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Commercial

Litigation Finance Bounces Back as Normalcy Returns

Like many industries, Litigation Finance experienced a slowdown during much of the COVID pandemic. Now that some sense of normalcy is approaching, backlogs will be addressed and deal flow is expected to accelerate. Alpha Week notes that contrary to predictions, legal activity decreased by 85% during COVID. While businesses have not yet returned to pre-pandemic levels, many in the legal and financial fields assert that it soon will. The three most developed markets for Litigation Finance include Australia, the United States, and the United Kingdom—with India and Singapore being considered welcoming jurisdictions for litigation funders. India’s newly developed bankruptcy and insolvency framework has provided a foundation for the practice of TPLF. It’s noteworthy that in India, every firm’s financial records are public information. This means it’s easy to access records from a defendant company to determine whether they can pay a judgment or award. If they can’t, funders are unlikely to offer assistance. Small law firms are especially likely to utilize legal funding, but it can be used by firms of any size, as well as businesses, claimant classes, and individuals. The flexibility and adaptability of the litigation funding industry allow for monetizing individual claims or portfolios of cases, and may involve selling legal claims in exchange for money that can be used for operating costs or expansion. The litigation funding industry has no shortage of capital. Late last year, Longford Capital raised nearly $700 million for its new fund. Lexshares, an NY-based funder, raised $100 million. Insiders say these numbers are merely scratching the surface of the available opportunities. The industry shows every sign of growth, and no signs of slowing.
Commercial Fundraising

Henderson & Jones Innovates With New Financing

London-based Henderson & Jones (H&J) is a boutique litigation finance firm with a focus of buying and selling insolvency claims. H&J prides itself on maximizing returns through strategic litigation by shouldering the risk and costs associated with winning a successful claim.  BDaily.co.uk reports that H&J has arranged £5MM in working capital from Secure Trust Bank Commercial Finance to help fuel innovation and growth inside the firm. With a history of litigation finance success for claims in the ballpark of £50MM, H&J is battling to challenge malfeasance in the legal sector by facilitating access to justice.  H&J’s managing director expects growth in supporting appropriate first-class litigation finance opportunities, further noting that profitability in the sector is on the rise with new efficiencies in systems and processes. H&J’s new working capital facility is expected to add comfort to the management team’s future plans and directives. 
Case Developments Commercial

Scramble to Recoup Rittenhouse Bail Windfall Involves Multiple Players

In a completely unsurprising turn of events, financial supporters of Kyle Rittenhouse have been bickering over who gets the nearly $2 million raised for the shooter’s bail. These include corporate entities and trusts, legal teams, and actor and conservative activist Ricky Schroder. Law and Crime details that a recent proposal suggests that Schroder would receive $150K, the law firm representing Rittenhouse would get $925K in trust, and an equal amount would go to the ‘Fight Back Foundation.’ While the $2 million raised for the teenage shooter’s bail was touted as an outpouring of support from an infuriated populace, closer examination reveals that most of the money came from a few wealthy entities who are now squabbling over it. Creditors for noted Trump lawyer John Pierce have filed a claim suggesting that the bail money should go toward paying back a $2.5 million judgment. Rittenhouse severed his relationship with Pierce, as well as adjacent Trump attorney Lin Wood. A trust formerly owned by Pierce’s law firm gave $300K to Rittenhouse’s bail fund with the expectation of being paid back fully, with interest. It has since requested that the court should hand over the entire bail fund to the trust. Rather than pay the money back, Rittenhouse accused Pierce of financial impropriety. In fact, the young defendant has been quite vocal on FOX News and other outlets in denigrating his former lawyer. Pierce has denied any wrongdoing and claims to have no interest in the bail fund. A Wisconsin jury acquitted the teen on self-defense grounds after he shot two people he alleged were trying to take his weapon.   At the end of January, Judge Bruce Schroeder approved the proposal to split the money between Ricky Schroder (no relation), the Fight Back Foundation, and the trust overseen by Rittenhouse’s defense team.
Commercial Regulatory Issues

Fifth Circuit Rules on Lack of Standing 

‘Locus standi’ or ‘standing’ is a law definition that sets conditions on legal remedies. The overall premise is that the court must be convinced of adequate details of connection to, and harm resulting from, a particular legal action or legislation. The opposite of standing is ‘lack of standing’ … And that is exactly how the Fifth Circuit ruled in regard to a litigation funding agreement challenge in Texas Bankruptcy Court.  OmniBridgeway.com profiles Judge Jacques L. Weiner Jr.’s ruling, when a debtor challenged the legitimacy of being harmed by a litigation funding investment. The arrangement was organized and approved by the court after attorneys realized a lack of funds to pursue bankruptcy proceedings. A funder was identified and a 30% return on investment was agreed upon.  Soon after, a debtor challenged the litigation funding agreement, on grounds that the 30% ROI attached allowed the investor’s return to be prioritized before debtors associated with the bankruptcy. To assess the question of ‘standing’ in this scenario, Judge Weiner employed the “person-aggrieved test.” Weiner noted that this test is more sophisticated than traditional constitutional standing.    In the end, Judge Weiner bypassed the question of the litigation funding agreement’s legitimacy. Rather, Judge Weiner concluded that the debtor raising the question was not materially impacted by the arrangement. And, as such, lacked standing in the overall concern. 
Commercial Fundraising

