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Case Developments Commercial

$2.1MM in Costs Awarded to James Hardie on Harditex Fibre Cement Cladding Boards Case 

The High Court in Wellington, New Zealand, has ruled that 153 home owners failed to prove that James Hardie construction materials were the cause of leaks and rot in their homes. The Court awarded James Hardie $2.1MM in court costs to defend the case, out of the $2.3MM the company requested.  Stuff.co.nz reports that Jamea Hardie's fibre cement cladding boards were responsible for homes unexpectedly deteriorating from leaks and subsequent rotting. James Hardie says that the firm spent over $4.7MM in additional expenses to defend the case, including an international construction consultant to help preserve James Hardie's reputation.  The home owners had sued James Hardie for $127MM in total damages. Claims Funding Australia funded the home owners' case, and is the responsible party for covering the costs associated with reimbursement to James Hardie concerning the matter.
Announcements Commercial People Moves

Omni Bridgeway announces global CFO and head of portfolio management appointments

Omni Bridgeway is pleased to announce the appointment of Guillaume Leger as Global Chief Financial Officer. Based in New York, Mr. Leger brings extensive corporate finance and public company experience as a key member of the executive team leading the company's continued U.S. and international expansion. Prior to joining Omni Bridgeway, Mr. Leger was Group Controller with Circle K – Alimentation Couche-Tard, Inc., a publicly traded Fortune 200 company. Previously Mr. Leger was CFO of Citigroup in Hong Kong following successive senior positions across Citigroup's business in North America, Asia, New Zealand, Australia, and Brazil. His early career included progressive roles with PwC and Deloitte.  In a planned transition, Mr. Leger is taking helm of the CFO office from Stuart Mitchell who served as Group CFO for four years. Also in the finance organization, Omni Bridgeway recently welcomed Mark Wells as the company's Global Head of Portfolio Management. Based in London, Mr. Wells is responsible for further developing Omni Bridgeway's global fund and capital management strategy and leading the global pricing and structuring team. Mark joined Omni Bridgeway from litigation funder Calunius Capital, which he co-founded in 2006 and led as Managing Partner. Mr. Wells' early career included two decades in derivatives trading and structuring at major institutions including JPMorgan/Chase and Toronto Dominion. Andrew Saker, Omni Bridgeway's Managing Director & CEO and Chief Strategy Officer-US, notes, "Mr. Leger and Mr. Wells are excellent additions to our organization. With their leadership and market perspective, we are well positioned to ensure continued success of our growth and innovation strategy and respond to increasing market demand for Omni Bridgeway's legal finance and risk management solutions." ABOUT OMNI BRIDGEWAY Omni Bridgeway is the global leader in litigation financing and managing legal risk, with expertise in civil and common law legal and recovery systems. With international operations in 23 locations, Omni Bridgeway offers dispute finance from case inception through to post-judgment enforcement and recovery. Omni Bridgeway is listed in the Australian Securities Exchange (ASX: OBL) and includes dispute funders formerly known as IMF Bentham Limited, Bentham IMF and ROLAND ProzessFinanz, and a joint venture with IFC (Part of the World Bank). For more information visit www.omnibridgeway.com.
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Announcements Case Developments Commercial

High Court Approves EQC On-Sold Class Action

The way may soon be clear for “On-Sold” homeowners to access a cash payment from EQC without the stringent conditions previously in place. More than 50,000 homeowners bought earthquake damaged homes they believed were properly repaired by EQC following the Canterbury earthquakes. Many of these homeowners subsequently found they were not properly repaired and applied for the Government On-Sold programme which has stringent conditions for the homeowner, including tranche payments and a covenant on the land title until works are completed. The High Court has ruled that a class action can be taken against EQC to receive a cash payment rather than being forced to repair or rebuild the home as required by the Government On-Sold programme which is administered by EQC. Leading insurance lawyer, Grant Shand, who took the case that has resulted in the courts opening this pathway for a class action, says a significant number of homeowners will be pleased by this decision. “Many homeowners do not want to go through the stress and extended time it will take to complete repairs, and these will be extensive repairs given they are over the EQC cap,” he says. “Some may be looking to move to a retirement home, some to relocate to be with family elsewhere; there are many reasons the Government On-sold programme is not appropriate for affected homeowners.” Mr Shand says he is aware of several cases where people have gone to sell their home that was repaired by EQC, only to find there are serious issues with that repair and the house can’t be sold. “One of these involved a couple in their late 80’s. No-one but especially older people ready to move to the next stage of their lives, should have to spend their precious time fixing an issue that was created by EQC,” he says. The class action requires claimants to “opt in” and people can do that in the next couple of months when a judge decides how that process will work. In the meantime Mr Shand is encouraging people to register their interest in the class action, which is being supported by litigation funder, Canterbury Litigation Funding Ltd. If claimants are due any amount from EQC as a result of this class action, the litigation funder will deduct a fee of up to 15% (including GST) of any settlement monies received or judgment sum awarded. Claimants will not be asked to pay any money up front or pay for a share of any costs – it’s simply a deduction of up to 15% (including GST) from any amount you are entitled to receive once the class action is resolved. Members of the class action will have no liability for legal or court costs if the class action is unsuccessful. “With the delays currently being experienced as a result of the building material shortages and other pressures on key people such as engineers and builders, being able to receive a cash payment and move on, I believe is going to be a very attractive option to many,” says Mr Shand. Interested claimants can go here or paste this in their browser www.eqconsold.co.nz
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Case Developments Commercial

