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Commercial Legal Innovation

LegalTech Fund Invests in Settlement Analysis Platform

One of the central tenets of litigation funding is the importance of risk management and analysis not only during case selection, but further down the road when counsel must weigh the benefits and drawbacks of settlement. Whilst law firms bring their significant weight of experience and expertise to bear when evaluating settlement options during dispute resolution, the ability to pinpoint the exact right moment and terms under which to settle is always a challenge. In an announcement by The Legal Tech Fund, one potential solution to this challenge is being explored, as the fund has invested in SettleIndex, a fintech company aiming to reduce risk through detailed financial modeling. The SettleIndex platform is designed to provide lawyers with the tools to evaluate the risk of any case, allowing them to visualize potential outcomes and map that against the financial risk of each option. The value of such technology is not only present for lawyers and their clients, but also for funders eager for more ways to assess case viability and mitigate risk when financing a particular case. Being able to model not only probabilities of success, but also the individual pathways to reliable financial return could be a unique tool in a funder’s arsenal.
Commercial Deals

Burford Shares Outlook on Funding Growth in Australia

While commercial litigation funding has been present in Australia since the 1990s, there are signs of continued industry growth within the country.  In a recent podcast, Burford Capital’s Matt Lee discussed the factors which are building momentum for further growth within the litigation finance industry. Mr Lee points out that while third-party funding has historically been used in class actions against companies, it has become apparent to these same large corporations that this funding is a useful tool to alleviate costs and manage litigation risk. In particular, Mr Lee sees increased adoption in the mining and energy, construction, M&A and commodities sectors.  Outside of domestic commercial litigation, the other main catalyst has been the changes to arbitration regulation in 2021, which was the first time third-party funding had been mentioned. These new rules released by the ACICA include the ability to recover the costs of funding during arbitration, further minimising risks and offering the potential benefits of recouping costs. Secondly, Mr Lee highlights the new clarity around disclosure rules as being a previously murky area that now offers clarity to funders, lawyers and clients alike. Mr Lee argues that international arbitration or investment treaty arbitration will be some of the most active areas for litigation finance in the coming years. This is due to the fact that funding helps offset the disadvantages of Australia being an adverse cost jurisdiction, the lengthy duration of international disputes and the challenge of enforcement and collection outside of national borders.
Commercial Regulatory Issues

Bloomberg on California’s Approach to Law Firm Ownership 

In the wake of the American Bar Association approving measures to loosen restrictions on sharing Law firm revenues with non-attorneys, Bloomberg law reports that legislators in California are resisting the notion. Many legal scholars around the country say that sharing law firm ownership with non-lawyers is inconsistent with core values of the legal profession.  According to Bloomberg Law, amending California's law firm ownership provisions could have a significant impact on the integrity of legal competition and innovation in the state. That said, William Farrell Jr. (Co-Founder and Managing Director at Longford Capital) highlights a long-term approach to the eventual economic evolution of law firm ownership structures around the United States.  Bloomberg reports of various 'sandbox' approaches to ownership models that could impact the sharing of profits from law firm proceeds. Arizona was the first state to repeal rules to allow non-attorney law firm ownership. Bloomberg notes that the concept of non-lawyer participants in firm ownership will continue to produce 'epic' debate.
Commercial People Moves

The Dawn of Summer Associates at Omni Bridgeway 

Offices in Houston, New York and San Francisco at Omni Bridgeway will host an exciting new 10 week summer associate program. Jordan Metoyer (Graduate of Georgetown Law Center) and Chanel Ricks (Rising 2L at Howard University School of Law) were selected to participate in the inaugural rotation of Omni's prestigious program.  Matt Harrison (Co-Chief Investment Officer and United States Managing Director at Omni Bridgeway) says that Omni is very excited to host the new Summer Associate program. Ms. Metoyer and Ms. Ricks both share enthusiastic praise for their experience in the summer internship program. Ms. Metoyer mentions learning from Omni's fact-driven approach to building customer relationships and unique litigation funding agreements. Ms. Ricks shares learnings about the significance litigation funding can play for claimants who are seeking justice.  Both Metoyer and Ricks say the summer rotation has had a meaningful impact on their journey as young attorneys. Amy Geise (Head of Houston Office and Summer Associate Program at Omni Bridgeway) says that Omni will continue to offer forward-thinking attitudes to help develop the next generation of litigation financiers.
Case Developments Commercial

Regency Funding Collects $29MM in Takata Airbag Class Action

The ability of consumers to hold major international corporations to account over their failings has been drastically strengthened by the presence of third-party funding options around the world. This was demonstrated in the case of the Takata Airbag class action, which saw the court award a $52 million settlement across six cases brought by Australian consumers against automobile manufacturers. Analysis by Wolters Kluwer Australia in Lexology highlights the extent of these actions, which found BMW, Honda, Mazda, Nissan, Subaru and Toyota liable for failing to comply with safety standards and quality requirements for the airbags in their vehicles. The settlement will see the primary six plaintiffs each receive $20,000 in compensation, as well as $600 in damages for any consumer affected by this breach in standards. Regency Funding, which backed the case, will receive $13 million in funder’s commission, as well as $15.57 million to recover the plaintiff’s legal costs.
Commercial Regulatory Issues

