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Commercial Regulatory Issues

Burford Capital CEO says Government Inaction Over PACCAR is ‘Perilous’

By Harry Moran |

Over 16 months have passed since the Supreme Court’s decision in PACCAR which caused upheaval in the UK litigation funding sector, with few signs of encouragement that a legislative solution will come into force before the two-year anniversary of the judgment. Whilst the Civil Justice Council’s (CJC) ongoing review into litigation funding is laying the foundations for eventual government action, it is increasingly clear that funders are growing impatient with the lack of urgency from Westminster.

Speaking with City AM, the CEO of Burford Capital, Chris Bogart offers his views on the new government’s approach to litigation funding and expresses dissatisfaction at the “uncertainty” caused by its cautious approach to addressing the impact of PACCAR ruling. Bogart cautioned that delaying a legislative solution whilst waiting for the outcome of the CJC’s review could endanger London’s “very strong global reputation for legal services.”

Bogart explained that with Burford’s position as a global litigation funder, they have both the opportunity and the need to prioritise certain markets, meaning that the government’s inaction is resulting in Burford being “less focused on using dispute resolution in London” than in past years. Bogart highlighted the strength of dispute resolution jurisdictions in New York, Paris and Singapore, and Burford are “migrating some dispute resolution activity away from London and towards New York.”

Bogart explained the company’s position through a rational financial framework, saying that he is “in the business of allocating capital to places that are reliable and deliver returns for shareholders.” In closing, Bogart sent what appeared to be a direct message to policymakers in London, warning that “it is perilous for the new government to take action or to exist in inaction that moves that capital away from London.”

Commercial Legal Innovation

A Radical Idea: What if We Restructured the Insurance Industry for the Public Good?

By Reid Zeising |

The following was contributed by Reid Zeising, CEO & founder of Gain.

Health insurance and third-party liability insurance are public goods, yet the insurance industry is structured on a for-profit model, which focuses on increased profits and shareholder returns, often over the needs and welfare of policyholders and claimants. Today’s largest insurers, especially third-party liability carriers, reap over $100 billion in annual profits, [1] while premiums and costs are on the rise for those depending on the policies that they issue for their financial protection. The insurance industry has a moral responsibility and a duty as a corporate citizen to prioritize its policyholders and claimants. By transitioning to a public utility model, the industry can refocus its priorities without jeopardizing liability carrier’s needs to cover operating costs and pay shareholder returns. By thinking like – and actually being – a public utility, insurers can fulfill their duties as a provider of an essential public good without imperiling their own financial health.

Transitioning to a Public Utility Model

The insurance industry predominantly operates on a for-profit model, emphasizing profit maximization[2] and shareholder returns.[3] This model, however, often neglects the welfare of policyholders and claimants.[4] It also does not reflect the reality that health insurance and third-party liability insurance are public goods. A public good is a benefit or service that should be available to all citizens and that ultimately contributes to the wellbeing of society as a whole.[5] One proven and effective model for delivering public goods is the public utility company, which is privately owned by investors, but committed to the provision of public good. A public utility company oversees essential services, ensuring their accessibility, reliability, and affordability.[6] By restructuring third-party liability carriers along these lines, we can elevate the role of insurance carriers from profit-centric entities to institutions focused on consumer welfare.[7] Similar to utilities, carriers could receive a fixed, reasonable return,[8] enabling investments in increased technology and efficiencies and sustainability while preventing the accumulation of excessive profits at the expense of policyholders.

Benefits of the Public Utility Model

Enhanced Payouts: Transforming the current model would necessitate that carriers pay out all remaining premiums to claimants, after covering operational costs, guaranteed returns and dividends. This fundamental change would translate to increased payouts for claimants, alleviating their financial burden and ensuring adequate compensation. This contrasts with the present situation, where substantial portions of premiums are often reserved for investments and increased profit margins, limiting the resources allocated to claimants. The Affordable Care Act sought to cap profits by mandating that health insurance companies could spend no more than 20 percent of revenue from premiums on administrative costs, marketing, and profits. However, insurers have skirted these rules by increasing overall costs and raising premiums, boosting revenues.[9] Therefore, further reform, along the lines proposed here, is needed.

