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Commercial Deals

The State of Third-Party Funding in Mexico

With litigation funding being more widely recognized across the globe as a useful tool for both prospective plaintiffs and law firms, funders are keen to explore jurisdictions that are able to provide growth markets for new investments. Whilst the U.S. remains the premier market for litigation finance in North America, some industry figures are looking at what opportunities exist in Mexico. In an article for The Law Reviews, Paloma Castro, senior legal counsel at Deminor, provided an overview of the state of third-party litigation funding in Mexico covering everything from the regulatory framework to disclosure requirements. Castro highlights that while the use of third-party funding is generally permitted in Mexico, the country has traditionally been slow to adopt the practice due to the comparatively low costs of litigating, the limited lack of recoverability and the courts’ tendency to provide conservative award values. However, recent developments in the country’s legal system have seen it grow more in line with the U.S., by creating a framework for collective actions and through Mexico’s Supreme Court having established a precedent of awarding punitive damages. Castro points to the rise in alternative dispute resolution practices as another key factor fueling the growth of legal funding in Mexico, with the country having seen an uptick in third-party funding used for arbitration proceedings compared to domestic court litigation. Furthermore, Castro notes that Mexico has undergone a process of innovation and modernization in the legal system, partly fueled by the pandemic, which may improve ease of access to funding in the country moving forward.
Case Developments Commercial

Nanoco Announces ‘No Fault Settlement’ With Samsung in IP Lawsuit

As intellectual property and patent cases continue to dominate the headlines, the discussion around funding disclosure has been a common through-line in this area, especially in U.S. courts. However, an update in a major IP lawsuit demonstrates that this is not universal, as Nanoco’s case against Samsung appears to be approaching a resolution whilst the funder’s identity remains anonymous Reporting by The Business Desk details an announcement by Manchester-based materials developer, Nanoco Technologies, that it has agreed to a “term sheet for a no fault settlement” with Samsung. The dispute, which has been ongoing since February 2020, saw the UK company accuse Samsung of infringing upon multiple patents related to the nano materials it had developed for use in electronics, including OLED screens. The announcement by Nanoco revealed that as a result of the agreement, both parties had requested a stay on the trial which was meant to begin this week, with the details of the settlement agreement being finalised over the next 30 days. Whilst the identity of the litigation funder is not public, Nanoco first engaged in the funding agreement in July of 2020.
Commercial Deals

Duane Morris Report Highlights Record Year for Class Action Settlements

Class action lawsuits have continued to gain interest and investment from litigation funders, with LFJ reporting on two high profile actions in the first week of 2023 alone. This is no doubt driven by the record-setting volume of class actions brought last year, as new research reveals the billions of dollars in class action settlements delivered in 2022. A new article by Forbes examines this year’s Duane Morris Class Action Review, which provided a breakdown of the 635 class action decisions in the U.S. last year. The latest installment of the law firm’s annual review found that the combined value of all class action settlements topped $63 billion, with 15 of these actions reaching a settlement resolution with a value of $1 billion or more. Authored by Gerald Maatman Jr., chair of Duane Morris’ class action practice, the report identified product liability class actions and mass torts as being the most valuable area, with over $50 billion in settlements. However, the area that saw the most growth in the value of settlements was in consumer fraud class actions, which reached nearly $8.6 billion and represented an increase of 640% from 2021. The presence of litigation funders who are willing to fund these actions will continue to play a role in the sector’s growth, whilst also contributing to the rise in the value of settlements.
Commercial Deals

Funder Outlines Key Case Factors that Attract Litigation Funding

As the litigation finance industry enters another year of expected growth in activity and invested capital, the question remains as to what type of cases will attract the most third-party funding. In order to find an answer, one industry leader has used both historical data, and his experience in the legal funding sector, to identify what makes a lawsuit attractive to prospective funders. Writing in a blog post on LinkedIn, Bill Tilley, president and CEO of Amicus Capital Group, examines the important qualities that litigation finance companies look for. Looking at research conducted by Bloomberg Law and by Westfleet Advisors, Tilley notes that commercial litigation is the practice area that receives the most funding, and that patent litigation is continuing its rise in popularity, attracting significantly more commitments from funders in recent years. Turning to the individual case factors that are at the top of a funder’s checklist, Tilley highlights three key markers: a defendant with sound financials, a plaintiff with the will to engage in the challenging fight of the litigation process, and the potential of the case to attract additional plaintiffs or members of the class action.  He also points out that cases where the defendant has a track record of previous misconduct will always increase the proposition’s attractiveness.
Commercial Regulatory Issues

Funder Calls for Change in ABA’s Position Towards Third-Party Financing of Law Firms

The maturation of the litigation funding industry has not only provided a tool to widen access to justice, but has also begun to offer law firms the capital and resources needed to modernise and evolve, in order to better service their clients. However, one prominent funder argues that institutional forces’ long-standing objection to a closer relationship between funders and lawyers is hindering further innovation In an article on Lexology, Ken Epstein, investment manager and legal counsel at Omni Bridgeway, argues that the American Bar Association’s (ABA) unwillingness to reform its policy against non-lawyer ownership of law firms and fee sharing arrangements is a major roadblock. Epstein points out that whilst a number of states have relaxed rules on these practices in recent years, the ABA’s refusal to engage the possibility of changing its own policy is stifling progress towards a more equal justice system. In contrast, Mr Epstein highlights the New York City Bar Association and its Litigation Funding Working Group’s study into such reform, which recommended changes to existing rules in order to permit third-party financing of law firms without breaching ethical guidelines. Whilst Epstein acknowledges that it is not the ABA who writes state legislation, he argues that the organisation can play an important role in paving the way for wider reform.
Commercial Regulatory Issues

