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Case Developments Commercial

Woodsford Funds $1 Billion Class Action Against Toyota Australia

The Volkswagen emissions scandal of 2015 stands out as one of the largest automobile industry scandals in history, and one of the most notable examples of a corporation facing repercussions for violating environmental standards. In what may be a successor to that, Toyota is facing a major class action suit in Australia, alleging that it produced hundreds of thousands of vehicles with so-called diesel defeat devices (DDD). An article by Sky News Australia illustrates the scale of this class-action, which alleges that up to 500,000 vehicles may have been affected, with the prospect of a settlement that could exceed $1 billion. Maddens Lawyers Australia, which is bringing the action against Toyota, argue that Toyota’s conduct was both ‘misleading and deceptive’ and violated Australian Consumer Law. Brendan Pendergast, special counsel at Maddens Lawyers, argues that if the allegation is proven, then this would represent one of the largest class action successes in Australian history. The class action is being funded by Woodsford, as part of an ongoing push by the funder to back cases targeting ESG violations and open avenues for consumers who otherwise would lack the capital to seek legal redress. Charlie Morris, chief investment officer at Woodsford, states that this action is about offering justice to consumers who were deceived, as well as holding corporations to account where they deliberately act in a way that harms the environment. In a statement, Toyota Australia denied any wrongdoing and stated that all of its processes meet emissions standards, and that they will strongly defend against this class action.
Commercial Deals

New Law Firm Brings Together Transatlantic Expertise to Target Group Litigation

As Litigation Finance Journal heard at IMN’s conference this week, group litigation continues to be a growing market and one of particular interest to litigation funders in the UK and around the world. Therefore, it is perhaps no surprise that a new law firm has launched in the UK, specifically targeting this area of litigation. As reported in The Law Society Gazette, the launch of Lanier, Longstaff, Hedar & Roberts LLP represents a transatlantic partnership between two English barristers and a US trial lawyer. Mark Lanier, founder of The Lanier Law Firm, along with its chief operating officer, Kevin Roberts, represent the American side of this partnership. While both the UK founding partners, Tom Longstaff and Ducan Hedar, hail from Manchester-based Exchange Chambers and have both previously worked as solicitors at Linklaters. Mr Lanier stated that he views the UK as an ‘emerging market’ for the same kind of group litigation that has flourished in the US, whilst Mr Longstaff agreed that there is a great opportunity for UK litigators to learn lessons from legal actions in the US that seek to represent groups of consumers seeking justice. Now that the firm has been granted its license by the Solicitors Regulation Authority, it expects to announce its first case in November, and will continue to recruit staff for its office in Manchester.
Announcements Case Developments Commercial

Hausfeld & Co LLP: Amazon faces £900m demand to compensate tens of millions of UK customers, as Lawsuit accuses E-Commerce giant of unlawfully favouring its own product offers

A ground-breaking new legal claim (“UK Buy Box Claim”) alleges that Amazon has breached competition law and caused millions of UK customers to pay higher prices for products sold on Amazon.co.uk and the Amazon mobile app by obscuring better-value deals.

The opt-out collective action, to be filed in the Competition Appeal Tribunal in London, will allege that the Big Tech company abuses its status as the dominant online marketplace and harms customers by channelling them towards its “featured offer”.

This featured offer – prominently located in the “Buy Box” on Amazon’s website and mobile app – is the only offer considered and selected by the vast majority of users, many of whom trust Amazon and wrongly assume it is the best deal.

However, Amazon uses a secretive and self-favouring algorithm to ensure that the Buy Box nearly always features goods sold directly by Amazon itself, or by third-party retailers who pay hefty storage and delivery fees to Amazon, it will be alleged.

The Buy Box is designed and presented in a way that effectively prevents millions of consumers from navigating the site to find cheaper offers, or better delivery options, for the same product, according to the claim.

Such manipulation of consumers is a breach of Amazon’s obligation as the dominant marketplace not to distort competition. The claim will seek damages from Amazon estimated in the region of £900 million.

Julie Hunter, a longstanding advocate of consumer rights, is seeking to represent the interests of tens of millions of Amazon users in the collective action, which is due to be filed before the end of October.

