Trending Now
  • International Legal Finance Association (ILFA) Announces End of Year Gala and Inaugural Legal Finance Awards

All Articles

3634 Articles
Announcements Commercial Legal Innovation

Omni Bridgeway launches US Judgment Enforcement business, expands global enforcement team

Omni Bridgeway (formerly known in the US as Bentham IMF) is pleased to announce the launch of its US Judgment Enforcement business.
Omni Bridgeway, the most experienced multi-disciplinary foreign judgment enforcement provider in the world, launches its Judgment Enforcement services business in the US with three key appointments and further expansion pending, building on the company’s 35-plus year track record in global enforcement. We are delighted to welcome Hannah van Roessel as Senior Investment Manager, Director Enforcement - US in New York. Since 2013, Hannah has served as Director Enforcement & EMEA, Senior Legal Counsel in the Amsterdam office of Omni Bridgeway’s litigation and global enforcement funding business, with a notable record of managing active enforcement cases and securing recoveries in contested settings. Hannah brings significant hands-on experience with the cross-border recognition and enforcement of arbitral awards on the basis of the New York Convention in a large number of jurisdictions, especially against sovereigns and semi-sovereigns.
Jeff Newton joins Hannah in Omni Bridgeway’s New York office as Investment Manager and Legal Counsel responsible for expanding the company’s US judgment enforcement initiatives. Jeff was a litigator at Kobre & Kim LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP where he represented parties in a wide range of complex commercial cases across financial fraud, crypto, defaulted debt, technology, environmental, pharma, insurance, and reinsurance matters. He has represented clients on the plaintiff and defense side in civil and class action lawsuits and helped recover assets internationally.
Rounding out the team responsible for advancing the company’s US enforcement business is Gabe Bluestone, who also joins the team as Investment Manager and Legal Counsel in New York. Gabe was previously a Shareholder and litigator at Bluestone, P.C., a leading asset recovery law firm with offices in Washington D.C. and New York, where he also maintained a robust business litigation practice. While in private practice, Gabe represented a global roster of clients in commercial disputes and in enforcing judgments, often seeking injunction-predicated relief, striking down fraudulent conveyances, and unravelling fraudulent corporate schemes.
Andrew Saker, Managing Director & CEO and Chief Strategy Officer - US notes “Omni Bridgeway’s global leadership in judgment enforcement is unparalleled in terms of the results we deliver clients. We are excited to officially launch our enforcement business in the US with the arrivals of Hannah, Jeff, and Gabe. Our dedicated US team will serve as an on-the-ground resource for clients in devising, managing, and executing cross border enforcement strategies, working closely with colleagues in North America, and researchers and asset tracers worldwide.”
ABOUT OMNI BRIDGEWAY  Omni Bridgeway is the global leader in litigation financing and managing legal risk, with expertise in civil and common law legal and recovery systems. With international operations based in 20 locations, Omni Bridgeway offers dispute finance from case inception through to post-judgment enforcement and recovery.
Omni Bridgeway is listed on the Australian Securities Exchange (ASX:OBL) and includes dispute funders formerly known as IMF Bentham Limited, Bentham IMF and ROLAND ProzessFinanz, and a joint venture with IFC (part of the World Bank). For more information visit www.omnibridgeway.com.
Commercial Special Features

Can defendants avoid or limit their liability through contractual provisions?