LegalPay Banks Pre-Series A

Alternative investment hedge fund Hedona has joined LegalPay’s extended Pre-Series A offering. Based in India, LegalPay’s FinTech platform offers users alternative investment solutions specializing in legal insolvency and legal debt financing.  IndiaTimes.com reports that alternative financing and asset management is picking up momentum as the United States signals a hike in interest rates in the near future. Hedona’s founder notes that LegalPay’s unique offering is made possible by a strong management team with high calabar of character. Hedona suggests LegalPay is driven to capitalize on capturing the litigation finance marketplace in India.  LegalPay’s pre-series A has included investment from the Amity Technology Incubator and Venture Catalysts. Total funding for the round has not been disclosed.
Commercial Fundraising

JustFund Launches in Australia and New Zealand 

Recently, Andy O’Connor and Jack O’Donnell proudly announced co-founding the launch of JustFund. Aiming to pioneer improvements for equitable access to justice, JustFund has been selected to participate in a preeminent Australian and New Zealand accelerator, Startmate.  JustFund notes that in Australia, only around 20% of claimants seek advice around efficient budgeting for litigation success. This prompts the notion that many in the region are not aware of the benefits of litigation finance investment. JustFund highlights success in family law matters, where litigation investment helps achieve equitable results for justice.    The launch of JustFund has received praise in the Australian and New Zealand litigation finance marketplace. We will continue to report on JustFund’s journey throughout the weeks and months ahead.
Commercial Deals

Construction Claims and Litigation Finance 

Contractors that pursue third party construction claims are seeing results, according to a new research report by Collaboration Management and Control Solutions. Construction litigation finance is not limited to rudimentary forms of organization. Technology is driving the future of construction litigation investment with surprising outcomes.  Bassam Samman, PMP, PSP, EVP, GPM authored the 10 page expose’ profiling the latest technological innovations related to efficient systems and processes related to construction litigation finance. Samman rightfully suggests that organization is key, further highlighting the necessity to digitize construction claim blueprint documents. Furthermore, Samman analyzes technological reporting use cases for instances of tracking deadlines to help push successful construction claims to fruition.         Samman notes quality and best practices in construction claim management are an artform. His report operates as a resource tool, profiling technology that is fueling the next generation of a successful construction litigation finance marketplace. 
Commercial

Litigation Funding in India 

While India has no direct legislation overseeing its litigation funding marketplace, traditionally the courts have supported a balanced approach to the sector. Indian magistrates have embraced the concept of welcoming third party funders. However, Indian attorneys are widely recommended not to work on contingency, due to ethical implications.  Ksandk.com recently profiled India’s third party litigation ecosystem. While courts are generally accepting of litigation investment contracts, there have been instances where such contracts have been rejected due to various conflicts. As with many markets, India has wrestled with the notion of social inflation related to third party litigation investment. And as with many other global jurisdictions, India has proven that frivolous litigation agreements are self policing, in that the investor’s bottom line often dictates a hope for a successful outcome.  Looking to the future of litigation funding in India, agreement transparency and confidentiality are paramount for the industry's success. Experts warn that the Indian legal system (like many others) operates with cumbersome systems and processes, costing time and ultimately money. As such, successful litigation investors must embody the virtue of patience within their business plans. 
Commercial Deals

Corporate General Counsels Look to Claim-Based Enterprise 

The task of any good corporate general counsel is to protect the firm from loss, and recover any reasonable damages in a claim. Costs associated with running a business are leveraged against profits associated with the firm’s day-to-day operations. Most executives are risk averse in entertaining the notion of supporting a general counsel, whose baseline costs are spiraling out of control.  Themis Legal Capital suggests an innovative approach to financing the modern general counsel’s office through claim-based enterprise. Given the episodic nature of meaningful litigation, budgets are often hard to estimate in advance. Once a claim comes to fruition, it can often be challenging to manage financial headaches along the way. Meanwhile, recoveries of meaningful ligiations can be 10x the investment. The debate many general counsels have is how to secure a recovery while balancing a multi-year litigation budget to yield a prospective recovery.  Claim-based funding can dramatically improve the calculus for many corporate general counsel offices. Themis suggests the concept of building a portfolio of such claim-based litigation instances. As the successful rulings start rolling in, the firm may see the general counsel's budget fully funded through payouts and settlements. This is a dream scenario which litigation funding can potentially offer.