Trending Now

All Articles

3490 Articles
Commercial Deals

4 Rivers Seeking Investors to Fund Fugees Rapper’s Defense Costs

Litigation funding is most often associated with commercial litigation, and primarily focused on plaintiff-side funding, as these are the cases with the surest route to a profitable return on investment. However, a new funding opportunity is looking to break that mould, as 4 Rivers Services is seeking investors to fund the defense costs of a high-profile criminal case which will pit a rapper against the U.S. Justice Department. An article from Reuters provides the details on this unique situation, which has originated from the Justice Department’s indictment of Fugees rapper Prakazrel Michel on charges of a criminal conspiracy relating to illegal donations of foreign money into Barack Obama’s 2012 election campaign, and two separate cases of lobbying the Trump administration. Whilst at first glance, this may not appear to be an obvious litigation finance opportunity, the funding advisor and broker 4 Rivers is looking for investors to fund Michel’s upcoming defense costs. Peter Petyt, co-founder and CEO of 4 Rivers, stated that he is looking for investors to provide at least $2.6 million in funding, with the financial return guaranteed by either the recovery of previously forfeited assets if Michel is acquitted, or a share of Michel’s future revenue from his music career. Petyt recognized that the case may be ‘difficult to finance’ due to its unique circumstances, and while he has received interest from funders in the opportunity, they had not yet secured an agreement as of the time of Reuters’ publication. Mr. Michel’s trial is currently scheduled to begin on March 27 in the U.S. Federal Court for the District of Columbia.
Commercial Regulatory Issues

Law Finance Group and GLS Capital Revealed to be Funding Patent Infringement Lawsuit

The issue of disclosure is once again front and center in a patent litigation suit. In the US District Court for the District of New Jersey, the identities of the funders of an infringement suit against a Merck & Co. company were revealed. Reporting by Bloomberg Law details the latest development in Microspherix’s lawsuit against Organon, a Merck & Co. spinoff company, over the infringement of patents for a contraceptive implant. In a court filing on March 15, the plaintiff’s attorneys revealed that it had received funding from Law Finance Group and from a GLS Capital affiliate, Zepata SPV. GLS Capital recently made headlines in another case, after its client Nanoco Technologies reached a $150 million settlement with Samsung Electronics over another patent infringement lawsuit. The filing also confirmed that Kirkland & Ellis, who are acting for Microspherix, were engaged on a contingency arrangement, and that in 2022 the firm had ‘agreed to share a portion of any proceeds it receives from this matter with LFG and GLS in exchange for a non-recourse payment of a portion of its estimated fees for the matter.’ It is also noteworthy, given recent events, that the court filing explicitly states that ‘none of LFG’s, Zepata’s, or GLS’s approval is necessary or required in any way for litigation decisions or settlement decisions in the action.’
Commercial Deals

Manolete Announces Record New Case Investments Amid UK Insolvencies Surge

Given all of the economic and geopolitical uncertainties at play, industry leaders and analysts are expecting insolvencies to continue to rise, which will create opportunities for funders focused on the space. This has been reflected in an update from one of the UK’s leading funders of insolvency litigation, which has announced record new case investments, case completions and cash recoveries in the current financial year to date (FY23 YTD). In a trading update to the London Stock Exchange, Manolete Partners has announced that it has made 246 new case investments for FY23 YTD, an increase of 55% compared to 159 new investments for the entirety of FY22. In parallel, Manolete stated that in this time period, it had also completed a record 168 cases, along with a record cash recovery from already completed cases of £26.2 million. According to the company, this has led to a consecutive five month run of profitability through the end of February 2023, with Manolete expecting a strong recovery of profitability in FY24. As LFJ had previously reported, Manolete has been engaged with Barclays on a pilot programme to recover misappropriated funds from the government’s Bounce Back Loan Schemes. In the trading update, Manolete revealed that 119 companies have been included in the pilot scheme, with 45 cases assigned to Manolete. Of these cases, Manolete claims that three have already been settled and a further seven have settlement offers, with only one of these cases not having offered or agreed to repay the full amount of misappropriated loans. Manolete’s CEO, Steven Cooklin, stated that ‘the UK is now experiencing record high levels of insolvencies and that is directly leading to the Company's impressive operating performance’. However, the trading update did also reveal that the Court of Appeal had dismissed Manolete’s appeal to a High Court judgement from last year, and that £750k in costs relating to the case ‘will now be written off in H2 FY23 and a line drawn under the matter.’
Commercial Deals

LCM Chief Executive Highlights Opportunities for Insolvency Litigation Following SVB’s Collapse