Who is eligible

Anyone who lives in the UK and made purchases on Amazon.co.uk or on the Amazon app since October 2016 is an eligible member of the claimant class. In accordance with Competition Appeal Tribunal rules, the collective action is being filed on behalf of all potential claimants without them needing to actively opt in to the claim.

The case against Amazon

The e-commerce giant is accused of unlawfully abusing its dominant position. According to the claim, Amazon steers potential purchasers to products which are not designed to be the best offers for consumers. Rather, the so-called Buy Box offers are systematically biased to favour goods sold by Amazon itself as part of its retail business; and/or by third party sellers who pay to use Amazon’s order fulfilment and delivery services (which are a key source of revenue for Amazon).

Other sellers, who do not pay for Amazon’s fulfilment services, are nearly always excluded from the Buy Box, stifling their ability to offer consumers a better deal, and leaving consumers out of pocket. It will be alleged that Amazon uses the Buy Box feature to manipulate consumer decision-making - directing customers to the product featured prominently in the Buy Box, and thereby obscuring the full range of options available to them, which may be cheaper and/or offer greater value.

The claim will accuse Amazon of breaching section 18 of the UK Competition Act 1998 and Article 102 of the Treaty on the Functioning of the European Union. It coincides with increased concern amongst the public and policymakers about Amazon’s dominant position as both a marketplace and a market participant (see Investigations and regulatory decisions, below).  

About the class representative

Julie Hunter has worked exclusively in consumer research, advocacy and protection for more than 20 years. She is an independent consultant who has worked with leading consumer organisations in the UK and abroad on topics such as consumer vulnerability, digital services, financial services, consumer rights, customer service and complaints.

Ms Hunter is Chair of the Consumer & Public Interest Network, an independent organisation representing consumers in the development of voluntary standards, supported by the UK standards body BSI. Ms Hunter is also a member of the Financial Services Consumer Panel (FSCP), an independent statutory body representing consumer interests in the development of UK policy for the regulation of financial services. Earlier in her career, Ms Hunter spent six years leading research projects and investigations at Which?.

Investigations and regulatory decisions

The European Commission is pursuing two formal antitrust investigations into Amazon.  One of these, initiated in November 2020, is evaluating the same alleged “self-preferencing” by Amazon as is alleged in the UK claim.  The Commission’s preliminary finding was that the rules and criteria for the Buy Box unduly favour Amazon's own retail business, as well as marketplace sellers that use Amazon's logistics and delivery services. The Commission is currently evaluating commitments offered by Amazon to address these concerns.

In July 2022, the Competition and Markets Authority ("CMA”) announced that it was investigating Amazon’s business practices, including how it sets the criteria for selection of the featured offer.  The CMA indicated that its investigation followed on from that conducted by the European Commission.

An investigation by Italy’s competition regulator concluded in December 2021 that Amazon had abused its dominant position by making certain benefits to third-party retailers conditional on their purchasing of its logistics service.

In the United States, the House Judiciary Subcommittee on Antitrust concluded that Amazon’s online retail dominance gives it monopoly power over third-party sellers on its US marketplace and that it effectively precludes retailers who have not purchased its logistics services from “winning the Buy Box”.

Statements

Julie Hunter, the proposed class representative in the action, said: “Nine out of ten shoppers in the UK have used Amazon, according to surveys, and two thirds use it at least once a month.  Like countless millions of people in the UK, I often use Amazon for the convenience it offers.

“Many consumers believe that Amazon offers good choice and value, but instead it uses tricks of design to manipulate consumer choice and direct customers towards the featured offer in its Buy Box. Far from being a recommendation based on price or quality, the Buy Box favours products sold by Amazon itself, or by retailers who pay Amazon for handling their logistics. Other sellers, however good their offers might be, are effectively shut out – relegated down-page, or hidden several clicks away in an obscure corner of Amazon’s website.

“Online shoppers have a right to be treated fairly and to be able to make informed decisions. This lack of transparency and manipulation of choice is an abuse of consumers’ trust, as well as a raid on their wallets.  Amazon occupies an incredibly powerful position in the market, making it impossible for consumers to take individual action. Amazon shouldn’t be allowed to set the rules in its favour and treat consumers unfairly. That is why I am bringing this action.”

