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Consumer

Post-Pandemic Predictions Include Extended Case Durations

Law firms that rely on contingency fee structures will soon feel the impact of the pandemic, if they haven’t already. Many contingency fee law firms experienced an immediate slowdown in cases once stay-at-home orders and mass business closures went into effect. While many firms used settlement income from previous years, those funds are likely nearly depleted by this time. Above the Law explains that personal injury cases and workers comp cases have dramatically slowed, impacting law firms' bottom lines. Meanwhile, court closures and excessive delays led to an increase in case durations—delaying payouts for law firms as well as third-party litigation funders. This can leave funders with a dearth of working capital, and could increase the chances of an adverse occurrence like bankruptcy, or the case going over its allotted budget. Even worse, some opportunists took advantage of slow courts and a long wait for jury trials by pushing through low-ball settlements for litigants already suffering from the pandemic. In nearly every state, trial delays, shutdowns, or extensions abounded, and delays continue even as venues are cautiously reopening. It’s predicted that consolidation is on the horizon for many contingency fee firms. Firms that aren’t already on track with sustainable growth initiatives are likely looking at consolidation or being acquired by a larger firm. The question then becomes: Buy or be bought? Firms that have financed cases instead of bearing the full cost may now be in a position to acquire. The continued effect of the pandemic on law firms can lead to an inability to secure competitive interest rates—owing to cases staying on balance sheets for longer than anticipated. This is good news for litigation funders though, as it means more firms in need of funding.
Case Developments Commercial

Flight 752 Victims’ Families Awarded $107M by Ontario Court

Nearly two years after 176 people died when Ukraine International Airlines Flight 752 was shot down, families of six victims have received a $107 million award in civil court. The decision included $100 million in punitive damages that will be split among the families, plus $1 million for specific losses, and another $6 million for pain and suffering. CBC details that the Flight 752 disaster was part of a deliberate terrorist act. Lawyer Mark Arnold explains that the team plans to seize Iranian assets in Canada and elsewhere to ensure that the award is paid. Canada is currently joining forces with multiple countries also seeking reparations from Iran for citizens lost on the flight. Iran has stated that its government will not engage in negotiations, prompting a statement by the countries promising to consider more aggressive actions against Iran. Unsurprisingly, Iran’s foreign ministry asserted that the courts lacked evidence, calling the Ontario ruling “shameful.” Because this was a civil case, not criminal, plaintiffs were not required to prove their case beyond a reasonable doubt. Iran has spoken out against Canadian class actions relating to Flight 752, saying any relevant litigation should take place in Iran. A news conference is expected this week.
Consumer

Advocate Capital Honored as a Top Litigation Funder

Florida’s Daily Business Review’s Best of 2021 has recognized Advocate Capital as a top litigation funding firm.  The survey compiled by Daily Business Review aims to recognize the best law service professionals and emerging products innovating Florida’s legal community.  Advocate Capital provides strategic accounting for law firms. Advocate’s team is passionate about helping attorneys get even better results. Advocate likely won Florida honors by always looking for ways to encourage, educate and support our law firm partners as they pursue justice on their clients’ behalf.
Commercial People Moves

Mark Sands to Head Apex’s Insolvency Practice 

With over 35 years as a respected insolvency practitioner, Mark Sands will now head Apex Litigation’s insolvency business. Prior to Apex, Mr. Sands, a former Insolvency Practitioners Association President, worked at Tenon and KPMG.  FinancialIT.net reports that Apex’s CEO Maurice Power is happy to recruit Mr. Sands to the firm, saying his, “...experience and expertise are perfect for the role, and we know that he will add huge value to our business and our clients.” Mr. Power went on to say that Mr. Sands’ “...proven investigative ability and diligence can only strengthen our capability in ensuring positive outcomes for our clients and supporting access to justice.” Sands echoed the excitement of joining Apex, where we will lead innovative insolvency technologies.  Sands shared, “I am confident that my experience in investigation services will prove to be a great benefit. I will also be able to draw on my wide network of IPs, litigators and other professionals to grow Apex’s position in the insolvency sector.”
Case Developments Commercial

Apple Rejected U.K. Litigation Insurance Details 

Cupertino, California based Apple Inc. is facing a $2.3B litigation battle in the United Kingdom, as nearly 20 million iPhone and iPad users claim Apple abused application payment ethics rules. Dr. Rachel Kent of King’s College London is the proposed class representative custodian.   Law Gazette reports that Dr. Kent has submitted a proposal of litigation trajectory and corresponding budget to finance the claim to trial. Attorney’s for Apple petitioned the court for details of Dr. Kent’s litigation budget, pressing for detail on ‘after the market’ (ATE) insurance premiums. Dr. Kent is said to have $20M+ in liability protection covering litigation against Apple.   Apple challenged that Dr. Kent’s litigation budget and ATE premiums are not subject to confidentiality. However, the U.K. tribunal hearing the case rejected Apple’s logic. Presiding justices cautioned that ATE premium details could motivate Apple to tactically forecast the insurers' anticipated claim risk. While refusing to disclose details of Mr. Kent’s litigation budget and ATE premium agreements, the court did not grant privilege to details of the insurance premium agreements. As such, Apple may engage alternative market research avenues to obtain the information. The court expressed concern that Apple may seek to increase pressure on Dr. Kent’s legal team by driving up litigation costs during the dispute.   
Case Developments Commercial

