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Commercial Legal Innovation

Liti Capital Announces Staking Program

Switzerland-based Liti Capital has announced a new staking program on the Polygon Network. Liti Capital purchases interest in litigation assets to help claimants fund cases. If the case is successful, token holders earn a portion of the proceeds. Liti Capital’s new staking program offers an intermediary method of earning a return on investment during a case’s lifecycle.  According to a recent Liti Capital press release, the executive team researched various options before choosing Polygon for their staking efforts. A second layer protocol on top of the Ethereum blockchain, Polygon offers significant cost savings and efficient transaction speed. Case in point, the Ethereum blockchain processes around 14 transactions a second for around $25.00/transaction. The Polygon network can process nearly 65,000 transactions a second for less than a penny/transaction.  Liti Capital claims its new staking program can garner significant interest.  For example, up to 1M Liti Capital “$wLITI'' tokens can be staked for 30 days for a 5% return, according to the press release. A 60-day saking period is said to garner 7%, and 90 days 10%. Various options are available to stake a portion of the proceeds for different time periods. A Liti Capital token holder can cash out their stake at any time, and the system will calculate earnings accordingly.  
Commercial

Litigation Funding Misconceptions

According to a Bloomberg survey, 88% of lawyers believe that third-party legal funding increases access to justice. Noted legal scholar Maya Steinitz describes the practice as the most important development in civil justice in this generation. American Bar Association explains that despite some detractors, litigation funding has ingratiated itself firmly into the legal world, and shows no signs of slowing. Legislation is catching up, expanding the uniform application of rules and guidelines regardless of jurisdiction. At the same time, common misperceptions persist. Some lawyers worry that if they obtain third-party legal funding, they must repay the funder. In fact, litigation funding is provided on a non-recourse basis. If the case is not successful, funders lose any monies deployed. There is confusion as to what TPLF can be used for—and whether it must be used exclusively for paying lawyers. In fact, funding dollars can be applied to operating budgets, to cover case research, consulting, or expert fees, and can even be used to cover personal expenses as plaintiffs wait for their case to resolve. One of the more pervasive misconceptions about Litigation Finance is that accepting monies will allow funders to make decisions about case strategy or settlements. This is false. Funders cannot influence strategy or settlement amounts, nor can they legally push for a case to end more quickly. Are all litigation funding documents discoverable, and will that complicate matters? Not really. Even in places where disclosing funding contracts is necessary, exact details are kept sparse. Judges, on the whole, are ruling that funding need only be disclosed when there is a compelling reason to do so—specifically to avoid unnecessary complications. Finally, some think that using a funder and providing them information about a case negates attorney-client privilege. It doesn’t. Discerning reality from rumors will go a long way toward ensuring that those seeking funding understand the process, caveats, and benefits.
Case Developments Commercial

The €1.4B Steinhoff Securities Fraud Settlement 

Steinhoff International Holdings NV recently settled the European Union’s second largest securities fraud claim, finalizing three years of complex contentious negotiations. Steinhoff, a Dutch firm with headquarters in South Africa, once operated over 40 retail brands across 30 countries. At its pinnacle, Steinhoff was valued at nearly €20B … and then in December 2017, Steinhoff disclosed accounting irregularities and the stock plunged 90%.  BurfordCapital.com recently profiled the Steinhoff securities fraud scenario through to this month’s resolution.  Announcement of the securities fraud situation wiped out €12B in share value, and Steinhoff faced nearly €8B in international legal claims.  As it was not entirely clear if Steinhoff would be operational given the overall crisis, Burford was brought in to help victims of the securities fraud debacle recover losses. Burford outlines that settlement negotiations were forced to employ strategies to overcome conflicts of interest due to Steinhoff’s overall precarious financial predicament. Ultimately, Steinhoff’s settlement provides €800M to shareholders who were defrauded by the faulty accounting practices. Deloitte, which was Steinhoff’s former auditor, offered an additional €110M in compensation. Burford highlights recovering 20%+ of its client’s losses, an overall solution that still allows Steinhoff’s business to operate in the near-term. 
Commercial

