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Commercial Regulatory Issues

Ireland’s Implementation of the EU Representative Actions Directive Avoids Tackling Litigation Funding

One of the stories that will be important to monitor throughout 2023 is how each country within the European Union will handle the implementation of the EU’s Representative Action Directive, particularly as it relates to the use of third-party funding for collective redress in each jurisdiction. LFJ has reported on both the Dutch and German approaches to implementation of the directive, with Ireland’s recent implementation now being highlighted as an example of a jurisdiction which has largely avoided addressing the problem of third-party funding. In a new piece of analysis published on Irish Legal News, Catherine Derrig and Marie-Alice Cleary of McCann FitzGerald, examine the impact of the Representative Actions for The Protection of the Collective Interests of Consumers Act 2023. Derrig and Cleary note that whilst Ireland is one of the first member states to fully implement the EU’s new directive, it has not brought comprehensive answers to all questions around collective redress, and has not brought significant clarity to the role that litigation finance will play. Derrig and Cleary raise the important point that the EU’s directive specifically requires member states to ensure that qualified entities are not prevented from seeking legal redress due to unaffordable costs. However, given the fact that the Law Reform Commission has only recently published its consultation paper on third-party funding, and the commission’s full review is not expected before next year, the Irish government has effectively moved forward with implementation whilst putting the question of litigation funding on hold. One observation from Derrig and Cleary that is particularly striking, is that the implementation of the directive stands in stark contrast to Ireland’s recent decision to expressly permit the use of third-party funding in international commercial arbitration. Unlike the reforms to arbitration funding, the implementation act only allows for funding in limited circumstances where it is “permitted in accordance with law”. It is therefore almost a certainty that Ireland will not see any significant increase in litigation funding for collective redress in the near future, and industry leaders will have to continue to wait for the outcome of the Law Reform Commission’s review.
Commercial Deals

Covid Disruption Lawsuits Against UK Universities Receive £13 Million in Funding 

As LFJ recently reported, the aftermath of the Covid-19 pandemic is proving to be fertile ground for lawsuits, including litigation being brought by university students who argue that they did not receive the services they paid for due to these institutions’ response to the pandemic. In a high profile case being brought against UCL, the judge ordered the students and the university to try and reach an agreement through alternative dispute resolution, but new reporting shows that this case is only one of many being backed by litigation financing. An article in The Financial Times provides an overview of the array of cases being brought against UK universities by students over Covid disruption, with the article noting that at least 18 institutions have received letters from lawyers representing groups of students. In a sign of the level of interest in these lawsuits, the US litigation funder, TRPG Capital, has reportedly provided £13 million in financing to support the group litigation orders targeting higher education providers. At the core of these students’ argument is that the universities breached their contract with students by failing to provide an adequate service, alleging that these organisations failed to deliver the quality of services that were advertised when the students enrolled. However, these lawsuits are not without their challenges, as Ane Vernon, head of education at Payne Hicks Beach, highlights that despite their legitimate grievances, the students’ biggest challenge “will be to prove liability for loss.” According to Shimon Goldwater, partner at Asserson, who is acting for the students, there is a clear argument that the universities failed to deliver their services, and as a result, the students are entitled to compensation for the “difference in value”. Other observers have noted that this is a difficult balancing act, with Charlotte Hadfield from 3PB barristers, suggesting that whilst it is not an impossible case, “calculating the loss to a student in a higher education claim can be very difficult”.
Case Developments Commercial

Shopify Undeterred in Efforts to Compel Disclosure of Plaintiff’s Litigation Funding