An Argument for Reforming the Principle of Non-Recoverability

While the availability of, and access to, litigation funding has been a boon for those seeking access to justice, some industry insiders argue that reforms have not gone far enough, and that more change is needed. One area of interest is recoverability for plaintiff costs, where currently claimants still stand to lose financially in order to cover the costs of the very funding that has allowed them to access justice. Writing for The Law Society Gazette, managing director of LionFish, Tets Ishikawa, argues that where defendants have been proven to have harmed plaintiffs, it is right and just that they recoup the costs for an action caused by the defendant’s wrongdoing. He argues this is doubly true in cases where the defendant prolongs proceedings through inaction or failure to properly handle proceedings, thereby causing claimant’s costs to rise; as is true in the case of Cabo Concepts Ltd v MGA Entertainment. Ishikawa also acknowledges that reform should not mean recoverability would be available in all commercial litigation matters, but that it should still be at the liberty of the court to make such determinations on a case-by-case basis. He points out that the basis behind non-recoverability is now outdated, and fundamentally misaligned with the principles of widening the avenues to legal redress that litigation funding is supposed to provide.
Commercial Fundraising

Australian Funder Seeks Outside Investment to Finance New Cases

Litigation finance is booming around the world, and while new funders are increasingly popping up to meet regional demand, industry stalwarts are continuing to augment their resources. Reporting for the Australian Financial Review demonstrates this trend with a spotlight on Litigation Lending Services (LLS), which is looking to stock its war chest for future cases with a new funding round, in partnership with Credit Suisse. The Sydney-based funder is looking to raise up to $35 million in new capital from investors, aiming to put this money to work funding new litigation opportunities, while its previous ventures are still moving towards completion. While the firm has previously relied upon its internal capital to fund new ventures, this is the second time it has looked for external investment after the launch of its Litigation Lending Fund 1, back in 2019, which raised $50 million to take on cases. LLS, which was founded in 1999, claims a success rate of 93 per cent on cases that reach completion, and has backed many high-profile cases in Australia, including the class action against NT and WA for stolen wages.
Commercial Deals

Evaluating the Rise of Class Actions in the UK and Europe

While class actions have historically been much more prominent within the US legal system, which has been more open to aggressive litigious actions, the UK and Europe seem to be heading in a similar direction. In particular, large consumer group claims are now more frequently being brought against major multinationals, particularly in the area of competition law. In a piece of analysis for Lawyer Monthly, David Greene, senior partner at Edwin Coe, argues that there are three primary drivers of this increase outside the US. He notes that updates in court rules allowing opt-out mass claims, a rise in the number of specialist claimant firms and the increased presence of third-party capital from funders, provide ample fuel to power this explosive growth. As to whether this growth in class actions globally is a positive or negative for the industry, Greene highlights that it is not just that consumers are going after big business, but also companies are using these structures and tools to engage in aggressive litigation against other corporates. He also notes that it would be unwise to make a one-to-one comparison with the US system, due to the more limited liabilities and the more narrow scale of damages and costs that can be incurred.
Announcements Commercial

LITFINCON ll: The Premier Litigation Finance Conference Returns to Houston

After a triumphant conference in March 2022, LITFINCON is excited to announce its return to The Post Oak Hotel in Houston, in March of 2023.  According to the company’s press release, this past year’s LITFINCON attracted global thought-leaders from a variety of disciplines in the legal and investment sectors. In particular, attendees learned about major trends and notable developments in litigation finance – an emerging asset class for institutional investors and a source of capital for legal professionals and law firms. Building on LITFINCON, LITFINCON II expects to have a diverse set of over 300 attendees that include leading business executives, judges, litigation funders, elite Am Law firms, corporate counsel, legal professors, and institutional investors. We are looking forward to hosting this event in our backyard, Houston, Texas, one of the largest legal markets in the country. Attendees will have the opportunity to listen to a diverse mix of insightful panel discussions, regulatory changes, judicial thoughts & opinions, and investment trends in litigation finance. There will be even more opportunities to connect with speakers, panelists, and other attendees to expand referral networks and become well-informed about this growing institutional asset class. New to the agenda, LITFINCON II will host an exclusive event for VIP attendees to experience the Houston Livestock Show and Rodeo, the largest livestock exhibition and rodeo in the world. The conference will also continue the fun tradition of "Law, Lunch & Laughs" with a celebrity comedian as a keynote speaker. LITFINCON II is thrilled to have early support from some of the most high-profile organizations in the litigation finance industry. Confirmed initial sponsors for LITFINCON II include Certum Group, CAC Specialty, Schulte Roth & Zabel, Omni Bridgeway, Filevine, Aon, Dunning Rievman, and Arran Capital. “We’re proud that the inaugural LITFINCON was a tremendous success and want to thank the many sponsors, panelists, and attendees, who attended from all over the world – London, Geneva, New York, Miami, San Francisco, and Austin. LITFINCON highlighted the growing field of litigation finance and the importance of Texas as a hub that unites all participants in the legal field. Siltstone Capital is excited about continuing the momentum and advancing the litigation finance field by hosting LITFINCON II in March 2023,” says Mani Walia, Managing Partner & General Counsel, Siltstone Capital. Entrusted by leading institutions, Siltstone Capital is a premier multi-strategy investment firm that provides capital solutions to litigants, law firms, and legal departments to help resolve their real-world legal issues and create significant value for all stakeholders.