LexisNexis Report on Litigation Finance in the UAE

The litigation finance marketplace has been thriving in the United States, Europe and Australia. Meanwhile, the United Arab Emirates (UAE) has one of the most imaginative and resource-driven litigation finance industries brewing in the middle east.   LexisNexis recently published an extensive report on litigation finance in the UAE. The report profiles leaders in the space using the trends and innovation metrics driving litigation investment across the UAE. Firms are developing bespoke systems and processes to maximize success in the region. Debating the best way to harness new technologies is the conundrum facing many ligation finance professionals in the UAE, according to the report. Meanwhile, competitive spirit seems to be driving litigation investment franchises across the UAE.  The UAE appears to be taking the bull by the horns when it comes to inventing new ways to uncover meaningful claims and solve challenges to claim success. The report outlines the necessary steps that several different firms are taking to evolve and hopefully prosper in the space. Overall, the UAE reports an increase in litigation finance caseloads with even more complexity than in years past.  Check out the complete LexisNexis report to learn more about ligation finance developments in the UAE. And we hope you enjoy the 60 highlights to the report we made in the link above, for general reference. 
Commercial Deals

The Benefits of Patent Litigation Finance

Being an inventor is part of the American Dream. The imagination, work and general effort it takes to invent a new product design is an overwhelming undertaking. Similarly, the patent process is no walk in the park. Obtaining a patent is a significant achievement, and when a patent is violated it can be a disheartening experience. Patent litigation finance can be a great solution to those looking to protect their invention(s).  Curiam.com recently published a guide to navigating patent claims. Obtaining a patent offers the overall right to exclude unlicensed groups from selling or using an invention for a given period of time. If an inventor finds a patent is being violated, the would-be inventor may find themselves up against titans of industry, with deep pockets. With a bottomless litigation budget, many large companies steamroll inventor patents, if given the opportunity.  Curiam’s profile outlines the multiple options available to inventors who find themselves up against costly patent litigation scenarios. Litigation finance can offer various benefits to providing the necessary tools and resources necessary to fend off problematic patent abusers.  Check out Curiam’s feature on patent litigation finance to learn more.
Commercial

Third Party Funding Can Impact Claim Cost 

With the third party litigation finance industry growing exponentially, trends show that claim investment may be cause for concern. US-based investment into third party funding in 2020 was around $17B. The global third party marketplace is expected to reach $30B+ by 2028, and many critics say this growth will stoke social inflation and overall claim cost.  InsuranceBusinesssMag.com reports that the liabilities of insurance are expected to rise as a result of third party litigation funding. The concern hinges on increased investment equating to longer ligation periods, driving higher claim costs and high dollar awards. The marketplaces seeing such social inflation include medical liability, auto/trucking and general liability, according to the report.  Third party funding is seeing a return on investment reaching upwards of 25% in recent years. This return is outperforming private equity and venture capital, making third party litigation investment an even more attractive asset class.  
Case Developments Commercial

Steinhoff Settlement Gives Investors Big Win

After three years of diligent negotiations, a GBP 1.4 billion settlement went into effect against Steinhoff International Holdings NV. This represents the second-largest settlement against a European company in a securities fraud case. Burford Capital explains that Steinhoff, a Dutch business with headquarters in South Africa, was responsible for more than 40 retail brands in at least 30 countries. In 2017, the company announced accounting irregularities and that it would delay the public disclosure of financial statements. The following day, CEO Markus Jooste promptly resigned. An investigation revealed GBP 6 billion in accounting fraud allegedly conducted by Jooste and several other senior executives. Share prices declined by almost 90%. Two years later, Steinhoff found itself facing at least $8 billion in legal challenges. Unsurprisingly, the beleaguered company opened the doors to settlement discussion. In the eventual settlement, about GBP 800 million will be given to defrauded shareholders. Former auditors Deloitte, as well as D&O insurers, have put up GBP 110 million more earmarked for shareholder compensation. Institutional investors largely see this settlement as a positive outcome and a good sign for anyone who may choose to join a similar group action. Funding leader Burford Capital was instrumental in achieving this record settlement and demonstrates how the right choice of funder can make a profound difference. In addition to providing funding, Burford worked with clients to collect supporting documentation for the case and advocated for an effective and fair-minded settlement. Clearly, the role of a funder can extend far beyond the deployment of capital.
Commercial Legal Innovation