Lesley Hannah, one of the partners at Hausfeld & Co LLP leading the litigation, said:

“Most consumers use the Buy Box when purchasing products on Amazon – estimates range from 82% to 90%. This means that millions of consumers have paid too much and been denied choice. This action seeks fair redress for them.

“Amazon takes advantage of consumers’ well-known tendency to focus on prominently-placed and eye-catching displays, such as the Buy Box. Amazon doesn’t present consumers with a fair range of choices – on the contrary, the design of the Buy Box makes it difficult for consumers to locate and purchase better or cheaper options. Amazon should not be allowed to take advantage of its customers in this anticompetitive way.” 

“Competition laws are there to protect everyone. They ensure that individuals can make genuine and informed choices, and are not simply led into making selections which benefit the companies they interact with. Fairness is at the heart of competition law and consumers are not being treated fairly by Amazon.”

Further information

Affected Amazon users, on whose behalf the class action is brought, will not pay costs or fees to participate in this legal action, which is being funded by LCM Finance, a global litigation funder.

Ms Hunter is represented by Anna Morfey, Lesley Hannah and Aqeel Kadri of Hausfeld & Co LLP, and by Marie Demetriou KC, Robert O’Donoghue KC and Sarah Love of Brick Court Chambers.

To learn more about Ms Hunter’s claim, please visit www.ukbuyboxclaim.com.

About Hausfeld & Co LLP

Hausfeld is a leading disputes-only law firm specialising in competition law, with significant expertise in all aspects of collective redress and group claims, including abuse of dominance litigation against Big Tech and other large corporates.

The firm pioneered the Trucks Cartel litigation in the UK, Germany and the Netherlands. It has acted on some of the most complex damages claims of the last decade: on the “Interchange Fee” litigation against Visa and Mastercard, in “Google Shopping” claims on behalf of price comparison websites against Google; against six financial institutions over their participation in unlawful price-fixing of the foreign exchange currency markets; and against Google, Apple and Qualcomm in relation to their alleged abuse of dominance concerning Google Play Store, Apple App Store and the smartphone chip market respectively.

Commercial Special Features

Recap of IMN’s Inaugural International Litigation Finance Forum

IMN’s inaugural International Litigation Finance Forum brought together a crowd of international thought-leaders from across the industry, showcasing perspectives from funders, lawyers, insurers and more across a packed day of content.

Following IMN’s successful New York conference, the London event demonstrated the growing reach and maturity of litigation funding, as topics covered everything from recent industry developments to the nuances of international arbitration and dispute resolution. At the core of the day’s discussion, the central themes of regulation, ESG and insurance were present throughout each session, with unique insights being shared by panelists.

The day began with a panel focused on the current state of litigation funding in Europe, where the topic of regulation took center-stage. Whilst most speakers agreed that the proposed reforms in the recently approved Voss Report were a step in the wrong direction for the industry, Deminor’s Erik Bomans offered a contrarian take on regulation, and highlighted that the very existence of this debate around regulation is a positive sign of the industry being taken seriously.

During the second panel on jurisdictional differences in Europe, this view was echoed by Clémence Lemétais of UGGC Avocats, who stated that it was promising that the EU parliament is raising the visibility of the industry, but that the draft resolution ‘shows a lack of knowledge’ about the industry itself. This was further reinforced in terms of individual country requirements by Koen Rutten of Finch Dispute Resolution, who argued that regulation has to be based on facts, and has to address a problem, which he does not see in the Nethlerlands.

A fireside chat with Rocco Pirozzolo of Harbour Underwriting gave the audience a detailed overview of the impact and evolving nature of ATE insurance on litigation funding. During this interview, Mr Pirozzolo highlighted the difference in approaches between insurers and funders when assessing cases, but further highlighted the need for collaboration between the two to deliver wider access to justice.

