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Commercial Deals

Law Firms Face Price Pressure from Clients Looking to Lower Legal Costs

Faced with global economic uncertainty, litigation funding has been classified as an investment market insulated from broader recessionary pressures. However, law firms are not seeing the same level of protection, and are facing increased competition from competitors who can offer lower prices to meet their clients’ restricted budgets. Reporting by Legal Futures highlights the results of a survey conducted by Harbour Litigation Funding, which found that 44% of law firm partners are negotiating with clients who are seeking lower legal fees, leading to 46% of those surveyed reporting clients moving business to firms with less expensive rates. This was further compounded by respondents highlighting the fact that their clients were increasingly depending on their in-house legal counsel to handle matters. Harbour’s Chief Investment Officer, Ellora MacPherson, stated that she expects these compounding factors to lead to an increased strain on law firms’ own balance sheets. MacPherson suggests that outside of lowering their prices, law firms will need to innovate through technology to reduce internal costs, whilst seeking more creative, low-cost methods of supporting clients.
Announcements Case Developments Commercial

Legal claim launched against Great Northern, Southern and Thameslink after millions double-pay for fares in London

A hearing has been set by the Competition Appeal Tribunal (“CAT”) to take place on the first available date after 20 February 2023 (the “CPO Hearing”).

The CPO Hearing is in respect of a claim launched on 24 November 2021 by Justin Gutmann, formerly of Citizens Advice, on behalf of millions of passengers who have allegedly paid twice for part of their journeys whilst travelling with Govia Thameslink Railway (“GTR”), (the “Proposed Claim”).

The Proposed Claim is against GTR (and its parent companies) which operates the following franchises:

i.                     Thameslink

ii.                   Southern

iii.                 Great Northern

Following a case management conference which took place on 15 November 2022, the CAT has confirmed a further hearing should take place so that the CAT can consider the following:

i.                     if Mr Gutmann (the person proposing to be the class representative) is suitable to act on behalf of the proposed class and should be certified to bring the claim; and

ii.                   if the Proposed Claim itself is suitable to be brought as a collective action and whether it should proceed to a full trial.

The CPO Hearing is to take place on the first available date after 20 February 2023.

Background to the Proposed Claim

Mr Gutmann alleges that GTR, as the operator of the Great Northern, Southern and Thameslink franchises has breached competition laws by charging TfL Travelcard holders too much for travel  on their routes.

Travelcard holders have already paid for their travel within the relevant TfL zones, so a Travelcard holder would only need to purchase a (cheaper) ‘boundary’ fare or ‘extension’ fare for the remainder of their route, to get to their destination. Mr Gutmann alleges that GTR does not make boundary fares sufficiently available for purchase. The claim is estimated to be worth around £73.3 million in damages.

Who is eligible?

Passengers who owned a Travelcard at any time from 24 November 2015 and also purchased a rail fare from a station within the zones of their Travelcard to a destination outside of those zones may be eligible for compensation.

What next?

The CAT will now determine whether or not Mr Gutmann’s claim is allowed to proceed to trial. If the claim is permitted to go forward, then those affected will not have to pay any legal fees, nor contact lawyers. 

Affected passengers who live in the UK will automatically be included in the claim, although they can choose to opt-out in due course.

Affected passengers who do not live in the UK will also be eligible to join the claim but must proactively opt-in.

As the case progresses, we will provide more detail as to what rail users will be required to do to either opt-in or opt-out. 

Further information 

The claim’s website and social media channels are available from the day of launch at BoundaryFares.com,  where affected passengers can sign up to receive further information regarding the legal proceedings. Justin Gutmann is also available for interview.

Commercial Legal Innovation

Litigation at the Forefront of Future Climate Activism

As we have already seen so far this year, litigation funders are keen to target capital towards ESG cases, and have even gone so far as to fund individual law firms to pursue such litigation, as was the case with North Wall Capital’s financing of PGMBM. On the back of the COP 27 summit, some industry commentators are looking to the future of such litigation, focused on holding entities that disregard their climate impact to account. In an article for Sentry Funding, Rachel Rothwell provides an overview of the current state of litigation targeting environmental issues, as well as looking ahead to how this space will evolve. Citing a study by Columbia Law School, Rothwell highlights that there are over 2,000 cases involving issues related to climate change. Furthermore, the article notes that this type of litigation has progressed from being primarily focused on misdeeds by nation states to now include corporations. Rothwell also uses the examples of cases brought against companies like Vedanta Resources and Royal Dutch Shell to demonstrate the successful impact climate activists have had in courts. The article suggests that ‘shareholder activism’ is likely to be at the forefront of future climate-related litigation, and will expand to include a broader range of companies that have less immediate impact on the environment.
Case Developments Commercial

Brown Rudnick Announces 2023 Litigation Funding Conference

As the European funding market continues to grow, the demand for industry gatherings and exchanges of ideas between thought leaders is also on the rise, giving way to another industry conference in the coming year. Building on the success of its 2022 event, Brown Rudnick announced its European Litigation Funding Conference 2023, set to be held in London on Thursday 16 March 2023. The one-day conference will feature the firm’s own partners alongside industry leaders from other leading UK and European funders, insurers and service providers. Brown Rudnick’s inaugural conference held in May of this year included speakers from Bench Walk Advisors, Therium, Burford and Deminor. Whilst the agenda for the 2023 event has not yet been released, the 2022 conference saw discussion topics ranging from ‘the rise of class actions’, to the interplay of ‘litigation funding and ESG’.
Commercial

