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Commercial Deals

Partnership between Sentry Funding and Verify 365 aims to Streamline Compliance Process

As the litigation funding industry continues to mature, the focus of industry leaders will naturally shift from providing the core service of capital provision, to finding ways to innovate and modernize the practice. A new partnership between the UK’s largest panel of litigation funders and a software company demonstrates this drive to optimize the customer experience. This week’s announcement of a partnership between Sentry Funding and Verify 365 looks to set the industry benchmark for anti-money laundering (AML) and client verification practices in the litigation funding industry. The partnership will allow Sentry to utilize Verify 365’s Digital Onboarding Platform, to optimize the process of onboarding new clients in terms of AML/KYC verification. Sentry Funding’s commercial director, Tom Webster, stated that the primary benefits for the company will be increasing both the speed and transparency of compliance checks when working with new law firms and clients. Rudi Kesic, CEO of Verify 365, highlighted that his firm’s platform will allow funders to reduce any fears or hesitation from clients that working with litigation funders could lead to potential issues around fraud or money laundering.
Commercial Legal Innovation

ME Litigation Funding Recognised as Tech Trailblazer

Litigation funders face similar challenges as big banks and traditional lenders, needing to both fulfill their core financial role to customers while also competing within the rapidly evolving marketplace driven by technology. Therefore, it is no surprise that funders who are able to demonstrate the agility of a fintech are being recognized for their digital capabilities. Featured in an article by WIRED, Manchester-based ME Litigation Funding has been highlighted as a ‘Tech Trailblazer’ in the Northwest of England. The collaboration between WIRED Consulting and HSBC UK has sought to identify companies across the UK who are standouts in their respective industries, for their innovation and fast-growth. ME Litigation Funding was recognized by the initiative for its underwriting platform, which automates the entire process of underwriting claims and seeks to maximize the speed and efficiency of the process for clients. Rob Cooper, CEO of ME Litigation Funding, highlighted the importance of talent attraction and retention for a fintech company that relies on having skilled employees with technical expertise.
Announcements Commercial Legal Innovation

GLS Capital Recognized in 2022 Global IP Strategist List

GLS Capital, one of the world's largest private investment firms focused on litigation finance, is honored to have (3) IP Strategists named to IAM's Global IP Leaders List in 2022, including Adam Gill, Jamison Lynch and Joel Merkin all receiving recognition. Intellectual Asset Management ("IAM") is the trusted source of worldwide news, analysis and data regarding intellectual property. IAM publishes its annual IAM Strategy 300, which showcases the top experts throughout the global IP industry, acknowledging leaders from in-house, private practice and service provider roles. The rankings are based on qualitative analysis from leading market experts, across the major IP markets in North America, Europe and Asia. Upon the recognition, Adam Gill, Managing Director of GLS Capital, shared the following statement: "On behalf of GLS Capital, I, along with my colleagues Jamie Lynch and Joel Merkin, are thrilled to be named to IAM's Strategy 300 List for 2022. We value this recognition as GLS was built on helping patent owners protect their IP and supporting partnerships with transparency, integrity, and responsiveness. We're humbled that IAM has included GLS every year since our inception." GLS Capital provides litigants and law firms with capital they need to pursue their cases or to manage risk; this approach enables clients to focus on what is important: growing their business, cultivating relationships, and keeping the lights on.  For more information about GLS Capital, please visit the corporate website, or call 312-900-0169; to learn more about IAM and their 2022 Strategy 300 Global Leaders Guide, click here.  
Commercial Deals

Manolete Partners Targets UK Companies who Misappropriated Covid Loans

Governments across the world responded to the Covid pandemic with varying levels of economic support for domestic businesses, with the UK government providing loans to companies to improve their financial recovery. However, one UK funder is now funding claims against business owners accused of misusing these loans. Detailed by reporting in The Law Society Gazette, Manolete Partners is already working with Barclays Bank on a pilot programme to recoup the funds that were misappropriated during the Bounce Back Loan Scheme (BBLS). Manolete is pursuing 102 cases as part of this initial partnership with Barclays, through which the funder will take a fixed return on any recoveries made by the bank. Manolete’s CEO, Steven Cooklin, has stated that the funder is looking to work with other banks and lenders who also have claims against loan recipients. He also implied that these efforts may not be limited to the BBLS, with Manolete seeing promising opportunities to fund other recovery claims against those who abused any of the government’s financial support programmes during the pandemic.
Commercial Legal Innovation

Bloomberg Research Indicates Litigation Finance Industry Set to Grow in 2023

Despite global economic instability, litigation finance has been touted by industry leaders as a resilient industry that remains insulated from market fluctuations, and stands out as a lucrative alternative investment. New research from Bloomberg indicates that the industry is still in a period of growth with further room to expand, but in doing so, will have to tackle ongoing concerns around disclosure and transparency. A new article by Bloomberg Law analyzes the results of its 2022 Litigation Finance Survey, which found that while a minority (10%) of lawyers have used or considered litigation finance, a third of these legal professionals indicated they are more likely to utilize third-party funding than they were in 2021. The survey’s results also indicated future growth on the horizon, with three-quarters of respondents who had previously accessed outside funding saying they would likely do so again. Funders remain confident that in spite of ongoing economic turbulence, three-quarters of the funders surveyed expected their deal volume to rise even if there was a further economic downturn in 2023. This expected appetite for litigation funding during a potential recession was also reflected in the fact that a third of funders believed they would raise additional capital if the economic situation continues to deteriorate. However, Bloomberg identified increasing calls for disclosure as a key issue in the litigation funding industry. According to the survey, industry participants are divided on the necessity of mandatory disclosure for funding agreements, with 50% of lawyers agreeing that this should be mandated, whilst over 75% of funders opposed such a requirement. Despite this opposition, the survey found that funders are coming to terms with this reality, as the number of firms who said they have never disclosed a funding agreement dropped from 30% to 10% in the last year.
Case Developments Commercial