Litigation Insurance is Not Just for Plaintiffs Anymore

Industry norms suggest that in commercial disputes, litigation insurance for defendants is not part of the equation. Usually, it’s claimants who make use of this type of after-the-event insurance. But why does this perception persist? Legal Futures UK suggests that because litigation insurance can meet adverse costs, it makes sense for both plaintiffs and defendants. For defendants, this is particularly vital in the case of cross disputes, or instances when the defendant didn’t want to go to court in the first place. After-the-event insurance is only enforceable when a case is successful. Most insurance policies state that a successful case is one where the legal action is settled or adjudicated with terms that are favorable to the insured. Litigation insurance is a common way to manage risk, which is especially valuable to defendants who have fewer options and less control than plaintiffs. After-the-event insurance helps defendants mitigate adverse cost exposure, allowing defendants to devote more resources toward a strong legal defense team. Ultimately, underwriters should be tailoring litigation insurance to meet the unique needs of clients—be they plaintiffs or defendants. For defendants, calculating the insurance premium against the possible adverse costs is an easy choice.
Announcements Commercial

Burford Capital surpasses $100 million in Equity Project commitments

Burford Capital—the leading global finance and asset management firm focused on law—today announces that it has crossed a significant milestone in its groundbreaking initiative designed to increase diversity in the business of law, with more than $100 million in cumulative Equity Project commitments made to back commercial litigation and arbitration led by female and racially diverse lawyers.

The Equity Project earmarks legal finance capital to promote diversity by giving historically underrepresented lawyers an edge as they pursue leadership positions in significant commercial litigations and arbitrations. The Equity Project also augments companies’ ESG and DEI initiatives by providing incentives for the firms that represent them to appoint historically underrepresented lawyers and to award them origination credit.

The Equity Project first launched in October 2018 with $50 million earmarked to back commercial matters led by women. After having committed more than that amount by December 2020, Burford announced an expansion of The Equity Project in October 2021, earmarking a further $100 million, broadening The Equity Project’s mission to promote both racial and gender diversity in law, and pledging to contribute a portion of its profits from successfully resolved phase two Equity Project matters to organizations that promote development for female and racially diverse lawyers on its clients’ behalf.

As of February 28, with more than half of phase two funds committed, Burford has now made more than $100 million in cumulative commitments to Equity Project matters.

Matters funded to date in this phase of The Equity Project include contract disputes, antitrust, federal statutory, IP/patent and treaty arbitration matters, with female and racially diverse litigators in leadership roles (first or second chair) as well as women-owned firms. Clients include large corporations and large litigation boutiques.

Aviva Will, Co-COO of Burford Capital and leader of The Equity Project initiative, said: “We are delighted by the overwhelming response to phase two of The Equity Project, particularly from corporate clients, and that’s reflected in the fact that we have crossed this significant milestone in a short period of time. The Equity Project is core to Burford’s culture and a part of our daily work, and we look forward to committing the remaining funding soon.”

David Perla, Co-COO of Burford Capital, said: “I’m very pleased to see the rapid commitment of our capital in phase two of The Equity Project. As the industry leader, we recognize that we may be the only commercial legal finance company with the resources to make such a significant financial commitment to increasing diversity in law. We are aware of our unique position and take seriously the significant impact Burford can have on the legal market in all the work we do.”

The Equity Project is supported by 26 Champions from leading companies, law firms and organizations. A list of Champions and more information about The Equity Project can be found on Burford’s website.