In a panel titled “Getting Paid: A Breakdown of Recent Settlements”, Max Doyle, Chief Strategy Officer at Consumer Attorney Marketing Group moderated a panel between Sam Dolce, Vice President at Milestone, Jennifer Hoekstra, Partner at Aylstock, Witkin, Kries & Overholtz, Michael London, Founding Partner, at Douglas & London, and Eamon Walsh, President of North America at Advoc8se.

Jennifer Hoekstra began the conversation by offering a broad overview of the mass torts space, the types of cases that make their way through the sector, and the various case durations spanning the rare rapid recovery on one end of the spectrum, and the decade-long battle royal on the other end.

Michael London commented on the 3M claim, where they faced a massive 10-figure judgement and just days later declared bankruptcy. He then mused about tobacco cases, how "if you want to make it onto the front page of the New York Times, you try tobacco cases. If you never want to get paid, you try tobacco cases."

London then recounted war stories around lifestyle products, including several pharmaceutical companies which settled claims there their drugs contained symptoms that were not listed on the label, mesh cases, firefighting foam cases, 3M cases, etc. "There's always going to be something. Wait, keep your powder dry, and don't chase the marketer. Just use the smell test and common sense test of what makes sense."

Sam Dolce represents Milestone, a claims administrator, which helps people get paid. He spoke to administrative duration, which occurs on the backend of a litigation, and can be as much as months or even years before the payments actually go out. Milestone streamlines those processes so everyone gets paid much faster. Many top tier mass torts firms have not optimized their settlement duration procedures, so they are missing out on efficiencies once the case concludes.

Eamon Walsh points out that funders should have a robust checklist which scores everything from origination to settlement administration. That gives way to a secondary market where you can trade things more easily, and also makes you feel bulletproof in the sense that when you get to the negotiating table, you aren't suffering from the Achilles heel of incomplete information.

Sam Dolce added that firms that take the time to build the payment infrastructure can maximize efficiencies on the backend. Law firms should have workflows built into their business the way any other business would, and funders should look to fund such law firms. Every law firm is a business, after all.

Jennifer Hoekstra added that the individual you may be speaking with when interacting with a law firm might not know all the details of a case, but the firm knows all the details (someone else at the firm can answer those questions), so don't get put off if the individual you're speaking with doesn't have all of the answers off-hand.

Michael London spoke to the 3M verdicts which saw 8-figure verdict after 8-figure verdict, which 3M kept fighting and losing. In other cases, the defendant can't write a check quickly enough, so it depends on the defendant and how much pressure you can put on them, and whether they are eager to reach a resolution or not.

London also noted that the Bayer Monsanto claim is a $10 billion liability that keeps getting bigger. Yet London noted he believes there may be a pause in Bayer paying out its claims. "At some point you've got to let that golden goose take a break from laying its eggs, and let that company stay alive."

Finally, Sam Dolce recommended that investors in the space look to the firms who are already succeeding and investigate what is working for them. Don't make the mistake of looking at the aggregate payouts - some firms get very large checks while others do not. Understand what separates the most talented firms from those in the second and third tiers.

Jennifer Hoekstra echoed that sentiment. "I keep my ear to the ground on projects I don't work on. I look at everything across the board, even if we're not involved with it." Looking at cases that aren't moving forward towards a rapid settlement can give you an idea of what types of cases aren't working. If timelines and milestones aren't being met, then defendants won't feel pressured to reach settlements.

In other words, do your homework before embarking on investment within this very complex sector.

Day one of this year’s LF Dealmakers event featured an entire day focused on one of the most prominent legal sectors within the litigation funding sphere: Mass Torts.

In the keynote session, titled “Mass Torts at a Crossroads: Is Wall Street Money a Catalyst or Complication?”, Seth Meyer, Managing Partner at Meyer Law Firm moderated a discussion between Steven Weisbrot, CEO of Angeion, and Harris Pogust, Founding Partner of Pogust Goodhead.

The conversation focused on Wall Street money’s impact on the litigation funding sector. The key question being if the influx of capital is a catalyst or complication.

Harris Pogust began the conversation by stating that there is no clear answer to that question. Many lives have been changed for the better thanks to the emergence of mass torts funding. That said, there are simply too many plaintiffs, and those plaintiffs that do get money aren’t seeing enough of it. “When I have to call some family whose family member died of cancer, and they’re supposed to get $100,000, but after attorney fees and all the other fees, they’re only getting $30,000, that makes me puke. That’s not what I got into this industry.”

While Steven Weisbrot does agree that the quantity of damages often isn’t reflected in what is deserved, he places the blame on access to capital, and the lack of optimization around bringing these types of cases in a more efficient manner. “I think capital really helps where you have a hard-to-reach target audience, whether they’re incarcerated or in geographically disparate locations. But we can’t just have attorneys settling saying ‘give me $1.2 billion and I’ll carve it up as I see fit.’”

Ultimately, there are four groups here: investors, funders, law firms and clients. Unfortunately, the people getting hurt the most are the clients. All other parties seem to be doing well. “There are firms that take $10 million and aggregate cases, and they make millions of dollars and they are happy,” explains Pogust, “but I’m a trial lawyer, not a businessman. I want to try good cases, not just make money.”

