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Commercial Regulatory Issues

High Court Ruling Suggests Funder Liability Is Broader Than Expected

The extent and scope of litigation funding liability is being questioned, after a High Court ruled the funder was liable for costs predating the litigation funding agreement (LFA).  In analysis for Lexology, Jodie Gittins and Chris Ross of RPC noted that this is a signal to funders to not assume their liability in unsuccessful claims will be measured against their portion of funding contributed, nor will it be limited by the start date of their funding agreement.  In the case of The ECU Group plc v HSBC Bank Plc & ors, the claimant had entered into an LFA with Therium in September 2019, to fund the action and partially cover costs that The ECU Group had accrued since November 2018. After the Commercial Court had dismissed all claims and ruled that ECU must pay the defendant’s costs, HSBC asked the court to order Therium to be jointly liable for all costs dating back to the start of proceedings. Mrs Justice Moulder ruled that Therium was indeed liable for these costs as they had (in part) covered these costs for ECU. As the courts have a breadth of options when deciding costs orders, funders should be mindful that in cases where they have the potential to reap a large reward if successful, they may face an equally significant loss when the outcome is reversed.
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Commercial

Omni Bridgeway Discusses Defense Investment Options

Jason Levine (Investment Manager and Legal Counsel at Omni Bridgeway) has a new feature exploring all the ways claimants can consider defense-side legal investment.  Levine outlines several examples of Omni's defense-side investments, including hybrid portfolio products and reverse contingency agreements.  Mr. Levine shares a wide variety of ways Omni can help finance worthwhile claims and provide options for splitting any settlement or award recoupment. Furthermore, Levine outlines the need for claimants and investors to determine what 'success' will mean for a claim, as settlements or awards can vary depending on a multitude of factors.  Click here to learn more.
Commercial Fundraising

New UK Funder Aims to Serve Regional Market

The UK litigation funding market has traditionally been very London-centric. However, a new funder aims to change this by providing services regionally targeted to the Midlands and the North. Thaxted Capital, owned by Jack Bradley-Seddon, is looking to fill this gap in the market by offering support for local cases of up to £1m. The new funder is backed by £25m from US private equity fund, Sandton Capital Partners, which will approve funding on a case-by-case basis. According to Legal Futures, Mr Bradley-Seddon wants to not only bring much-need services to these regions, but also take an approach that deals with clients in a direct manner. He stresses that their approach will focus on clear communication, and while he would not set a minimum case size, the average range is predicted to be around £500,000. Thaxted will also avoid charging clients based on a portion of damages, instead calculating charges based on capital deployed. Thaxted Capital will also be supported by Justina Stewart, a commercial barrister from Outer Temple Chambers, in an advisory capacity.
Commercial Legal Innovation

Litigation Finance in China? It’s Not Out of the Question

The growth in third party litigation funding has seen the practice evolve in new markets from Europe to Asia. However, we have yet to experience its adoption in every major market, and with ample funding resources available, there are still plenty of opportunities for the industry to grow. Of all these untapped regions, China stands out from the pack both for its size and scope. In a recent analysis by DLA Piper, Legal Director Jue Jun Lu makes the case for why Chinese entities should look to utilize third party funding, particularly when it comes to the realm of international arbitration. This analysis examines the benefits and opportunities for external finance in both single case and portfolio funding. In the former case, third party funding can be a useful tool in the arsenal of a company to manage cash flow, without negatively impacting financial reporting. Additionally, this approach reduces risk for the company dramatically, whilst also placing the claimant in a position of strength, demonstrating its ability to commit adequate capital to the litigation. With regards to portfolio funding, DLA Piper highlights the flexibility provided to any company involved in multiple disputes, allowing these entities to fund smaller cases that might not otherwise qualify for funding. Leveraging this new avenue of litigation finance would allow Chinese companies to engage with their multinational counterparts, who have already taken advantage of third party funding to bolster their Legal Services sectors.
Commercial Deals

Availability of Litigation Funding Drives Increase in European Class-Action Claims

The number of class action suits filed in Europe reached new heights in 2021, ending the year with 110 separate claims. The UK was the leading country for class actions, having experienced nearly three-times the previous year’s claims and representing 54% of all European suits. The Global Legal Post examines these findings from a recent CMS study, which highlighted the role of increasing access to litigation funding in the UK and across Europe. CMS litigation and arbitration partner, Kenny Henderson, focuses on the opportunities for funders to reap great reward as long as they are willing to conduct proper due diligence when examining claims. The article also explores the rise in the number of collective proceeding orders raised, with the vast majority of these being stand-alone claims–also a developing trend compared to previous years. Henderson highlights the absence of regulator action being a driving force in the increased activity by claimants and funders.
Commercial Fundraising

Soros Pumps £5MM in Litigation Finance Investment 

The Soros Economic Development Fund has issued a £5MM investment into Aristata Capital. This brings Aristata's total fundraise to well over £40MM. The firm has been established to protect social change projects and the environment. The announcement is being touted by those who praise idealistic investments into litigation finance. Aristata will provide a central location for claimants to seek funding, but also assistance in publicizing their cases.  The Soros Economic Development Fund says that the investment will hopefully provide greater access to the rule of law.
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Commercial Fundraising

CASL Banks $155MM Australian Investment 

CASL, the Australian-based litigation funder, has announced on the company’s LinkedIn profile that it has secured a $155MM AUD investment. According to its website, CASL reports an aggregated length of industry experience totaling 76 years, and a 92% case success rate. Of the nearly 200 claims the company has funded, CASL has realized close to $3 billion in settlements.   Find out more here. 
Commercial Regulatory Issues

New Insights: Litigation and Arbitration Treaties

Interesting insights into the modernization of rules and processes regarding litigation and international arbitration treaties have been published by Litigation Capital Management (LCM). Themes suggested include the growing demand for transparency in third party litigation and arbitration agreements.  LCM reports that the evolution of litigation investment hinges on squashing unnecessary confusion and conflicts throughout the litigation lifecycle. LCM suggests that in some jurisdictions, litigation finance is being debated as illegitimate due to transparency concerns. Hence, investors in legal franchise products and services should emphasize their embrace of transparency.  According to LCM, structural imbalances may preclude bad investments in international claims, meaning the sector has plenty of upside potential going forward.
Commercial Legal Innovation

Legal Dive Explores the Evolution of Legal Investment Economics 

Researchers around the world are providing examples of litigation finance becoming an increasingly important asset class. This, as investors are on the hunt for high return opportunities with compounding portfolio effects.  LegalDive.com has issued a report that investigates the nature of litigation finance in terms of being considered a serious legal asset class. With scrutiny never in short supply, Legal Dive suggests that litigation financiers are on the cusp of real innovative approaches to products and services to help support the rule of international law.  Click here to read more.
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