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Case Developments Commercial

Funder’s Strategy to be Reviewed After Two Losses

Whilst the large returns on investment for litigation funders are both lauded and criticized by commentators, there is never an absolute certainty that funders will see a positive return on each and every case. This uncertainty has been brought into the spotlight once more, after one funder’s parent company reported recent losses from two unsuccessful cases for its funder subsidiary. A new article from The Law Society Gazette covers the announcement by RGB Holdings, that its high profile litigation funding business, LionFish, has suffered two losses in recent cases that it had financed. The losses declared to the London Stock Exchange, sees LionFish incur a £4 million non-cash write-off for 2022, having failed to meet its expected £2.3 million in profits. However, the actual cash value of these losses only total £1.1 million. Nicola Foulston, RBG’s chief executive, stated that she was ‘disappointed’ with these results from LionFish and that the company would review the funder’s strategy with an eye towards reducing exposure to the £3.3 million in LionFish's outstanding litigation commitments. RBG stated that it would provide a further announcement in 2023. Editor's note--a previous version of this piece listed LionFish's commitments as being under review.  That is incorrect. It is the overall strategy under review. We regret the error.
Case Developments Commercial

Judge Issues Fierce Defense of Litigation Funding Disclosure Order in Patent Dispute

In the conversation around litigation funding and disclosure, few cases have attracted as much attention as the ongoing proceedings between a Delaware federal judge and Nimitz Technologies, a patent holding company. Since LFJ last reported on Nimitz’s appeal of Judge Colm Connolly’s order for further disclosure regarding its litigation funding arrangements, Judge Connolly issued an 80-page opinion, detailing his reasoning for his order. Outlined in articles by Reuters and Bloomberg Law, Judge Connolly’s opinion went further than ever before by raising the spectre of companies abusing the court system through these patent disputes, and using a “shell LLC” to bring lawsuits without incurring any liability. Connolly re-asserted that despite Nimitz’s protests, the Court retained this “inherent authority” to order disclosure of other parties involved in the case, where there are concerns that their identity is being hidden from both the judge and the defendants. Whilst all participants in the case will have to await the result of the mandamus petition filed by Nimitz, it is clear that the lasting consequences of Judge Connolly’s initial order are far from complete and that the outcome will have a significant impact on the intersection of third-party funding, patent disputes and disclosure. Judge Connolly’s opinion can be read in full here.
Case Developments Commercial

Harbour Funds £14 billion Claim Against Google for Anti-Competitive Adtech Practices

Whilst the power of technology giants has increased tremendously over the last two decades, this growth in market dominance has also attracted the attention of those wary of monopolistic practices by these companies. With no looming threat of any kind of government-led crackdown on these market leaders, the courts have become the new battleground for those seeking to re-assert competition and balance to the Technology industry. An article in TechCrunch details the latest development in one such case, as Google is facing a class action claim in the UK for its allegedly anti-competitive practices in the Adtech space. This suit, along with another claim in the Netherlands, was first reported in September and focuses on the suggested malpractice by Google when dealing with digital publishers. Google is accused of controlling pricing and dictating terms that are favourable to its own ad platforms. Both cases are being financed by Harbour Litigation Funding, with the UK claim seeking to secure up to £13.6 billion in damages for approximately 130,000 businesses who were harmed by Google’s alleged anti-competitive behaviour. The UK suit is being brought to the Competition Appeal Tribunal (CAT), with UK law firm, Humphries Kerstetter, acting for the plaintiffs.
Commercial Deals

Litigation Funding Could Play a Key Role in Securing Scottish Business Resilience 