U.S. Attorney Reviews Advanced Legal Fee Agreement  

The U.S. Attorney's Office in New York’s Eastern District is set to review potential conflicts of interests in an advance fee agreement related to alleged agents of a foreign government.  Law.com reports that U.S. District Judge Brian Cogan will entertain deliberations as to whether Trump’s inaugural committee chairman Thomas Barrack was in conflict with a written agreement to advance Matthew Grimes’ legal fees.  Both men were arrested in July 2021, under suspicion of being unlawful foreign agents of the United Arab Emirates in the United States. Both men are accused of failing to properly register with the attorney general’s office in a now botched enrichment scheme.   Attorneys representing the accused are quick to submit that no fee advancements have yet occurred. The three week trial is expected for September 2022.  
Commercial Regulatory Issues

Turkey’s Litigation Finance Future 

Turkey's economy has been targeted by aggressive international profiteers, according to officials in Ankara. The Capital Market’s Board fined a group of United States banks who signaled clear hawkish intentions with surprise illegal short selling of Turkey’s stock market in 2021. The banks included marquee firms such as Goldman Sachs International, Credit Suisse Securities Europe and Barclays Capital Securities.  Imrquits.com recently profiled Mondaq’s contemporary Overview of Turkish Litigation Practice. Litigation finance is a bright new concept in Turkey, and many are hopeful of its usage as a potential international diplomacy tool. The volatile Turkish Lira and global inflation pressures continue to prompt Turkish officials’ call for international diplomacy rather than targeted economic conflict. Litigation finance may be useful in closing regulatory arbitrage loopholes that have the potential to snowball into crimes against humanity. For example, Turkey is covered by New York Human Rights provisions to certain acts committed outside the state of New York (§ 298-a.). If a New York bank willfully intends to target Turkey’s vulnerable economy by violating human rights laws, claims based on such aggression can be financed without armed conflict.  Savvy international litigation funders may look for unique opportunities to finance profitability diplomatic solutions, rather than exacerbate Turkey’s economic vulnerabilities. 
Commercial Regulatory Issues

Flaws in Credit Agreements and Their Impact on ATE Insurance 

As the third party funding ecosystem matures, businesses' organizational systems and processes are sure to evolve. A credit agreement has traditionally served as a loan vehicle to fund litigation. The loan earns interests while an “after the event” (ATE) policy is secured to insure the loan. If litigation is successful, credit agreement facilities traditionally can be helpful. 

However, Andrew Mckie’s new essay on LinkedIn points out flaws in credit agreements, many with too many moving parts that are convoluted. Mckie argues that legacy credit agreements are prone to misselling and misrepresentation. When credit agreements are mis-sold, Mckie points out that many ATE policies are rendered void, a commonly undesirable consequence for parties of failed litigation. 

When a credit agreement gets to the stage of ATE policy cancellation, Mckie prompts the disadvantaged to evaluate the capacity of professional negligence as a culprit. Depending on the severity of the matter, negligence can be career-ending malpractice.  Mckie’s thematic point concludes that modern litigation funding agreements have dynamism that credit agreements simply lack in design.  Read the entire essay to learn more. 
Commercial Deals

The Future of Banking and Litigation Finance

An obvious question is how will innovation in the banking and litigation finance sectors evolve together? Litigation funding is serving as a de-risking mechanism that doubles as a conduit to justice.  Oonbazul.com recently hosted a discussion titled, “Third Party Funding Executive Roundtable: A Perspective for Banks.” The panel brought together experts from Hereford Litigation, including Mr. Dakis Hagen QC, Mr. Edward Grundy, Managing Partner, Mr. Ben Mays, Managing Director, and the Managing Director from Kroll, Mr. Jason Kardachi.
  • According to the panel, banks are exploring litigation finance tools for asset recovery. Benefits include risk being absorbed by funders who are motivated to see a return on their investment. 
  • While funders do not control third party litigation, many in-house bank collection operations lack such motivation to innovate. 
  • As such, experienced funders have partnered with leading banks to engage in litigation finance as a risk mitigation strategy. 
Looking at the international horizon, forecasts suggest that high profile cross-border banks will broadly explore litigation finance facilities. Similarly, investors will look to leverage sophisticated  banking relationships that service a new generation of global litigation funding business. A symbiotic relationship that stands to increase overall bank profitability.