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Legal Teams Support CEO and CFO Investment Vehicles 

Traditionally, CEOs and CFOs have approached legal expenses from a risk averse perspective. Yet litigation finance is increasingly being understood as a modern instrument of legal innovation and balance sheet protection. Something has got to give.  Burford Capital discusses these concepts in a new LinkedIn post that suggests corporates who engage litigation finance will reap rewards. Burford seemingly suggests that those who are not looking to leverage litigation investment as a tool will succumb to loss of market share. Burford suggests that CEOs and CFOs who design a portfolio of litigation assets may be respected as best-in-class in terms of financing quality litigation.   Litigation portfolio architecture is innovating litigation finance from a one case risk mitigation utility to a bundle of cases that hedge overall corporate and legal risks. Buford also suggests that law firms that engage in ethical litigation finance practices stand to inherit reputational benefits typically associated with legal innovation.   

LexShares Debates Delaware’s Legal Finance Disclosure Guidelines  

Litigation Finance Journal has been covering Delaware’s Chief Judge, who has ordered  disclosure of litigation finance agreement details, in a move the court claims helps provide funder transparency (akin to KYC/AML). LexShares has published a debate on the significance of Delaware’s disclosure mandate, discussing the implications for quality United States regulation of the litigation finance industry.  Lexshare’s insights suggests a hawkish approach to disclosures, questioning if claimant interests are being promoted or protected. Traditionally, third party funders have been skeptical of mandatory disclosure of litigation agreements. LexShares seemingly suggests that common regulation of litigation investment is not on the horizon in the United States.  Litigation Finance Journal has reported the World Bank’s Settlement of Investment Disputes has adopted a common set of rules and regulations for third party legal investors. Meanwhile, in Singapore and Europe, universal rules and standards are being discussed as imminent requirements for the industry to reach its full potential.

Apex Litigation Finance to appoint Stephen Allinson as ‘Head of Legal’

Litigation funding specialists, Apex Litigation Finance have announced the appointment of Stephen Allinson, Solicitor and Licensed Insolvency Practitioner, as their new Head of Legal. Stephen is a credit, debt and insolvency specialist who has worked in the field since 1987. His extensive background also includes setting up his own consultancy and before that he was a Business Recovery and Insolvency Partner at a major law firm. As well as acting as a consultant within the legal field, Stephen also pursues other projects in the legal, insolvency and credit fields, and is a Visiting Lecturer at the University of Law. In addition to Stephen’s extensive licensed insolvency work, he has also been an Associate Member of the Association of Property and Fixed Charge Receivers. A multi-disciplinary consultancy whose council is selected through leading members of combined professions, to offer professional support in property, legal and insolvency matters. Stephen says: "I am absolutely delighted to be joining the growing team at Apex. Without a doubt, litigation funding is now a vital area in the litigation sector. With its concentration on mid-tier claims, Apex is well placed to become a very important player in this market. I am looking forward to working with Maurice and the team, and with the many solicitors and insolvency colleagues who will, no doubt, wish to discuss opportunities with us." Furthermore, Stephen is no stranger to the position of Chairman as he was appointed Chairman of the Board of The Insolvency Service in January 2017, serving in that role until May 2021, and is also the Chairman of the Joint Insolvency Examination Board (JIEB), a member of ICAEW Investigation Committee and a Chairman of the Methodist Church Disciplinary Process. Apex CEO Maurice Power says: “We are excited to announce Stephen’s appointment and to welcome him to our growing team. His skill and experience will add real value to the Apex proposition and further cement our position as a litigation funder of choice for the insolvency sector.” Apex was proud to attend and to sponsor the first in person R3 National Conference since COVID. The Apex team thoroughly enjoyed greeting new and existing contacts and demonstrating how the Apex funding model is a perfect fit for insolvency litigation. As Apex continues to grow the team, they are keen to hear from interested individuals from various disciplines, including legal, insolvency, litigation funding, AI development, and business development. Specific litigation funding experience is not essential. Apex will look at an individual’s skillset and identify those who can contribute to their success. Interested applicants are asked to contact Apex via enquiries@apexlitigationfinance.com by sending a current cv and details of why they would be the right fit for Apex. About Apex Litigation Funding: Apex Litigation Finance Limited brings together experts from the legal and finance sectors to provide third party litigation funding to litigants (corporates, liquidators, and individuals) who are unable to pursue a claim due to the prohibitive cost of litigation. Although the claim may have merits, uncertainty over the total costs and the potential risk of being ordered to pay the defendant’s cost, should they lose the claim, prohibits access to justice for many claimants. Our process is augmented by artificial intelligence systems to assess risk. As a professional litigation funder, Apex will make available funds to pay legal and other costs associated with a claim in return for an agreed share of any successful return. If there is no recovery, or if the claim is lost, there is nothing to repay.   For details, please see www.apexlitigation.com