Two panels completed a busy morning of discussion, with the first providing insight into the evolving nature of funders’ approach to capitalization, and the second analyzing the best practice for those seeking funding. LCM’s Patrick Moloney honed in on the evolution of the industry having come from a place of being perceived as ‘the dark arts and then loan sharks’ to now being in a position where funders like LCM garner investment from public listing. Later, Ben Moss of Orchard Group, offered a detailed overview of how requests for funding should be best structured and highlighted the ‘holy trinity’ of ‘merits, budget and quantum’.

The afternoon saw a broadening of the range of discussions, kicking off with Tom Goodhead of Pogust Goodhead providing an insightful presentation on group litigation in the UK and the need for future reforms to enable growth. Another two panels brought a wealth of insights, with the topics of co-investing, diversification and the secondary market in the first, being followed by a wide-ranging discussion of the different types and applications of litigation insurance.

After a breakout meeting explored the best practices in talent development and growth for women in litigation finance, a trio of panels capped off the day’s agenda. In a wide-ranging discussion of innovative deal terms and structures, panelists from the likes of Brown Rudnick, Litigation Funding Advisers and Stifel, provided insight into everything from the effect of insurance on pricing to the increasingly technical and data-drive process of due-diligence.

Taking a more global approach for the penultimate panel, Alaco’s Nikos Asimakopoulos, skillfully guided the audience through a global look at enforcements and international arbitration. The panel of legal experts discussed an extensive range of topics, with Tatiana Sainati of Wiley Rein, spotlighting ESG as a primary driver in the increase in transnational disputes and particularly in the EU where ESG initiatives have taken hold.

In the final panel of the day, the topic focused in on the use of litigation funding by corporates and institutional investors. In an illuminating exchange, Woodsford’s Steven Friel played down claims by other funders that CFOs and other corporate executives primarily look to litigation funding for its ability to shift legal costs off the balance book. Instead, Friel and other panelists highlighted the need for funders to bring more than just capital to the table, and that true value could be brought through a funder’s insight, as well as its ability to manage the litigation process and reduce the non-financial resource burden on corporates.

Overall, IMN’s inaugural UK event displayed the incredible depth of the litigation funding industry and gave attendees a wealth of insights that will no doubt generate further discussion and debate among leaders. In a day of packed content, IMN’s roster of speakers and panelists provided both high-level overviews and detailed looks at the nuances of certain industry sub-sectors.

Editor's Note: An earlier version of this article erroneously attributed the detailed overview of how funding requests should be structured to Rosemary Ioannou of Fortress Investment Group. The remark was made by Ben Moss of Orchard Group.  We regret the error. 
Commercial Legal Innovation

Funders Must Move Beyond Providing Capital and Add Value Through Collaboration

To close out IMN’s International Litigation Finance event, a panel discussed the ways in which corporates and institutional investors are using litigation finance. Moderated by Stefano Catelani, Founding Partner at Calimala Legal, the panelists included Andrew Leitch, Senior Associate at Bryan Cave Leighton Paisner LLP, Sonia Hadjadj, Chief Insights Officer of Crafty Counsel, Noah Wortman, Director-Global Collective Redress for Pogust Goodhead, Verity Jackson-Grant, Head of Marketing and Business Development at Simmons & Simmons and Steven Friel, CEO of Woodsford.

