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Commercial Fundraising

North Wall Builds on Previous Successes with New €500 Opportunities Fund

With the ongoing economic instability and inflation pressures felt around the globe, investment firms are looking for alternative avenues to maintain returns and scale future growth. As a result, those firms willing to explore more niche opportunities including litigation finance are continuing to raise capital to take advantage. Reported by Bloomberg UK, North Wall Capital is a recent example of this trend, as it looks to raise €500 million to complete a second opportunities fund focused on the European market. North Wall’s chief investment officer, Fabian Chrobog, said that as opportunities in traditional markets remain restricted, the firm is looking for additional funding partnerships to exploit these alternative asset classes. The firm has already raised €250 million, with a significant portion committed by MLC, an Australian superannuation fund. On top of this second Europe opportunities fund, North Wall may soon look to build its third fund focused on litigation, having seen great success with its previous endeavours which included a £100 million commitment to the law firm PGMBM to fight high-profile ESG cases.
Commercial Deals

Pravati Capital’s CEO Discusses the Growth of Litigation Funding and ABS for Law Firms

As the litigation finance industry continues to mature, established leaders within the industry are now able to trace recent developments to the history of this niche area of financing. One such long-established figure, Alexander Chucri, founder and CEO of Pravati Capital, recently shared his thoughts on the most significant changes in litigation funding and what the future of third-party funding holds. Speaking with Dealmakers’ LINE magazine, Mr Chucri spoke about the transformation of litigation finance from a boutique world of small investments, to law firms being open to and eager for financing from firms like Pravati.  In particular, Chucri honed in on recent developments in certain states in the US around Alternative Business Structures (ABS) for law firms, which allows non-lawyers to participate in law firm ownership. While he sees the benefits for law firms seeking capital, Mr Chucri maintains that for a funder like Pravati, it is far more advantageous to invest in a firm through existing methods rather than risk the complications and potential conflicts of interest that come by taking an equity position. As for the future of the litigation finance industry, Mr Chucri sees no slowdown on the horizon and expects growth to continue as law firms and corporates will utilise this tool in their litigation arsenal with increasing frequency. He also highlighted the benefits of working with a dedicated litigation funder over a hedge fund, as the former can handle all case underwriting needs and therefore reduce the complications of sharing confidential data with third-parties.
Commercial Regulatory Issues

Omni Bridgeway Weighs In on New Zealand’s Proposed Class Action Reforms

As regulation continues to be the subject of debate in the litigation funding industry, the differences in approach across jurisdictions has shed light on wider issues of legislation covering litigation. In New Zealand, this has most recently manifested through the government’s review of its class action regime and the impact of litigation funding. In an article for BusinessDesk, Omni Bridgeway’s Gracey Campbell offers a funder’s perspective on the Law Commission’s report on class actions, released in June of this year. Their analysis praised the Commission’s recommendations for courts to oversee concurrent class actions, but argued that where concurrent actions do not include members present in both actions, then they should not be classed as competing actions. Furthermore, Campbell suggested that any kind of certification test would only increase the time and cost burdens on proposed class actions, without providing significant benefits. With regard to the Commission’s proposals for third-party funding regulation, the article praised the report’s view of funding as primarily existing to provide access to justice, as well as the decision not to impose any kind of mandatory level of returns to class action members. However, Campbell argued against the proposal of a ‘rebuttable presumption’ that funders would provide for security costs, and instead argued in favour of giving the courts the power and discretion to order this based on a case’s individual circumstances.
Commercial Deals

General Counsels Share Views on Third-Party Litigation Funding

A common refrain from leaders and commentators in the litigation funding industry is that one of the biggest developments that has fuelled growth has been the uptake of third-party funding by corporates. However, the exact type of situation and motivation for these large companies to engage funders is not so clear, and some in-house counsels are still struggling to see the benefits over self-funding. Reporting from the International Legal Finance Association’s (IFLA) inaugural conference, Legal Newsline, highlighted comments by general counsels (GCs) at some of America’s leading companies that suggest widespread acceptance is still not a reality. Rishi Varma, general counsel for Hewlett Packard Enterprise, acknowledged that while the industry has momentum, GCs still have concerns around undue influence and control by funders over the litigation process and settlement decisions. Looking at the issue from a different perspective, Raytheon Technologies’ chief litigation counsel, Steven Greenspan, argued that a large obstacle is the imbalance in returns that a funder may receive. Greenspan stated that a situation where the funder’s own returns outweigh the client’s is a major issue, therefore funders may need to explore structure agreements which see a more equal distribution of financial return if companies are to be enticed. However, not all GCs shared the same concerns and objections. Sandy Grimm, chief legal officer at Southeastern Grocers, highlighted the benefits of being able to shift costs off the balance book and reduce impact on the company’s budget. Grimm pointed out that being in an industry that primarily values a company’s EBITDA, the value of moving those costs away from the budget and onto a third-party does represent a major benefit.
Commercial