The following article was contributed by Valerie Blacker and Jon Na, of Piper Alderman. Applicants often confront the proposition, which respondents typically use in their defense, that terms in consumer contracts will effectively exclude or restrict the claims that have been brought. The High Court of Australia recently weighed in on this issue, deciding that a mortgage contained an enforceable promise by the borrowers not to raise a statutory limitation defense in relation to a claim by the lenders, which was commenced out of time. Price v Spoor [2021] HCA 20 In a slight twist to the typical scenario, the lenders were the plaintiffs who brought recovery proceedings after the expiry of the period stipulated in Queensland’s Limitation of Actions Act 1974. The borrowers argued no monies were owed because the claim was well and truly statute barred. Proceedings should have been brought by 2011, but the lender did not file a claim until 2017. In reply, the lender relied on this clause in the contract: “The Mortgagor covenants with the Mortgage[e] that the provisions of all statutes now or hereafter in force whereby or in consequence whereof any o[r] all of the powers rights and remedies of the Mortgagee and the obligations of the Mortgagor hereunder may be curtailed, suspended, postponed, defeated or extinguished shall not apply hereto and are expressly excluded insofar as this can lawfully be done.” The effect of which was said to be a promise not to take the limitation point. The lender’s argument failed at first instance (before Dalton J) but was overturned on appeal (by Gotterson JA on behalf of Sofronoff P and Morrison JA) and then ultimately vindicated by the High Court (Kiefel CJ and Edelman J, with whom Gageler, Gordon and Steward JJ agreed). The public policy principle Part of their Honours’ reasoning was that what is conferred by a limitations statute is a right on a defendant to plead as a defense the expiry of a limitation period. A party may contract for consideration not to exercise that right, or to waive it, as a defendant. That is not contrary to public policy. This, in our view, is akin to agreements frequently entered between prospective parties to a litigation to toll a limitation period (suspend time running) for an agreed amount of time. That can be contrasted with a clause in an agreement that imposes a three- year time limit instead of six, for bringing a claim for misleading and deceptive conduct under the Australian Consumer Law.[1] Clauses of that kind are unenforceable based on a well-established principle that such clauses impermissibly seek to restrict a party’s recourse to his or her statutory rights and remedies, contrary to law and public policy. The “public policy principle” was first identified by the Full Court of the Federal Court in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546. Henjo has been referred to and applied in numerous cases since, and cited with approval in the High Court.[2] This is not to say that contractual limitations can never be effective in limited circumstances - this much was shown in Price v Spoor. The question of whether commercial parties to a contract can negotiate and agree on temporal or monetary limits while not completely excluding the statutory remedies for misleading and deceptive conduct claims under section 18 of the ACL remains debatable[3]  - but those specific circumstances do not arise here. About the Authors: Valerie Blacker is a commercial litigator focusing on funded litigation. Valerie has been with Piper Alderman Lawyers for over 12 years. With a background in class actions, Valerie also prosecutes funded commercial litigation claims. She is responsible for a number of high value, multi-party disputes for the firm’s major clients. Jon Na is a litigation and dispute resolution lawyer at Piper Alderman with a primary focus on corporate and commercial disputes. Jon is involved in a number of large, complex matters in jurisdictions across Australia. For queries or comments in relation to this article please contact Kat Gieras | T: +61 7 3220 7765 | E:  kgieras@piperalderman.com.au -- [1] For example in Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd [2018] VSC 246 [2] For example in IOOF Australia Trustees (NSW) Ltd v Tantipech [1998] FCA 924 at 479-80; Scarborough v Klich [2001] NSWCA 436 at [74]; MBF Investments Pty Ltd v Nolan [2011] VSCA 114 at [217]; JJMR Pty Ltd v LG International Corp [2003] QCA 519 at [10]; JM & PM Holdings Pty Ltd v Snap-on Tools (Australia) Pty Ltd [2015] NSWCA 347 at [55]; Burke v LFOT Pty Ltd [2002] HCA 17 at [143]. [3] For example in G&S Engineering Services Pty Ltd v Mach Energy Australia Pty Ltd (No 3) [2020] NSWSC 1721.
Announcements Commercial Fundraising

Litigation Capital Management Limited (“LCM” or the “Company”): Interim results for the half year ended 31 December 2021

Litigation Capital Management Limited (AIM:LIT), a leading international alternative asset manager of disputes financing solutions, is pleased to announce its unaudited interim results for the half year ended 31 December 2021, delivering a significant improvement on the prior year.