The UK remains one of the premier jurisdictions for litigation funding, with an array of funders based in the country and a regulatory structure that largely allows for the industry to self-regulate. However, within the UK, there is a natural bias towards funding opportunities in London, both in terms of value and volume, leading some industry figures to highlight the need for expansion to the UK’s regional markets. Writing in The Scotsman, Nicola Ross, a partner at Morton Fraser, argues that litigation funding could be the key to providing added resilience for Scottish businesses in this difficult economic climate. However, the article also suggests that due to the often lower value of disputes in Scottish courts, traditional funders based in London have not taken an interest in these cases. Ross does highlight that with the Scottish legal system now allowing class actions in the form of group proceedings, there should be more opportunities of interest to these funders. However, the speed at which this evolution can happen is of key importance, she argues, as Scottish businesses struggling under the instability of the financial markets will not be able to continue accessing legal redress without support from the third-party funding sector.
Commercial Regulatory Issues

New Research Suggests UK Public are Skeptical About Funder Involvement in Class Actions

Litigation funders in the UK have been increasingly vocal about the potential for a surge in mass class actions, paralleling the rise in large-scale class actions in other prominent jurisdictions. New research demonstrates that whilst funders and law firms may be optimistic about these opportunities, the general public remain largely skeptical towards the practice, although certain signs point to increasing acceptance in some areas. Reporting by The Law Society Gazette highlights forthcoming research by Portland Communications, which shows that majorities of respondents would support class actions where they were directly affected, especially where businesses have allegedly committed environmental harm. This was reflected by the fact that energy and finance were the two top industries where the public would favour class actions taking place. However, a major stumbling block for class actions in the UK is that less than half of respondents felt class actions were likely to actually secure compensation or even had the capability to force companies or institutions to take accountability. More worryingly for the litigation finance industry, nearly a quarter of those surveyed said they would not join a class action where funders received a ‘large percentage’ of the award. The survey suggests that a major hurdle for both lawyers and funders is the need to dispel the assumption that it is they who are the ones benefiting from class actions, rather than individual claimants.
Announcements Commercial People Moves

Deminor further develops its litigation funding activities in Germany

Deminor further develops its litigation funding activities in Germany with the addition of Patrick Rode in Dusseldorf. Patrick Rode will bring experience and expertise in commercial, securities and antitrust litigation to further increase Deminor’s footing in the German litigation funding market. Deminor is pleased to announce the appointment of Patrick Rode as Senior Legal Counsel. He will strengthen the team dedicated to the German litigation funding market already consisting of Felix von Zwehl, Dr. Malte Stübinger and Jasna Jarmuschke. Patrick will be based in Dusseldorf and strengthens the German team in Brussels and Hamburg in Deminor’s continued approach to expand within the German market. Erik Bomans, CEO of Deminor: “After the opening of Deminor’s German office in Hamburg in 2021, the demand for Deminor’s litigation funding services in Germany continues to increase. We very much welcome the opportunity to bring Patrick on board and to now also have a presence in the western region of Germany known as the Rhineland.” Patrick is an experienced commercial litigator who is admitted to the bar in Germany and who has worked on a broad range of domestic and multi-national disputes. His focus lies on cross-border post M&A-litigation and antitrust damages disputes, which are becoming increasingly relevant for Deminor’s business. Patrick comes with experience working for several renowned national and international law firms, most recently as an Associate with Latham & Watkins in the firm’s Litigation & Trial practice and as a Litigation & Disputes Partner with a medium-sized German law firm. Patrick was recognised by the US publishing house Best Lawyers in the category „Ones to Watch 2023” in Litigation. On joining Deminor, Patrick comments: “I am absolutely delighted to be joining a firm with such a great track record and growth rate. Litigation funding is still at a very early stage in Germany, and I look forward to promoting the benefits of third-party funding and especially the opportunities Deminor has to offer.”
Commercial Deals

