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Case Developments Commercial

CAT Hearing Begins in Harbour-Funded Class Action Against BT

Despite the issues caused by the Supreme Court’s judgement in PACCAR, UK class actions backed by third-party funders continue to gain momentum in the courts. This week has marked the beginning of a trial for one of these funded cases, as BT finds itself defending allegations of anti-competitive behaviour and overcharging customers, in a case backed by one of the world’s leading funders. An article in the Financial Times highlights the start of the trial in the class action brought against BT over charging consumers excessive prices for their landline services, with the case being financed by Harbour Litigation Funding. The hearing in the Competition Appeal Tribunal (CAT) began on Monday and is scheduled to continue for the next eight weeks, with the class action representing BT customers on an opt-out basis.  The case’s significance is heightened due to its position as the first to reach trial following the implementation of the 2015 Consumer Rights Act. Given the class action’s proximity to last year’s Supreme Court ruling in PACCAR, observers are watching closely to see how any potential financial returns for the funder will be structured. Anna Morfey, antitrust partner at Ashurst, explained that the case “will be instructive to see how any damages awarded are distributed to the class members — and how much ends up in the pockets of the lawyers and funders.” In response to the litigation, BT denied the allegations and stated, “We do not accept that our pricing was anti-competitive back then, and as such are committed to robustly defending our position at trial.” Harbour revealed that it has “committed an eight-figure amount to cover the costs associated with bringing the claim”, with chief investment officer, Ellora McPherson describing their involvement as a “reminder of the important role that litigation funders can play in ensuring consumer claims can be pursued to conclusion”.
Case Developments Commercial

BMW Seeks Disclosure of Funding Documents amid Arigna Technology’s Dispute with Longford Capital

The role of patent monetization firms and their intersection with litigation funders has been the subject of significant scrutiny over the last year, with corporate defendants arguing that funders are using these monetization firms to file frivolous lawsuits to make a profit. Arigna Technology, one of these prominent patent firms, is now firmly in the spotlight after its dispute with Longford Capital has prompted defendants to seek further disclosure of its litigation finance agreements. Reporting by Bloomberg Law covers BMW’s efforts to force the disclosure of documents detailing litigation funding arrangements between Arigna Technology and Longford Capital, as part of the patent infringement lawsuit brought against the German automaker by Arigna. BMW’s push for disclosure comes after Arigna’s relationship with Longford came to light in a Delaware Court late last year, where Arigna sued its funder over proceeds from various patent infringement cases. Last week, BMW filed an opposition to a motion to withdraw, after law firm Susman Godfrey had sought to withdraw from the patent infringement lawsuit brought by Arigna against BMW in the Eastern District of Virginia. Susman Godfrey has represented Arigna across its patent litigation efforts and has received direct funding from Longford for the cases. However, the law firm had filed its motion to withdraw from the case in Virginia, arguing that Arigna’s lawsuit against Longford had created a conflict of interest. In its filing, BMW argued that “documents related to the perceived value of Arigna’s portfolio are relevant to damages, and documents regarding the scope, strength, or content of the patent-in-suit are relevant to non-infringement and invalidity.” Due to the relevance of these funding arrangements and the possibility that BMW may seek recovery from Susman Godfrey at a later date, BMW argued that the law firm “should not be permitted to withdraw at least until the discoverability of the ‘Funding’ and ‘Engagement’ Agreements is resolved”.
Commercial Legal Innovation

