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Commercial

LexShares’ Fourth Quarter 2022 Highlights 

As the global litigation investment marketplace continues to mature in meaningful ways, LexShares reflects on the firm's Q4-2022 success.  According to LexShares, overall financial performance of the industry continues to advance and attract favorable attention from a variety of investors looking to profit from the increasing usage of litigation finance.   LexShares forecasts that business owners will embrace creativity in searching for capital lines, and litigation investors are targeting qualified legal funding franchises as a result. As 2022 closed, all signs pointed to legal professionals' increasing engagement with the services offered by the litigation finance industry.  LexShares reflects on the 60 Minutes expose of the industry, which snagged over 11M viewers, many of whom may have discovered litigation finance for the first time. Overall, LexShares suggests that the global litigation investment marketplace is attracting traditional money managers who are seeking to invest in uncorrelated litigation finance instruments.
Commercial Deals

Funders Predict More Partnerships With Law Firms in 2023

Whilst all signs point to litigation funding continuing its growth trend into 2023, that does not necessarily mean that it is going to be a year without challenges in the wider litigation industry. As law firms come under pressure from the sheer volume of litigation combined with the impact of the economic downturn on their own balance books, two leading funders predict that law firms will increasingly look to litigation finance companies to manage costs and risk. A recent article in Law.com features commentary on the outlook for the year ahead from David Perla, co-COO at Burford Capital, and Ralph Sutton, CEO of Validity Finance. Perla highlighted the continued uptick in litigation and the need for law firms to cut costs as a primary catalyst for increased partnerships with funders moving forward. He also reported that the law firms he is dealing with have “an increased appetite to take on risk or to increase risk,” and that Burford makes for an ideal partner to share in that risk. Validity’s CEO also reinforced the prediction that 2023 would be a strong year for funders, stating that “litigation finance always picks up in downturns because capital is short”. However, Sutton did raise the concern that there is still a lack of understanding of the funding industry, even from law firms in major markets, and that a focus on billable hours is a stumbling block for a wider adoption of these kinds of law firm-funder partnerships. On the need for wider education and understanding, Perla highlights the importance of engaging with operations and innovation executives at law firms, whom he has found to be the best ambassadors when it comes to providing a gateway of information about funding options to the wider law firm.
Commercial Fundraising

Korean Litigation Finance Startup Raises $6MM in Funding Round

As funders continue to see success in emerging markets around the world, investors are also continuing to show a willingness to provide capital to newer startup funders, who are gaining footholds in these burgeoning markets. This was demonstrated once again this week as a Korean legaltech startup announced it had raised over $10 million, following its latest funding round. An article by AsiaTechDaily details the announcement by Law&Good, which revealed the startup had raised $6 million through its Series A2 funding round. The capital raised will be used by the company to expand its remote lawyer hiring services, and further develop its litigation finance offering. Law&Good became Korea’s first native litigation funder in 2022, having funded a number of local litigation proceedings, which had been referred to the company through its own platform by consumers and small businesses. Law&Good’s founder and CEO, MK Min, highlighted the company’s focus on customer experience above all else, and its use of data to select the most suitable lawsuits to finance.
Case Developments Commercial

Omni Bridgeway and Baker McKenzie Lead Class Action Against Medibank

Class actions remain one of the most powerful tools for consumers to seek legal redress against corporate wrongdoing, with litigation funders ready and waiting to finance meritorious claims with the potential for strong financial returns. This week saw the launch of a major class action in Australia, as one of the country’s leading health insurers is facing a serious lawsuit from its consumers over a data breach. Reporting by the Australian Financial Review revealed that Baker McKenzie had filed a class action lawsuit against Medibank, with the case being financed by Omni Bridgeway. The claim is being brought on behalf of Medibank’s customers who were affected by a cybersecurity breach last October, which resulted in the sensitive personal data of millions of Australians being compromised.  Baker McKenzie’s participation is noteworthy, given the firm’s history of working with corporate clients on cybersecurity cases, including one of the partners leading the Medibank case having previously acted for telecommunications company, Optus, relating to a data breach. Omni Bridgeway, which announced its support for the class action recently, clarified that this action is “separate to representative complaints lodged by other firms with privacy regulator OAIC.”
The LFJ Podcast
Hosted By Giugi Carminatti |
In this episode, we sat down with Giugi Carminatti, Vice President of Business Development for LexShares. Giugi discussed LexShares unique technological platform for sourcing claims, how they manage smaller claims, what types of cases they're seeing in the market right now, and some expectations for the year ahead. [podcast_episode episode="10961" content="title,player,details"]
Consumer

