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Case Developments Commercial

Court of Appeal Rules in Favour of Harbour in Dispute With Panamanian Foundation

As is always the case in litigation funding, a victory in the courts is not truly a success until judgements can be enforced and financial returns collected. A recent ruling in the Court of Appeal reinforced this principle, as Harbour received a favorable ruling from the court confirming its right to priority in the repayment of funds. The ruling, which is detailed on Casemine, was handed down by the England and Wales Court of Appeal (Civil Division) on January 20 and rejected an appeal by Phoenix Group Foundation, a Panamanian foundation which contested that it should hold that right as assignee. The denial of this appeal is the result of previous litigation which saw Harbour provide funding for commercial litigation by the “Orb Claimants”, which ended in a successful result for the claimants. Phoenix had argued in its appeal that any distribution of funds from the litigation fell under the terms of its Liquidation Inter-Creditor Settlement Agreement (LICSA). However, the court ruled against Phoenix’s appeal, and affirmed the order given by Mr Justice Foxton in the High Court of Justice, in May 2021. This ruling demonstrates the extended timeframes that funders have to work with in order to realize a return on their investment, given Harbour’s original investment in the commercial litigation dated back to July 2013.
Commercial

Leaders from Burford, GLS and Omni Bridgeway Speak at PTAB Masters

Patent infringement litigation has been at the forefront of the litigation funding industry, with high profile disputes over disclosure and the role of third-party funding coming into the spotlight. The role of the Patent Trial and Appeal Board (PTAB) has also come under scrutiny, and an event hosted this week hosted industry leaders from law firms and funders who discussed the future of patent disputes. An article by IPWatchdog recapped their Third Annual PTAB Masters program held in Ashburn, Virginia. The two-day event’s agenda included sessions on the best path for reforming the PTAB, a panel sharing the perspectives of Administrative Patent Judges (APJs), and a discussion on patent assertion and funding strategies featuring leaders from some of the industry’s most established funders. The latter panel session saw speakers from Burford Capital, GLS Capital and Omni Bridgeway all provide their insights into the challenges faced by patent owners. Omni Bridgeway’s Sarah Tsou spoke to the process of inter partes reviews (IPR), describing it as an opportunity rather than an obstacle for funders and their clients, as it allows them to prove the validity and value of their patents, which increases the likelihood of success. Joel Merkin, principal at GLS Capital, highlighted the risk/reward calculation when it comes to final written decisions (FWD), as they represent a significant advantage when given in favour of the patent owner. Raising the potential challenges created by the PTAB, Burford Capital’s Chris Freeman stated that there was always a high degree of uncertainty as to what direction the PTAB will take, regardless of the funder’s own assessment of a patent’s validity.
Commercial Deals

Omni Bridgeway’s Co-Chief Investment Officer Shares Industry Outlook

As litigation funding in the U.S. looks to have another strong year ahead with the volume and breadth of investing continuing to increase, industry leaders are sharing their outlook on the state of the market. In a new interview, Omni Bridgeway’s Co-Chief Investment Officer shares his perspective on a range of topics including the evolving relationship between funders and law firms, prevailing misconceptions about third-party funding and the challenges of judgement enforcement. Interviewed by Massachusetts Lawyers Weekly, Jim Batson, managing director at Omni Bridgeway, provided an overview of how litigation funding continues to evolve. Looking at partnerships with law firms, Batson reports that Omni is increasingly seeing law firms working on lawsuits on a partial or full contingency basis. This has created further opportunities for the funder to provide portfolio financing to law firms, thereby unlocking capital that can be deployed for a variety of business purposes, while still allowing Omni to achieve a suitable return on investment. Batson highlights that now is more important than ever for funders to provide expertise and strategic guidance to their clients beyond the actual financing requested, pointing to judgement enforcement as an area where Omni’s dedicated team can bring real value to clients in challenging situations. Batson also recognized the challenges that still remain for the industry due to common misconceptions around the practice, such as the idea that funders exert control over the litigation process, when in reality, their role is limited to an advisory capacity.
Commercial Regulatory Issues