Industry Shift to Public Good: By orienting the industry towards the welfare of policyholders and the larger community, we can establish a new standard of corporate responsibility within insurance carriers. This alteration fosters a climate where the pursuit of public good[10] becomes inherent, eclipsing the erstwhile emphasis on profit maximization. Under this paradigm, carriers become stewards of societal welfare and financial responsibility, ensuring equitable distribution of resources and safeguarding policyholder interests.[11]

Policyholder Centric: In this reimagined model, policyholders would be the primary beneficiaries, receiving enhanced protections and services. This framework mandates a focus on policyholder needs and aspirations, catalyzing the development of consumer-centric policies and practices. Additionally, the compulsory dividend payouts would ensure that policyholders receive tangible, financial benefits, contributing to economic stability and welfare.

A More Equitable Economy: The proposed transition has profound economic implications, marking a departure from purely capitalistic orientations to a more balanced, equitable economic structure. The substantial increase in payouts would stimulate consumer spending and economic activity, while the emphasis on public good would promote social cohesion and mutual responsibility. Moreover, this shift would mitigate the socioeconomic disparities[12] emanating from the current profit-driven model, fostering a more inclusive and equitable economic environment.

Redefining the Insurance Industry

The transformation of the insurance industry -- particularly third-party liability carriers – into a public utility model is a radical yet necessary step towards creating an equitable and consumer-oriented industry. By guaranteeing returns and mandating the allocation of remaining premiums to claimants, we can ensure the industry serves the public good and prioritizes policyholder welfare. This transition is not merely a structural adjustment; it symbolizes a philosophical shift, redefining the purpose and responsibilities of insurance carriers in a way that recognizes that third-party liability insurance carriers are essential public goods. This revolutionary approach promises increased payouts, enhanced policyholder benefits, and a collective pursuit of societal well-being. The pivot from a profit-centric paradigm to a model centered on public welfare, where the interests of consumers are placed above unchecked profit accrual. In the long term, this alteration can be a catalyst for more claims being paid and funds being utilized for the purposes they were intended.  Insurance is in place to reimburse those who have suffered through no fault of their own, and a utility model can assure that more monies are paid to consumers and less goes into the coffers of companies beyond what is needed to service these portfolios.

[1] “Visualizing the 50 Most Profitable Insurance Companies in the U.S.,” HowMuch.net, https://howmuch.net/articles/top-50-most-profitable-us-insurance-companies-2020. Data is based on Fortune 500 listings.

[2] Elisabeth Rosenthal, “Insurance policy: How an industry shifted from protecting patients to seeking profit,” Stanford Medicine Magazine, May 19, 2017, https://stanmed.stanford.edu/how-health-insurance-changed-from-protecting-patients-to-seeking-profit/.

[3] Nathalia Bellizia, Davide Corradi, and Jürgen Bohrmann, “Profitable Growth Is King: The 2022 Insurance Value Creators Report,” Boston Consulting Group, September 2, 2022, https://www.bcg.com/publications/2022/insurance-total-stakeholder-return-value-creation-report/.

[4] Rosenthal, “Insurance policy.”

[5] National Consumer Law Center, Access to Utility Service, 6th ed. 2018, 1.1.5, www.nclc.org/library; Jason Fernando, “What Are Public Goods? Definition, How They Work, and Example,” Investopedia, March 20, 2022, https://www.investopedia.com/terms/p/public-good.asp.

[6] David E. McNabb, “Chapter 1: Public utilities: essential services, critical infrastructure,” in Social and Political Science 2016, October 28, 2016, 3-18, Elgar Online, https://www.elgaronline.com/display/9781785365522/chapter01.xhtml.

[7] Jonathan D. Washko, “It’s Time to Resurrect the Public Utility Model Concept–But This Time for Healthcare,” Journal of Emergency Medical Services, October 18, 2017, https://www.jems.com/news/it-s-time-to-resurrect-the-public-utility-model-concept-but-also-for-healthcare-this-time/.