Harbour Funds Dual Lawsuits Against Google in the UK and Netherlands

As tech companies have grown in size and market power over the last two decades, many critics have accused these multinational corporates of abusing their near-monopolistic status. A new lawsuit being pursued in both the UK and EU jurisdictions is leveraging litigation funding to hold one of these tech giants to account, and restore the balance in favour of smaller market competitors. Outlined in reporting by TechCrunch, this latest lawsuit is being brought against Google, whom the plaintiffs accuse of misusing its ad tech to side-line publishers and smaller media companies on its platforms. The case is being brought by Geradin Partners in the Netherlands and by Humphries Kerstetter in the UK, both of which are filing anticompetitive conduct claims against Google. Harbour Litigation Funding is financing both claims, with the combined total value of damages being sought potentially reaching €25 billion. An important distinction between the two cases is their classification in each jurisdiction, with the UK claim being categorized as an opt-out claim, whereas the Dutch matter will go forward as an opt-in claim. Furthermore, the former case is being brought to the UK’s Competition Appeal Tribunal and the case in the Netherlands will be seeking collective damages on behalf of European publishers.
Commercial Deals

New research shows companies with large claims recover more and preserve budgets by using legal finance as part of their class action opt out strategies

Burford Capital, the leading global finance and asset management firm focused on law, today releases new independent research demonstrating the value of legal finance for companies with valuable commercial class action claims. In recent years, Burford has seen an increasing number of major corporations choosing to opt out of class action lawsuits to pursue high value claims individually and has commissioned independent research to examine the trend in greater depth.

Although companies are currently still more likely to remain in the class than they are to opt out, the research reveals that their reasons for doing so are economic—and solvable with legal finance, which de-risks the choice to opt out and provides a clear benefit to corporations with high value claims. As most legal finance is non-recourse, companies can receive risk-free funding to pursue meritorious claims as individual plaintiffs, as well as to accelerate the often-significant value represented by pending claims.

Given the results of the research, Burford expects the trend toward opt outs will continue, with major companies choosing to rethink their opt out strategies with legal finance.

Christopher Bogart, CEO of Burford Capital, said: “Burford’s independent research on commercial class actions demonstrates the clear benefit that legal finance provides to companies with significant claims. If you’re a GC and you have a claim that’s big enough to merit opting out, you should, because you’ll recover more, and you can do so without budget implications by using legal finance capital. Further, your competitors who are already using legal finance are opting out three times more often. As a former GC, I recognize the importance of maintaining control and maximizing returns in litigation, and Burford works with many GCs to use legal finance to reduce risk, maintain greater control and enhance the likelihood of achieving greater recoveries.”

Key findings from the research include:

  • Use of legal finance correlates to opting out.
    • Use of legal finance is 3x likelier among companies that mostly/always opt out vs. companies that mostly/always remain in the class, and 2x likelier than all companies.
  • Companies’ top reasons for opting out are maintaining control and maximizing return.
    • The #1 reason large company GCs opt out is their fiduciary duty to maximize recoveries to their company.
  • Companies’ top reasons to stay in the class are economic.
    • Not being able to justify the cost of pursuing an opt out claim (64%) and not having the budget to do so (61%) are the top 2 reasons companies remain in the class.
    • Legal finance ameliorates both cost and budget constraints.
  • GCs say the availability of legal finance would impact their opt out strategy.
    • 1 of 2 (52%) say that while they have not used legal finance, its availability would positively impact the decision to opt out. 

The Report on Class Action Recoveries can be downloaded on Burford’s website, where full results are also available. The research report was conducted in June 2022 by GLG via an online survey, with responses from 150 US GCs, heads of litigation and other senior in-house lawyers responsible for their companies’ commercial litigation.

About Burford Capital

Burford Capital 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), and it works with companies and law firms around the world from its principal offices in New York, London, Chicago, Washington, DC, Singapore, Sydney and Hong Kong.

For more information, please visit www.burfordcapital.com.