Litigation Finance Confidentiality Concerns

As litigation finance grows in popularity, the industry will be on the hook for responsibility associated with confidential client information. Right now, litigation investment facilities hold inherent third and fourth party risks associated with confidential information. Sentry Funding has published insights suggesting that litigation financiers have been overly focused on assessing potential client awards, and have forgotten to respect legal fundamentals associated with client confidentiality.  Sentry Funding suggests that a robust confidentiality agreement is the first step in mitigating risk associated with confidentiality. Sentry suggests that with Europe’s upcoming patent and trademark marketplace expansion, European litigation investment professionals should be extremely cautious. Patent and trademark protection has a long history of confidentiality breaches, which could pose problems for plaintiffs.   Sentry’s research underscores the importance of litigation investors spearheading legal innovation through exemplary confidentiality practices, and outlines several steps claimants can take to ensure proper confidentiality.

Potential Uptick in IP Finance and Investment on the Way

Law Business Research’s IAM-Media.com has published new guidance that the United States and European patent and intellectual property marketplace will soon experience increased activity. West U Capital is making headlines in the United States as a powerhouse with a patent and trademark pedigree hard to match. In other news, Europe will soon open its Unified Patent Court (UPC), which is rumored to represent over 24 of the 27 European Union member states. Over 40 countries are eligible to join the UPC, helping to solidify the notion that increased IP marketplace activity should be expected forward.  IAM-Media.com has collated an outline of several global patent and trademark marketplace events for litigation investors to consider. Specifically, trends point to an inflow of capital in patent, trademark and intellectual property portfolio building. Trends also suggest a growing disparity between United States and European risk as trends point to Europe’s UPC being a conduit for aggressive IP claims against US enterprises.  As an added bonus, Litigation Finance Journal has included 33 highlights to Citibank’s Metaverse and Money report that includes several IP and trademark issues expressed by leaders in the United States, Europe and Russia, that could become part of UPC portfolios.

Funding a Credit Crunch: How Litigation Finance Has Fueled Global Actions Against Visa and Mastercard

