their ESG agendas, net-zero targets and broader corporate governance, it is unsurprising to see an uptick in litigation focused on this area. The combination of investors who are seeking to hold corporate boards to account for their failings or false statements, and a strong third-party funding industry, likely means that we will see this activity continue to increase over the coming years. An article by Bloomberg looks at the ongoing trend towards investor-led lawsuits that are being brought against corporations over their ESG failings or misstatements. The reporting highlights that many of these cases are using a specific area of UK law to bring their claims, namely Sections 90 and 90A of the Financial Services and Markets Act 2000. These legal provisions stipulate a company’s liability for making misleading statements or failing to disclose information which results in shareholder losses. According to the law firm Bryan Cave Leighton Paisner, there have been 13 cases brought under these provisions in the last decade. Of these 13 lawsuits, seven are still ongoing, four have been settled, with one successful and one failed claim apiece. James Hennah, partner at Linklaters, noted that whilst investors are becoming increasingly focused on ESG issues and shown a willingness to take these concerns to court, it is also true that “these claims are notoriously hard to bring, particularly for ESG issues.” Bloomberg’s article also notes that these investor-led lawsuits represent a good opportunity for litigation funders, many of whom see alignment with their own focus on ESG issues and can see the potential for lucrative returns on their investments. The reporting highlights a 2022 report from Woodsford that stated the funder was pursuing one of these types of claims under the FSMA provisions, having identified two multinationals that had made false statements to their investors. Emily Blower, managing associate at Simmons & Simmons, puts the proposition for third-party financiers in simple terms: “If a claim succeeds, there’ll be a recovery — that’s of interest to litigation funders.”
Announcements Case Developments Commercial

Attorney Lynwood Evans Appointed to Leadership Role in Camp Lejeune Water Contamination Litigation

Ward and Smith is pleased to announce that litigation attorney Lynwood Evans has been appointed to the Plaintiffs' Executive Committee in the litigation over contaminated water at Camp Lejeune. This appointment is particularly significant as we are quickly approaching the first anniversary of the Camp Lejeune Justice Act. This legislation paved the way for veterans, family members, and workers stationed on the base between 1953 and 1987 to seek compensation and justice for their suffering. However, because claims of this nature have never before been litigated, there has been substantial uncertainty and limited progress made since the passage of the Act despite tens of thousands of claims having been filed. Everyone is hopeful that this newly appointed leadership structure will provide the framework for progress. The Executive Committee assists and advises lead counsel and co-lead counsel in the undertaking of coordinating and conducting these proceedings. Its members also serve on subcommittees to execute a comprehensive litigation plan and ensure oversight, accountability, and coordination throughout the process. One of the subcommittees is the Law and Briefing Subcommittee, on which Mr. Evans will serve.  Reflecting on his new role, Mr. Evans stated, "I am honored to be appointed to the Plaintiffs' Executive Committee and the Law and Briefing Subcommittee in this crucial litigation. Together with the dedicated leadership team, I am confident that we will be able to work collaboratively with the Government and Court to create the framework within which these claims can eventually be brought to conclusion." Mr. Evans is now the third Ward and Smith attorney chosen for a leadership position in this historic litigation process. Recently, the US District Court of the Eastern District of North Carolina named attorneys Charles Ellis and Ret. Major General Hugh Overholt as Liaison Counsel. They are serving as intermediaries between the Court, the Plaintiffs' Leadership Team, and unrepresented victims. "We are encouraged by the appointment of 3 of our attorneys to leadership positions in this groundbreaking litigation and believe that their participation will help propel the legal process forward," remarked Brad Evans, Ward and Smith's Co-Managing Director. Ward and Smith's entire Camp Lejeune litigation team is dedicated to advocating for victims seeking justice for damage caused by the water contamination. Those interested can contact Ward and Smith directly or visit our website for more information about how we can help them begin their journey toward justice. About Ward and Smith Ward and Smith is a full-service law firm in North Carolina with offices in Asheville, Beaufort, Greenville, New Bern, Raleigh, and Wilmington. The firm has more than 100 attorneys knowledgeable in more than 35 practice areas, from agribusiness to zoning. For more information, visit https://www.wardandsmith.com/.
Commercial Deals

Harbour Funds Bamboo Law Acquisition of Regional UK Law Firm

As the environment for litigation funders in the UK is set to undergo some turbulence, we will likely see increased efforts by funders to diversify their activities beyond individual case funding. One sub-sector with enhanced activity is law firm funding, and for the second time in as many months, a funder has stepped in to provide capital for the acquisition of a law firm. An article by Insider Media reports on the acquisition of Hawkins Hatton by Bamboo Law, with Bamboo’s purchase financed by Harbour Litigation Funding. The deal to buy Hawkins Hatton was advised on by Ortus Group, which researched a range of potential buyers for the firm before selecting Bamboo as the ideal acquirer.  Colin Rodrigues, partner at Hawkins Hatton, stated the acquisition will provide “real opportunities for growth” and will allow the team to focus on delivering high quality services “while leaving administration in the hands of experienced professionals.” Speaking about the question, Bamboo’s founder, Michael Burne, emphasized that Bamboo “wants to do more sensible deals with great law firms like Hawkins Hatton”. As LFJ reported in July, this will not be the first law firm acquisition funded by Harbour in recent times, as the funder provided financing for Rothley Law’s acquisition of Shoosmiths’ ‘private client practice’.
Case Developments Commercial

Investors in RCR Class Action Raise Concerns Over Prolonged Duration

Investor-led class action cases are often viewed as lucrative targets for litigation funders, bolstered by the fact that they offer an opportunity to support investors in seeking legal redress against companies that have misled their shareholders. However, just like any litigation, the protracted duration of these cases can cause issues with investors, as we are seeing in a class action brought in New South Wales, Australia. Reporting by The Australian Financial Review reveals that investors in the collapsed engineering corporation, RCR Tomlinson, are growing frustrated with the continual delays and lack of progress in a class action brought against the company. The investors’ complaints focus on the lack of a settlement nearly five years after the class action was filed, even though the lawsuit has received funding from both Burford Capital and Omni Bridgeway. The Financial Review heard from investors with ongoing concerns that Quinn Emanuel Urquhart & Sullivan, the law firm leading the case, are not proceeding efficiently and may be benefiting financially from the prolonged duration of the litigation. Damian Scattini, partner at Quinn Emanuel, responded to these concerns by emphasising that they had been unsuccessful in reaching a settlement during a mediation on May 30, but were hopeful that a resolution could be achieved at the next mediation session on August 24. The article also highlights that this is not the first time the case has been hit by criticism, noting that a short seller report published by Muddy Waters in August 2019 alleged that Burford was “misrepresenting some of RCR’s financial data and any recovery from the class action would be “little to nothing”. Burford responded at the time by claiming that the report was “misleading” and not an accurate analysis of RCR.