UK Litigation Funding Market Could See Growth if EU Imposes Restrictions

The shadow of the Voss Report’s recommendations looms over the future of litigation funding in Europe, as firms evaluate where the best opportunities will be in 2023. As some in the industry fear that overly zealous regulation of the practice could seriously hamper funder activity in the European Union, there is growing speculation that the United Kingdom could be one of the largest beneficiaries if the report’s proposals are enacted. Writing in City A.M., Glenn Newberry, head of litigation at Eversheds Sutherland, offers an optimistic outlook for the potential growth of Litigation Finance in the UK. Newberry points out that there is still an issue with policymakers maintaining misconceptions about third-party funding, particularly around the idea that funders are predatory investors who seek to control litigation while exploiting plaintiffs for their own financial gain. Newberry highlights that the use of litigation funding is far broader than simply financing class action cases, and instead has become a multi-faceted tool which can be used by companies to pursue meritorious litigation. He argues that with the variety of funding options and different types of fee arrangements, the practice has become a sophisticated asset for the legal industry, and one that requires investors to take on commensurate risk in return for their potential return on investment. If Europe does move forward with restricting the use of litigation funding, Newberry suggests that this should only encourage the UK to create a welcoming market to benefit claimants, law firms and investors.
Commercial Deals

Litigation Funding as a Valuable Tool for HNW Individuals

When it comes to individuals taking advantage of litigation funding, it is most often thought of through the lens of class action lawsuits being brought by individuals or collectives against corporations or institutions. However, one area that has received less attention is the utility of litigation finance for high-net-worth individuals (HNWIs) who are looking for capital to fund their own disputes. In a new piece for WealthBriefing, Catherine Penny and Elizabeth Butler of Stevens & Bolton, argue that the current economic climate may put a strain on individual finances, and third-party funding can be a valuable tool to allow HNWIs to pursue meritorious lawsuits with the use of outside capital. The authors highlight that the scope of use for litigation funding has significantly widened over recent years, and now represents a viable option for a range of litigation including fraud disputes or asset recovery proceedings. Analyzing the qualities that HNWIs should look for in a funder, Penny and Butler suggest that choosing a funder who is a member of a reputable network, such as the Association of Litigation Funders (ALF), will offer potential claimants increased confidence in their services. Furthermore, HNWIs should focus on funders who have a proven track record of financing the sort of claim that they are looking to pursue, and depending on the importance of speed, they may also want to enquire about the length and extent of due diligence that an individual funder will require.
Commercial Regulatory Issues

Increased Transparency in Litigation Funding Could Aid Policymakers

Calls for increased transparency in the litigation finance industry are being brought by opponents of the practice, with the aim of forcing funders to disclose detailed information around funding agreements that they would prefer to remain confidential. A new op-ed argues that a measured and appropriate level of transparency would enable lawmakers to develop smart policy informed by accurate data and avoid potential issues caused by one party having less thorough disclosure requirements. Writing in Bloomberg Law, Michael Menapace, non-resident scholar at the Insurance Information Institute, and partner at Wiggin and Dana, provides an argument in favour of increased transparency in litigation finance in order to address the lack of a unified legislative framework to regulate the industry across the U.S. Referencing the recent GAO study that highlighted the lack of current and verifiable data around litigation funding, Menapace points out that both legislative and judicial decision-making around the use of third-party funding could be improved by increasing the availability of such data. Menapace also suggests that under the current structure, plaintiffs are at an unfair advantage because defendants must disclose any legal liability insurance they have in place, whilst plaintiff funding does not face the same requirements, resulting in an imbalance when it comes to parties evaluating pre-trial settlements. Furthermore, Menapace argues that without transparency, there is the inherent possibility of conflicts of interest, due to funder involvement remaining undiscovered, and therefore negatively impacting the judicial process.
Announcements Consumer