[8] McNabb, “Chapter 1: Public utilities: essential services, critical infrastructure.”

[9] Marshall Allen, “Why Your Health Insurer Doesn't Care About Your Big Bills,” NPR, May 25, 2018, https://www.npr.org/sections/health-shots/2018/05/25/613685732/why-your-health-insurer-doesnt-care-about-your-big-bills.

[10] Samuel S. Flint, “Public Goods, Public Utilities, and the Public's Health,” Health & Social Work, Volume 36, Issue 1, February 2011, 75–77, https://academic.oup.com/hsw/article-abstract/36/1/75/659133?redirectedFrom=PDF.

[11] Carter Dredge and Stefan Scholtes, “The Health Care Utility Model: A Novel Approach to Doing Business,” NEJM Catalyst, July 8, 2021, https://catalyst.nejm.org/doi/full/10.1056/CAT.21.0189.

[12] Samuel L. Dickman, David U. Himmelstein, and Steffie Woolhandler, “Inequality and the health-care system in the USA,” America: Equity and Equality in Health 1, The Lancet, April 8, 2017, Volume 389, 1431-1441, https://www.thelancet.com/pb/assets/raw/Lancet/pdfs/US-equity-and-equality-in-health-1491475717627.pdf.

Announcements Case Developments Commercial

UK Facebook Users Could Benefit from £2.1 Billion Class Action as Case Proceeds to Trial

By Harry Moran |

Competition law expert Dr Liza Lovdahl Gormsen’s multi-billion pound case against Meta has been certified by the Competition Appeal Tribunal in London. Meta failed to prevent the case from proceeding as neither the Competition Appeal Tribunal nor the Court of Appeal granted Meta leave to appeal.

The case is now proceeding to trial, opening up the prospect of compensation for 46 million UK Facebook users.

Every Facebook user who were domiciled in the UK on 15 February 2024 and accessed Facebook at least once in the period between 14 February 2016 and 6 October 2023 will be automatically included in the case unless they opt out by 5 March 2025.

Dr Lovdahl Gormsen says: “We welcome the opportunity to hold Meta to account for abusing its dominant position by exploiting 46 million UK users’ data. Meta abused its market dominance by imposing unfair terms and conditions on UK users and imposing an unlawful price. We are very pleased that the Tribunal has approved me to go ahead and represent the class in our pursuit of redress for each individual affected”

The Tribunal ruled Meta’s attempts to challenge Dr. Lovdahl Gormsen’s claims were “insufficient” after expert testimony from leading economist Fiona Scott Morton, a former Deputy Assistant Attorney General for Economics at the U.S. Department of Justice's Antitrust Division. Whilst Meta attempted to appeal this decision, the Court of Appeal in October refused permission for them to do so.

Class action claims have risen in the UK in the past three years but do not always receive a Collective Proceedings Order. As of November 2024, only a third of all cases have reached this stage, underscoring the importance of this decision.

Dr Lovdahl Gormsen’s case argues that Meta set an ‘unfair price’ for UK Facebook users. The “price” set for granting access to the social network was the surrender of UK users’ highly valuable personal data on a take-it-or-leave-it basis for access to the network. In return, users only received “free” access to Facebook’s social network, and zero monetary recompense whilst Facebook generated billions in revenues from its users’ data. This unfair deal was only possible due to Meta’s market dominance, meaning users had no other social network they could use to get the same service.

The claim seeks damages of at least £2.1 billion, plus interest, on aggregate for all UK consumers affected.

Kate Vernon, partner and Head of Competition Litigation Practice at law firm Quinn Emanuel, representing Dr Lovdahl Gormsen said: “This groundbreaking case promises to redefine the application of competition law in the context of data exploitation. It sets a legal framework for approaching this pivotal matter and represents a significant shift in how we address the associated critical issues.”

Dr Lovdahl Gormsen’s legal action is an opt-out class action brought under the Competition Act 1998 and the first to protect individuals’ data rights against Meta under competition law in England and Wales. The case is backed by some of Britain’s most prominent lawyers and economists, such as the Rt. Honourable Lord Neuberger, former President of the Supreme Court, Professor Richard Whish, Honorary Kings Counsel, economist Chris Pike, and Peter Vicary-Smith, former CEO of Which?.