The topic of funding disclosure in patent litigation has continued to be one of the most pressing issues in the US market, driven by ongoing efforts in Delaware to put the spotlight on funders. Last month, LFJ reported on another patent infringement lawsuit in Texas where Shopify unsuccessfully attempted to force the plaintiff to disclose its funding sources.  New reporting from Bloomberg Law reveals that Shopify has not been deterred by its initial failure to force Lower48 IP LLC into revealing details around any litigation funding it has received, with the e-commerce giant now filing an objection to the magistrate judge’s denial of the motion to compel disclosure. Despite Shopify highlighting the apparent connections between Lower48 and IP Edge LLC in its original motion, Magistrate Judge Derek T. Gilliland had rejected Shopify’s request on the grounds that this level of disclosure had not previously been required for patent litigation cases in Texas. Shopify’s new objection argues that both the magistrate judge and the case’s presiding judge David A. Ezra lacked the necessary information as to whether Lower48’s ties to IP Edge represented a conflict of interest. Having previously cited the ongoing efforts by Judge Colm F. Connolly in Delaware to mandate disclosure of litigation funding in such cases, Shopify argued that IP Edge intentionally seeks to obscure the funding sources for its patent litigation efforts, and that the court and the public “should know who else stands to benefit.”
Case Developments Commercial

UK Supreme Court Ruling Riles Litigation Funders

One of the most significant court rulings for litigation funders in the UK was handed down today, as the Supreme Court announced its decision in the case of R (on the application of PACCAR Inc and others) (Appellants) v Competition Appeal Tribunal and others (Respondents). The Supreme Court’s majority judgement found that where litigation funding agreements are entitled to a portion of the damages recovered in a case, these fall under the definition of damages-based agreements (DBAs).  In the Supreme Court’s judgement, Lord Sales ruled that “where a third party litigation financing arrangement takes the form of a DBA it will be unenforceable unless certain conditions are complied with”. Whilst this ruling was solely in relation to the funding of collective proceedings brought against European truck manufacturers, the judgement acknowledged that “the likely consequence in practice would be that most third party litigation funding agreements would by virtue of that provision be unenforceable as the law currently stands.” Lord Sales’, who was joined in his judgement by Lord Reed, Lord Leggatt and Lord Stephens, found that litigation funding agreements do fall within the definition of ‘claims management services’ under the Compensation Act 2006. Whilst the Court acknowledged the difficulty in interpreting the exact meaning of this term, Lord Sales highlighted that the language used in the 2006 Act “is wide and is not tied to any concept of active management of a claim”, thereby rejecting arguments from respondents that litigation funding does not full under ‘claims management services’ because funders do not actively manage claims. Before concluding his judgement, Lord Sales included a statement which was specifically targeted at the case before him, but may also come to be the defining words for the litigation finance industry from this ruling: “As a matter of substance, the LFA retains the character of a DBA as defined.” In the hours following the Supreme Court’s judgement, we have already seen strong opposition to this ruling. Funders, law firms and industry experts are highlighting the damage this judgement could inflict on access to justice.  Woodsford’s chief investment officer, Charlie Morris called on the UK’s lawmakers to take proactive steps to address this ruling: “This decision is bad news for consumers and other victims of corporate wrongdoing. Parliament urgently needs to reclarify what its intentions were when it introduced DBAs, and take any necessary remedial action to ensure the proper functioning of the CAT to the benefit of those who have been wronged.” Garbhan Shanks, commercial litigation partner at Fladgate, highlighted that whilst the ruling was a blow to litigation funding in the UK, it would not stop the industry: “The Supreme Court’s ruling today that the litigation funding agreements in place for collective proceedings in the Competition Appeal Tribunal are not enforceable because they fall foul of the Damages Based Agreement statutory conditions is clearly an unwanted outcome for claimant side lawyers and funders in this space. It will be quickly cured, however, with restructured compliant agreements, and the increase in collective and group action proceedings in the UK supported by ever increasing third party funding capacity will continue at pace.” An article by The Law Society Gazette, provides additional quotes from industry figures, including a joint statement from the International Legal Finance Association and the Association of Litigation Funders of England and Wales: “We are disappointed by this decision as it runs contrary to the accepted understanding that financing agreements are not damages based agreements. The decision is not generally expected to impact the economics of legal finance and will not deter our members’ willingness to finance meritorious claims. It will only affect how legal finance agreements are structured so that they comply with the regulations and individual financiers will have been considering what if any changes are needed to their own legal finance agreements as a consequence of this decision.” Glenn Newberry, head of costs and litigation funding at Eversheds Sutherland, put particular emphasis on the troubles this judgement may cause political leaders in Westminster: “The decision is potentially a blow for the government as the collective funding of consumer claims has helped bridge the gap caused by the erosion of state funded legal assistance for civil claims. Funders themselves may well start to actively lobby to seek legislation which effectively reverses this decision.” And Tets Ishikawa, Managing Director of LionFish, added: “It’s fair to say that few expected this judgment. It certainly raises more questions than it answers, with the potential for a multitude of unintended consequences extending beyond litigation funding agreements. At the same time, the judgment leaves significant scope for litigation funding agreements to continue their evolution and long term growth in a compliant way, so that it continues supporting the drive to improve access to justice”.
Case Developments Commercial

