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Commercial Deals

The Value of Litigation Funding for Insolvency Practitioners

With the economic climate uncertain and rising inflation taking a toll on markets around the world, industry insiders are keeping a careful eye on a related spike for insolvencies. As a result, insolvency practitioners are under pressure to finance their operations, and may need to turn to litigation funders in order to successfully recover assets. In an article for LondonlovesBusiness, Lucas Arnold, Director of Litigation Funding at Harbour, makes the case for practitioners to increasingly leverage third-party funding where legal claims need to be brought. Mr Arnold argues that whether it is through individual case funding or portfolio funding, litigation finance firms can reduce financial risk for insolvency practitioners, whilst allowing them to pursue legal redress against issues such as fraudulent directors or wrongful trading. Mr Arnold highlights that with companies facing financial strain from the economic downturn and budgets being restricted or reduced across the board, litigation funding is a valuable tool in a Board’s arsenal. Beyond case and portfolio funding, he also puts forward the merits of a funding facility which will give insolvency practitioners a pool of capital to deploy in advance of any legal proceedings they may need to pursue, rather than being stuck in a reactive footing.
Commercial Regulatory Issues

Australian Government Announces Reforms to Litigation Funding Regulations

The vitality and continued growth of litigation funding is still incredibly dependent on the evolution of government policy. As a result, we have seen regulations implemented by governments in recent years that have restricted access to third-party funding. However, a recent announcement by the Australian government has indicated that regulators are open to reform and liberalisation. Reporting in LaywersWeekly highlights last week’s announcement by the Treasury to provide an exemption for litigation funders from the Managed Investment Scheme (MIS) and the Australian Financial Services License (AFSL). This would be a reversal of the previous government’s policy, which had sought to cap a funder’s return on investment to 30 per cent of any settlement. This change reflects a judicial ruling in federal court (LCM v Stanwell) that stated a litigation funding scheme should not be considered an MIS. The announcement has been welcomed by funders and law firms alike, with Jan Saddler, head of class actions at Shine Lawyers, stating that these changes will widen access to justice and provide claimants with the necessary funds to fight back against corporate wrongdoing. A statement by Omni Bridgeway suggests that the funder supported the reforms, but clarified they did believe funders should hold an AFLS.
Commercial Fundraising

Argentine Funder Receives $3 Million in Capital to Grow Operations

Despite not being seen as a traditional hub of third-party funding, South America is showing signs of a burgeoning industry as new funders are emerging to meet regional demand. This was demonstrated once again last week, with the announcement of Qanlex, a new startup receiving $3 million in outside investment to build its platform. Coverage from La República, spotlighted the Argentina-based funder’s announcement, with the firm receiving investments from private capital including The LegalTech Fund, Carao Ventures, FJ Labs and J Ventures. Qanlex’s founders, Yago Zavalía Gahan and Fernando Folgueiro, aim to provide a new avenue to access justice, and sits on a solid foundation of 40 cases having already been funded, with each arriving at a successful outcome. The firm aims to differentiate with a technology-led approach, boasting its proprietary Case Miner solution. Qanlex leverages this sourcing algorithm to select cases for funding by assessing their probability of success, with the founders claiming the technology builds its models upon the analysis of over 9 million lawsuits.
Commercial Fundraising

Omni Bridgeway Gears Up for New Investment Opportunities with $1 billion in Capital

With the litigation funding market booming across the globe, established market leaders are seeing the positive impacts on their balance sheets, and these leading funders are building significant amounts of capital ready to be deployed in future cases. Reporting by ALM International details how Omni Bridgeway is at the forefront of this kind of growth and investment, after the funder reported a return to profit and announced it had over $1 billion for new investment opportunities. This builds upon over $463 million in capital invested in the last year alone in ongoing litigation proceedings, fueled by the wider adoption of third-party funding around the world. Andrew Saker, chief executive of Omni Bridgeway, highlighted that not only does the funder have this ample war chest already established, it is not closing off the potential to raise further capital through private or public equity raises. Saker also highlighted the unique benefits of the litigation funding market, pointing out that the funder’s financial outlook is not tied to wider economic trends, and that in times of economic stress, there is even more litigation and those who pursue it must rely on outside capital.
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Case Developments Commercial

Australian Small Businesses Leverage Funding to Pursue Class Action

Litigation funding allows consumers to seek legal redress against companies when their consumer rights are infringed, and is also a valuable asset for small business owners who lack the financial resources to stand up to those they enter into commercial agreements with. In the latest example of such a case, Australian businesses have launched a claim against EFTPOS systems provider, Tyro, arguing that weeks of system outages led to significant lost revenue for their companies. Reporting by news.com.au outlines how a nationwide failure of Tyro’s systems, which lasted for several weeks, resulted in around 11,000 companies being unable to process payments and thereby losing valuable business. The class action, which is being funded by Syndey-based Court House Capital, was launched last October and seeks damages from Tyro for the outlets’ lost revenue, which the claim argues ranges from $5,000 to a staggering $100,000. Bannister Law, which is leading the class action, has been working to register as many claimants as possible, as any businesses who do not register to participate in the action will not be entitled to any compensation if the claim is successful.  Charles Bannister stated that this case is particularly important, as it is intertwined with COVID business practices, given that many customers were unable or unwilling to pay in cash when the payments systems stopped functioning, resulting in an even more dire outcome for these businesses.
Commercial Legal Innovation

