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Commercial

Litigation Funding as Alternative Investment Class

From an investor perspective, Litigation Finance allows investors to earn money from legal claims without seeing a day in court. While this was once an opportunity only available to sophisticated, well capitalized investors, it’s becoming democratized thanks to global startups like LegalPay. Live Mint explains that legal funding is considered an alternative investment because it is uncorrelated to the rest of the market. When COVID sent the world into financial turmoil, litigation funding remained profitable and has only grown in scope and profitability. India-based LegalPay offers two avenue to access the market: litigation funding, and interim financing under IBC (insolvency & bankruptcy code). Litigation funding carries more risk—but also has the potential for higher returns. Typically, cases under consideration for funding are carefully vetted, then funding is offered to the most promising opportunities. Funds provided to litigants are issued on a non-recourse basis. There’s a risk of walking away with nothing if the case loses. If the case wins, investors could see 2-4 times their investment when the award is collected and split among the parties.
Commercial

New Zealand: From Funding to Summary Judgment 

Experts highlight that New Zealand’s class action provisions were last updated in 1882, and today do not reach modern benchmarks for class action litigation. Some suggest that New Zealand is prime for smart and sophisticated regulatory guidance to usher in and protect a golden age of third party litigation investment.  Casl.com.au reports that New Zealand’s Law Commision is conducting a full scope review of class action litigation funding guidance. Looking to neighboring Australia for advice, the Association of Litigation Funders of Australia (ALFA) has joined the New Zealand Law Commission in conducting pioneering research, written/oral submission and roundtable discussions aiming to produce a report to the Minister of Justice, due May 2022.  The New Zealand Law Commission seeks to leapfrog past Australia’s process of rushing ad-hoc and piecemeal approaches to litigation funding regulation. New Zealand is embracing avantgarde design features in cultivating a bright future for it’s litigation finance marketplace.  
Commercial

Tips for Success in High-Stakes Disputes

Litigation requires many factors to be successful: a strong and effective strategy, the ability to adapt to changing circumstances, a talent for minimizing risk. This applies to both in-house and outside counsel, as well as a company’s board members and executive team. Omni Bridgeway assembled a panel of experts to discuss business-critical issues in litigation from the perspective of clients, counsel, and funders. Amanda Klein, chief legal officer at Toronto Hydro has suggestions for external counsel for large corporate clients:
  • Align legal strategies with the interests of shareholders. Regardless of the strength of the legal case, high stakes disputes must also have an eye on how litigation impacts external shareholders.
  • High-stakes litigation may be smaller than you think. Important cases may not be worth millions, but can set a lasting precedent that impacts entire industries.
Eliot Kolers, partner at Stikeman Elliott and head of Toronto Litigation & Dispute Resolution Group, asserts the importance of storytelling from a litigator’s perspective. Helping a judge see the client’s side without getting bogged down in legal minutia can go a long way toward a positive result. He also recommends:
  • Valuing experts in the industry. When framing the legal issues as a compelling story, experts can clarify complex issues in a way that laymen can easily understand.
  • Client communication. This is essential for a number of reasons—particularly to avoid surprises and to prepare involved parties for questioning.
From a funding perspective, Paul Rand—Omni Bridgeway’s Canada CIO, has suggestions:
  • Seeking multiple opinions on a claim is always a good idea, as differing perspectives may reveal facts or ideas that could have been otherwise missed.
  • Never assume clients won’t be open to legal funding. Not all clients realize this is an option, and even fewer fully understand how it works. Keeping options open can lead to better outcomes.
  • Reverse engineer a strategy. Starting at the end and working back to a viable plan can be successful. Sure, some adjustment will be necessary, but starting with an end point in mind can be beneficial to all parties.
Commercial Regulatory Issues

Australian Chief Justice Weighs in on Class Action Debate

Chief Justice James Allsop has a lot to say about class action reform in Australia. He asserts that class actions have an inherent public benefit—one that’s in constant danger of being minimized or even forgotten. This came within days of AG Michaelia Cash revealing that the government would not continue its quest for litigation funding reforms. This includes the proposed 30% cap on payouts to third-party funders. Financial Review details Chief Justice Allsop’s statement that Parliament and other interested parties put aside personal prejudices and preconceived notions about the industry when deciding how to move forward. It’s essential, he said, that people keep in mind that class actions are vital to the public good. Some have suggested that a 30% cost and funding cap would reduce the number of spurious or low value class actions being launched. But is that happening? Evidence suggests that it isn’t. Logic suggests that no funder wants to bankroll a case without merit. Legal author Jason Betts suggests that giving claimants 70% of an award seems more fair. But is it? Especially given that funders take on 100% of the financial risk? Would this change even make a difference, or would cases simply be filed in Victorian Supreme Court instead? It’s been suggested that judges be given leeway to make or approve decisions regarding the division of award funds, because they’re able to look at each case individually rather than relying on broad mandates. We'll have to wait and see how the Aussie regulatory system shakes out. 
Commercial People Moves