The panel began with Steven Friel challenging the oft-repeated claim that corporates use litigation finance to offset legal costs from their balance books, stating that in Woodsford’s experience, this is rare and not the primary motivations for corporates. Friel went further and argued that in regular commercial litigation there isn’t often a great incentive for corporates to seek third-party funding, saying that ‘more has been said about it than done’. Instead, Friel noted that the real value of litigation funding to these institutions tends to be in group litigation, where a funder like Woodsford can bring these opportunities to stakeholders’ attention, organize them and then manage the process moving forward. Verity Jackson-Grant agreed with Friel’s position and highlighted that it was refreshing to hear a funder challenge this mantra which is regularly repeated by other industry leaders. She pointed out that while corporates are not using litigation finance for every kind of case, there are occasions where ad hoc cases can represent cash flow issues or just unnecessary hassle for using legal spend, where a company will then take advantage of third-party funding. Instead, Jackson-Grant argued that litigation funding should be seen as a tool that can be used when it adds value. Noah Wortman emphasized that in his experience of working with institutional investors and particularly pension funds, the value of bringing in a third-party funder often stems from a desire to outsource the management of these cases externally. Not only does it offload administrative responsibilities and alleviate strain, but funders can actually add real value through their experience and insight from working on similar cases. Wortman also emphasized that in order to maximize value, funders must highlight that the relationship is collaborative and a partnership beyond just funding. Sonia Hadjadj brought the insightful perspective of in-house legal counsels, stating that for those in that role, every decision has to be reinforced by a business case, and in order to justify bringing in a funder, in-house counsels need the support to actually bring a viable business proposition to the CFO. Andrew Leitch put forward that this is an area where education and information still plays a key role in helping to overcome these obstacles, and that all leaders in the industry need to continue to provide that education wherever possible. Woodsford’s Friel also stated that funders need to be experts at removing obstacles in the litigation process, and offering more than just capital, arguing that if all a funder can provide is capital then ‘clients want us to be cheap, fast and quiet.’ Jackson-Grant added to this idea, suggesting that funders need to move away from the message of ‘funding is your solution’ and instead work collaboratively with lawyers and insurers to offer options to general counsels, and then let those counsels choose the solution that best fits their problem.
Commercial Legal Innovation

Wide Range of Insurance Solutions Available to Litigators and Funders

Building on the earlier fireside chat about ATE Insurance, IMN's conference began its afternoon agenda with a panel exploring the broader impact of insurance on the litigation funding market.

The panel was moderated by Steve Jones, Executive Director & Joint Practice Head at Gallagher, and the panelists included: Robin Ganguly, Executive Director for UK & EMEA at Aon, Carlos Ara, Equity Partner at Cuatrecasas, Mohsin Patel, Co-Founder & Director of Factor Risk Management Ltd and Rocco Pirozzolo, Underwriting Director at Harbour Underwriting.

The panel began with an overview by Rocco Pirozzolo on the ways in which insurance providers have innovated to meet the needs of funders, as the capacity required for these cases has continually increased. In particular, he focused in on Security for Costs cover, which has been designed to combat defendants' use of this mechanism as a stalling tactic. Pirozzolo explained that this can come in the form of an anti-avoidance endorsement or deed of indemnity. As a result, Pirozzolo argued, these tactics force defendants to instead look at the merits of the case and often settle.

Mohsin Patel addressed the market growth which has seen the volume and scale of requirements for insurers increase. As a result, some industry leaders are looking to co-insuring arrangements and therefore, the importance of brokers has also grown, as they can help reduce that 'transactional angst'. Patel also highlighted the utility of Capital Protection Insurance (CPI), which can allow a funder to remove the downside risk of losing a claim in exchange for a lower potential return. Patel argued that CPI can make a broader range of cases financially viable, thereby benefitting both funders and lawyers.

Moving from single-case to portfolio insurance, Robin Ganguly examined the ways in which insurers will assess the risks of different types of portfolios. For those with existing historic cases to be insured, insurers can tailor a policy for a secondary market sale based on factors including case duration and funder involvement. For those empty or forward looking portfolios, it is the funder's track record that the insurers are underwriting. Ganguly also stressed that insurers can put limits on policies for these portfolios including case type and size, jurisdiction of cases, and can even mandate insurer approval of individual cases.

Carlos Ara agreed with the panel that the evolving market is experiencing a wider breadth of investors, and that this has also opened the way for insurance policies that can be taken out after the initial investment, or in cases where secondary market transactions are possible. Ara also raised the suggestion of greater collaboration between funders and insurers, with opportunities for them to collaborate on the creation of new products for clients.

Mr Pirozzolo also covered the cases of defendants taking ATE insurance policies. He explained that this was a less common occurrence, in part because it is much more difficult for a defendant to define what would count as a win. Outcomes are clear when the claim is dropped or the defendant is successful at trial, but other degrees of success make it harder for insurers to offer the right cover for a defendant. Pirozzolo did raise the very rare example where insurance can be provided, which only kicks in if the case goes to trial, but in his own words, 'it's jolly hard to do'.