ICSID Rules in Favour of LCM-Backed Indiana Resources Claim Against Tanzania

An area of litigation and arbitration that has become increasingly associated with funded claims is the world of international investment treaties, and claims brought by corporations against governments for being in breach of these treaties. The latest occurrence of such a dispute has seen an arbitral panel order the Tanzanian government to pay over $109 million to an Australian mining company, for the government’s breach of a bilateral investment treaty. An article in The East African reports on the decision by an ICSID ad hoc arbitral panel, which found that Tanzania had breached the UK-Tanzania Bilateral Investment Treaty when it cancelled a mining retention license and seized the Ntaka Hill Project which had been held by a trio of three companies under majority ownership of Indiana Resources. As the manager of the joint venture, Indiana Resources had led the claim of arbitration against the Tanzanian government since 2019 and according to an announcement in August 2020, had secured $4.65 in funding from Litigation Capital Management. Indiana Resources’ executive chairman Bronwyn Barnes praised ICSID’s award for reflecting the “substantial investment that has been lost by shareholders through Tanzania’s unlawful expropriation of the Ntaka Hill project,” and stated that the company would now look to enforce the award. In an article by Stockhead in February 2021, Barnes had highlighted the importance of LCM’s funding as a sign of the merit of the claim, pointing out that the funder “don’t back claims they don’t research fully, and don’t expect to win.”
Commercial Legal Innovation

Burford Highlights ‘Industry Standard’ for Legal Finance Valuation and Reporting

As the litigation finance industry continues to mature, there will naturally be an expectation that the industry should move towards standardized approaches and methodology. Reflecting this trend, Burford Capital’s CEO and CFO have recently published an article discussing their new valuation methodology for litigation finance investments, suggesting that “its widespread adoption seems inevitable”. In an article published on Law.com, Christopher Bogart and Jordan Licht of Burford Capital highlight its new methodology for valuing and reporting on litigation finance investments, describing it as a process that “sets a new standard for the industry and will lead to enhanced transparency.” Burford’s executives explain that the funder developed this methodology with input from the US Securities and Exchange Commission (SEC), with the aim of creating “a legal finance valuation methodology that is consistent with global accounting standards.” Bogart and Licht summarise the methodology as being a synergy of two core concepts: “First, that legal finance asset value is driven by observable events as cases progress, and second, that the value of any asset, including legal finance assets, is impacted by duration and the time value of money.” In essence, this means that valuation must inevitably change “given the passage of time”, irrespective of whether a significant “case event” has happened during the valuation period. It is argued that this approach should be considered logical rather than novel, given the principle that as a case progresses, it is inevitably “more valuable because it is closer to resolution”. Citing the oft-repeated critique that litigation funding lacks transparency as an asset class, Bogart and Licht argue that just because litigation itself necessitates limited transparency to those outside the matter, this is “no reason to fail to enumerate a company’s investments according to available industry standards.” They further state that they expect this valuation methodology to become the new best practice for the industry, and that its use “will enhance still more growth and maturation in this industry.”
Announcements Commercial Deals