Legal 500 Releases Funder Rankings and Shares Industry Insights from Litigators

Legal 500 has announced its litigation funding rankings for 2023. This year sees the rankings expand to cover not only the top UK funders, but also the leading funders in the US market. In its article announcing the 2023 rankings, Legal 500 provided an update on the state of the market with insights from industry leaders and litigators in both regions. Diane Sullivan, a partner in Weil’s New York office, described how the size and breadth of the industry had grown, with funders now engaged in a wide variety of cases from patent litigation to mass tort cases. Commentary from litigators also stressed the importance of the relationship between law firms and funders, with Jonathan Sachs, partner at BDB Pitmans in London, highlighting the need for funders to trust solicitors and to avoid trying to control the litigation process as a third-party. Meanwhile, Hausfeld’s Lucy Rigby pointed out that funders now exist in a competitive market, and to stand out from the crowd, they must go beyond just providing capital and excel in terms of speed and transparency Legal 500’s finalised rankings for this year included ten firms in its UK listings, whilst its inaugural US rankings included nine funders. Burford, Harbour and Therium were all listed as tier one funders in the UK, and Burford repeated that achievement in the US, alongside Omni Bridgeway. It is worth pointing out that Legal 500 has yet to disclose its methodology for assigning funders to its various tiers.
Commercial Regulatory Issues

Deminor’s CEO Argues the EU’s Proposed Fee Caps Would Harm the Industry

As Litigation Finance Journal has reported in recent weeks, the response to the EU Parliament’s approval of the Voss Report has been largely negative from industry leaders across the continent. Whilst funders and law firms alike recognise the need for regulation and oversight, the specific proposals in the report have been criticised for addressing problems that don’t exist, and for a lack of empirical basis. In an interview with The Law Society Gazette, Deminor’s CEO, Erik Bomans, specifically took aim at the proposal to cap litigation funders’ fees to 40% of any awarded damages. Bomans argued that a hard cap like this would result in cases not receiving much-needed financing, as any funder must weigh potential returns against the inherent risks of a case which includes the possibility of exorbitant costs driven up by a prolonged process. Bomans reiterated the criticism of many industry leaders that the proposed changes represent an incomplete understanding of the third-party funding industry, with Bomans further comparing it to the actions of the US Chamber of Commerce, which has always opposed and lobbied against the industry. Bomans argues that there is no more pressure placed on a client by a funder than any normal relationship between a claimant and their legal counsel, citing the existing oversight in place from the courts themselves.
The LFJ Podcast
Hosted By Alexander Garnier |
In this episode, we sit down with Alexander Garnier, Founding Partner and Portfolio Manager of North Wall Capital. Alex discusses the firm's background, how it came to be involved in the legal assets space, the risks and challenges for investors in the space, how North Wall differentiates itself from the competition, and the firm's ESG initiatives. [podcast_episode episode="10549" content="title,player,details"]
Case Developments Commercial

LCM Funds £900 Million Class Action Against Amazon

Class actions alleging anti-competitive behavior by corporations have become a frequent sight in the UK litigation space, with the Competition Appeal Tribunal as venue for these high-stakes showdowns between consumers and businesses. Many of these actions would not be possible without third-party funding, and last week saw yet another example, as Litigation Capital Management (LCM) announced the financing of a new claim against Amazon. Detailed in reporting by The Guardian, the e-commerce industry leader is facing a class action suit alleging that its ‘Buy Box’ feature misinforms consumers by highlighting products and sellers beneficial to Amazon, rather than promoting the genuine best deals and prices. Julie Hunter, the class representative for the case, argues that by putting either Amazon’s own products or retailers who use Amazon’s logistics services at the top of their online store, the company is using its dominant position to deny consumers’ fair choice. The CEO of LCM, Patrick Moloney, said that this case was the latest in a series of competition-related cases that the firm has funded, and that the funder would continue to support consumers in disputes in the UK. The £900 million class action covers all UK consumers who purchased products through Amazon since October 2016, and is an opt-out claim. Amazon’s representative denied any wrongdoing by the business, and stated that there was no merit to the claim, as the company has always supported independent sellers and therefore allowed consumers to choose from the best prices.
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.