A notice of the collective proceedings order, which sets out how users may opt out of the claim, can be found here.

About Dr Liza Lovdahl Gormsen

The case is being led on behalf of the class by Dr Liza Lovdahl Gormsen, Senior Research Fellow at the British Institute of International and Comparative Law (BIICL) and the director of the Competition Law Forum.The Competition Law Forum is a noted centre of excellence for European competition and antitrust policy and law.

In addition, Dr Lovdahl Gormsen is a Board Member of the Open Markets Institute and sits on the advisory board of the Journal of Antitrust Enforcement (OUP).

As an international expert in the field, Dr Lovdahl Gormsen co-authored the paper “Facebook’s Anticompetitive Lean in Strategies” (2019) and “Facebook’s Exploitative and Exclusionary Abuses in the Two-Sided Market for Social Networks and Display Advertising” (2021). The latter argues that antitrust enforcement is required to prevent the company from reinforcing its data-driven abuse of market power.

Dr Lovdahl Gormsen is represented by Quinn Emanuel Urquhart & Sullivan UK LLP, one of the UK’s leading competition law specialists. The case is spearheaded by Quinn Emanuel partner Kate Vernon, a highly respected competition law specialist, and assisted by partner Leo Kitchen, and associates Megan Hiluta, Aadil Master and Alexander Groes. Also advising Dr Lovdahl Gormsen are counsel Robert O’Donoghue KC of Brick Court Chambers, Tom Coates of Blackstone Chambers, Greg Adey of One Essex Court and Ian Simester of Fountain Court Chambers.

The case is being funded by Innsworth, one of the world’s largest civil litigation funders.

Case Developments Commercial

Federal Court of Australia Rules Against LCM Funded Party in Energy Class Action

By Harry Moran |

LFJ reported earlier this week on the impressive financial returns that can be achieved by funders backing high-value class actions, and now we have another reminder of the inherent risk behind all these investments when the eventual outcome is unknown.

An announcement from Litigation Capital Management (LCM) reveals that the Federal Court of Australia has ruled against the applicant it had funded in a class action brought against Stanwell Corporation Ltd and CS Energy Ltd. The judgment handed down by Justice Sarah Dennington found that the two electricity generators had not engaged in market manipulation to illegally raise prices for their customers. The class action, which was led by Piper Alderman and brought on behalf of over 47,000 customers, had alleged that the two government-owned entities had manipulated Australia’s National Energy Market (NEM) bidding system to create an artificially scarce supply.

LCM had provided A$25m in funding from its own balance sheet capital to support the class action and the funder said it is considering the judgment before deciding to make an appeal before the deadline in 28 days. LCM’s CEO, Patrick Moloney provided the following comment on the outcome: “We will carefully review the Federal Court's decision and, with the legal team, will assess the prospects of a successful appeal from the judgment. Our expectation has always been that an appeal in this case was likely, regardless of the initial outcome. We remain confident in the strength of the underlying claim."

An article from ABC News covering the judgment included statements from both Stanwell and CS Energy, with the Stanwell spokesperson saying that the allegations were “wrongly levied against Stanwell by the international litigation funders and their representatives behind this misconceived action."

The full written judgment from Justice Dennington in the case of Stillwater Pastoral Company Pty Ltd v Stanwell Corporation Ltd can be read here.

Case Developments Commercial

Settlement Agreement in Mastercard Claim Sees Divided Reactions From Class Representative and Funder

By Harry Moran |

Although a settlement is often seen as the ideal outcome in collective proceedings backed by a litigation funder, as it provides compensation for the claimants and a return on investment for the funder, this does not always mean that all parties will naturally agree on what such a settlement should look like.  

Reporting by the Financial Times reveals that a settlement agreement in principle has been reached in a consumer claim brought against Mastercard, with the provisional settlement reportedly reaching around £200 million. The legal action, which was brought by class representative and former financial ombudsman Walter Merricks, focused on allegations that the payments company had been charging excessive fees on card transactions. With the claim representing up to 46 million consumers, the settlement is reportedly worth around £40 to £50 for each class member. 