Highlights from Burford Capital’s 2023 Research Reports

A post from Burford Capital’s chief marketing officer, Liz Bigham, looks back at the trio of research reports that the funder commissioned in 2023, picking out the key insights uncovered from the surveys. In all three reports, Burford surveyed GCs and senior in-house counsel, looking at their attitudes, priorities, and concerns across commercial litigation and arbitration. In the litigation economics survey, Burford found that 74% of the in-house lawyers surveyed expected ‘an increase in the volume of disputes over the next two years because of the current geopolitical, economic and regulatory environment.’ In the face of the increasing financial burden from these disputes, 62% of respondents expressed their desire for ‘law firms to offer more creative pricing solutions, such as alternative fees.’ Burford’s commercial dispute & enforcement economics survey switched focus to examine how these legal teams were ‘optimizing the value of pending claims, judgments and unenforced awards without adding cost to their legal budgets.’ Judgement enforcement and collection proved to be a major pain point for these lawyers, with 2% of those surveyed reporting that ‘they recovered 100% of the value of their judgments and awards over the last five years.’ Encouragingly for litigation funders, when in-house counsel were asked what they were looking for in outside law firms, 69% included ‘familiarity with legal finance’ as a key attribute. Finally, Burford’s survey on ‘the commercial disputes leadership diversity gap’ explored the work that in-house lawyers are doing to improve diversity in the profession. The results showed an interesting gap between expectations and formal guidelines around diversity, with only 44% of respondents confirming that ‘they apply formal requirements for diversity to the law firm teams that represent them in court.’ In terms of making progress on this issue, 76% said ‘they would benefit from being exposed to recommended female and racially diverse litigation and arbitration lawyers from a trusted source.’
Commercial Regulatory Issues

The Potential Benefits of Standardizing Litigation Funding Agreements

As the size and influence of the global litigation finance industry has grown, so too has the frequency and intensity of criticism leveled at the practice. To combat these critiques, litigation finance leaders continue to explore different avenues to reinforce the credibility of third-party funding. In an opinion piece published on Bloomberg Law, Tets Ishikawa, managing director at LionFish Litigation Finance, has suggested that implementing some form of standardization across litigation funding contracts could bolster these efforts to improve the industry’s reputation. He argues that ‘standardized agreements can play a pivotal role in improving transparency in litigation funding,’ thereby offering a solution to one of the most commonly voiced critiques of third-party funding. Ishikawa begins his piece by comparing litigation finance to the derivatives market, explaining how the introduction of a master agreement by the International Swaps and Derivatives Association (ISDA) ‘reaped enormous gains in market efficiency and transparency.’ He argues that for documentation used in both litigation funding and litigation insurance, introducing some form of standardization could ‘enhance the market’s global credibility, legitimacy, and transparency.’ Looking at what areas of litigation funding documents could be standardized, Ishikawa identifies several ‘key basic concepts’ that could benefit from global uniformity. These concepts include proceedings, funder profits, termination events and default provisions, drawdown processes, and waterfalls/priorities agreements. As Ishikawa points out, ‘as the market evolves, more concepts will become obvious candidates for standardization.’ As for the specific benefits that standardization of litigation funding agreements could offer, Ishikawa argues that it would immediately result in ‘execution efficiencies’, with the ‘savings passed onto plaintiffs.’ He also suggests that another important upside from standardization would be its encouragement of ‘openness and transparency’, which Ishikawa believes could be ‘a major tool in removing rogue funders.’ An additional benefit identified is that standardization would ‘bring a level of maturity that brings the market structurally closer to other financial markets’, something that Ishikawa highlights as one way to tackle fears of foreign interference through litigation funding.
Announcements Commercial

Omni Bridgeway Releases Investment Portfolio Report at 31 December 2023

Omni Bridgeway Limited (ASX: OBL) (Omni Bridgeway, OBL, Group) announces its investment performance for the three months ended 31 December 2023 (2Q24, Quarter) and for the financial year to date (FYTD, 1H24). Summary:
  • First close of Fund 4 and Fund 5 series II capital raise on improved cost coverage terms.
  • Investment income of A$187 million in 1H24; A$32 million provisionally attributable to OBL.
  • 10 full completions, 4 partial completions, and a secondary market transaction with an overall
  • MOIC of 2.2x, and an IRR of 56% in 2Q24.
  • A$260 million of new commitments in 1H24 with a corresponding A$4.5 billion in new EPV.
  • Materially improved pricing on new commitments; 38% up on FY23.
  • Strong pipeline of new investment opportunities.
  • OBL cash and receivables of A$121 million plus A$60 million in undrawn debt.
  • A$5.1 billion of possible EPV completions over the next 12 months.
  • Review and simplification of communications and disclosures; working towards replacing EPV with a Fair Value measure.
The full investment portfolio report can be read here.
Community Spotlights
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Member Spotlight: Nick Wood

