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Commercial

Ethics and Values Behind Litigation Finance Products and Services 

Above the Law profiles thoughts and ideas behind ethical communication of third party funding products during attorney-client discussion. Marla Decker argues that clients often have a material benefit in engaging legal finance options for strong case claims.  Ms. Decker argues that all attorney-client conversations should embrace ethical duty and care when it comes to financial benefits of litigation finance. Monetization of claim awards is a unique opportunity for many to expand bottom line growth. Therefore, Ms. Decker suggests that it is an ethical imperative for values-focused attorneys to properly discuss third party funding options with clients.  Click here to learn more about Ms. Decker's insights.   
Commercial Regulatory Issues

The Argument Against Forced Legal Finance Agreement Disclosure 

Keith Sharfman (Professor at St. John's University School of Law) has a new feature arguing against mandatory litigation finance agreement disclosure in the 94 New York State Bar Journal 36. Mr. Sharfman's article covers unique approaches to legislation targeted at third party funders and their clients.  Sharfman's research concludes that financial privacy is subject to degradation under forced litigation agreement disclosure rules. Furthermore, Mr. Sharfman alludes to the notion that claimants who have not received funding face discriminatory acts from adversaries who may take advantage of those who have not received funding.  Mr. Sharfman therefore suggests that lawmakers reject mandatory legal funding agreement disclosure. 
Commercial Fundraising

Aristata Capital Drives Meritorious Funding Innovation Banking £40MM Investment 

Aristata Capital is proud to announce a £40MM capital injection to fund a portfolio of impact investments. Such investment will include funding legal expenses for cases involving human rights, equality, indigenous law and ESG litigation.  In a press release, Aristata says the firm seeks to expand its customer base to include claimants who lack access to capital while victims of meritorious claims. Aristata suggests that the global system of commercial litigation has created an enterprise-ready environment for pursuing portfolio impact of this subject matter.  Aristata says the investment builds on years of experience in strategic litigation systems and processes. 
Commercial Deals

Deminor’s Research Reports ESG Bump 

Legal Futures profiles Deminor's ESG insights in a new report. Deminor says that ESG legal investment has a high likelihood of becoming one of the United Kingdom's most investable lines of business for litigation financiers.  Deminor forecasts that litigation funders will experience active upcoming regulatory requirements that should be embraced. Furthermore, Legal Dive highlights that most class actions in the United Kingdom have a litigation financier funding the effort. Trends point to a continuation of favorable circumstances for funded ESG class actions in the UK.  Click here to learn more. 
Commercial

Litigation Finance as a Revenue Vehicle

In a new article, Legal Dive explores the notion that litigation portfolios can become a revenue driver for legacy gain. According to Legal Dive, investors are 'plowing' funds into legal finance products and services looking to avoid cyclical market events. As a revenue driver, investors are looking at returns up to 4x their contribution.  With such figures, Legal Dive suggests that strategic partnership with legal funders should be a topic for every modern general counsel's office. The growing acceptance of litigation finance is widely considered to be an opportunity for innovators in the legal arena.  Legal Dive also focuses on monetization of potential awards, in that if a general counsel's office is relentless, the firm can profit from various business lines of litigation portfolio case assets. 
Commercial Legal Innovation

Innovative Australian Funder Launches Service With New Approach

The vibrant and growing litigation finance market in Australia continues to expand, with the launch of a new funder in Juel Litigation Finance. With a goal to shake-up the industry, Juel is aiming to operate as a traditional litigation funder, and also bring a more holistic approach to legal financing that considers the individual behind the case as important as the case itself. Speaking with Lawyers Weekly, founder and executive director Mark Paton explained that Juel wants to be a partner to litigants and support them with any costs incurred during litigation – not simply legal fees. Mr Paton stresses that the new funder will not just focus on providing the legal financing, but rebalance the whole equation in favour of individuals and businesses who will already be under immense pressure during the litigation process. This innovative approach will allow Juel to support a wide range of cases, from personal injury disputes to insolvency matters, ensuring that their clients have a partner during proceedings from beginning to end.
Commercial Regulatory Issues

The Role of Superannuation Funds in Litigation Finance

The role of superannuation funds in litigation finance (specifically in funding class action claims) has been highlighted by industry insiders in Australia, who point to it as a benefit to the funds themselves and also an encouragement of good corporate governance. The recent example of HESTA, a super fund based in Sydney, taking part in a class action lawsuit against multiple financial service companies, has demonstrated both the appetite and the potential benefits of such engagements. In an article by Super Review, vice president and managing director of Financial Recovery Technologies, Sean Cookson, spoke about this more active approach to investment, and highlighted HESTA as a super fund that has been able to leverage its capital to apply pressure through this alternative avenue. Mr Cookson pointed to the fact that apart from the US, Australia represented one of the lowest risk countries for funds to join class action claims when compared to jurisdictions such as Germany and the UK. Mary Delahunty, the former head of impact at HESTA, went a step further and stated that it was incumbent upon super funds to recover losses through class actions where corporates have failed in their fiduciary duty to shareholders. However, both Cookson and Delahunty warned that in order for this to be effective, the Australian government will need to reverse course and place an emphasis on regulating corporate behaviour.
Case Developments Commercial

Finnish Investor Argues He Is Not Required To Pay Funder

In a high-profile dispute between litigant and litigation funder, a mining investor who successfully sued the Egyptian government has refused to compensate Buttonwood Legal Capital after claiming the funding agreement is invalid. Mohamed Abdel Raouf Bahgat, who was the beneficiary of a $99.5 million award in 2021, defended his position to the High Court by arguing that the agreement’s terms were invalid due to extraordinarily high fees combined with an additionally large rate of interest. According to reporting in Law360, Bhagat claims that Buttonwood was not legitimately positioned as a litigation funder, and that the agreement itself was not properly concluded. Buttonwood, who supported Mr Bhagat with £2.3 million in funding, argues that he is in breach of the initial 2017 settlement agreement and is owed over £16 million in unpaid fees.
Case Developments Consumer

Deception And Fraud By Solicitor Led To Collapse Of Axiom, SFO Alleges

Investment in litigation finance does not come without risks, however, few investors would expect to see these funds taken for personal and criminal gain by the lawyers they were meant to support. This is exactly what is alleged to have happened in the recent case of Timothy Schools, who took over £19.5 million from Axiom Legal Financing Fund starting in 2009, and then allegedly proceeded to funnel this money to himself and to two other individuals who are also accused of fraudulent behaviour. Examined in reporting by The Law Society Gazette and Law 360, the charges leveled by the Serious Fraud Office (SFO) outline how Schools used his law firm, ATM Solicitors, to take the loans from Axiom only to enrich himself by funneling the money to a network of offshore companies. His co-defendants include solicitor Richard Emmett and independent financial adviser David Kennedy, who are accused of receiving over £1 million and £5 million of fraudulent funds respectively. This alleged deception of Axiom led to its collapse in October 2012, as auditors unearthed the catastrophic information that the fund was owed £60 million from loans to law firms. Prosecuting for the SFO, Miranda Moore QC, argued that the defendants were skimming commission off these loans without informing Axiom, and that they willfully misused these investors’ funds to profit themselves. Moore stated that these actions not only led to the collapse of Axiom and loss of investor capital, it also deprived the claimants who the loans were intended for, of their representation and access to justice. The three defendants have denied the charges and the trial is expected to come to a close on Monday with the court’s judgement.