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Announcements Commercial Deals

Omni Bridgeway Announces Completion of Fund 1 Secondary Market Transaction

Omni Bridgeway Limited (Omni Bridgeway, Company, OBL) (ASX: OBL) announces that the sale of a participation in Fund 1 to Gerchen Capital Partners (GCP) has completed and the Initial Payment of US$38.0 million has been received and distributed as set out in our announcement dated 11 May 2023.  Further, the residual interest in Fund 1, previously owned by the original investor, has been purchased by Fund 4, such that the original investor no longer retains any interest in Fund 1.  The continuing investors in Fund 1 will be GCP and OBL.
Case Developments Commercial

Panthera Resources Agrees to Due-Diligence Deadline Extension with LCM Funding SG

As LFJ reported in February of this year, the gold exploration and development company, Panthera Resources, entered into an arbitration funding agreement (AFA) with Litigation Capital Management’s subsidiary, LCM Funding SG Pty Ltd. The agreement, which is set to provide Panthera with $10.5 million for a claim against the Indian government, is still being finalized pending further due diligence by LCM. Reporting by Sharecast provides an update on the AFA as Panthera Resources announced that it had agreed to an additional one-month deadline extension for LCM to fully complete its detailed due-diligence. Panthera stated that it did not expect further deadline extensions, and that once this due-diligence process was complete, Panthera and LCM would be able to finalize a funding confirmation notice. The claim in question focuses on allegations that the Indian government had breached the Australia-India Bilateral Investment Treaty. Commenting on the deadline extension, Panthera’s board stated: “In addition to pursuing a potential claim against the Republic of India for breaches of its obligations under the Australia-India Bilateral Investment Treaty, the company continues to pursue an amicable resolution of the dispute, and the grant of the Bhukia Prospecting License. In this regard, the company remains in advanced discussions with a potential joint venture partner pending the resolution of the LFA.”
Case Developments Commercial

Delaware District Court Rules in Favor of Compelling Plaintiff to Disclose Details of Financial Interests

Whilst state legislatures across the US continue to debate and advance legislation to mandate the disclosure of litigation funding in civil cases, in most jurisdictions the power to order disclosure still sits with individual courts and judges. This has been most frequently demonstrated in the area of patent litigation, and we now have yet another example from the Delaware District Court, where the court ruled in favour of compelling disclosure of financial interests. In a blog post on Lexology, Stanley M. Gibson, partner at Jeffer Mangels Butler & Mitchell, provides analysis on the district court’s ruling in Speyside Medical, LLC v. Medtronic CoreValve LLC et al, which granted the defendant’s motion to compel the plaintiff to provide information on its members and litigation funder. Medtronic had argued that the disclosure of this information was pertinent to the case, as it would bring to light any issues or biases caused by parties having a financial interest in the litigation’s outcome. The district court agreed with the defendant’s argument, and stated that the details of who has a financial stake in the case were “relevant to bias for purposes of future cross-examination” of the plaintiff’s members. Furthermore, the court ruled that the exact level of financial stake was relevant to this issue, explaining that a “1% stake will have a different impact on a witness than a 98% stake”.  Gibson notes that this information is most useful in providing context for the court in terms of what ‘winning’ the case would mean for each party, and as to the level of financial reward they could seek from recovery if successful.
Consumer

Louisiana Senator Makes Case for Litigation Funding Disclosure Bill

As LFJ reported last week, Louisiana has become the latest state in the US to advance new legislation that more closely regulates third-party litigation financing and increases disclosure requirements for funders operating in the state. With the bill making its way through the Louisiana legislature, the bill’s sponsor has spoken out in support of the proposed law and offered an argument for its necessity. In an op-ed published in the Shreveport Times, State Senator Barrow Peacock puts forward his argument that litigation funders are currently ‘using the civil justice system as an investment tool’, without any requirement that they disclose their involvement in cases. Sen. Peacock also suggests that the involvement of funders creates conflicts of interest between the claimant and their legal counsel, as he claims that the attorney’s salaries ‘are coming from the pockets of third-party financiers’, which supposedly allows a funder to exert control over the litigation. Sen. Peacock also includes the now common refrain from critics of the litigation finance industry, that third-party funding is a vehicle for foreign interests to undermine US national security. The op-ed concludes by not only asking readers to contact their state representatives to support Senate Bill 196, but also implores them to contact their representatives at the federal level to push for Congress to enact similar legislation that would mandate litigation funding disclosure nationwide.
Case Developments Commercial

LLS-Funded Class Action Enlists Hayne Royal Commission Barrister

For litigation funders, it is imperative that any legal action they choose to finance not only has a strong theory of the case to win, but also is paired with the best legal representation possible. This is especially true in high value class actions that may proceed to trial, such as the ongoing shareholder class action in Australia being brought against a prominent wealth management company over alleged failures to disclose misconduct. Reporting by the Australian Financial Review reveals that the class action being brought against Insignia Financial has enlisted the services of barrister Michael Hodge KC, who comes highly regarded having assisted the Hayne Royal Commission in 2018 as counsel. The investor class action, which is being led by Shine Lawyers and financed by Litigation Lending (LLS), is set to proceed to trial in Federal Court from June 5, with an expected duration of around five weeks. The class action representing shareholders who bought Insignia shares between March 1, 2014 and July 7, 2015, is centered on allegations that Insignia failed to disclose misconduct. This included conflicts of interest and insider trading, which led in turn to shareholders suffering financial losses.  Craig Allsop, joint head of class actions at Shine Lawyers, claimed that “the company breached its continuous disclosure obligations and misled its shareholders.” Insignia’s own spokesperson provided a statement saying that “Insignia Financial will vigorously defend the claim and is looking forward to having the matter heard and determined.”
Commercial Regulatory Issues