Bench Walk to Fund Environmental Claim at UK Competition Appeal Tribunal

Following the COP 27 summit earlier this month, there has been much discussion about the role litigation funders can play in financing claims against companies that fail to meet ESG standards, or act with disregard towards the environment. A new case brought against UK utilities companies demonstrates this very potential, as a major industry funder has stepped in to finance the claim. Announced in a release by UK law firm, Leigh Day, a new competition damages claim being brought against water and sewage management companies is being funded by Bench Walk. The opt-out claim, brought on behalf of UK households, alleges that these companies unlawfully disposed of untreated sewage and wastewater into public waterways. Zoë Mernick-Levene, partner at Leigh Day, noted that this is a landmark case, as it is the first environmentally-focused claim being brought before the Competition Appeal Tribunal (CAT). The funding agreement and additional ATE insurance for the case were brokered by Factor Risk Management, whilst AlixPartners are attached to the case in the role of economic experts.
Consumer

Funder Agrees to $1 Settlement with CFPB over 9/11 Fund Litigation

As the litigation finance industry has matured, the possibility of funders running afoul of legal oversight grows. This was the case in a recent settlement between RD Legal Funding LLC and the U.S. Consumer Financial Protection Bureau. Reporting in Reuters covers the announced settlement, which highlighted the funder’s alleged predatory lending practices with 9/11 first responders, where it allegedly charged 250% interest on loans to these clients. While RD Legal did not admit any wrongdoing, the settlement required the funder to pay a whopping $1 for breaking New York’s state law concerning high-interest loans. RD Legal had argued that the financial assistance it provided to the first responders were not loans, but instead ‘sales of legal receivables’ as part of its funding agreements. The CFPB and the New York Attorney General’s Office had originally sought higher damages outlined under the state’s consumer protection law. However, the CFPB stated that this settlement provides the first responders access to the victim relief fund, totalling $482 million–hence the miniscule agreement.
Announcements Commercial People Moves

Omni Bridgeway APAC team expands and announces senior appointments

Omni Bridgeway is delighted to announce new arrivals to its growing team in Asia, reinforcing the company’s leading position as the largest and most recognised dispute finance team in the market. We also congratulate senior colleagues on their promotions. We welcome Eloise Matsui as Investment Manager. Eloise joins us from Stephenson Harwood where she was a partner in the restructuring and insolvency team in Hong Kong, and previously King & Wood Mallesons where she was a member of the litigation and regulatory team. Eloise brings a wealth of expertise in restructuring, insolvency and cross-border litigation and has acted for foreign, listed and private companies, creditors and insolvency practitioners across the breadth of restructuring, insolvency, enforcement and associated litigation scenarios. Mitch Dearness joins our team as Investment Manager, bringing expertise in arbitration and cross-border litigation, with particular experience in the infrastructure, mining and energy sectors. Mitchell joins us from Herbert Smith Freehills where he was a Senior Associate in the Singapore disputes team. Kristen Smith (Melbourne) and Ewen McNee (Sydney) have been promoted to Senior Investment Managers, and Niall Watson-Dunne’s role as Investment Manager (Sydney) expands in recognition of his case management responsibilities. We acknowledge their combined extensive experience in legal finance and valuable role in the company’s development. Cheng-Yee Khong (Hong Kong) has been appointed Senior Relationship Manager, responsible for new case origination and relationship management across jurisdictions. “Our expansion is in direct response to the market’s flourishing demand for our financial solutions, and reflects our ability to attract leading talent. We are thrilled to welcome Eloise and Mitch to our wonderful team and further expand our services to clients.” Tom Glasgow, Managing Director and Co-Chief Investment Officer (APAC), Portfolio Manager – Global International Arbitration “Congratulations to colleagues on well-deserved promotions. It is the talent and hard work of our people that results in Omni Bridgeway being consistently recognised as the leading legal finance team.” Oliver Gayner, Managing Director and Co-Chief Investment Officer (APAC).
ABOUT OMNI BRIDGEWAY
Omni Bridgeway is the global leader in legal finance and risk management, offering dispute finance from case inception through to post-judgment enforcement and recovery. Omni Bridgeway is listed on the ASX and has operations around the world.