Funding Opportunity: 4 Rivers Seeks Funding for RICO Claim

4 Rivers has a case which requires urgent funding. It is a RICO claim against a large insurance company, which has recently been found to be already engaging in serious misconduct, including a Punitive Damages award against it, and found vicariously liable for assisting arsonists. The Claimant has been the subject of a meticulously orchestrated and sustained campaign of intimidation, cyber stalking, computer related crimes, fraud, harassment, and life-altering interference, for almost two decades, much like the recent eBay cyber stalking and harassment case, which eBay lost. The interference effectively prevented the Claimant from developing a transformational and disruptive biotech company which reduces causes of cancer, an area where damages have just been established in the $11 – 16 billion range by US court judgments. Damages reports from highly reputable consulting firms show mid 9-figure damages before trebling and costs. We also have a suite of legal memos from a RICO expert which demonstrate, inter alia, the extent and number of the predicate acts and the damages flowing from them. Additionally, we have two of the leading RICO authorities in the United States acting as close personal advisors to the Claimant.  A motion to dismiss (MTD) filed by the defendant was denied on all counts and has not been appealed. We are looking for a funding facility of approx. $1 million, to be drawn over the next few months. Trial is set for October 2023 but there is a strong dynamic for a settlement to be secured prior to this, meaning that a funder would achieve a very quick return on investment.  Please contact Peter Petyt of 4 Rivers at peter@4rivers.legal urgently if you wish to discuss this opportunity further.
Commercial Special Features