Operations

·US$150m Global Alternative Returns Fund (“GAR”), now fully committed and achieved within the two year mandated commitment period
·Completed US$200m first close of second Fund - Global Alternative Returns Fund II (“Fund II”) with targeted close of US$300m well progressed and expected to complete during FYH2
·Resolution of previously announced direct investment delivered strong returns with a ROIC of 261% and IRR of 199%1
·Portfolio of direct investments well progressed with three investments resolved and awaiting payment or resolution of appeals, four direct investments had final hearings and are awaiting judgment and four direct investments have or expect hearing dates scheduled before end of 2022

 KPIs

Total assets under management increased to A$343m at 31 December 2021 and A$386m by 8 March 2022
196 applications received during the period vs 266 in H121. A further 89 applications received in the two month period to 28 February 2022, demonstrates an acceleration in momentum and return to normal operating conditions
Investment commitments of A$25m during the period, down on the prior period commitment of A$67m which was skewed by a large construction portfolio investment which was consequently scaled down due to a sale and change in ownership of the funded party
Total invested capital during the period was A$31.5m vs A$39.7m in H121
Improved performance - cumulative 162% ROIC and IRR of 79% over the past 10 and a half years (inclusive of third party unless otherwise stated)

Financials

Gross profit of A$13.9m (H121: A$5.4m)
Adjusted profit before tax A$7.5m (H121: A$0.2m loss)
Statutory profit before tax of A$4.0m (H121: A$1.4m loss)
Cash of A$43.5m at 31 December 2021 (A$30.3m exclusive of third party interests)
Cash receipts from the completion of litigation investments of A$20.6m, up 94% on the prior year*
Total equity of A$94.3m*
 *exclusive of third party fund consolidation

Post period events and outlook

·Mary Gangemi, CFO, appointed to the Board bringing extensive and valuable experience
·LCM continues to build out the platform and extend both its own balance sheet commitments and fund management business.

metrics based on final AUD cashflows

Commenting on the results, Patrick Moloney, CEO of Litigation Capital Management, said:  “We have achieved great progress during the period despite disruption as a result of COVID-19 lockdowns and unprecedented restrictions in the areas we operate.

“I am pleased with the progress in our Fund Management business, which is now well established, with our first US$150m Fund now fully committed and the US$200m first close of Fund II with a final close target of US$300m by the period end. Equally, our portfolio of direct investments has performed well given the difficult external circumstances impacting our industry, with a number of ongoing investments resolved and awaiting payment, or awaiting judgment in the second half.

“As conditions normalise and with the core executive team now in place in our London office, LCM is now in a stronger position to grow both divisions, enabling us to access greater amounts of capital and facilitate the expansion of our portfolio of investments. The countercyclical nature of our industry suggests that economic and market conditions at present, represent a growing opportunity for the Company which will be realised over the long-term. We look to the second half and beyond with optimism and confidence.”

An overview of the interim results from Patrick Moloney, CEO is available to view on this link: https://bit.ly/LIT_H122_overview_video.

The accompanying results presentation is available on LCM's website:

https://www.lcmfinance.com/shareholders/investor-presentations-results/

The Interim Financial Report is available at:

https://www.lcmfinance.com/shareholders/annual-reports-financial-reports/

Commercial Legal Innovation

Litigation Insurance Trends and Product Innovation

The litigation finance space is evolving at break-neck speed with new, innovative products to meet marketplace demands. Development of a new market segment includes the emergence of litigation risk insurance, aimed at mitigating threats arising from acknowledged claims.  InsuranceJournal.com explains that with historic investment in world-wide litigation finance, litigation insurance products offer a dynamic set of tools to help offset high-stake, high-dollar litigation awards. Even more exciting, mergers, acquisitions and leveraged buyout scenarios are finding litigation risk insurance an attractive solution to material litigation liablities.   There are two emerging categories of litigation risk insurance:  
  • Adverse Judgment Insurance: Facilitating coverage in unexpected scenarios, this solution provides various coverage options to potential adverse judgment awards. Policyholders usually are defendants offering rider coverage to consider assignees associated risk.
  • Judgment Preservation Insurance: The journey of contentious litigation can award significant claim values that stand a chance of being overturned in appeal proceedings. Judgment preservation insurance offers claimants various facilities to protect awarded judgements in the event of lesser recovery. 
  Litigation risk policy coverage is bound much like traditional insurance coverage. Policyholders pay corresponding premiums to gain agreed upon indemnification. Bespoke policy scenarios are widely becoming a risk mitigation technique out of design. It will be interesting to see how the litigation insurance industry continues to evolve alongside that of litigation finance. 
Commercial Regulatory Issues