Legalization of Litigation Funding in Ireland Remains on the Distant Horizon

Whilst it is routinely stated that litigation funding is on the rise both in adoption and volume of activity around the world, there are still numerous jurisdictions where it has struggled to take hold, and others where it is actively prohibited under the law. One such country that is viewed as lagging other jurisdictions in terms of legalization and adoption is Ireland, where future law reforms do not appear to be arriving any time soon. An insights article by Dentons provides an overview of the current state of legislative reform regarding litigation funding in Ireland, highlighting that any potential changes to the law will not occur before the Law Reform Commission Review of third-party funding is produced in 2024.  The authors note that although some observers expected the new EU Directive on Representative Actions would catalyze more immediate reform in Ireland, recent statements by government ministers suggest that this is not the case. Whilst the Irish government will have to implement the directive’s broad requirements into Irish law, the Department of Justice has made it clear that litigation funding for these actions will not be permitted until separate legislation allows the use of third-party funding for litigation. The article does highlight that there are small areas of progress being made with the Courts and Civil Law Bill 2022 currently making its way through the legislature, which would permit the use of third-party funding in arbitration matters located in Ireland. The authors also point out that supporters for legal reform have a strong argument that it is necessary to modernize the Irish legal system, and would further allow Ireland to take advantage of its position as the only English-speaking common law jurisdiction within the EU.
Commercial Deals

Advice for Patent Owners Considering Third-Party Funding

Patent infringement lawsuits have become some of the most sought-after targets for litigation funders, despite the increasing pressure from courts in the US to increase disclosure around the involvement of third-party funding. In this contentious environment, it is important for litigants and patent holders seeking third-party funding to keep several factors in mind. An insights article by Lauren Sabol and Lawrence Hoff of Fox Rothschild, provides an overview of key considerations for patent owners when pursuing litigation funding for their infringement cases.  Sabol and Hoff emphasize that in order to begin the process, patent owners should enlist the services of experienced patent and litigation funding counsel before approaching funders with their case. They suggest that this kind of specialist counsel makes it more likely that patent owners will obtain a funding agreement with favourable terms, and enter into an agreement with full knowledge of the potential issues that can arise during litigation. Sabol and Hoff also highlight the ongoing issues around disclosure that have been brought to the forefront by Judge Connolly in Delaware, and note that whilst disclosure requirements vary from state to state, patent owners should always be prepared to, at the very least, disclose the existence of third-party funding. In addition, they note that proper care must be taken to ensure that privileged or confidential information cannot be exposed, primarily by using NDAs that counsel can assist patent owners with.
Commercial Regulatory Issues

Delhi High Court Provides Favorable Ruling to Funder in Costs Liability Appeal

As litigation funding continues to expand into newer markets, a key issue that funders will be keeping an eye on is the creation of precedents from court judgements and rulings that relate to the use of third-party funding, as well as any norms that are established in these cases. In a market that has enormous potential for growth, as India does, funders who are considering entering the market will be pleased by a recent ruling which suggests a limited scope for funder liability in unsuccessful claims. An article by Bar and Bench provides an overview of a recent judgement from arbitration proceedings in the Delhi High Court, which found Tomorrow Sales Agency (TSA), a litigation funder, is shielded from liability in the case, “which they have neither undertaken nor are aware of.” This ruling related to the case of Tomorrow Sales Agency Private Limited v. SBS Holding, Inc and Ors, in which SBS Holding had asked the court to order TSA to pay its legal costs, after TSA’s client had failed in its claims against SBS Holding. SBS Transpole, the claimant which TSA had funded, was unsuccessful in its arbitration against SBS Holding. However, SBS Transpole did not have the capital or assets to pay the tribunal’s award against it. SBS Holding’s request to force TSA to cover this award was appealed and finally rejected by the Delhi High Court, which found that “there are no rules applicable to proceedings in this court for awarding costs against third parties.” The High Court’s ruling will be of further interest to funders, as it emphasized the importance of third-party funding to the judicial system and stated “A person without the necessary means would have no recourse, in the absence of third-party funders. Third party funders play a vital role in ensuring access to justice.”
Commercial Deals

Legal Experts Share Guide to Choosing the Right Litigation Funder

The expansion of litigation funding around the globe and the concurrent increase in the number of funders has meant that there are now more options than ever for litigants or law firms seeking third-party funding. However, that increased choice also means that it will become harder for first-time users of litigation funding to know which funder would be the best partner for them. An article for the Concurrences journal by Marc Barennes of Bureau Brandeis and Miguel Sousa Ferro of Milberg Sousa Ferro, provides a guide to those seeking litigation funding on what factors they should consider when evaluating different funders. The article offers prospective users of third-party funding the necessary framework for choosing the right funder, outlining some of the key questions to ask during the process, and what considerations to keep in mind before making a final decision. The detailed and comprehensive article includes useful information on the following topics:
  • Approaching the right number of funders
  • Understanding who the funder is
  • Asking about the investment decision-making process
  • Agreeing on the timeline
  • Inquiring about the experience, expertise and appetite of the funder for a case
  • Understanding the financial criteria and expectations of the funder
  • Special considerations for the funding of class actions
Barennes and Sousa Ferro suggest that with the increasing maturation of the litigation funding market, the increased competition between funders will allow prospective clients to take a more comparative approach to find the best option for their case. Above all the factors to consider, the authors encourage potential users of litigation funding to be proactive in asking questions and gathering information before making a final decision. The full journal article can be found here.