Lawyer Directed Litigation Funding Agreements And Professional Conduct Rule 5.4

The following article was contributed by John Hanley, Partner at Rimon Law, and Ryan Schultz, Vice President of Business Development for Woodsford Litigation Funding. Third-party litigation funding (“TPLF”) involves financing of expenses incurred in a lawsuit (for example, expert fees and usually some portion of legal fees incurred) in exchange for a share of the final judgment or settlement. The funding is typically non-recourse (i.e., the amounts funded need not be repaid if the lawsuit is unsuccessful) and is often repaid through a financial interest in the attorneys’ fees realized by the law firm if the case is successful. These arrangements have become common in the marketplace: in 2022, $3.2 billion in capital was committed for new TPLF; 61% of that capital was deployed to law firms as opposed to clients and claimants; and 28% of the funding recipients were members of the Am Law 200.1 The question of the permissibility of such arrangements in light of Rule 5.4(a) of the New York Rules of Professional Conduct, which prohibits fee sharing with a non-lawyer, and TPLF arrangements arises. This Insight focuses on New York practice. As stated below, substantial precedent suggests that Rule 5.4(a) was not intended to preclude TPLF arrangements, and the New York City Bar Association has made two proposals intended to clarify Rule 5.4(a) in that regard. Rule 5.4(a) And TPLF Arrangements Rule 5.4(a) of the New York Rules of Professional Conduct provides, in relevant part, that a “lawyer or law firm shall not share legal fees with a non-lawyer.”2 In July 2018, the New York City Bar Association issued a non-binding opinion which concluded that future payments to a litigation funder contingent on the lawyer’s receipt of legal fees could violate Rule 5.4’s prohibition on fee sharing with non-lawyers.[1] The main thrust of the non-binding opinion was to protect the lawyer’s professional independence and judgment. The opinion was widely criticized and met with strong disagreement from the litigation finance community and some legal ethicists, who declared it is simply “wrong” or, at a minimum, overly broad and misguided.[2] In October 2018, the City Bar’s President formed the Litigation Funding Working Group (the “Working Group”) to study TPLF and provide a report. In 2020, the Working Group released a 90-page report finding that the prior opinion was neither binding nor a required rule of practice, and that Rule 5.4 should be revised to make clear that litigation funding should not be prohibited.[3] The report stated that Rule 5.4 “should be revised to reflect contemporary commercial and professional needs and realities” and “lawyers and the clients they serve would benefit if lawyers have less restricted access to funding.” The report made two proposals, both of which focused on lawyer independence and disclosure of the arrangement to clients.  The proposals are substantially similar. Proposal A would require TPLF be used for a specific legal representation, prohibit participation in the litigation by the funder and require the client’s informed consent.  Proposal B would permit funding to be used for the lawyer’s or law firm’s practice generally, allow the funder to participate in the litigation for the benefit of the client and not require the client’s informed consent although the client must be informed of the arrangement in writing. As of today, neither proposal has been implemented, and the Working Group noted that “a number of lawyers and funders believe that such a statement is unnecessary under the current Rules of Professional Conduct,” given that Rule 5.4 was not designed to prohibit such arrangements, as discussed in the following section. Court Rulings Regarding Rule 5.4 And TPLF Arrangements The courts that have addressed litigation funding in light of Rule 5.4 have concluded that the ethics rules do not preclude a financing interest in future attorneys’ fees or law firm revenue. In 2013, in Lawsuit Funding, LLC v. Lessoff, a New York trial court held that the litigation funding arrangement at issue did not violate Rule 5.4.[4] In that case, the law firm received an advance secured by future contingency fees through a litigation funding agreement styled as a Sale of Contingent Proceeds. “The [agreement] called for [the funder] to receive a portion of the contingent legal fee that [attorneys] were expected to receive if five specifically named lawsuits were adjudicated in favor of [the] clients.”[5] The court noted that “several other jurisdictions have addressed the interplay of alternative litigation financing and Rule 5.4(a),” and did not find an ethical violation.[6] Judge Bransten adopted the PNC Bank Court’s reasoning and held that the litigation funding arrangement did not violate Rule 5.4, and went on to state that:
There is a proliferation of alternative litigation financing in the United States, partly due to the recognition that litigation funding allows lawsuits to be decided on their merits, and not based on which party has deeper pockets or stronger appetite for protracted litigation. See A.B.A. Comm. on Ethics 20/20, Informational Report to the House of Delegates 2 n.6 February 2012 . . . Sandra Stern, Borrowing from Peter to Sue Paul: Legal & Ethical Issues in Financing a Commercial Lawsuit ¶ 27.02[3] (2013). Therefore, this Court adopts the PNC Bank court’s reasoning and finds that the Stipulation does not violate Rule 5.4(a) and is not unenforceable as against public policy.
In 2015, in Hamilton Cap. VII, LLC, I v. Khorrami, LLP, another New York trial court stated that “other courts have analyzed the legality of [litigation] financing arrangements between factors and law firms and held them not to run afoul of the applicable ethical rules.”[7] In that case, the lender was entitled “to a percentage of the Law Firm's gross revenue as part of the consideration for the money loaned to the Law Firm.”[8] There, the plaintiff was in the business of lending money to law firms and the loans were secured by the law firm’s accounts receivable. The law firm asserted, among other things, that the contract was unenforceable because the additional compensation to be paid to the lender in the amount of 10% of the law firm’s gross revenues collected between dates certain was an illegal fee-sharing arrangement. The court pointed to Judge Bransten’s decision in Lessoff and described it as “on point and persuasive.” Judge Kornreich ruled in favor of the lender, found the agreement was enforceable and did not violate Rule 5.4:
While it is well settled that actual fee-sharing agreements are illegal and unenforceable . . . the case law cited by defendants does not support the proposition that a credit facility secured by a law firm's accounts receivable constitutes impermissible fee sharing with a non-lawyer. To the contrary, as Justice Bransten [in Lawsuit Funding, LLC v. Lessoff] explained, courts have expressly permitted law firms to fund themselves in this manner. Providing law firms access to investment capital where the investors are effectively betting on the success of the firm promotes the sound public policy of making justice accessible to all, regardless of wealth. Modern litigation is expensive, and deep pocketed wrongdoers can deter lawsuits from being filed if a plaintiff has no means of financing her or his case. Permitting investors to fund firms by lending money secured by the firm's accounts receivable helps provide victims their day in court. This laudable goal would be undermined if the Credit Agreement were held to be unenforceable. The court will not do so.11
