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Commercial

Burford Blames COVID for $80 Million Loss

COVID has adversely impacted most industries, and litigation funding is no exception. While new commitments and deals are up from last year, cases are simply not concluding in a timely manner. Sharecast explains that Burford has predicted an annual net loss of AU $70-80 million. Burford maintains that the loss is due to timing, and not any other factor. CEO Christopher Bogart explains that performance has been strong, and that the value of the company’s portfolio has not diminished. Thus far in 2022, Burford shares have fallen 15%.
Commercial Fundraising

LionFish Enters Funding Deal with Unnamed Investor

RGB Holdings has announced that its legal funding arm, LionFish Litigation Finance, has entered into an agreement with a sizable alternative investment firm.  Law Gazette explains that the new arrangement is expected to provide LionFish with significant capital—allowing for a more diversified portfolio of risks while moving away from the investor sales model—this according to a statement released to the London Stock Exchange. Nicola Foulston, RBG Holdings Chief Executive, says that the arrangement represents a significant step forward in the long-term growth of LionFish. Managing director Tets Ishikawa explains that the deal increases litigation investments without relying on antiquated, lower-margin models. RBG Holdings shares rose to 126.35p following the announcement.
Commercial

Omni Bridgeway Explains the Maturation of Litigation Funding

The Litigation Finance industry began as a way to increase access to justice, funding David v Goliath cases and giving average citizens a chance to have their day in court. Legal funding still does that—and so much more. Market Screener shares an interview with Jim Baston and Matthew Harrison, co-chief investment officers of US operations at Omni Bridgeway, as they discuss how the industry is maturing. Assets under management doubled between 2017 and 2020 according to the ILFA. Harrison explains that the trend has been increasing numbers of entrants into the marketplace. New funding entities are raising fresh capital and entering the market, creating niche opportunities for lawyers and investors. Hedge funds have gotten in on the fervor, as have university endowments, pension funds, and others. As competition increases, so have adaptations, as new funders decide on specialties and formulate business plans based on specific client sizes or case types. Flexibility in funding models has also increased—which is good news for those seeking funding. Laws governing litigation funding are also changing. Disclosure rules are a big topic of discussion, as jurisdictions increasingly impose or suggest rules requiring that courts be informed of the existence of third-party funding. At the same time, some courts are rejecting these disclosure requirements, finding that most litigation funding agreements aren’t relevant to the facts of the cases at hand. Baston details that there is an acceleration in the advances in Litigation Finance, largely due to the pandemic and the stressors it brought about. More companies than ever are interested in Litigation Finance, either as an investment or as a useful tool to manage risk. These days, the top 10 law firms in the country are interested in Litigation Finance. This wasn’t true even a decade ago.
Commercial Fundraising

First of Its Kind Litigation Finance Stock Offering

Litigation Finance has taken the investment world by storm. Mechanisms to vet cases are always improving, and the industry has adapted to changing circumstances. The problem? As a maturing asset class, Litigation Finance is typically only available to wealthy investors. Thanks to a startup from partners Roche and Freedman, that has changed. ABA Journal reports that retail investors can buy a share in a federal lawsuit filed by hemp growers. The minimum investment is only $100. The risks to investors are substantially lower than those typically endured by third-party funders. In the case, known as Apothio, hemp growers allege that the government illegally disposed of at least $1 billion in hemp crops in California. There’s a possibility that the case will be dismissed. If that happens, investors will see 80% of their investment returned. If the case succeeds, investors may see as much as a 350% return. Funds deployed to the Apothio case are provided on a non-recourse basis. So if the case goes to trial and loses, investors lose their entire investment—as is typical of litigation funding agreements. Are there downsides for consumers? Obviously, any investment carries risk. Litigation as an investment can be perilous, and many laymen lack the knowledge and experience needed to vet legal investments effectively. One professor at Indiana University applauds the laudable efforts of Roche and Freedman, but they worry that new investors won’t understand the intricacies of their investment, leaving them unable to make informed decisions. This would include background info and a summary of underlying legal issues. Roche’s team is developing new methods of explaining case data to investors in a manner that is easily digestible for those without legal expertise. The Apothio case was filed in the Eastern District of Columbia in 2020. Motions to dismiss are pending.
Commercial People Moves

Mary Gangemi Becomes Board Member of LCM

Litigation Capital Management has appointed its Chief Financial Officer to its board this week. Mary Gangemi, who joined the company in April 2020, was promoted as a board member, effective immediately. London South East reports that Gangemi has extensive experience in wealth and asset management, and has provided financial oversight to multiple corporations across the UK, Europe, and Asia. Gangemi is working with Chief Executive Patrick Moloney in LCM’s London office. This brings LCM’s executive team into a single hub. Note--an earlier version of this article stated that Mary Gangemi was appointed as Chief Financial Officer.  That is incorrect.  Mary Gangemi was already CFO, and was appointed to the board.  We regret the error.
Commercial

Key Factors to Consider When Seeking Legal Disbursement Funding

Identifying a reliable legal disbursement funder can be a minefield, especially if you aren’t sure what to look for. Most funders want to know a lot about your business. This should include case origins, fee structuring, risk appetite, and a track record of success. Legal Futures explains that funders should also want to look at your company’s recent financials and predictions for the coming year. Funders should also ask about existing loans, liquidity, and working capital. From a client perspective, there are a few questions everyone seeking disbursement funding should ask:
  • How is the funder’s track record and experience?
  • Where are the funds coming from—funders of outside investors?
  • Can I understand the terms? Are they reasonable?
  • Is the process clear and easy to navigate?
Asking the right questions and knowing what to be aware of will make the search for legal disbursement funding easier and more effective.
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.