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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.
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.