Commercial Fundraising

Funders Diversify Their Capitalization Sources, Driven by ESG and Emerging Markets

In a panel during the morning of IMN's International Litigation Finance event, the topic of differing approaches to capitalization and sources of investment was discussed. The panel was moderated by Dennis Knitowski, EVP & Head of Capital Markets at Cartiga, LLC and featured Patrick Moloney, Managing Director of LCM, Andi Mandell, Partner at Schulte Roth & Zabel and Katherine Mulhern, CEO of Restitution Impact Limited.

The discussion began with the panelists exploring the evolving nature of funder capitalization. LCM's Moloney spoke to his firm's blended approach, where its business model is that of a fund manager whilst also utilizing listings on both the Australian and London Stock Exchanges. Moloney noted that this has been an evolution as the company and wider industry has matured, and that LCM is now seeing interest from increasingly sophisticated investors, including endowment funds.

Andi Mandell discussed her view on the North American market, where there has been an increased interest from private equity and hedge fund entities that are keen to provide funding to law firms. Mandell noted that recent legal reforms in states like Arizona and Utah, which allow non-lawyers to share in the firms' revenue, has also driven further investment. However, Mandell clarified that this new Alternative Business Structure has also attracted bad investment into the sector.

In a different area of focus, Katherine Mulhern's Restitution works in the space of supporting post-war newly democratic government, and therefore has a wider approach to seeking investment. Mulhern explained that Restitution works with everyone from foundations and donors to ESG investors and insurers.

The panel also discussed the need to garner mainstream appeal for the litigation funding industry in order to increase the pool of investors engaged with funders. Moloney highlighted that the industry went from being viewed as 'the dark arts and then loan sharks', but the perception of the industry has already shifted dramatically. Mandell noted that ratings agencies are now more willing to rate some transactions in the market, but also raises the issue that the IRS has still not provided concrete tax guidelines for funding deals, which is a barrier to some investors.

When looking to attract new investors, the panel agreed that ESG investors are likely to represent an increasingly large share of the market, as the number of ESG-related cases is continuing to rise. However, Mulhern pointed out that the Sustainability and Governance aspects of ESG are less-defined, but that if funders can successfully define and measure impact, then class actions in this field will be a valuable asset. Moloney also suggested that emerging markets play a similar role in broadening a funder's portfolio, as they continue to look for jurisdictions with evolving legal systems to open the door for third-party funding.

A discussion of the impact of technology and data on litigation funding led to a question around the rise or cryptocurrency and the blockchain, and whether it has had a significant impact on funders. Moloney acknowledged that it is beginning to encroach on funding and has utility for those looking to trade in business and cases. However, Mulhern provided a unique view, and described it as a mixed blessing. She pointed out that while crypto can unlock capital, it is also widely used in countries with weak regulatory oversight to hide money.

Announcements Commercial Deals

EU and UK market are set to capture 15.8% of global litigation funding, poised for strongest growth worldwide

Deminor, a leading international litigation funder, projects that the investment potential for litigation funding in Europe is set to reach USD 1.8bn annually, representing nearly 16% of the global market. This is according to the white paper, Litigation Funding from a European Perspective, released today. Deminor predicts the investment potential for litigation funding in Europe is set to reach nearly USD 3.7bn in 2025 (+100%), compared to USD 17.8bn globally in 2020.

The actual amount invested in litigation annually is still a fraction of the investment potential estimated at 27% (USD 486m in Europe).  As a percentage of total litigation spend, actual amounts invested by third party funders in litigation represent less than 1%.  Real investments in litigation are likely to move closer to the investment potential over the next years, but fears that third party litigation funding is driving up the cost of doing business in Europe are largely overdone.

The white paper predicts the ESG agenda will be one of the drivers for growth in the UK and Europe, with cases having already been heard claiming damages for environmental harm. Climate and human rights issues are equally set to benefit from litigation funding over the next few years as this market looks to keep up with changing social issues. Other areas for growth include anti-trust damages, commercial litigation, including intellectual property, and data breaches.

Erik Bomans, CEO of Deminor, commented: “The growth of litigation funding in Europe will not only create a shift in perception, but in consumers’ and businesses’ ability to successfully resolve legal disputes that otherwise wouldn’t be accessible to them. Given the economic uncertainty, Deminor anticipates the market will shift towards businesses using the funding to be strategic with capital and release money that would otherwise be tied up in litigation. This is also likely to lead to more successful litigation outcomes where businesses can benefit from the knowledge of experts in the field.”