Nick Wood has 30+ years of private client advisory investment management and private equity experience, including implementation of tax planning strategies for a wide range of globally mobile clients. He has successfully built several specialist advisory and consulting businesses. Nick's first involvement in Litigation Finance in 2016; establishing, building, and successfully sourcing finance for a high-profile and high-value case against a global bank for fraudulent misrepresentation (see Upham & Others v HSBC UK Bank PLC). He was involved in establishing many similar projects since; acting for claimants, law firms, and investors with funding placed for over £1 billion of claims in 8 years. Company Name and Description:  Audley Capital Ltd. In its short life, Audley has created and developed a rapidly growing advisory, consulting, and broking business, utilising and developing groundbreaking technology. Audley aims to disrupt historic litigation finance and legal processes, ensuring investment capital, legal expertise, and claimants benefit from Audley’s experience, expertise, legal tech, and AI offerings. Audley is focused on facilitating access to justice for those unable or too risk-averse to fund it themselves. Utilising our in-depth knowledge of litigation funding, technology, and our ever-growing network of key players we aim to make the process efficient, cost-effective, and swift, facilitating successful outcomes for our mutual clients. InvestorHub, LawfirmHub, and IntroducerHub are focused on specific service provision via our website. AudleyHub+ gives access to a wide (and rapidly growing) range of AI tools and consulting services. Company Website: www.audleycapital.co.uk Contact Information: nick@audleycap.com Year Founded:  2023 Headquarters:  Notionally London, in practice Global. Area of Focus:  Case funding, strategy, legal consulting, risk analysis, claims valuation and management consulting, secondary market valuation strategies, AI consulting, and bespoke program provision. Member Quote: Litigation finance is the cornerstone of access to justice; however, the process can be cumbersome, unfocused, opaque, and too often frustrating. Through a combination of knowledge, experience, networking, and the implementation of technology Audley aims to reduce timescales, improve communication, and monitor performance; ultimately providing much-needed efficiencies and ensuring that money, legal expertise, and deal flow dynamically converge to create exceptional outcomes for all concerned. Our team is growing rapidly and we are actively seeking to build further our network of like-minded people and organisations in the investment, legal, and origination space.
Commercial Special Features

An LFJ Conversation with Chris Baildon, Co-Founder and Chief Operating Officer of Lex Ferenda