Both the Lessof and Hamilton cases relied significantly on PNC Bank, Delaware v. Berg, 12 in which the Delaware Superior Court noted that it is common practice for a lender to have a security interest in an attorney’s accounts receivable and there is no real “ethical” difference in a security interest in contract rights (fees not yet earned) and accounts receivable (fees earned). In finding that the financing arrangement at issue did not violate Rule 5.4, the court stated:[9]
[D]efendants suggest that it is “inappropriate” for a lender to have a security interest in an attorney's contract rights. Yet it is routine practice for lenders to take security interests in the contract rights of other business enterprises. A law firm is a business, albeit one infused with some measure of the public trust, and there is no valid reason why a law firm should be treated differently than an accounting firm or a construction firm. The Rules of Professional Conduct ensure that attorneys will zealously represent the interests of their clients, regardless of whether the fees the attorney generates from the contract through representation remain with the firm or must be used to satisfy a security interest. Parenthetically, the Court will note that there is no suggestion that it is inappropriate for a lender to have a security interest in an attorney's accounts receivable. It is, in fact, a common practice. Yet there is no real “ethical” difference whether the security interest is in contract rights (fees not yet earned) or accounts receivable (fees earned) in so far as Rule of Professional Conduct 5 .4, the rule prohibiting the sharing of legal fees with a nonlawyer, is concerned. It does not seem to this Court that we can claim for our profession, under the guise of ethics, an insulation from creditors to which others are not entitled.
Washington D.C., Utah and Arizona and other States  Washington D.C. adopted a modified rule 5.4(b) in 1991 and, until the developments beginning with Utah and Arizona in 2020, was the only jurisdiction in the United States to permit partial, limited non-lawyer ownership of law firms which removes ethical constraints that may arise regarding lawyer directed TPLF and rule 5.4(a). The Utah Supreme Court issued Standing Order No. 15 effective August 14, 2020 (the “Order”).[10] The Order establishes a pilot legal regulatory sandbox and an Office of Legal Services Innovation to oversee the operation of non-traditional legal providers and services, including entities with non-lawyer investment or ownership with the goal of improving meaningful access solutions to justice problems.  The Order has been amended twice (most recently September 21, 2022) and the program will continue until 2027.  At that time the Supreme Court will determine if and in what form the Office of Legal Services Innovation will continue. The Arizona Supreme Court issued a unanimous order that eliminated its rule 5.4 entirely, creating a new licensing requirement for alternate business structures that are partially owned by non-lawyers but that provide legal services.[11] These reforms remove ethical obstacles presented by rule 5.4(a) regarding lawyer directed TPLF but that is just incidental to their purpose – increased access to the justice system and lower costs. Other states that have considered or are considering similar regulatory reform to close the access to justice gap in the U.S. include California, Illinois, Oregon, Nevada, New Mexico, Indiana, Connecticut and New York, according to the ABA Center for Innovation's Legal Innovation Regulatory Survey.[12] Qualified Conclusion This Insight is limited to our review of the New York Rules of Professional Conduct and, in particular, Rule 5.4(a), and the limited related precedent. We note that there is no appellate decision in New York to address these issues but the two trial court decisions are persuasive authority. Practitioners should take these limitations into account in analyzing the risks associated with transactions similar to those described in this Insight. Based on the foregoing it would not be unreasonable to conclude that  a court of competent jurisdiction acting reasonably, applying the legal principles developed under the case law discussed above, after full and fair consideration of all relevant factors, and in a properly presented and argued case, would not find a TPLF arrangement which provided a lender a contingent interest in law firm revenue on a case or group of cases, similar to the arrangements discussed above, to violate Rule 5.4(a). John Hanley is a Partner at Rimon Law and drafts and negotiates litigation funding agreements on behalf of lawyers, law firms, claimants and litigation funders. Read more here Ryan Schultz is a Vice President of Business Development for Woodsford and works with claimants and leading lawyers around the world to identify meritorious claims in need of funding.  Prior to joining Woodsford, Ryan was a Partner in the Intellectual Property & Technology Group at Robins Kaplan, LLP.  Ryan helped clients monetize their IP assets in the US and around the world to provide maximum value for their innovations.  Read more here If you are interesting learning more about Litigation Funding, please reach out to John Hanley or Ryan Schultz. -- [1] The Association of the Bar of the City of New York Committee on Professional Ethics, Formal Opinion 2018-5: Litigation Funders’ Contingent Interest in Legal Fees. [2] See, e.g., Paul B. Haskel & James Q. Walker, New York City Bar Opinion Stuns the Litigation Finance Markets, Lexology (Aug. 31, 2018), available here. [3] Report to the President by the New York City Bar Association Working Group on Litigation Funding, available here [4] Lawsuit Funding, LLC v. Lessoff, No. 650757/2012, 2013 WL 6409971, at *5 (N.Y. Sup. Ct. Dec. 04, 2013). [5] Id. at *1. [6] Id. at *5 (citing PNC Bank, Delaware v. Berg, No. 94C-09-208-WTQ, 1997 WL 529978, at *10 (Del. Super. Ct. January 21, 1997); Cadle Co. v. Schlichtmann, 267 F.3d 14, 18 (1st Cir. 2001); Core Funding Grp., L.L.C. v. McDonald, No. L-05-1291, 2006 WL 832833, at *11 (Ohio Ct. App. Mar. 31, 2006); ACF 2006 Corp. v. Merritt, No. CIV-12-161, 2013 WL 466603, at *3 n.1 (W.D. Ok. Feb. 7, 2013); U.S. Claims, Inc. v. Yehuda Smolar, PC, 602 F.Supp.2d 590, 597 (E.D. Pa. March 9, 2009); U.S. Claims, Inc. v. Flomenhaft & Cannata, LLC, 519 F.Supp.2d 515, 521 (E.D. Pa Nov. 13, 2006)). [7] Hamilton Cap. VII, LLC, I v. Khorrami, LLP, 48 Misc. 3d 1223(A), 22 N.Y.S.3d 137 (N.Y. Sup. Ct. 2015). [8] Id. [9] Id. [10] Utah Supreme Court Standing Order No. 15 (Amended September 21, 2022) (utcourts.gov) [11] Order re R-20-0034 (azcourts.gov) [12] Legal Innovaon Regulatory Survey – An overview of the legal regulatory landscape related to legal innovaon and access to jusce.
Case Developments Commercial