Mastercard and Visa are no strangers to legal action, having endured class actions and legal challenges all over the world. Currently, a collective action funded by Bench Walk Advisors accuses the credit giant of illegally overcharging Multilateral Interchange Fees (MIFs) in the UK. It has been asserted that MIFs, here charged as a percentage of each purchase, are unlawful. If the courts agree, merchants will be compensated for the money lost—possibly with interest. A similar case was recently settled in Canadian courts. Merchants across Canada will share a $131CA million settlement for businesses accepting Visa and Mastercard since 2001. Given these developments, we thought it prudent to take a look back at the Visa and Mastercard claims. What happened? How did we get here? How are litigation funders impacting the case? And what can we expect from all of this going forward? So, without further ado… The Story Behind the Case Visa and Mastercard have been accused of overcharging merchants on multilateral interchange fees, or MIFs. This fee is charged to the merchant’s bank in every credit card transaction. It also makes up the largest portion of the Merchant Service Charge—which is assessed simply so that the merchant may accept Mastercard and Visa payments from customers. Unlike other types of merchant fees, MIFs are not set with regard to market rates. In this case, the credit card companies are accused of unlawful and anti-competitive practices. Because merchants have no choice but to pay these fees, lest they forego the ability to accept credit card payments—Visa and Mastercard appear to be taking full advantage of the leverage they maintain over merchants. Merchants and banks pass these charges on to consumers, which means everyone is adversely impacted by this type of overcharging. The Upcoming UK Class Action The UK class action was launched in August of last year with funding from Bench Walk Advisors. Bench Walk is taking over for Therium Capital Management, the original funder slated to finance the exceptionally large claim, valued at GBP 15 billion. Interestingly, the Competition Appeals Tribunal (CAT) scrutinized the funding agreement, and observed that there was enough funding in the agreement to cover the potential costs of the claim, even with extensive disclosure motions. Bench Walk is said to be providing up to GBP 45.1 million in funding, with an additional GBP 15 million slated for adverse costs. The CAT has found estimated costs to be roughly GBP 32.5 million for the claim, leaving plenty in the budget should disclosure motions rain down, or the claimant class experience any additional unforeseen consequences. In August of 2021, a London court approved the class action. Claimants assert that as many as 46 million Britons may receive roughly GBP 300 each if the case is successful. As is de rigueur in funded cases, Mastercard is calling the class action “spurious” and asserting that it’s a glib and cynical ploy to make money. Ironic, no? According to financial ombudsman Walter Merricks, these consumer-focused class actions are designed to hold big businesses responsible for misdeeds. Noted class action focused firm Harcus Parker is helming the UK case, which includes merchants and customers who used credit cards between May 1992 and June 2008. In 2015, UK law capped MIFs at .3% on consumer credit transactions, and .2% for consumer debits. While the cap was not applicable to corporate or inter-regional transactions, Harcus Parker asserts that such MIFs should be zero. Bench Walk Advisors’ funding will help more than 100,000 companies pursue claims against Visa and Mastercard. The Case in Canada  Settlements with Capital One, Bank of America, National Bank, and others have been reached with merchants. Lawyers for the Canadian class action include Consumer Law Group, Branch MacMaster LLC, and Camp Fiorante Matthews Mogerman LLP. The settlement includes a provision giving merchants the ability to make surcharges (up to a cap) for the next five years minimum. This codicil seems less consumer-focused, as the end result will be customers paying surcharges with each credit card purchase. Consumers may find this especially galling, given recent inflation and a COVID-inspired increase in credit card shopping, both in-person and online. In Canada, Mastercard and Visa have settled with class action participants to the tune of $131 CAD. Merchants will be reimbursed for MIFs paid on credit transactions from 2001 forward. Smaller businesses (those which make under $5 million in yearly sales) may claim as much as $30 per year, up to a maximum reimbursement of $600. Both settlements have been approved by the courts. Meanwhile, none of the banks involved have not admitted any malfeasance. The Canadian class action did not rely on traditional litigation funding. Rather, lawyers were compensated from settlement funds as approved by the courts. Does this mean that third-party legal funding isn’t necessary for a successful class action in Canada? Not necessarily. The differences