Omni Bridgeway Expands Employee Roster in Australia

Litigation Finance giant Omni Bridgeway has announced some new appointments in its Investment Management team and Investment Committee in Australia. Omni Bridgeway is a global leader in legal finance and risk management, with offices across the world. Since 1986, Omni Bridgeway has offered assistance from the first case filing through award enforcement and recovery. Market Screener details the new additions to the Omni Bridgeway team:
  • Michelle Painter SC brings decades of experience to her new position on Omni Bridgeway’s Investment Committee, where she will evaluate cases for funding with the rest of the team.
  • Christopher Kahwaji joined the Sydney team in 2021 as an Investment Manager. Formerly a class action specialist at Herbert Smith Freehills, Kahwaji’s experience managing commercial disputes and complex litigation is significant.
  • Chris Liscica, formerly of the litigation and regulatory team at DLA Piper, brings extensive experience to Omni Bridgeway. His specialties include general liability, personal injury cases, and professional indemnity.
  • Phillipa Briggs joins the Sydney team as an Investment Manager where she will engage in due diligence and management of funded cases. Her experience includes time at Hunt & Hunt, and in private practice at Minter-Ellison.
  • Grant Covington, formerly Special Counsel at Wotton & Kearney, joins the Sydney team as an Investment Manager. He was also Special Counsel with Moray & Agnew.
Omni Bridgeway CIO Tania Sulan expresses delight in welcoming her new colleagues, and is confident of their ability to improve the client and investor experience.
Consumer

Choosing the Right Consumer Legal Funding Company

You have a meritorious case with a good chance of winning. That’s good news, right? But did you know it could be months or even years before that money is in your hands? Appeals, delayed negotiations, unwillingness or inability to pay...all of these can contribute to an even longer wait to get what you’re owed. By availing yourself of the services of a Consumer Legal Funding company, you can get that money when you need it most. Finance Monthly details what you should look for in a Consumer Legal Funding company, and how to determine which is the best one to meet your specific needs. The first thing to keep in mind is that before signing any contract—speak with your lawyer. They will have a solid understanding of how lawsuit loans work in a pre-settlement context. There are three main factors that deserve consideration:
  • Duration for transferred funds. Many plaintiffs are in a tight financial spot while waiting for a case to be resolved—and therefore may require immediate funds. Ideally, the funding process from application to approval shouldn’t take more than a few business days once the funder has received the necessary information from your legal team. It’s vital that you ask how long the loan process will take from start to finish.
  • Transparency. A reputable company will be clear and concise when explaining interest rates, the payoff table (what you’ll pay, and under what circumstance). This will allow you to easily compare the various companies you’re considering.
  • Interest rates. Obviously, the amount you’ll ultimately pay back is important. Companies should be open about rates and be willing to provide numbers in writing. Be suspicious of any company that doesn’t.
Knowing what to look for and which questions to ask is an essential part of finding the right legal funders for your situation.
Commercial Legal Innovation

Bribes, Grease Payments and Global Litigation Finance 

Both competition law and consumer protection law focus on eliminating global marketplace manipulation. Deceptive acts and practices in many offshore businesses are byproducts of illegal bribes, or legal grease payments. Exclusionary price fixing of international virtual currency markets suggests that innovation is necessary to level the playing field.  Boston College International and Comparative Law Review researchers have suggested that ‘greasing the palms’ of international regulators is not necessarily forbidden. During the COVID-19 pandemic, many virtual currency firms made significant efforts to increase earnings via marketplace manipulation. Conditional regulatory approvals have prompted deceptive advertising practices which led to marketplace fraud and earnings manipulation. Famous international banks have made a business out of regulatory arbitrage frameworks … allegedly issuing bribes when necessary.  To navigate such bad behavior, price fixing agreements can be negotiated as a litigation finance tool. Engaging virtual currency fixing, as with Proof of Transfer (POX) powering NYCCoin and MIA Coin, supports the idea of government “donation bounties.”  Such practices are a hot topic of discussion for United States innovation policies.  The Department of Justice has recently begun to consider various instances of litigation finance solutions to help eliminate cross-border bribery and marketplace manipulation architectures.  For reference, we highlighted 32 key points in“The Foreign Corrupt Practices Act: It’s Time to Cut Back the Grease and Add Some Guidance.” Feel free to scan the doc and see our key takeaways (highlighted inside). 
Commercial

Podcast: The Litigation Finance Asset Class 

With the litigation finance industry experiencing meaningful growth, many investors are finding the space to be an attractive alternative asset class. The United Kingdom has witnessed litigation finance investment increase twofold, now valued at £2B a year.  A new podcast from Robert Rothkopf, Managing Partner of Balance Legal Capital, explores industry trends driving venture capital and private equity investments in litigation finance. Rothkopf is credited with being a pioneer in the UK’s third party funding industry.  Balance Legal Capital is a member of the Association of Litigation Funders (ALF). ALF serves as an independent association engaged by the Ministry of Justice in self-policing England and Wales litigation funding agreements. Listen to the podcast to learn more about Rothkopf’s insights.
Commercial

Pandemic-Powered Third Party Funding 

During the COVID-19 pandemic, world economies came to an abrupt halt. Nearly every industry was forced to reimagine itself in a bid for survival. Two years into the new normal, litigation finance’s exponential growth has been buttressed by an onslaught of COVID-19 related litigation claims.   Bill Tilley of Amicus Capital Group recently published a LinkedIn essay exploring third party funding trends witnessed during the pandemic. Tilley highlights that a large number of new litigation investors have joined the market to meet the demand for claims. With industry awareness on the rise, many regulators are looking to introduce third party funding mandates with consumer protections in mind.  Tilley forecasts that quality litigation will continue to experience increased costs, spawning a need for alternative litigation lenders. The time to a verdict is slowing, as the pandemic has contributed to litigation supply chain disruptions. Third party investors must be willing to devote time and resources and be patient as they await resolution.   Tilley says, with the pandemic waning, third party investment is continuing to surge with exponential year-on-year increases well into 2030.