Pogust wants to see Wall Street be more careful with whom they give money to, so they don’t bring garbage cases and give the sector a black eye.

Wiesbrot agrees that vetting the firm and understanding their communication strategy is key. Also understanding if their strategy is about litigating vs. just aggregating. “Nurturing those relationships means less client attrition, and it’s also good because I can’t tell you how many random pieces of evidence have come out of those conversations. It’s good to hear from your clients directly about their experiences.”

In the end, Pogust was proven correct, in that no clear answer to the question of whether Wall Street money is a net positive or negative emerged. One can make a case either way, and as mass torts funding continues to accelerate in the coming years, it is doubtless this debate will continue on.

In a series of posts on LinkedIn over the last week, The Association of Litigation Funders of Australia (AALF) announced that it has welcomed Ebury, Sedgwick, and Sapere as its newest Associate Members. With the addition of these three new members, AALF now boasts a total of 18 Associate Members in addition to its eight Funder Members.

On September 12, AALF welcomed Ebury as an Associate Member. The global fin-tech company specialises in international payments, collections and foreign exchange services. As part of its global network of 31 offices in 21 countries, Ebury Australia’s domestic footprint includes operations in Brisbane, Sydney, Melbourne and Perth. More information about Ebury can be found on its website.  

On September 14, AALF then welcomed Sedgwick as an Associate Member. A global provider of technology-enabled risk, benefits and integrated business solutions, Sedgwick’s range of solutions interact with the litigation funding market primarily through its claims administration services and expert witness/litigation services for class actions, mass torts and commercial disputes. Sedgwick’s presence in Australia includes offices in Sydney, Brisbane, Darwin, Melbourne, Adelaide, Canberra, Hobart and Perth. More information about Sedgwick can be found on its website. 

Finally, on September 16, AALF welcomed Sapere as its newest Associate Member. Sapere is one of the largest expert consulting firms in Australia and provides independent economic, forensic accounting and public policy services. In the world of litigation funding, Sapere offers expert witness and forensic accounting services to corporate clients, major law firms, government agencies, and regulatory bodies. Sapere has offices in Melbourne, Sydney, Canberra, Perth, and Brisbane, as well as two offices in New Zealand. More information about Sapere can be found on its website. 

A full list of AALF’s funder members and associate members can be found here.

In the world of litigation funding cases with geopolitical implications, there can be few more significant than the ongoing dispute between Burford Capital and Argentina over the enforcement and collection of the $16 billion YPF award.

An article in the Buenos Aires Times covers the news that the United States Department of Justice sent a letter to US District Judge Loretta Preska asking the Manhattan court to delay ruling on Burford Capital’s request for the court to order Argentina to turn over its 51% interest in YPF. The reason for this requested delay, is that the US government is “actively considering whether to file a Statement of Interest with respect to the pending motion for an injunction and turnover.”

In the letter sent by the US Attorney for the Southern District of New York, Damian Williams, the DOJ said that it “respectfully requests that the Court reserve decision on the pending motion for an injunction and turnover until the United States has had an opportunity to submit any such statement of interest.” The letter explained that it will be in a position to inform the court whether it does intend to file a Statement of Interest, and submit this statement, no later than November 6, 2024. 

Whilst this may seem like a prolonged period for the government to be considering whether to file the statement, the DOJ explained that its process for making a decision on this “involves coordination among interested government agencies and the approval of the U.S. Department of Justice through the Principal Deputy Assistant Attorney General for the Civil Division.”

The full DOJ letter can be read here.

The contentious debate over future regulation of the litigation finance market tends to primarily focus on the impact of outside funding on the legal system or on individual cases, a new academic paper looks at the issue through a broader lens, arguing that ‘litigation finance generally promotes marketplace efficiency and should be encouraged.’

In a forthcoming paper for the Southern California Law Review, Suneal Bedi and William Marra provide a new outlook on the debate over the regulation of third-party litigation funding. Bedi and Marra explain that their article ‘reframes the debate about litigation finance’, broadening the conversation from the effects of outside capital of the legal system, to an examination of ‘how litigation finance affects competition not only in the courtroom but also in the marketplace’.

The authors centre their analysis around the business concept of “non-market strategies”, looking at how funding is used by companies outside of the courthouse to ‘access the capital markets and gain an advantage in the marketplace’. Bedi and Marra emphasises that whilst their non-market strategy analysis is focused on litigation finance within this paper, ‘it holds the promise to reframe the debate around legal issues far beyond the realm of litigation funding.’

Through this analysis, Bedi and Marra argue that proposed regulation of third-party funding will go beyond the courthouse and affect the capital markets as well, ‘with significant but unexplored implications for contemporary debates about funding.’ They go further and argue that regulating the litigation finance market ‘is especially likely to harm small and medium-sized enterprises’, as these are the companies relying on third-party funding for capital raises.

The full article can be read here.

Suneal Bedi is an associate professor at Indiana University’s Kelley School of Business. William Marra is a director at Certum Group and lectures at the University of Pennsylvania Carey Law School.