between funded class actions and cases taken on contingency can vary widely depending on the case at hand. In the United States In September of last year, Visa and Mastercard were both ordered to face antitrust class actions over MIFs by a Brooklyn judge. The class action includes claimant merchants who accepted Mastercard or Visa between 2004 and 2019. A settlement was reached in 2012, but was not approved by several large merchants. It was then overturned on appeal—resulting in a new settlement offer of a whopping $900 million more than the original settlement. A representative from Mastercard, which vociferously defended against the antitrust and unlawful fees allegations, stated that the company is pleased to have reached an agreement. That’s not surprising, given how frequently the company finds itself in court on the same type of accusation. Again, a Mastercard spokesperson asserted that the class actions were brought by “US-based lawyers and litigation funders primarily focused on making money...wasting the court’s time...” It’s noteworthy that in the US case, major retailers may see an even larger windfall. Walmart, Target, Kroger, and other large merchants have opted out of the settlement in the hopes of striking a better deal. A court has found that the credit card companies violated antitrust laws—ordering a preliminary settlement amount of between $5.5-6.25 billion. In short, US merchants may be reimbursed for interchange fees overpaid for the past 15 years. The preliminary settlement was approved by the courts. However, the Second Circuit Court of appeals has entertained objections to the settlement approval in March of this year. It’s unclear when a decision will be reached. Mastercard Around the World Mastercard in particular is no stranger to lawsuits, particularly those surrounding interchange fees. Jurisdictions around the world have pursued, or attempted to pursue, class action cases against the credit giant. These include:
  • European Union: 2012—resulting in Mastercard repealing earlier pricing changes and promising greater transparency in pricing.
  • France: 2009—resulting in Mastercard committing to reduce interchange fees across the board.
  • Poland: 2007—determined Mastercard’s interchange fees to be unlawful, while the Protection of Competition and Consumers disagreed. An appeal is pending
  • Hungary: 2009—Visa and Mastercard both found to have violated competition laws and fined $3 million.
  • Italy: 2010—Mastercard fined 2.7 euros, though this was annulled the following year.
  • United States: 2012—Mastercard opted out of a settlement of $7.25 billion, reducing the settlement amount to $5.7 billion. This is still a record-setting amount of an antitrust class action.
How are Litigation Funders Helping? As the appeals are being decided and the claims period draws near, a number of funders are offering post-settlement funding to claimants with payouts en route. This provides an avenue for struggling merchants to gain access to reimbursements without waiting. For small businesses hurt by rampant overcharging, this can be tremendously helpful. We can see from this that Litigation Finance can do more than ensure that class actions are funded and that claimants have their day in court. The industry can also monetize payouts, offering choices not previously available to members of a class. In short, it’s not just access to justice that the Litigation Finance industry provides, but access to much needed funds that can keep business afloat, especially during turbulent economic times. So What’s Next? All eyes will no doubt be watching for the outcome of the UK anti-competition case against Visa and Mastercard. The European Commission has already declared that Mastercard breached its duty when setting its fees, thus the meritorious nature of the claim should never have been in question. It is now up to a court to decide the culpability of the credit card giants, as per UK law. One interesting final note: you might have been wondering how a financial ombudsman such as Walter Merricks can possibly discern the specific payout that each of the 46 million or so claimants deserve? Well, the answer is he likely can’t, but that won’t affect the outcome of the case. The Supreme Court has found that the impossibility of Merricks’ task does not take defendants off the hook. Instead, Merricks may seek an aggregate award with data that affirms an appropriate amount of damage, even if he cannot apply a methodology that is fair to everyone in terms of a final payout. As opponents of the action have duly noted, the court’s ruling could potentially “open the floodgates” to a bevy of future class actions, similar in scope to what we’re witnessing here. Perhaps ironically, many in the funding community are nodding their heads, as the potential for large, US-style class actions in the UK is viewed as a positive development – greater access to justice, after all. We will continue to bring you updates on the Merricks claim as it winds its way through the UK legal system.

