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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.
Commercial Deals

Third-Party Funding in the UAE Requires a Tailored Approach

As the practice of litigation funding continues to expand globally, it is important for companies to be aware of the nuances of the regulatory structures governing funding arrangements in each jurisdiction. Within the United Arab Emirates (UAE), third-party funding is widely accepted, but as with other jurisdictions, there are local considerations which vary based on the specific type of funding that a client wishes to pursue. In a piece of analysis for Lexology, Nick Braganza and Nicola Gare of HFW, outline the best practices and key points to consider when seeking funding for disputes in the UAE. As the country has separate court systems, HFW highlights the most important issues to bear in mind. For example, where claims are brought in the Dubai International Financial Centre (DIFC) or Abu Dhabi Global Market (ADGM) economic free zones, funders will mandate that clients acquire ATE insurance to offset risk in the event of adverse cost orders. However, this is not the case in the onshore courts, as those orders are rarely made, and where they do occur, do not represent a significant penalty. When it comes to the types of funding agreements, HFW notes that Damages Based Agreements are unlawful within the UAE, with the sole exception of the ADGM freezone. However, Conditional Fee Agreements are broadly accepted across the courts, but it is important to note that in the onshore courts, the legal costs that can be recovered are nominal. Furthermore, agreements must be structured based on the legal fees being incurred, and not based on a proportion of the financial reward should the case be successful.
Commercial Legal Innovation

Litigators Must Adapt to New Ways of Working post-Covid

The impact of the Covid pandemic has been wide-ranging across the legal industry, and in a fundamental sense, has reshaped the ways in which everyday proceedings are carried out. This is especially true for litigation where matters that would have required hours of in-person attendance, in addition to travel, can now be carried out more efficiently through virtual proceedings. In a conversation with Burford Capital, John Quinn, managing partner at Quinn Emanuel Urquhart & Sullivan, highlighted the ability to conduct depositions remotely as an area that has not only been executed effectively, but also has advantages over in-person depositions. However, Christopher Bogart, CEO of Burford, raised the issue that depositions may be less useful for the questioner when he or she is not able to be in the same room as the deposed individual. On a similar note, Quinn discussed how law and motion days in courts previously represented time-consuming and expensive exercises for attorneys, but now these have been replaced with more streamlined remote sessions. All of these factors will therefore shape the ways in which litigators and funders continue to work together in a post-Covid world.