The report forecasts that while the EU market is still relatively small, the increase in the use of litigation funding is expected to hit annual growth of 8.3% in the next five years. Growing costs and focus on working capital is a key factor, prompting businesses to free-up working cash from long-term litigation projects and use litigation funding as a financial management tool. The United Kingdom is set to be the biggest single market contributor, with annual investment potential reaching USD 1bn.

Countries such as Germany and the Netherlands have been key players facilitating collective actions ahead of the European Representative Action Directive which makes a collective action mechanism available for consumers in all EU countries in the future. Several business lobby groups are calling for regulation of the litigation funding industry but, given the industry’s small scale in comparison to the litigation market as a whole, this looks premature.

Erik Bomans added: “Regulation is not necessarily negative and may create more certainty and transparency in the market, provided it is used to protect fair market competition and access to justice for all market players regardless of their financial means. The goal should be to give consumers and smaller companies litigation options to support justice, to champion social progress and to restore balance.”

About Deminor

Founded in 1990, Deminor is a leading privately-owned and international litigation funder with offices in Brussels, Hamburg, Hong Kong, London, Luxembourg, Madrid, Milan and New York. Deminor’s name, derived from the French “défense des minoritaires”, reflects its origins in providing services to minority shareholders. Deminor is still very much defined by the pursuit of good causes and its determination to restore justice for clients. Combining skill sets from 16 different nationalities and 14 languages, Deminor has funded cases in 18 jurisdictions including the Americas, the Middle East and offshore centres such as the Cayman Islands and Bermuda. With specialists in arbitration, intellectual property, competition, corporate & post-M&A, investments, enforcement, and tax litigation, Deminor has achieved positive recoveries for clients in more than 81% of the cases it has funded, against an industry average of 70%.

Commercial Legal Innovation

The Evolving Role of ATE Insurance in Litigation Funding

In the first fireside chat of IMN's inaugural event, Lucy Pert, Partner at Hausfeld, spoke with Rocco Pirozzolo, Underwriting Director at Harbour Underwriting, about the evolving role of ATE insurance in litigation funding.

The conversation began with a discussion of how the nature and demand for ATE Insurance has evolved over the last two decades. Mr Pirozzolo highlighted that between 2000 and 2010, most ATE policies were taken out directly with litigants. However, after first encountering litigation funding in 2007, the sector has experienced a complete reversal, with most policies in the last decade coming from funders.

In terms of the types of cases that are attracting ATE Insurance, Pirozzolo claims that it has largely followed the trends of the wider litigation funding industry. Over time, the volume of cases has shifted from unitary claims and insolvency misconduct claims to a large amount of class action claims, as well as commercial litigation cases which are now attracting third-party funding.

Discussing the challenges that ATE insurers face, Pirozzolo highlights that they cannot afford to blindly rely on funders' due diligence, as there are different levels of return on investment and risk compared to funders. Similarly, when assessing a case, Pirozzolo argues that while funders are able to first analyze the possibility of enforcement and the true value of the case, insurers must nearly always begin by solely assessing the merits of the case.

Responding to Ms. Pert's question around the high costs of ATE Insurance, Mr Pirozzolo argues that ATE is unique due to the binary outcomes that are possible for any given policy. As a result, there is very little margin for error compared to other types of insurance which can rely on the principle of many premiums paying for a small number of claims.

Furthermore, Pirozzolo rejected the idea that the high costs of litigating is the fault of funders, lawyers or insurers individually, instead pointing to the current environment which has fueled these rising expenses. He went on to say that despite these costs, it is the partnership between these players which allows the litigation funding industry to deliver wider access to justice.

The fireside chat concluded with Mr Pirozzolo offering his view on what anyone should look for in a good ATE provider. In particular, he highlighted an 'A' rating from one of the agencies, the ability for the insurers to deal with complex issues such as providing a deed of indemnity, and finally ensuring that the provider has a team of experienced and high quality professionals.