Lex Ferenda is latin for “the law as it should be”. The firm includes a team of seasoned lawyers, financiers, general counsel, and retired jurists who bring value to every aspect of the cases they commit to, resulting in better outcomes for all. Below is our LFJ Conversation with Chris Baildon, Co-Founder and Chief Operating Officer of Lex Ferenda: Lex Ferenda recently announced the launch of its first fund. Tell us a little about the company, its focus, and what you’re investing in.  Lex Ferenda Litigation Funding’s (“LF2’s”) investment mandate is primarily geared towards commercial claims in the United States, with funding available for cases at any point in the dispute resolution timeline. We typically target funding towards single commercial cases averaging $1-10 million per investment, however the firm has the resources and capital to make substantially larger investments in a broad range of single cases, portfolio investments, and law firm financing. Our team consists of seasoned litigation funders, lawyers, and investors with substantial legal and financial expertise. LF2 was founded by Michael German and Chris Baildon. Michael is an experienced litigator, trial lawyer, and litigation funder with more than a decade of experience litigating, resolving, and investing in complex commercial litigation and arbitration matters. Chris has three decades of global investment banking and finance experience, with substantial capabilities in management, business development, and capital raising across investment verticals, including litigation finance. LF2’s investment underwriting is directed by Andrew Kelley, who has more than two decades of complex commercial litigation experience, both as head of commercial litigation for a large publicly traded company and as an external advisor at international law firms, where he created and led programs that resulted in recoveries of almost $1 billion for his clients. The Advisory Board consists of Honorable Vanessa Gilmore, who recently retired after serving over 25 years on the federal bench, and Scott Mozarsky, who is a former GC to a public company and former President of a major legal technology outfit, and as such adds substantial legal and technology expertise. Litigation Finance is quickly maturing into a mainstream alternative asset class. Where do you see the evolution of the industry from here?    The market for litigation finance is seeing a rapid expansion in both the number of active funds as well as the amount of committed capital from institutional investors. Additionally, the penetration of third-party funding in the US is still low compared to other global markets. Recent research from Westfleet Advisors and Research Nester predicts that cases funded in the U.S. will grow by 17% year over year to 2035. As the asset class matures, I believe you’ll see a far greater volume of high profile/high value lawsuits financed through litigation funding. Similarly, I believe you’ll continue to see increasing commitments from large asset managers who are weary of market volatility and attracted to impressive returns in an uncorrelated asset class. What makes Lex Ferenda different from other funds operating in this space? What can the industry expect to see from the firm going forward? LF2 is unique in that it’s anchored by institutional-grade capital from a leading global investment manager, with the discretion to invest within its target based on good judgment without the delay of seeking investor approval. This structure allows the firm to be incredibly nimble while still operating an investment platform and system of controls of the highest standard to satisfy all of our different investor groups. Our market focus on domestic commercial litigation/arbitration (within our investment target of $1-10 million per case) has allowed the firm to seize upon attractive funding opportunities with a growing pipeline. LF2 adds value before and after investment with strategic case advice available from experienced legal and finance professionals with a best-in-class track record. LF2 tries to live up to its exponent so-to-speak – we use the broad experience and capabilities of our day-to-day employees and the Advisory Board to offer insight and experience as the dispute resolution process progresses so that our clients can secure (hopefully exponentially) better outcomes. Of course, LF2 maintains the highest level of ethical standards in funding, and our clients retain control over the litigations they fund with us. The industry can expect to see LF2 make major advances in medium to large commercial case investments, while also serving as a thought leader in the litigation finance space through education and philanthropic initiatives. Speaking of those initiatives, you recently launched a pair of them—LF2 University and LF2 Gives.  Can you provide some background on each?   LF2 University is a first-of-its kind educational initiative that aims to provide a greater understanding of the litigation finance industry. The program offers educational seminars to law firms, attorneys, businesses, students, and individuals interested in learning more about this growing field. Recently, we’ve launched Lit Finance 101 which covers the fundamentals of legal finance, and we’ll soon be launching a seminar on Litigation Finance Ethics which will cover the rules and ethical considerations involved in litigation funding. We’re equally excited about LF2’s new philanthropic initiative, LF2 Gives, which seeks to make positive impacts in the communities in which LF2 operates through community action programs and legal service offerings. During multi-annual “Action Days”, LF2 personnel partner with local organizations to participate in various volunteer services. This past Summer, LF2 Gives had its first Action Day where LF2 members volunteered their time with the Food Brigade in New Jersey as well as the Food Bank of the Rockies. For those interested in learning more about (or participating in) these initiatives, we encourage you to visit our website (LF-2.com). We look forward to further collaborations with those who share our dedication to service and education as we grow.
The LFJ Podcast

Episode 83: Mani Walia

Hosted By Mani Walia |
In this episode, we sat down with Mani Walia, Manager Partner and General Counsel of Siltstone Capital. Mani discussed the 3rd annual LitFinCon conference, taking place in Houston, Texas on March 6th and 7th, 2024. Mani explains what we can expect at the conference, some of the creative agenda decisions, the networking potential, and how Siltstone Capital operates as a litigation funder in the broader market. [podcast_episode episode="12486" content="title,player,details"]
Announcements Commercial Fundraising

White & Case Advises on Burford’s Upsized $275 Million Senior Notes Offering

Global law firm White & Case LLP has advised a syndicate of leading financial institutions on an upsized offering by Burford Capital Global Finance LLC, an indirect wholly-owned subsidiary of Burford Capital Limited, of US$275 million aggregate principal amount of tack-on 9.250% senior notes due 2031. White & Case previously advised a syndicate of leading financial institutions on Burford Capital Global Finance's initial issuance of US$400 million aggregate principal amount of such senior notes due 2031 in June 2023. Burford intends to use the proceeds from the offering for general corporate purposes. The closing of the offering is expected to occur on January 30, 2024, subject to customary closing conditions. Burford is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR). The White & Case team was led by partner Jonathan Michels, associates Elizabeth Mapelli, Joanna Heinz and Jacob Manzoor, and law clerk Heidi Ahmed (all in New York).