Insolvency and bankruptcy litigation remain one of the top targets for litigation funders, fuelled by the current economic uncertainty and the prolonged after-effects of the Covid-19 pandemic, which left many businesses in dire financial trouble. The recent implosion of Silicon Valley Bank (SVB) has only added to this fertile environment for insolvencies. In an article by City A.M., LCM’s chief executive Patrick Moloney stated that SVB’s collapse would likely cause a “myriad of litigation”, which will only further compound the difficult circumstances that many corporations are facing. Moloney highlighted the fact that in such an environment, liquidators will be keen to utilize litigation financing as a tool to pursue any resulting lawsuits. In the same interview, Moloney pointed to the dramatic rise of class action claims in the UK as another sector that LCM is pursuing. Moloney suggested that this increase in class actions is largely due to the “change in the law that’s allowing these claims to come through”, with funders like LCM standing by to provide the needed capital to move these claims forward.
Commercial Regulatory Issues

Nevada Senate Committee Debates Litigation Funding Disclosure Bill

Critics of the litigation funding industry have intensified efforts to lobby the federal government to more heavily regulate the practice in recent months, buoyed by examples of courts mandating increased disclosure of third-party funding. These efforts have also found an audience in state legislatures, with the Nevada Senate Judiciary Committee scrutinizing a bill that proposes increased disclosure requirements for funders. An article by 2News recaps the Senate Judiciary Committee’s hearing that took place this week, with lawmakers examining Senate Bill 179 which primarily concerns disclosure for litigation funding and the advertising of lawsuits.  Senator Scott Hammond, who is sponsoring the legislation, argued that third-party funding has the potential to increase frivolous lawsuits and put pressure on plaintiffs to aim for higher settlements to recoup the financial gain that is passed on to funders. Unsurprisingly, given its opposition to third-party funding, the US Chamber of Commerce also had a representative at the meeting, with Vice President Page Faulk echoing Hammond’s critiques and asserting the Chamber’s recent claim that the practice is a threat to national security. These critiques did not find a unanimously warm welcome among the Committee, as Melanie Scheible, Chair of the Senate Judiciary Committee, questioned whether Faulk’s assertion about foreign exploitation of litigation funding was based on proven data. Scheible stated that “this committee does maintain the ability to ask you to back that up with some kind of evidence, some kind of proof, some kind of factual basis”. 2News also reported that the Nevada Justice Association opposes this current bill.
Commercial Fundraising

FightRight Technologies Launches New Fund

The Indian litigation funding market continues to stand out as a hotbed of activity for new funding efforts, with startups and legal tech firms looking for opportunities to grab a share of this growing market. There is an equal appetite from investors in the country to secure valuable returns on litigation finance investments, with the launch of a new fund aimed at High-Net-Worth Individuals (HNWIs). Business Today covered the announcement by FightRight Technologies, an Indian legal tech startup, which has launched a new fund for HNWI investors looking to diversify their portfolios and explore litigation finance as an alternative asset. The Rs 100 crore fund will look to build a portfolio of 15-20 cases, with FightRight expecting an annualized ROI of 30 percent or greater. The startup confirmed that the fund, which is a special purpose vehicle, has already secured 100 percent of the committed investment required. FightRight was founded by Nitin Jain and Visha Mangal in 2020, utilizing its proprietary AI and machine learning technology to analyze litigation opportunities for potential investment and risk assessments. The funder is targeting claims brought by mid-market and MSME businesses, as well as individuals bringing commercial disputes, and has already funded Rs 250 crore worth of claims in the current financial year. Jain, who serves as CEO of FightRight, stated that the new fund is looking to take advantage of the “significant increase in demand for litigation funding” in India.
Case Developments Commercial

Dispute Escalates as Burford Sues Sysco

As LFJ reported last week, we are seeing one of those rare occurrences in which a funder and client’s relationship breaks down in a very public and contentious manner, as Burford Capital and Sysco have found themselves in opposition to one another. However, it appears that Sysco’s lawsuit against Burford was only the beginning of this conflict, as Burford’s subsidiary companies have launched their own lawsuit against Sysco. Reporting by Reuters details the latest developments, revealing that Burford subsidiaries: Glaz LLC, Posen Investments LP and Kensosha Investments LP, are requesting a court order from the New York Supreme Court, which would prevent Sysco from settling any of the existing claims that are at the heart of the original dispute. Burford’s latest lawsuit is an effort to reaffirm the previous ruling from an arbitration panel on March 10, which granted Burford’s request to stop Sysco from closing the settlement deals that Burford took issue with. Sysco responded to Burford’s lawsuit by stating that “The arbitration ruling and Burford's petition [do] not change our position that Burford is attempting to unlawfully seize control of Sysco's settlement rights and rewrite the terms of our contract.” Burford has maintained that its funding agreement with Sysco had always included a requirement for the funder to approve any settlement deals, with Burford’s CEO Christopher Bogart describing Sysco’s lawsuit as “frivolous”.
Announcements Commercial