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Case Developments Commercial

Dispute Between Funder and Law Firm over Fees Reaches Federal Court

The biggest challenge for a funder taking on an investment in a case is the need to balance potential financial returns against the risk of losing one's investment. However, an ongoing matter making its way through the federal court system in the US shows that even when a case is successful, funders may still face challenges in recovering those returns. Reporting in Bloomberg Law highlights this issue, as Woodsford is seeking to force Hosie Rice, a law firm based in San Francisco, to pay almost $2 million in fees for its financing of a case that successfully settled in 2020. After an arbitrator ruled that Hosie’s client, Space Data, owed the law firm up to $4 million in costs but no contingency fee, Hosie argued that it was not required to award Woodsford any additional fee beyond the original loan repayments. Woodsford’s CEO, Stephen Friel, has argued that this dispute is a simple matter of Hosie failing to repay its debts, and last year an arbitration panel agreed that Woodsford was owed additional remuneration as the $4 million client payment constituted a ‘revenue event’ for the law firm. A federal judge in Delaware is now considering Hosie’s appeal that the arbitration award was improper. Whichever way the judge rules, it is sure to be carefully watched by funders and law firms alike, who no doubt will be considering future situations where the two parties may have differing definitions of what constitutes a contingency fee.
Commercial Deals

Investment in Litigation Finance can offer Stability Against Market Volatility

This year has seen the global economic market continue to struggle on shaky grounds; weighed down by the pressure of inflation, conflict in Europe and associated weaknesses in supply chains. As a result, investors have been looking for alternative avenues to seek more reliable and secure returns for their capital, with litigation financing representing a tempting proposition for a growing number of funds. Insights by Katch Investment Group highlight that with the spectre of a recession on the horizon, investing in litigation finance can provide stability that simply cannot be found in the equities market at present. Katch argues that while investors often overlook this asset class due to its complex nature and smaller market size, in comparison to traditional investments, the litigation finance space is not only growing, but also seeing increasingly diversified opportunities with the rise of specialist outfits. Katch does caution potential investors that engagement in this market needs to be carefully evaluated, with the jurisdiction and type of cases being primary concerns. Furthermore, investors should also assess not only the likelihood of any given case resolving successfully, but also the challenges that may arise when attempting to collect on any financial rewards.
Commercial

Omni Managing Director Highlights Enforcement and Collection as Key Issues

The litigation funding industry is continuing its upward growth trajectory, so much so that even the largest and most established funders must evolve to keep pace with changing market and jurisdictional conditions. In an interview with Lawdragon, Matthew Harrison, managing director and co-chief investment officer at Omni Bridgeway, sees the litigation funding space continuing its upward momentum. This is true not only in terms of case volume, but in the speed of case resolution as the court system begins to shake-off the sluggish pace of the pandemic. Observing another trend that has become a more frequent concern within the industry, Omni Bridgeway has launched a U.S. Judgement Enforcement Team, bringing its expertise to bear in the field of enforcing and collecting awards from successful cases. Mr Harrison highlights that while the primary challenge for any funder will always be winning the judgement in the first place, the need for both clients and firms to consider how to collect on financial returns is of paramount importance. Harrison notes that the biggest trend among Omni’s client base is the increased willingness of the more established law firms and similarly enterprise-level companies to explore litigation funding. Whilst most funders may have started out representing small clients against large entities, Omni’s co-CIO sees this balance shifting, with large-scale commercial litigation being at the forefront of investment opportunities.
Announcements Case Developments Commercial

Manolete Partners writes down GBP2.3 million on High Court decision

Manolete Partners PLC on Friday said it has received a "rare adverse decision" on one of its larger cases from the UK High Court, forcing it to write down GBP2.3 million. Shares in the London-based insolvency litigation financing company were down 15% to 214.00 pence each in London on Friday morning. Manolete said that it has applied for permission to appeal the High Court's decision, but it has decided to write down the full value of the case in its forthcoming results for the six months ended September 30. The impact of the write-down will be a GBP2.3 million reduction to pretax profit, of which the cash paid out on this case to date is GBP636,756. Separately, the company said it will take a more prudent view of the company, due to the challenging macroeconomic climate in the UK. Manolete expects to report a pretax loss of around GBP5 million in its financial year 2023 interim results, as a result of these two factors. However, the company said that it continues to "operate well", with gross cash generation from completed cases in the first five months of the financial year at a "record" GBP15 million. This compares to GBP15.6 million for the entire year ended March 31. Further, it said that revenue, from completed cases, for the first five months of financial year 2023 more than doubled to GBP10.6 million, compared to GBP3.9 million in the same period last year. Chief Executive Steven Cooklin said: "The board and our legal advisers were surprised and disappointed by the very rare adverse initial judgment that we received on one of our larger cases, a case that we originally signed up in 2019. For the first time in our 13-year history, we have applied for permission to appeal that decision to the Court of Appeal. "We have taken a cautious stance by reducing the carrying value of that case to zero until we know the final outcome of the appeal process."
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