Nigeria Loses Funded Claim Against Shell and Eni

While the majority of lawsuits between corporates and national governments tend to see litigation funders working with the corporate party, there are examples of states seeking third-party funding to finance their own claims. However, gaining the backing of a funder is no guarantee of success, as was recently the case with a claim by the Nigerian government failing to secure damages. Outlined in an article by Energy Voice, an Italian appeals court in Milan denied the Nigerian government’s request for over $1 billion in damages against Shell and Eni. The dispute with these energy companies concerned the OPL 245 scandal, in which the two companies were accused of bribing senior government officials to secure drilling rights to the OPL 245 block of water. The Nigerian government’s case was funded by US litigation funder, Drumcliffe Partners, who according to reporting, could have received in excess of $350 million return on its investment. Nigerian officials have said that they will appeal the ruling to Italy’s administrative court, whilst Eni is engaged in arbitration at the International Centre for Settlement of Investment Disputes (ICSID) to secure rights to the OPL 245 area.
Commercial Regulatory Issues

New Zealand Funders Call for Changes to Method of Awarding Costs

The primary benefit of litigation funding for plaintiffs is the ability to seek justice where they lack the capital to cover the costs involved in the process. However, the current system of awarding costs in New Zealand has come under criticism from a leading funder, who argues that the current method of costs being awarded on a scaled basis incentivizes delaying tactics from defendants and fails to deliver adequate restitution to successful litigants. In a press release, LPF Group argued that unlike the UK and Australia where costs are awarded on an indemnity basis, New Zealand’s current model negatively impacts both plaintiffs and the overall court system, which is being bogged down by defendants looking to draw out the process for as long as possible. If full recovery of costs was adopted, LPF said, then defendants would be discouraged from utilizing delay tactics and plaintiffs would receive proper compensation when their cases are successful. LPF’s CEO, Phil Newland, stated that this would not be a one-sided solution, as it would also benefit defendants who are cleared of wrongdoing in court and would represent another disincentive for parties who would bring frivolous or baseless lawsuits. While the courts should still retain the authority to award lesser costs, Newland argued that everyone in the legal industry, including insurers, should support this change that would continue the process of widening access to justice.
Commercial Deals

US Funder Makes the Argument for Financing Law Firms  

With recent developments in a small number of states in the US, namely in Arizona and Utah, the possibility for non-legal entities to own or found law firms is becoming a more tangible possibility for those with the capital to do so. When paired with the explosive growth of litigation funding, one leading US funder suggests that the industry should look for investment opportunities that go beyond cases, and instead fund law firms themselves. Writing in the New York Law Journal, Joshua Libling, director of risk analytics at Validity Finance, argues that ‘financing the business of law itself’ is the next step in the natural evolution of third-party funding. Just like traditional litigation funding, this type of investment would seek returns from fees earned pursuing successful litigation cases, but in this scenario, the collateral could include contingency and hourly fees. Libling argues that whilst case-led litigation financing is a great method for supporting plaintiffs and seeking returns, by supporting law firms with broader investment, funders can enable growing firms to improve and innovate on a larger scale. Whilst the risks are more varied in this scenario, Libling notes that this kind of action is not an equity investment, but a broader partnership between a funder and the law firm. In alignment with the wider goal of widening access to justice for individuals and entities who lack the necessary capital, Libling points out that this kind of funding would do the same for lawyers who might otherwise struggle to access the necessary levels of investment to launch their practice.
Commercial Deals

Woodsford Discusses Approach to IP Litigation Funding

There has been much commentary in recent months on the role of litigation finance for intellectual property disputes, as it continues to represent a large share of all third-party funding commitments. In a new podcast, Woodsford shared its perspective on this area of funding, breaking down why litigation funding is so sought after in this industry, and what types of cases funders will pursue. In the latest episode of the On Intellectual Property podcast, Jeff Harty interviewed Robin Davis, chief investment officer, and Bob Koneck, director of litigation finance at Woodsford. Davis explained that the ‘basic but unfortunate truth’ is that IP litigation is extremely expensive because of the need for expert witnesses, technical analysis and even the fees for IP specialist lawyers, due to their own technical expertise and training. As a result, litigation funding has emerged as a unique solution to solve the capital needs of potential plaintiffs. Discussing how Woodford evaluates and selects IP cases, Davis highlighted that the main criteria for the funder is that the expected damages from a successful outcome must have a 10:1 ratio over the commitment required. She noted that when looking at the whole array of actions, patent and trade secrets litigation tend to meet this bar more often than trademark disputes, and that cases with multiple patent infringements are often the best opportunities. Responding to the oft-stated criticism that litigation funding encourages patent troll litigation, Davis argued that Woodsford’s ESG and access to justice priorities align with inventors and small companies who have been infringed by large corporates. However, the funder also works with larger private and public companies who have had their IP infringed, as third-party funding can alleviate cost pressures for legal departments at these businesses.