Judge Can Request Further Funding Disclosure in Patent Disputes, Says Federal Circuit Panel

The beginning of the new year appears to have continued where 2022 left off, as third-party funding disclosure in patent lawsuits remains a contentious issue in a number of cases. Just as LFJ has reported in the Nimitz lawsuit, the U.S. federal courts are willing to allow a judge’s probing of litigation funding arrangements in another two patent lawsuits. Reported by Bloomberg, a panel of three judges from the U.S. Court of Appeals for the Federal Circuit denied two separate patent owners’ requests to stop Judge Colm F. Connolly’s ongoing efforts to mandate further disclosure of their litigation funding sources. Creekview IP LLC and Waverly Licensing LLC had requested to have their cases dismissed, with the agreement of the defendants in each suit, but the panel ruled that Judge Connolly should be allowed to continue his probe. The Federal Circuit maintained that the Delaware judge was not acting outside the bounds of the court’s authority, and that dismissal of a case does not prohibit the court from “addressing collateral issues.” The panel’s order resembles a ruling in the Nimitz patent dispute, in which the court’s authority to request further disclosure of funding arrangements was similarly upheld.
Case Developments Commercial

Omni Bridgeway Funds Class Action Against Australian Insurer Over Data Breach

Litigation funding of class actions remains a powerful tool for holding large corporates to account, especially within industries such as Healthcare and Insurance, which can see customers outmatched by the financial and legal power of the companies involved. A new proposed class action in Australia looks to bring justice to customers of a major private health insurance provider. Omni Bridgeway recently announced that it is funding a class action against Medibank Private Limited, on behalf of customers affected by the company’s data breach around 12 October 2022. Medibank, which provides insurance policies under the ‘ahm’ brand, suffered the data breach in October of last year, and reportedly compromised millions of customers’ personal data including ‘passport numbers and health claim data’. Omni Bridgeway is inviting both current and former customers to register their interest in the class action, which will be led by the law firm Baker McKenzie.
Case Developments Commercial

LitFin Funds Class Action Against European Truck Manufacturers Over Antitrust Violations

The ongoing rise and potential continued growth in class actions in Europe was a common topic of discussion in 2022, and it appears that this year will continue that trend, as a prominent European funder is backing a significant action against some of Europe’s largest automobile manufacturers. LitFin, a European funding firm based in the Czech Republic, is funding a class action claim in Germany against manufacturers of heavy and medium-duty trucks, who were fined by the European Commission for breaching antitrust laws. LitFin is bringing this claim on behalf of companies who bought or leased this category of vehicles from Daimler, MAN, Volvo/Renault, DAF, Iveco and Scania; all of whom admitted their antitrust violations, with the exception of Scania. These manufacturers were all fined by the Commission for acting as a ‘cartel’, violating antitrust regulations by agreeing to prices on trucks sold in the European Economic Area (EEA) between 1997 and 2011. LitFin had already brought a claim against the cartel in the Netherlands, but due to the statute of limitations rendering these claims ‘time-barred’, the funder is also leading a claim in Germany to offer the manufacturers’’ clients another avenue for seeking compensation. The class action in Germany will be led by the Munich-based law firm, MMG Rechtsanwaltsegesellschaft.
Commercial Deals

Arbitration and Third-Party Funding in Asia

The use of third-party funding in international arbitration is on the rise, and as its use grows more commonplace, parties are increasingly keen to understand the nuances of accessing funding in jurisdictions that do not have the same established practices as countries like Australia, the UK or US.  In a new article for the China Business Law Journal, Yang Xueyu and Mariana Zhong, partners at Hui Zhong Law Firm, examine the different third-party funding practices and relevant legislative frameworks across Asia.  Singapore has one of the most-established legal structures for legal funding, having permitted the use of third-party funding in international arbitration since 2017, and then widened this permission structure to include domestic arbitration matters in the Singapore International Commercial Court. However, the authors highlight that third-party funding is only permissible where the funder meets the required criteria of having at least 5 million SGD in paid-up share capital or managed assets. Whilst Hong Kong does not allow the broader use of litigation funding, it does permit the use of third-party funding in both domestic and international arbitration proceedings, and in 2022, legalised “outcome-related fee structures” in order to offer parties a wider array of permissible fee arrangements. Importantly, Hong Kong has well-defined disclosure regulations, which require the existence of funding agreements to be disclosed, including the identity of the funder. Finally, while mainland China does not have established legislation around third-party funding, there have been no indications that it is prohibited, and contingency fee agreements are also recognised as valid. Xueyu and Zhong do highlight that some of China’s arbitration bodies, such as CIETAC and BAC, have set out guidelines for third-party funding regarding investment arbitration that more closely align with international standards.