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Commercial Deals

Funders Play Vital Role in Enabling International Securities Fraud Litigation

Although the US has traditionally been the primary jurisdiction for securities fraud litigation, a wave of regulatory developments and landmark cases has led to a much more active international market in recent years. In countries including the UK, Australia and the Netherlands, we are seeing numerous examples of high-value settlements being secured, and litigation funders are playing an increasing role both in providing capital and reducing risk for investors looking to take legal action. A new article by Bloomberg Law details the rise in investor-led litigation against major corporations, highlighting data from Institutional Shareholder Services (ISS) which shows an average of 60 of these lawsuits being brought each year outside of the US, since 2016. Jeff Lubitz, director of securities class actions services at ISS, states that while this trend is not experienced in every jurisdiction, there is clear evidence that in certain countries there is a combination of investors, lawyers and funders working together to actively pursue these claims. Burford Capital’s director of legal finance, Michael Sternhell, argues that the Netherlands and Australia are two particularly promising jurisdictions due to the speed of their legal system and the willingness of the courts to take an inclusive approach to international shareholder participation. Adam Erusalimsky, senior investment officer at Woodsford, also highlighted the important role litigation funders play in this area, as they provide a counterbalance to corporate power and open access to justice for shareholders.
Commercial Regulatory Issues

Burford Co-Founder Says Outside Investment is Key to Law Firm Growth

The traditional partnership model for law firms has been one of the bedrocks of the industry for so long, that suggestions of alternative ownership structures have been regularly dismissed without significant debate. However, with the advancement of law firm IPOs in the UK and the rise in adoption of the alternative business structure (ABS), some industry figures see outside investment as the best path forward. Writing in Law.com, Burford co-founder and chief investment officer, Jonathan Molot, argues that while there have been examples of IPOs and outside ownership gone awry, outside equity investment is still the best tool for law firms to innovate. He highlights the fact that the partnership model does not incentivize investment for long-term innovation and development, while outside capital can allow a firm to invest in new technology and services which will benefit firms and their clients. Molot goes on to state that by accessing outside investment, especially from legal finance companies, law firms can explore more flexible billing options for clients, which can be a powerful tool in attracting and retaining customers in such a competitive market. He also raises the currently unstable economic market as another reason why relying on traditional methods of funding can be vulnerable, whereas a third-party funder is able to provide capital and offer a stable foundation for growth and innovation.
Case Developments Commercial

Nimitz Loses Appeal Against Judge’s Funding Disclosure Order

Disclosure has been the key word in the litigation funding industry in recent weeks, as an ongoing patent infringement lawsuit brought the issue into the spotlight. However, the latest development in the case suggests that the tide may be turning against funders who seek to maintain a level of discretion over their involvement. Reporting by Reuters details the announcement today that Nimitz Technologies LLC failed in its appeal to prevent a federal judge in Delaware from mandating disclosure of its litigation funding arrangements. The U.S. Court of Appeals for the Federal Circuit ruled in favour of Judge Colm Connolly, stating that the request for disclosure was within the Court’s authority, and did hold relevance to the ongoing patent infringement case. Whilst the Federal Circuit denied Nimitz’s appeal, it did make clear that Judge Connolly’s order was not a request for the plaintiff to make the details of its funding arrangements known to the public, and they would still have the ability to request the disclosure be sealed by the judge.
Commercial Fundraising

LegalPay Seeks to Boost Legal Innovation Through New Fund

Litigation funding has been a powerful tool for widening access to justice and driving innovation in the legal sector, and technological evolution continues to provide ongoing sector optimization. Seeking to enable this kind of evolution, one major industry player is setting up a fund to boost technological development for the legal sector. Detailed in an article by Hello Entrepreneurs, LegalPay, the market-leading funder in India, has launched its Justice and Inclusion (JAI) Fund to provide startups and established LegalTech companies with $2 million in capital. The purpose of the fund is to invest in technologies and solutions to make India’s legal system more efficient, and speed up the litigation process. LegalPay’s founder and CEO, Kundan Shahi, stated that the JAI Fund aims to remedy the lack of capital for Indian startups, especially those whose solutions could be beneficial for the country’s legal structure, which has experienced relatively little innovation. In addition to Shahi, the fund’s investment committee includes Kashish Grover, COO of LegalPay and Ojasvi Babbar, CEO of the Amity Incubation Centre.
Announcements Consumer