Risk Settlements Announces Name Change to Certum Group

Risk Settlements, which provides bespoke solutions for companies facing the uncertainty of litigation, has changed its name to Certum Group. Latin for “certainty,” Certum represents the core benefit the company delivers to its clients across its entire suite of solutions. “Our new name represents our mission of bringing certainty to the uncertain world of litigation through our proprietary risk transfer platform,” said Joel Fineberg, managing director. “By using risk transfer of known, threatened, or pending litigation or judgments, we help our clients win more by risking less.” Certum Group has created the first and only litigation risk transfer platform that combines insurance, premium finance, and litigation funding to provide tailored solutions for companies, litigants, and law firms. Founded 10 years ago, the team is comprised of former litigators, judicial clerks, actuaries, and financial professionals who design risk transfer and funding solutions to meet legal, business, and financial objectives. Certum Group’s suite of products includes litigation funding for companies and law firms, claim monetization for known or latent litigation assets, and judgment preservation insurance (JPI) to guarantee the recovery of large judgments being appealed. It also includes portfolio “wrappers” to ensure that an entire group of cases will prevail making monetization or funding possible, class action settlement insurance (CASI) which removes the uncertainty of claims-made settlements, and litigation buyout insurance (LBO) that shifts the outcome of contested litigation from the defendant to a large insurance carrier. Depending on the client’s goals, these solutions are offered stand-alone, or in combination with each other. About Certum Group Certum Group provides bespoke solutions for companies facing the uncertainty of litigation. We are the leader in providing comprehensive alternative litigation strategies, including class action settlement insurance, litigation buyout insurance, judgment preservation insurance, adverse judgment insurance, contingency fee insurance, capital protection insurance, litigation funding, and claim monetization. Our team of experienced former litigators, insurance professionals, and risk mitigation specialists helps companies remove the financial and operational volatility arising out of litigation by transferring the outcome risk. Learn more at www.certumgroup.com.
Consumer

CNN Report on Personal Injury Advertising Trends

In 1977, the United States Supreme Court ruled that legal advertisements are protected by the first amendment. The court highlighted that restrictions on legal marketing hampered access to justice “particularly for the not-quite-poor and the unknowledgeable.” The 1980s spawned a renaissance in attorney advertising, and today, the market for legal advertising tops well over $1.2B a year in the United States. CNN Business reports that many personal injury firms are seeking to advertise to the public, in a bid to attract attention with clever TV commercials and newspaper promotions. Direct response methods are even engaged to target potential clients who are currently in the hospital recovering from injury. Hedge funds and savvy litigation investment networks invest vast sums of capital to attract business in the personal injury market, according to CNN.  The U.S. Chamber’s Institute for Legal Reform (a longstanding opponent of the litigation funding industry) claims that aggressive attorney advertising is problematic and can increase the number of frivolous lawsuits. In contrast, CNN reports that the overall amount of claims filed in the United States is declining, partly due to stricter state laws to curb social inflation, and also due to the increasing cost of bringing cases to court. That latter point is exactly why consumer legal funding exists in the first place. 
Commercial Deals

Swedish Funder Backs Claim Against Investment Bank

Litigation funding continues to be one of the best tools available for individuals to seek legal redress against large corporations and institutions, where they would otherwise be outmatched by the weight of legal resources these organizations can finance. This is once again the case, as a Swedish business leader has received funding for his case against one of Sweden’s prominent investment banks. Realtid covered the news that Kapatens, a leading Swedish litigation funder, is backing Lage Jonason’s claim against Mangold Fondkommission. The lawsuit centres around allegations by Mr. Jonason that Mangold unlawfully executed a forced sale of shares that Jonason had pledged as security. The sale of these shares in one company, which reportedly took place mostly in a single day, resulted in a massive 86 percent drop in the value of the company’s shares.  Jonason’s claim alleges that the shares which were forcibly sold for a value of 20 million SEK, were previously valued at 150 million. Kapatens is funding the claim which is valued at approximately 99 million SEK, with the case being led by Nybron Advokater, a Stockholm-based boutique law firm.