A separate article in The Law Society Gazette provided additional reporting on the reactions of the various parties to the provisional settlement.

Merricks expressed his enthusiasm towards the agreement, saying that it will “deliver meaningful compensation to class members who chose to come forward to participate in the distribution of the damages.” In a similarly positive statement, a Mastercard spokesperson said that that company is “pleased to have reached an agreement”, subject to the review and approval of the settlement by the CAT.

However, the Gazette also reported that the praise for this agreement was not unanimous, with vocal opposition from the claim’s funder Innsworth. A spokesperson for the litigation funder said that the settlement was reached without their agreement, and that “it is both too low and premature.” The spokesperson went on to say that despite the fact Merricks and his legal representatives have previously asserted the claim was valued in the billions, “they seemed to have rushed to settle for a reported £200 million raising some serious questions.” Most strikingly, the Innsworth statement clarified that the funder “will be challenging this agreement and have already written to the CAT.”

Boris Bronfentrinker, a partner at Willkie Farr & Gallagher who represents Merricks in the proceedings, said that “Innsworth’s opposition, and its desire that Mr Merricks continue with risky litigation that could result in UK consumers recovering significantly less, or even nothing .” Bronfentrinker went further and questioned the motives behind Innsworth’s objections, arguing that their objection “has to do with advancing the interests of UK consumers, and is all about funder greed.”

Commercial People Moves

Harris Pogust Steps Down from Chairman of Pogust Goodhead

By Harry Moran |

In a post on LinkedIn, Pogust Goodhead announced that Harris Pogust has retired from his role as Chairman of the global law firm, following his move to step back from being actively involved in UK cases in March of this year. The announcement explained that Mr Pogust will continue working with his US law firm and as President of the non-profit organisation Trial Lawyers For A Better Tomorrow, which works to raise money to help children and support access to education.

Mr Pogust provided the following comment on his departure: “Over the past six years we have built Pogust Goodhead into the world’s premier group litigation firm. We have helped defend the rights of those who cannot defend themselves against the misdeeds of big business. 

At this time in my life, I want to devote more time and energy to my philanthropic endeavours including a charitable organization we have just launched to assist children all over the world reach their fullest potential, their hopes and their dreams. Throughout my career I have been lucky enough to visit communities and make friends all over the world. I have increasingly felt pulled to focus my search for justice and fairness on helping children who are disadvantaged and lack the basic resources to access education.

I look forward to watching Tom lead the firm for many more years and obtain success on behalf of millions of people who would otherwise not have access to justice.”

Thomas Goodhead, global managing partner of Pogust Goodhead, also provided the following statement celebrating Mr Pogust’s contribution to the firm: “Without Harris, founding this firm would never have been possible. He has played a fundamental part in getting us to where we are today. I cannot thank Harris enough for everything he has done for me personally, for the firm and for our clients.

Harris’ generosity of spirit, his constant encouragement and support to myself and everyone in the team have been invaluable. Thanks to him we are taking on some of the biggest companies in the world to make a difference to the lives of millions of people. Harris has had an extraordinary career and while he is retiring from his role as Chairman, we know he will continue to use any means necessary to help improve real people’s lives through his new charitable foundation and his US law firm.”

The announcement did not state who would replace Mr Pogust as chairman of the firm.

Past Event

Legal Funding Journal Virtual Town Hall – 2024 Recap / 2025 Outlook

In this insightful Virtual Town Hall recording—one of our most popular annual sessions—industry experts analyze the major milestones impacting the litigation finance industry and discuss key trends to watch. Topics covered include:
  • The shifting regulatory landscape in the U.S. and U.K.
  • The emergence of new funding models and platforms.
  • The role of technology and AI in driving operational efficiency.
Commercial Regulatory Issues

UK Government Minister Says Litigation Funding ‘Plays a Critical Role’

By Harry Moran |

Whilst industry commentators noted that litigation funding would likely not rank highly among the new government’s priorities following this year’s general election, there has been renewed interest in the government’s approach to third-party funding as the Civil Justice Council (CJC) continues its review of the sector.