High Court Orders Stay on GLO Application Brought by UCL Students with £4.4 Million in Litigation Funding

Over three years after the outbreak of Covid-19, claims are still being brought by individuals or groups who suffered losses due to actions taken by organizations during the pandemic. In one example of a funded group claim being brought against a university, the courts have demonstrated a desire for such cases to be resolved outside of the courtroom, and for the parties to make use of alternative dispute resolution (ADR) rather than through costly court proceedings. An article in The Law Society Gazette provides the details of judgement by Senior Master Barbara Fontaine in the High Court, which ordered an eight-month stay on the group litigation order (GLO) application made on behalf of 924 students, who claimed that UCL breached its contract in services during strike action and the pandemic. Master Fontaine ordered the stay and adjourned the application, stating: “These claims are all individually of low or modest value, group litigation can be costly, and there is a statute-backed ADR scheme in place, all factors that point in favour of the parties attempting construction discussions through some medium of ADR.” Fontaine cited concerns about the potential for significantly high costs for both parties, noting that the claimants had secured £4.4 million in litigation funding and obtained after-the-event insurance cover for any adverse costs. Fontaine highlighted that due to these factors, if the claimants were successful in their case, they would likely “receive only some two-thirds of the damages awarded to them” and even with 100 per cent of damages, it would represent only “a modest sum for each claimant.” Fontaine encouraged both parties to engage in ADR to find a suitable outcome, highlighting that the length and costly nature of such a group claim were not ideal, especially for a university whose “management, time and funds could be more productively spent than on substantial legal costs.”