Nimitz Appeals Litigation Funding Disclosure Order in Patent Dispute

In the evolving back-and-forth between disclosure and non-disclosure of third-party funding, it continues to be demonstrated that individual court decisions are the driving force for momentum in either direction. An ongoing patent dispute case in Delaware has reinforced this narrative, as the plaintiff seeks to appeal a court ordered disclosure of any litigation funding arrangements. Reporting by Reuters reveals that Nimitz Technologies has appealed Judge Colm Connolly’s order to reveal the specifics of its relationship with Maxevar, arguing that such information is irrelevant to its lawsuits and should remain confidential. Nimitz maintained its position that Maxevar has acted only as a consultant for the litigation and that it has not received any funding from Maxevar that would fall under Judge Connolly’s standing order to disclose such arrangements. In response to the appeal, the U.S. Court of Appeals has issued a temporary pause on the order, which will also provide the opportunity for the defendants to respond. This case also bears similarity to another of Judge Connolly’s proceedings, VLSI Technology’s patent dispute with Intel Corp, where he ordered a pause to that litigation after stating that VLSI did not sufficiently disclose details around its financial backing. Whilst the outcome of both these disclosure orders is not yet apparent, it is clear that courts will continue to engage in close scrutiny of third-party funding arrangements.
Case Developments Commercial

Alan Dershowitz Ordered to Disclose Identity of Funders in CNN Lawsuit

One of the biggest topics of discussion around litigation funding at present is the issue of transparency, and the extent to which the presence of third-party funding in cases should be disclosed. Whilst this discussion is nothing new within the industry, an ongoing high-profile case has pushed the issue into the spotlight of mainstream commentary. Analysis by the Freedom of the Press Foundation, highlights the ongoing matter of a defamation lawsuit being brought against CNN by the famous lawyer and professor, Alan Dershowitz. The defendant's request that the identity of Mr Dershowitz’s funders be disclosed has now been granted by a federal district court judge.  Magistrate Judge Patrick M. Hunt explained his decision by noting that it is relevant for the court to know whether the plaintiff’s funders are seeking to advance their own agenda, rather than simply supporting Mr Dershowitz’s attempt to seek damages. Mr Dershowitz had previously revealed the existence of third-party funding, the “Alan Dershowitz Legal Defense Fund”, but did not identify which individuals or groups actually contributed to this fund.  Whilst this case differs from the majority of commercially funded litigation, both in its participants and the nature of the case, it does stand out as another data point in the trend of courts growing increasingly active in mandating disclosure of the presence of third-party funders.
Commercial Regulatory Issues

Chamber of Commerce Poll Finds Majority of US Voters Support Disclosure of Litigation Funding

With the issue of disclosure at the forefront of industry commentary, those who seek to limit the influence of third-party funding are ramping up pressure to have legislation enacted which would mandate disclosure of funding agreements. Following on from a recent study, which argued that third-party funding posed a risk to America’s national security, the Chamber of Commerce recently conducted public opinion research to take the pulse of voters on the issue. The Chamber’s Institute for Legal Reform released the results of a poll conducted on the day of the midterm elections, asking 800 voters whether they supported the idea of mandatory disclosure for third-party funding agreements. The poll found that a majority of voters, 69%, supported such a proposal, with broad support from voters across the political spectrum. The poll also reported that an even greater majority of voters, 82%, opposed the idea of allowing foreign governments to invest in litigation targeting American companies. Whilst the Chamber’s position on litigation funding is well-established, industry leaders will need to bear in mind that a wide swathe of voters are in favour of greater disclosure, especially when framed as an issue of foreign interference in domestic legal proceedings involving American businesses.
Consumer

Guilty Plea in New York Slip and Fall Fraud

New York attorney Marc Elefant has reversed his previous non-guilty plea, now pleading guilty to one count of conspiracy to commit wire fraud in the organization of a lucrative slip and fall scheme. Elefant is accused of coordinating the trip and fall scam with fellow attorney, George Constantine, and physicians Andrew Dowd and Sandy Riberio, between 2013 and 2018. According to Reuters, Elefant worked with co-conspirators to recruit victims to stage slip and fall accidents. The victims would undergo unnecessary surgeries that would be paid for by litigation funders. As part of the conspiracy, litigation investor Adrian Alexander was also charged with a role in the slip and fall fraud run by Elefant.  Prosecutors claim that the trip and fall scheme was organized to fake personal injuries. Allegedly, surgeries were required if victims wanted to proceed with a slip and fall claim to maximize the fraud's potential returns. According to Reuters, individuals saw little-to-no recovery from their claims with most of the monies distributed between the co-conspirators. 
Commercial Fundraising

Omni Bridgeway Explores Ukraine ‘War-Time’ Compensation Fund 

Many have predicted Russia's inevitable economic fallout stemming from its war in Ukraine. Omni Bridgeway has announced the formulation of a task force dedicated to monitoring the war in Ukraine with a mandate to explore various ways of retrieving compensation from damages and other losses caused by Russia's invasion.   On LinkedIn, Mr. Mikolaj (Miko) Burzec says that Omni Bridgeway is working with various stakeholders to carve out ways forward for the Ukraine Compensation Fund. Omni Bridgeway is looking to work with individuals or organizations who are victims of direct economic losses from Russia's war with Ukraine. The firm will consider claims over 1 million euro for actions taken by Russia from 27 February 2014 to present.  Furthermore, Omni Bridgeway says that the Ukraine Compensation Fund will operate on a contingency "no success, no fee" basis. All upfront legal fees and other costs will be covered by Omni Bridgeway, with success agreements arranged with clients beforehand.  To learn more, email: ukraine@omnibridgeway.com.