In a speech to the Civil Justice Council’s 13th National Forum, Heidi Alexander MP highlighted the ongoing work of the CJC’s review of litigation funding and reinforced the government’s message to the third-party funding industry. In a speech that covered a wide range of issues under the new government’s approach to civil justice, Ms Alexander highlighted the CJC’s recently published interim report and its working group, which she described as “expertly chaired by Mr Justice Simon picken and Dr John Sorabji.”

She once again laid out the government’s position, saying that “third-party litigation funding plays a critical role in enabling access to justice and as a government we want to make sure it’s fair for all.” Acknowledging that there was some disappointment they had not picked up the previous parliament’s legislation to solve the PACCAR judgment, Ms Alexander said that “we want to consider this issue carefully and holistically.”

Before moving onto other issues, she highlighted the ongoing review of third-party funding as “incredibly valuable”, and encouraged interested parties to engage with the consultation before it closes at the end of January.

The recording of all the forum’s speakers, including the minister’s remarks, can be found on YouTube.

Announcements Commercial People Moves

International Legal Finance Association Adds Arcadia Finance as New Member

By Harry Moran |

The International Legal Finance Association (ILFA) today announced the addition of Arcadia Finance to the only global association of commercial legal finance companies. 

Launching in June, Arcadia provides specialized services for U.S.-based commercial and patent litigation, domestic and international arbitration, and funding for a wide variety of other litigation-based assets, from mass torts and law firm lending to patent acquisition. 

“ILFA is pleased to welcome the newly founded Arcadia Finance to its growing membership base,” said Shannon Campagna, ILFA’s interim Executive Director. “Arcadia’s team is one of the most experienced in the industry, and the firm will play a crucial role in promoting the highest standards of operation and service for the commercial legal finance sector worldwide.” 

Arcadia was founded by three litigation finance industry veterans with over 25 years of combined experience and who have invested over $425 million across 80+ deals. The trio formerly led various legal and investment units at ILFA member firms, and each holds the title of managing director at Arcadia: Dave Kerstein, former managing director and senior investment officer at Validity and senior investment manager at Bentham IMF, now Omni Bridgeway; Ronit Cohen, former portfolio counsel at Validity and legal counsel at Bentham IMF; and Joshua Libling, former director of risk analytics at Validity. 

"At Arcadia Finance, we believe that innovative financial solutions are a crucial part of the legal industry and capable of benefitting all participants in their pursuit of just outcomes," Joshua Libling, Managing Director, stated. "ILFA is the preeminent industry association and we’re proud to join it and to share our expertise in pursuit of responsible and sustained evolution of our industry. We look forward to working alongside other leaders to set new standards and expand the possibilities of legal finance." 

About the International Legal Finance Association 

The International Legal Finance Association (ILFA) represents the global commercial legal finance community, and its mission is to engage, educate, and influence legislative, regulatory, and judicial landscapes as the voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA has local chapter representation around the world. 

For more information, visit www.ilfa.com and find us on LinkedIn and X @ILFA_Official. 

About Arcadia Finance 

Arcadia is a U.S. commercial litigation, patent litigation, and domestic and international arbitration-focused legal funder offering solutions to all participants in the legal market. Led by industry veterans with over $425 million invested across over 80 deals, the firm offers customized financial solutions for all — from litigation boutiques to AmLaw firms and corporations. Arcadia’s mission is to invest in meritorious litigation, and with backing from multiple and flexible capital providers, the team find new ways to help clients and law firms finance, monetize, and share risk on their legal assets. Arcadia aims to make securing litigation funding as fast and convenient as possible. Going beyond traditional litigation finance agreements, Arcadia provides “frictionless funding” through the adaptable and transparent partnerships necessary for clients and law firms to make the most well-informed decisions. At every stage from pre-litigation to appeal and enforcement, Arcadia has the experience, flexibility, and capital to assist. 

For more information, visit https://www.arcadiafin.com/meet-our-team