Mill City Ventures III, Ltd. Enters into Letter of Intent to Acquire Mustang Funding, LLC

Mill City Ventures III, Ltd. ("Mill City") (NASDAQ:MCVT), a specialty short-term finance and non-bank lender, announced today that it has entered into a non-binding letter of intent for a merger transaction with Mustang Funding, LLC dba Mustang Litigation Funding ("Mustang"), a Delaware limited liability company owning and operating a Minneapolis-based litigation finance business focusing on the long-term capital needs of law firms, plaintiffs and vendors. Mustang has associated offices in Plymouth Meeting, Pennsylvania and Sarasota, Florida. The letter of intent contemplates Mill City's acquisition of Mustang through a legal structure that is to be determined in connection with reaching a definitive agreement, but with the owners of Mustang receiving a sufficient number of shares of Mill City common stock such that they would own 80% of the total number of issued and outstanding shares of Mill City common stock on a post-transaction basis. The letter of intent is non-binding and obligates the parties only to work cooperatively and in good faith for the purpose of negotiating and entering into a definitive agreement governing the transaction. The letter of intent sets forth certain conditions precedent to any closing of the transaction, and a definitive agreement, if reached, would likely set forth additional customary and negotiated conditions to any such closing. The conditions identified in the letter of intent include the completion of due diligence to the satisfaction of the both parties, a financing-based condition, the consummation of a short-term loan by Mill City to Mustang, the approval of the owners of Mustang and the shareholders of Mill City, together with any related regulatory approvals that may be required, including any required approval by Nasdaq of the continued listing of Mill City common stock after any closing. Any definitive agreement that may be reached is expected to contain other customary and negotiated terms and conditions, and may contain terms and conditions different from those contemplated in the letter of intent. About Mill City Ventures III, Ltd. Founded in 2007, Mill City Ventures III, Ltd., is a specialty short-term finance company providing short-term non-bank lending primarily to small businesses, both private and public. Additional information can be found at www.sec.gov or www.millcityventures3.com. About Mustang Litigation Funding Founded in 2018, Mustang Funding, LLC dba Mustang Litigation Funding looks for best in class capital solutions for the legal industry through funding law firms, plaintiffs, vendors and other opportunistic legal assets. More information can be found at www.mustangfunding.com
Announcements Commercial People Moves

Omni Bridgeway expands in France with new Paris operations, welcomes Leon Ioannou

Omni Bridgeway is pleased to announce the company's expansion and permanent operations in France, welcoming Leon Ioannou as Investment Manager and Senior Legal Counsel. Based in Paris, Leon will focus on supporting clients and lawyers with non-recourse financing and recovery solutions for legal disputes both in France and internationally. Leon brings extensive legal, financial, and international arbitration expertise across jurisdictions from his career in-house and with leading law firms, most recently as the general in-house legal counsel for the European operations of an international medical device company where he steered the resolution of the company's European disputes and litigation. Prior to that, Leon practiced as a lawyer resolving international disputes at White & Case LLP, Hughes Hubbard & Reed LLP, and Freshfields Bruckhaus Deringer. Leon's has advised clients in international arbitration (both common- and civil-law governed) across industry sectors including energy (nuclear, oil and gas), construction, utilities, telecommunications, pharmaceutical, banking and finance, and professional service industries. Leon has conducted proceedings under most of the world's major arbitral institutional rules as well as ad hoc proceedings under the United Nations Commission on International Trade Law (UNCITRAL) Rules.  In Paris, Leon will work closely with the full EMEA team including French trained lawyer, Nevena Ivanova, Investment Manager, Senior Legal Counsel who joined Omni Bridgeway in 2020. Prior to Omni Bridgeway, Nevena gained over a decade of experience in a French boutique law firm where she specialised in fraud, insolvency, asset recovery and international private law litigation. She has deep experience in the enforcement of EU and non-EU judgments and arbitral awards, and regarding the ex-parte authorisations and challenge of various asset attachments, including real estate. "Omni Bridgeway has been successfully funding and supporting clients with legal proceedings in France for more than 30 years, including litigation, arbitration, and judgment enforcement proceedings," notes Raymond van Hulst, Executive Director, MD and CIO for EMEA. "We are very pleased to deepen our commitment to our clients in France with Leon joining us in Paris. Leon's excellent track record is based on his deep international arbitration experience and business perspective, gained in leading law firm and corporate in-house roles across various jurisdictions. He is very well positioned to advise law firms, companies, and individuals in France and across borders regarding dispute funding, legal risk management and specialist recovery solutions." Leon Ioannou commented, "I am extremely happy to join Omni Bridgeway, the most respected legal finance provider in the industry with the most experienced team. As international disputes become more complex and require novel financing and legal solutions, we are well-equipped to help our clients manage risk, and provide both legal and financial support. This includes advising and supporting law firms and companies whether they are large established corporations, or small and emerging businesses who operate in our local market." 
Announcements Consumer People Moves