Omni Bridgeway APAC Leadership Developments

Omni Bridgeway (ASX:OBL), the world’s largest legal risk finance and management team, is pleased to announce new appointments in its Asia Pacific leadership team. Managing Directors and co-Chief Investment Officers (APAC) Oliver Gayner (Sydney) and Tom Glasgow (Singapore) assume new roles as Managing Directors and co-Chief Investment Officers (APAC), responsible for jointly overseeing all aspects of Omni Bridgeway’s investment management, due diligence processes and operations across the Asia Pacific region. Tom has led Omni Bridgeway’s Asian operations since joining the company in 2017 and has built the largest and most respected legal risk finance and management team in the Asian region, applauded by clients and recognised and awarded by industry participants and commentators. In addition to his expanded regional role, Tom will also manage Omni Bridgeway’s international arbitration portfolio, leading our team of arbitration specialists across the globe. Oliver joined Omni Bridgeway in September 2015 and is a highly experienced legal risk financier with an international practice who has played an integral role in Omni Bridgeway’s expansion into Asia, EMEA and Latin America. Omni Bridgeway’s APAC team serves clients across Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pacific Islands, The Philippines, South Korea, Vietnam and beyond. The joint appointment advances the ongoing global integration of Omni Bridgeway’s business operations, and also reflects the cross-border nature of funding in the region. Managing Director - Transformation We also congratulate Tania Sulan who assumes a newly-created role as Managing Director – Transformation, in which she will oversee the implementation of strategic projects for the Board. Tania joined Omni Bridgeway in November 2007 and previously led the Australia New Zealand team as Chief Investment Officer – ANZ, and prior to that she led the establishment and growth of Omni Bridgeway's Canadian operations as Chief Investment Officer – Canada. Andrew Saker, Omni Bridgeway’s Managing Director & CEO and Chief Strategy Officer, said: “These exciting appointments recognise the immense talent in our leadership team and reflect the ongoing  integration and transformation of our business, from its origins as a founder of the dispute finance industry, to our present status as a global fund manager, specialist in legal assets, and the largest legal risk management team in the world.” ABOUT OMNI BRIDGEWAY Omni Bridgeway is the global leader in financing and managing legal risks, with expertise in civil and common law legal and recovery systems, and with operations around the world. Omni Bridgeway offers dispute finance from case inception through to post-judgment enforcement and recovery. Since 1986, it has established a record of financing disputes and enforcement proceedings.

ILFA Announces Inaugural International Legal Finance Conference in New York

The International Legal Finance Association (ILFA) today announced it will host its first annual International Legal Finance Conference on Monday, October 24, 2022, at the prestigious Morgan Library in New York City.

The conference will draw together legal and finance leaders from across the world—including providers of legal finance, investors, law firms, corporate general counsels and CFOs to discuss the best practices in managing litigation and arbitration costs and risks and monetization of legal assets. A range of speakers from across the legal finance ecosystem will present on the industry’s most substantive topics such as managing in-house legal budgets, managing financial and reputational risk, the impact of global economic trends on liquidity pressures, enforcement and monetization of awards, law firm financing and portfolio funding.

“As the world’s only global trade association for commercial legal finance, we are excited to launch this industry-leading conference,” said Gary Barnett, Executive Director for ILFA. “The event will provide a forum for legal finance professionals and users of legal finance including corporate counsel to explore the role of litigation finance in today’s global marketplace as a cost and risk management tool, as well as for investors in legal assets.”

“The conference marks an exciting moment for ILFA and comes at a pivotal time for our industry,” said Neil Purslow, ILFA Chairman and Co-Founder and CIO of Therium Capital Management. “Conference attendees will have a unique opportunity to learn from leaders in the field about how it can be used as an integral part of their cash management strategy.”

To register for the legal finance conference or view additional details, visit http://conference.ilfa.com/

About the International Legal Finance Association

ILFA was founded to represent the global commercial legal finance community, and its mission is to engage, educate and influence legislative, regulatory and judicial landscapes as the global voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA is incorporated in Washington, DC, and will have chapter representation around the world. For more information, visit www.ilfa.com and find us on Twitter @ILFA_Official and LinkedIn.

Therium Funds Multi-Billion Pound Action Alleging Truck Cartel Price Collusion 

Six producers of big rigs have allegedly conspired in a 14-year scheme to defraud government regulators over emissions mandates. The Competition Appeal Tribunal has approved a £2B claim marking a historic first for United Kingdom collective actions. The Road Haulage Association (RHA) is representing an estimated 18,000 claimants as the beneficiaries of the hopeful award.  Law Gazette reports that Therium is the litigation funder that will earn a total of 6% of the award’s proceeds of anything over £2B. Therium will be granted 8% of an award of over £3B. Therium will NET 30% of collective proceeds if the award amounts to anything less than £150M. While the payout ratio of the funding deal is large, claimants say litigation would not be possible without access to third party investment.  Similarly, RHA claims that the case’s lifespan may vary as well, depending on tribunal preference of proceedings. RHA underscores the importance of the litigation agreement’s scaled architecture.