LCM Releases Interim Results for the Half Year

Litigation Capital Management has released its Interim results for the half year ended 31 December 2022. Highlights
  • Fund II Capital commitment at A$79m as at 31 December 2022 and A$114m as at 28 February 2023. Fund I fully committed
  • Assets under Management (AuM) increased to A$506m by 31 December 2022 with further commitments in Fund II bringing our AuM to A$537m at 28 February 2023
  • Overall Capital commitments were up significantly on the same prior year period at A$107m
  • 162 applications reviewed, made up of better quality, larger and more complex cases, with expectations of enhanced returns from these cases
  • Capital invested during the period increased from A$31.5m to A$56.9m
  • Total revenue A$3.0m with a further A$22.5m recognised post the period end
  • Adjusted loss for the period A$5.5m reflecting conservative revenue recognition. Post balance sheet resolutions would have increased LCM only performance to an adjusted operating profit of A$6.3m
Post period events and outlook
  • Post Year End first successful settlement from a Fund I co-investment, generating ROIC of 278% for LCM’s balance sheet contribution and expected to contribute A$6.3m to gross profit
  • Post Year End successful settlement on one of LCM's 100% direct balance sheet investments which was an Australian class action contributing approximately A$5.8m to gross profit
(Capital commitment means the total estimated budget of an investment) Commenting on the results, Patrick Moloney, CEO of Litigation Capital Management, said: “I am pleased we have continued to make progress on our Fund Management business, which has the potential to bring superior returns to LCM, as demonstrated by the first successful settlement from a Fund I investment, producing favourable outcomes both for the Fund and our balance sheet.” “Building on the increased levels of commitments in the period, we expect more investment opportunities to present themselves, in part due to the counter cyclical nature of our business, and as moratoriums against insolvency and restructuring disputes are relaxed. Our track record shows we are well positioned to capitalise on these opportunities, wherever they present themselves in the world.” LCM will be hosting a webinar for investors today at 11.00 a.m. The presentation is open to all existing and potential shareholders. If you would like to attend this presentation, please register using the following link: https://www.investormeetcompany.com/litigation-capital-management-limited/register-investor  A webinar presentation for analysts will take place at 9.00am. Analysts wishing to attend should contact: lcm@tavistock.co.uk to register. The accompanying results presentation is available on LCM's website: https://www.lcmfinance.com/shareholders/investor-presentations-results/  The Interim Financial Report is available at: https://www.lcmfinance.com/shareholders/annual-reports-financial-reports/
Announcements Commercial Deals

International Legal Finance Association Adds Contingency Capital as 20th Member

The International Legal Finance Association (ILFA), the only global association of commercial legal finance companies, today announced that Contingency Capital has joined the organization as its 20th member.  “As the only global association representing the commercial legal finance industry, ILFA is excited to welcome Contingency Capital as the organization’s 20th member,” said Gary Barnett, ILFA’s Executive Director. “The addition of Contingency Capital serves as a landmark moment for the growth of ILFA as an organization, as well as the commercial legal finance industry at-large.”  “Contingency Capital’s investment strategy leverages our litigation expertise to build diversified pools of legal assets,” said Brandon Baer, Founder and Chief Investment Officer at Contingency Capital. “As the asset class attracts increased interest from institutional investors, we look forward to working alongside our fellow members to build a broader understanding of the legal finance industry,” said Baer.  Since ILFA’s inception in 2020, the association has grown from six to 20 members, representing the world’s leading providers of commercial legal finance. During this time, ILFA has established itself as the undisputed global voice of the legal finance industry, by lending its voice to major legislative and regulatory debates in a variety of jurisdictions and relevant bodies, including in Europe, Australia, the U.S. and international arbitration institutions. Further, the association hosted its inaugural International Legal Finance Conference at the historic Morgan Library in New York City, with plans to hold additional events throughout the world this year.  About 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 global 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 is incorporated in Washington, DC, and has local chapter representation around the world. For more information, visit www.ilfa.com and find us on Twitter @ILFA_Official and LinkedIn.  About Contingency Capital  Contingency Capital is a global asset management business focused on credit-oriented legal assets. For further information on Contingency Capital please see www.contingencycapital.com.