FinLegal invests in international growth

Leading claims automation solution FinLegal has appointed Connor Goggin, as a Senior Product Specialist, to work closely with US firms and litigation funders to replicate its success in the UK. Connor joins FinLegal with extensive experience in SaaS (Software as a Service) and legaltech sales.

Commenting on the news, CEO, Steve Shinn says: “Many US law firms and claims administrators struggle to obtain information from claimants in a timely fashion and spend unnecessary hours on offline administration and communication. They desperately need online solutions in mass torts, class action, and mass arbitration.”

He continues: “Our solution helps firms reduce the man hours and costs associated with these cases by automating the qualifying, information gathering, and correspondence with claimants and third parties. This leads to more engaged claimants and more fees for firms.

“I am delighted that Connor has joined us to solidify our presence in such an important jurisdiction.”

Commenting on his appointment Connor adds, “I am excited to be joining FinLegal at such a significant growth period for the business. Our platform solves the key challenges that class action and mass torts law firms face including claimant dropout and labour-intensive administration. I am looking forward to working with Steve and the team to establish FinLegal as the leading claims automation solution across the US.”

About FinLegal:

FinLegal is the legaltech provider for the business of disputes. We enable those in the disputes market to do more business by abandoning offline and dated methods and benefitting from automation and online connectivity.

Our claims automation solution removes the costly barriers of claims management - that it's people intensive and often uses dated systems. It streamlines and automates the majority of claims management, claimants self-serve and so legal teams only need to intervene when prompted.

Our funding and After the Event insurance marketplace provides access to funders across the globe and to a range of funding for disputes of different types and sizes, whilst also providing lawyers with visibility and control over their funding requests. Our claimant marketplace links claims management companies, marketing services providers and claim originators in volume claimant work and class actions so you can easily buy or sell claimants, leads or traffic at the touch of a button.

Commercial Deals

Funded Class Action Against UK Universities over Covid Policies May Include Law Schools

One significant driver of class action litigation over the last year has been the after-effects of Covid, and parties claiming damages for the impact of pandemic-related policies implemented by institutions and businesses. One such class action in the UK targeting higher education institutions looks to be gaining momentum, with law schools now potentially being targeted as well. Reporting by The Law Society Gazette provides an update on the ‘Student Group Claim’, which sees students demanding compensation from their universities for a failure to deliver in-person teaching and wider access to university resources as a result of the pandemic and staff labour actions. The claim which already represents 300,000 students also includes almost 3,000 law students, and is targeting 18 universities across the country. The claim has managed to garner broad student participation due to the involvement of an unnamed litigation funder and the presence of litigation insurance, meaning that there is no risk of legal fees for the students. The claim is being brought by solicitors from Asserson and Harcus Parker, who have suggested that if successful, each student could receive compensation of up to £5,000 and beyond.
Case Developments Commercial

Funder’s Strategy to be Reviewed After Two Losses

Whilst the large returns on investment for litigation funders are both lauded and criticized by commentators, there is never an absolute certainty that funders will see a positive return on each and every case. This uncertainty has been brought into the spotlight once more, after one funder’s parent company reported recent losses from two unsuccessful cases for its funder subsidiary. A new article from The Law Society Gazette covers the announcement by RGB Holdings, that its high profile litigation funding business, LionFish, has suffered two losses in recent cases that it had financed. The losses declared to the London Stock Exchange, sees LionFish incur a £4 million non-cash write-off for 2022, having failed to meet its expected £2.3 million in profits. However, the actual cash value of these losses only total £1.1 million. Nicola Foulston, RBG’s chief executive, stated that she was ‘disappointed’ with these results from LionFish and that the company would review the funder’s strategy with an eye towards reducing exposure to the £3.3 million in LionFish's outstanding litigation commitments. RBG stated that it would provide a further announcement in 2023. Editor's note--a previous version of this piece listed LionFish's commitments as being under review.  That is incorrect. It is the overall strategy under review. We regret the error.