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Commercial Deals

North Wall Capital Finds Strong Value Proposition in ESG Litigation

The importance of ESG cases for litigation funders has become more and more apparent over recent years, and in 2022 alone, we have seen several developments indicating that this trend is not set to slow down. North Wall Capital has been proactive in terms of using litigation funding to back claims against corporations violating environmental standards and protections, most recently providing $100 million in capital to Pogust Goodhead to fight these cases. Speaking with New Private Markets, the chief investment officer and founder of North Wall, Fabian Chrobog, argues that this avenue of financing lawsuits is a key method for ensuring multinational companies face accountability for the environmental harm they may cause. Discussing the agreement with Pogust Goodhead, Chrobog highlighted that this financing is not committed to a specific piece of litigation, but rather a pool of capital that can be leveraged to pursue any case that is ESG-focused. When factoring in the risk of each funding agreement, Chrobog argues that ESG cases are beneficial, as they maintain a higher probability of settlement than most case types, resulting in a strong financial return for the funder. Furthermore, by lending a single sum of capital to a law firm like Pogust Goodhead, North Wall diversifies its claims investment and avoids relying on an individual case for a positive outcome.
Commercial Regulatory Issues

Legal Scholar Cites Lack of Transparency as Key Flaw in Litigation Funding

While litigation funding has been a great boost to those seeking access to justice, the system is not without its critics or those who have raised concerns. One area that has recently come under the spotlight is the issue of transparency in funding. Some commentators in the US are comparing this to the lack of transparency in US political donations. Writing for Tuscon, Xavier Segura, a legal scholar and higher education professional, suggests that not only is the lack of transparency an issue in and of itself, it could lead to conflicts of interests between judges who unknowingly have a financial interest in cases they are overseeing. He goes on to speculate that this could also impact national security matters, noting the presence of sovereign wealth funds and state-backed entities in litigation finance; he raises the concern that they could be funding cases to litigate against key national security priorities. As a solution to this issue, Segura argues for voters and legislators to support the Litigation Funding Transparency Act (LFTA), a bill in the US House of Representatives. This legislation would not only require disclosure of the presence of funding agreements, but also make the names of funders publically available. Many litigation funding industry participants have categorized the LFTA as legislative overreach, and a solution in search of a problem. The bill continues to languish in Congress, with no clear momentum at this time.
Consumer

Legal-Bay Increases Focus on Medical Malpractice Suits 

The medical malpractice field has always been a contentious and active area of litigation, with a volume of cases that is constant and not as affected by economic conditions as other areas of litigation. It comes as no surprise, therefore, that litigation funders are continuing to explore high-value malpractice cases that yield significant returns. In a recent press release, Legal-Bay announced its intention to increase the number of medical practice cases it funds, citing its experience in the field and ability to support claimants through the often long and arduous process.  The funder’s CEO, Chris Janish, highlighted that due to this drawn-out process many plaintiffs suffer financially even while trying to seek compensation, and therefore Legal-Bay’s funding is a crucial aid for those engaging in malpractice claims.
Commercial Regulatory Issues

SEC’s Proposed Amendments Might Impact Litigation Funding

As part of a broader effort by the US Securities & Exchange Commission (SEC) to increase transparency around hedge fund investing and reduce risk in the financial system, the spotlight has fallen on the activities of funds engaging in litigation financing investments. In a proposal last week, the SEC would require hedge funds and private investment advisors to confidentially disclose their litigation funding activities and spending. Analysis by Bloomberg Law highlights that there has been a lack of transparency around the extent of hedge fund involvement in the litigation funding industry, even for regulators. However, the new rules would ensure that funds would have to report what portion of their capital was dedicated to litigation financing efforts. This reporting would not be made public. Bloomberg reports that there will certainly be pushback from both hedge funds and Republican officials, who have long fought against any national disclosure regulation. However, this may not deter the SEC, as Scott Masciana, partner at Holland & Knight, points out that as the industry continues to grow, it will become increasingly difficult to escape further oversight from regulators.
Consumer