Litigation Funders Win Dismissal of Claims Brought in California Bankruptcy Court

Whilst litigation funders are most often the ones financing plaintiffs’ claims, occasionally they may find themselves on the receiving end of litigation and having to fight their own cases. In an update to an ongoing dispute in California, two litigation funders have successfully won a dismissal of all claims against them regarding allegations that they helped a now-defunct law firm engage in fraud. An article by Bloomberg Law outlines US Bankruptcy Judge Barry Russell’s decision to dismiss the claims brought against Counsel Financial Services and California Attorney Lending II, and their alleged part-owner Joseph D. DiNardo. The claims had been brought by Elissa D. Miller, a trustee for the bankrupt law firm Girardi Keese, alleging that the funders and DiNardo had been partners or insiders of Girardi Keese and should be held liable. Judge Russell ruled that res judicata resolved the claims and that he would not allow any additional amendments, going on to tell the claimant that, “there’s no way in the world you’re ever going to prove they’re partners. It just isn’t there.” The defendant’s counsel, Larry Hutcher, praised the judge’s decision and highlighted that the court’s ruling made it clear that Counsel Financial had acted properly.
Case Developments Commercial

Funders, Law Firms and Legal Marketers Eyeing Camp Lejeune Claims 

Many litigation funders are keeping a close watch on where the next source of mass class action claims could occur, with the potential to finance a large volume of cases and generate a lucrative return on investment. The Camp Lejeune tainted water scandal looks likely to become one of the largest sources of new claims, with law firms, legal marketers and financiers actively investing in traditional and social media marketing to engage with potential claimants. Reporting by Bloomberg Law details the immense advertising campaign that is taking place across the country to target those affected by water contamination Marine Corps Base Camp Lejeune in North Carolina, between 1953 and 1987. According to data shared by Bloomberg, advertising campaigns targeting the victims had reached over $145 million by the end of 2022, with more than $32 million spent on social media and online advertising alone. The momentum for these lawsuits has been supercharged by President Biden’s signing of the Camp Lejeune Justice Act of 2022 in August of last year, with Congress having allocated over $6 billion for payouts to claimants. Industry analysts and insiders suggest that these advertising campaigns reflect the increasingly attractive proposition of litigation financing, with Keller Postman CEO, Adam Gerchen, pointing to “innovations around digital marketing and origination, the technology to absorb that type of volume, and capital.”
Announcements Commercial People Moves

Validity Finance Announces Promotions of Michelle Eber & Sarah Williams

Validity Finance is pleased to announce the promotion of Michelle Eber to Director of Patent Investments and Sarah Williams to Director of Underwriting, effective immediately.

Michelle Eber joined Validity's Houston office in January of 2022 from Baker Botts, where she spent more than 10 years as a patent and trade secret litigator, representing plaintiffs and defendants in the energy and technology sectors in high-stakes IP cases, including disputes involving oilfield technologies, telecommunications systems, data and video compression systems and computer hardware and software. Michelle has played a key role in sourcing and evaluating patent investments since joining the Validity team, and in her new role as Director of Patent Investments, will oversee the entirety of Validity's portfolio of patent investments. She will also continue to lead Validity's due diligence of new patent litigation opportunities, and the monitoring of funded patent cases.

Sarah Williams joined Validity's Houston office in November of 2020 from Kirkland & Ellis, where she had been a Partner in the litigation practice and successfully represented both plaintiffs and defendants in high-stakes, bet-the-company litigation across the country. Her broad experience in all aspects of complex commercial litigation includes energy, contract, fraud, antitrust, and bankruptcy-related disputes. Since joining the Validity team, Sarah has worked closely with clients, law firms, and the Validity team to develop innovative solutions to meet the legal finance funding needs of companies in Texas and beyond. As Director of Underwriting, Sarah will oversee Validity’s case underwriting and diligence, including developing and implementing new policies and procedures and ensuring consistent application of Validity’s robust underwriting standards across its portfolio.

"As we approach our fifth anniversary as a company, we are proud to have grown to be the largest private funder in the U.S., and to have a team that includes so many female leaders," says Managing Director & Senior Investment Officer Laina Hammond, who leads Validity's Houston office. "Michelle and Sarah have been a key part of Validity's growth in their time here. We are so thrilled to have them step into these new roles and have the opportunity to make an even greater impact on Validity's ability to serve the law firms and clients with which we partner."