The Benefits of Data-Driven Litigation

Just as other industries have been enhanced by the evolution of technology and particularly data-driven processes, litigators also have the potential to benefit from drawing on a wealth of data to maximize successful outcomes in their work. In a new piece of analysis by LCM, investment manager Hugo Marshall, argues that utilizing data does not remove the importance of the individual expertise litigators bring, but rather enhances it. By using large data-sets to look at broader patterns within cases and outcomes, litigators can view each of their own individual cases through a wider lens, and gain a high degree of certainty when it comes to predicting the outcomes of future proceedings. While Mr Marshall does not disregard the clear limitations of data when viewed by itself, he highlights that it can be used by funders to more accurately assess financial risk, by law firms to define the most successful strategy, and by companies looking to decide if they want to pursue litigation and what their most secure options are. Mr Marshall also points out that while firms should leverage their own proprietary data, they should be open to taking advantage of third-party data that can inform their own risk analysis and probability forecasting. LCM works with litigation analytics platform, Solomonic, to do just that.
Commercial Regulatory Issues

Ongoing Debates around Litigation Funding Regulation in Europe

As the pace of adoption of litigation funding continues to grow across Europe, so too does the debate around the level and scope of regulation needed to ensure that this burgeoning sector is able to flourish without unethical practices becoming commonplace. Industry leaders alongside government and regulatory officials continue to work together to find a best path forward for an adequate framework across the continent. Andrina Cordina, PhD researcher at Erasmus School of Law, provided an informative update on the latest discussions and developments in an article for Conflicts of Laws. Cordina outlined the latest insights from thought-leaders at The Future Regulation of Third-Party Litigation Funding in Europe conference, where speakers discussed pressing issues for upcoming regulation including disclosure requirements, litigation costs and the purported risks of excessive litigation resulting from an increased use of third-party funding. Cordina also highlighted the recent launch of a third-party litigation funding project by the European Law Institute, which over the course of the next two years seeks to establish a core set of principles to be used when assessing the merits of engaging in a third-party funding agreement. Finally, Cordina also spotlights a recent special edition of the Erasmus Law Review dedicated to legal funding, with insights including the differing nuances of litigation funding in individual European jurisdictions versus the role of the European Union’s legal framework.
Commercial

Omni Bridgeway Banks a Profit 

Sydney-based litigation financier, Omni Bridgeway, announced a $4.5MM profit for the 12 months ending in June. The news is a turnaround from the -$12.7MM loss a year prior. Andrew Saker (CEO at Omni Bridgeway) says Omni maintains resources of over $1B for potential litigation investments.  According to Law.com, Mr. Saker says that Omni is taking advantage of global market opportunities in Australia, New Zealand, Europe and the United States. Saker highlights Omni earning AUD $463.3MM in new commitments over the last 12 months.  Law.com reports that litigation finance is experiencing increased growth via broader acceptance of resources to access the justice system. Mr. Saker notes Omni Bridgeway's business plan is not affected by the cyclical economic climate with cases maturing throughout good and bad cycles.  Saker goes on to say that the firm performs handsomely in downturns, given the increased need for access to capital. 
Announcements Commercial Deals

LITFINCON ll: The Premier Litigation Finance Conference Returns to Houston

LITFINCON is excited to announce its return to The Post Oak Hotel in Houston in March 2023, after a triumphant conference in March 2022.

Last year’s LITFINCON attracted global thought-leaders from a variety of disciplines in the legal and investment sectors. In particular, attendees learned about the major trends and notable developments in litigation finance – an emerging investment asset class for institutional investors and an increasing source of capital for legal professionals and law firms.

Building on LITFINCON, LITFINCON II expects to have a diverse set of over 300 attendees that include leading business executives, judges, litigation funders, elite Am Law firms, corporate counsel, legal professors, and institutional investors. We are looking forward to hosting this event in our backyard, Houston, Texas, one of the largest legal markets in the country. Attendees will have the opportunity to listen to a diverse mix of insightful panel discussions, regulatory changes, judicial thoughts & opinions, and investment trends in litigation finance.

There will be even more opportunities to connect with speakers, panelists, and other attendees to expand referral networks and become well-informed about this growing institutional asset class. New to the agenda, LITFINCON II will host an exclusive event for VIP attendees to experience the Houston Livestock Show and Rodeo, the largest livestock exhibition and rodeo in the world. The conference will also continue the fun tradition of "Law, Lunch & Laughs" with a celebrity comedian as a keynote speaker.

LITFINCON II is thrilled to have early support from some of the most high-profile organizations in the litigation finance industry. Confirmed initial sponsors for LITFINCON II include Certum Group, CAC Specialty, Schulte Roth & Zabel, Omni Bridgeway, Filevine, Aon, Dunning Rievman, and Arran Capital.

“We’re proud that the inaugural LITFINCON was a tremendous success and want to thank the many sponsors, panelists, and attendees, who attended from all over the world – London, Geneva, New York, Miami, San Francisco, and Austin. LITFINCON highlighted the growing field of litigation finance and the importance of Texas as a hub that unites all participants in the legal field. Siltstone Capital is excited about continuing the momentum and advancing the litigation finance field by hosting LITFINCON II in March 2023,” says Mani Walia, Managing Partner & General Counsel, Siltstone Capital.

Entrusted by leading institutions, Siltstone Capital is a premier multi-strategy investment firm that provides capital solutions to litigants, law firms, and legal departments to help resolve their real-world legal issues and create significant value for all stakeholders.

For more information, visit our website http://www.litfincon.com. Please view our March 2022 Highlight Video. For media and partnership inquiries, please contact Allyson Herebic at allyson.herebic@siltstone.com

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