Three Consumer Funders Combine to Form Technology-Driven Entity

While many small funders maintain niche or industry-specific practice areas, or in some cases take a regional approach, the industry is now seeing some of these smaller funders join forces to improve their product offering and widen their potential consumer-base. In a press release this Monday, it was announced that Ardec Funding, LawCash and Momentum Funding would be joining forces to operate under a new unified brand: Cartiga. The firm aims to bring the unique attributes of each firm to offer consumer legal funding and attorney funding, built on a foundation of proprietary data and technology assets, and a focus on maximising the customer experience. CEO of the newly-formed Cartiga, Charlie Platt, said that the new funder puts just as much emphasis on providing its clients with the right technology and data analytics tools as it does on providing the raw capital. By doing so, the company hopes to provide attorneys with the resources they need to select the right types of cases, and then see those proceedings through to a successful conclusion.
Commercial People Moves

UK Funder Supports Future Growth with New Hires

Following on from reporting last week that AxiaFunder, one of the UK’s fast-growing firms, was seeing success with its latest product offering, the funder has now announced two new hires to bolster its team. In an article by Peer2Peer Finance News, AxiaFunder announced the hiring of Anthony Berry and Noor Khadim, as senior case assessors who will join Michael Lent in the firm’s case assessment team. Berry brings over 20 years of experience in the legal services and insurance industry, while Khadim has previously worked as a partner at Armstrong Teasdale, and has experience as an expert legal consultant on arbitration for the U.S. Department of Commerce. CEO and founder of AxiaFunder, Cormac Leech, highlights the success of the firm’s track record as a key driver for its growth, noting that to date they have lost no claims. Leech also stated that the firm expects to reach profitability in the fourth quarter, with future growth looking strong.
Commercial Deals

Crypto Class Actions Represent Opportunities for Litigation Funders

The dramatic decline in the value of cryptocurrencies over the last nine months has sent shockwaves through the investment world, which is now spilling over into the legal industry. The combination of a large number of retail investors losing substantial amounts of capital, and a severely under-regulated crypto market, is driving an uptick in the number of class action suits from investors. In a piece of analysis for BusinessCloud, Mark Kenkre, partner at Keller Postman UK, highlights that the lack of a firm regulatory structure for crypto assets has left investors in the dark as to the risks they might face in their investments. As a result, Kenkre sees a sharp rise in the volume of class action claims in the UK, and points to ongoing cases abroad, such as the class action suit filed in the US against Binance for false advertising of its Terra USD asset. Kenkre highlights the role litigation funders may have to play in these upcoming suits, given the staggeringly large number of retail investors and the potential for equally high returns due to the scale of damages that could result.
Case Developments Commercial

United Kingdom Sentences £100M Litigation Financier to 14 Years Jail 

The United Kingdom's Serious Fraud Office's (SFO) investigation of Timothy Schools has ended in a 14 year jail term. Mr. Schools is accused of defrauding investors to fund his exorbitant lifestyle. More than £100M in proceeds were part of the SFO investigation. SFO.GOV.UK reports that Mr. Schools operated a Cayman Island based fund under the banner of Axiom Legal Financing. Schools was convicted of tricking investors by using the funds for personal expenses, such as the purchase of a motor boat. The SFO investigation concluded that Schools siphoned off money at the detriment of investor confidence.  SFO says that it will continue prosecution of similar cases to support the public interest. 
Commercial Legal Innovation

Digital Freedom Fund’s Strategic Litigation Toolkit

The Digital Freedom Fund offers capital for legal and other expenses associated with technological liberties. As digital rights heat up (for example, with crypto technology) it is a safe bet litigation will shape the broader economy. Henceforth, the Digital Freedom Fund has collated a new library of tools to help those looking for strategic funding. According to their website, the Digital Freedom Fund approached coordination of the toolkit in a collaborative way. The Fund suggests the new research offers resources from case conceptualization, funding, through to finalized ruling. Offered part of CC BY-SA 4.0 license, the kit can be open property.  Finally, the Digital Freedom Fund also notes its precedent in funding litigation to progress technologies and the freedoms associated with that.