About Validity

Validity is a leading commercial litigation finance company dedicated to fair funding practices that build trust. Validity’s mission is to make a meaningful difference in our clients’ experience of the legal system. We invest in commercial, patent, bankruptcy, and breach of contract litigation, as well as international arbitration. With decades of combined experience in funding, our team of trial-tested attorneys has invested over $370 million since 2018 across more than 70 matters and portfolios. Our management team has an over 85% success rate. Clients and law firms count on Validity for reliable capital, strategic help, and risk minimization. Our focus is fairness, innovation and clarity.

Announcements Commercial Deals

PREMIER LITIGATION FINANCE FIRM ROCADE LLC PARTNERS WITH BARINGS AND EJF CAPITAL

Rocade LLC (“Rocade” or the “Company”) today announced its launch as a specialty finance company focused on litigation finance with a long-term investment approach, in partnership with Barings LLC (“Barings”), one of the world’s leading investment managers.

Under the terms of the transaction, funds affiliated with Barings have made a significant equity investment into the Company. EJF Capital LLC (“EJF Capital”), which launched Rocade’s predecessor vehicle, Rocade Capital LLC in 2014 with a highly skilled management team, will support the platform and remain a material shareholder in the newly formed entity alongside management, which will transition to the Company.

Headquartered in the Washington, D.C. area, Rocade provides flexible law firm financing solutions, with facilities ranging in size from $10 million to over $100 million which are secured by contingent fees receivable or other litigation assets. Under this new organizational structure, Rocade will benefit from having a robust and patient capital base backed by Barings, enabling it to provide flexible, long-term capital solutions to growing law firms, while leveraging the team’s combination of deep sector expertise and financial structuring capabilities.

Brian Roth, Chief Executive Officer and Chief Investment Officer of Rocade, said, “Uniting with Barings in our vision for a permanent capital vehicle is an incredible milestone for Rocade, as this long-term investment horizon sets us apart and will meaningfully enhance our alignment with the firms in which we invest. The strength of our combined experience and expanded financial resources empowers us with scale and flexibility to continue our trajectory as a leading litigation credit provider in the rapidly evolving litigation finance industry.”

“We are thrilled to partner with Rocade to cement its status as a leading litigation finance provider,” said Bryan High, Head of Capital Solutions at Barings. “Brian and the outstanding team of professionals at Rocade have built a best-in-class, technology-enabled platform that meets the needs of many law firms as they navigate increasingly complex litigation. Rocade’s deep relationships, strong credit culture, and market-leading expertise powerfully complement Barings’ permanent capital base and long-term investment approach.”

“This expanded capital base allows us to scale our platform more quickly while maintaining our focus on asset quality,” added Jacob Cantrell, Chief Risk Officer of Rocade. “Our core team, process, and product will remain the same while we continue to invest in technology to improve our decision process and drive efficiency. Adding the strength, diversity, and scale of resources available across the Barings private credit team to these core strategies offers Rocade more long-term flexibility and reliability for our law firm partners.”

Emanuel Friedman, Co-Founder and Co-CEO of EJF Capital, commented, “We are pleased to participate in the continued success of Brian and his team, who have built a terrific platform that has differentiated itself through an institutional approach to a niche asset class and a data-driven process for understanding complex situations. I look forward to partnering with an innovative and dynamic capital partner in Barings, and I am confident that Rocade is well positioned for a highly successful next chapter with a renewed focus on becoming a dominant player in the space over the long-term.”

Fried, Frank, Harris, Shriver & Jacobson LLP served as legal advisor to EJF Capital. Dechert LLP served as legal advisor to Barings. Nixon Peabody LLP and Cooley LLP served as legal advisor to Rocade and management.

About Rocade

The Company, which operates as Rocade Capital, is a private credit firm which provides flexible growth capital for plaintiff law firms in order to finance case acquisition, manage working capital or realize settled cases.  Since Rocade’s predecessor was founded in 2014 by EJF Capital, the platform has funded approximately $900 million of loans to leading law firms within mass tort and other complex litigation, unlocking potential for dozens of growing law firms.  Its flexibility, industry expertise, track record and long-term focus position it to be a leading law firm lender.  Rocade has an experienced team of professionals, located in the Washington, DC area and Houston, TX, which includes both finance industry veterans as well as litigation experts. For more information, please visit https://rocadecapital.com/.

About Barings

Barings is a $347+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment.

*Assets under management as of December 31, 2022.

About EJF Capital

EJF Capital LLC is a global alternative asset management firm headquartered outside of Washington, D.C. with offices in London, England and Shanghai, China. EJF has over 70 employees, including a seasoned investment team of over 30 professionals. The firm was founded in 2005 by Manny Friedman and Neal Wilson. To learn more, please visit http://ejfcap.com.