Corporations Act s596A Expanded by High Court of Australia

A recent decision by the High Court of Australia (HCA) expanded the scope of s596A of the Corporations Act 2001, regarding public examinations and who has standing to conduct them. In a majority decision, the HCA found that claims of corporate malfeasance reflect the public interest in enforcing laws and protecting creditors and investors. Omni Bridgeway, in its case study of Michael Thomas Walton & Anor v CAN 004 410 833 Lit, explains the various considerations of the court:
  • Because each case is unique, there’s no reason to create an exhaustive list of legitimate reasons to invoke s596A. Each case will be examined on its own merits and circumstances.
  • Amendments expand who may conduct public examinations, as well as expanding the underlying concerns and purpose of the same.
  • Rather than dismissing a summons for abuse of process, litigants would be better off ensuring the integrity of examinations by invoking control over which questions should be asked.
The case involves a potential class action by a shareholder group, a summons, and discovery of multiple documents—including Simon Gailbraith, former director of Arrium. Arrium tried to have the order set aside, claiming abuse of process. The court disagreed because:
  • Arrium did not suffer losses.
  • The class action claimants did not include all shareholders, therefore emphasizing the ‘private nature’ of the claim.
  • Shareholders failed to provide ASIC that recovery would include other potential claimants.
The Court of Appeal later determined that if the predominant purpose of the request was for a private claim, it was an abuse of process. How exactly is abuse of process defined?
  • Using courts for an illegitimate purpose.
  • Processes are used in a way that oppresses one party.
  • Violation of court integrity.
Ultimately, this decision is beneficial to legal funders as it expands the tools that can be used to pursue claims.
Case Developments Commercial

Liquidators Accuse Mainzeal Directors of Mishandling Crisis

A recent NZ court of appeal ruling found that the director of Mainzeal traded on his company, which was technically insolvent for nearly a decade—yet caused no material loss to creditors. Liquidators backed by LPF are appealing the ruling.  RNZ explains that the directors, which include former NZ prime minister Dame Jenny Shipley, argued through their lawyers that the lower court ruling was “profoundly wrong,” and that they continued running the company as usual—believing they could salvage it. The directors also asserted that its parent company, Richina, would pay back $44 million in loans to Mainzeal. When this was revealed to be untrue in 2013, Mainzeal was put into administration by its bankers. Despite this, the directors allowed trading and new contracts to be secured. This led liquidators to argue that the company had a “policy of insolvent trading,” putting creditors at profound risk.
Commercial

Augusta Ventures Lists Litigation Finance Benefits 

Augusta Ventures has been a pioneer in international litigation finance, putting to work over $770M of capital into litigation investment agreements since its founding in 2013, Augusta purports a pedigree of litigation finance innovation well into the future.  Augusta recently published a list of benefits of litigation investment scenarios for the savvy litigator. Below we provide you a synopsis of the findings:   
  • Litigation finance offers both attorneys and their clients access to greater liquidity. The utilization of litigation investment as a tool was born with the spirit of easing liquidity hurdles, while providing access to justice. 
  • Corporate profit and loss statements can be saddled with millions of dollars in legal expenses during multi-year litigation. With litigation agreements, profit and loss metrics are handled by the investor, not the firm under litigation. This can be of great benefit for many growing companies. 
  • Risk associated with litigation can be burdensome without keen organizational structures. Litigation funders normally make an investment accepting 100% of the risk associated with a claim. 
  • Claim experience is nice to have, as litigation investors’ entire operational success depends on the level of claim experience (aka claim wins) they have scored. 
  • The claim owner has the luxury of complete independence from a litigation investor’s meddling in the claim’s outcome, once a litigation agreement has been executed. 
Read Augusta’s complete article to learn more.
Case Developments Commercial

Amazon Web Services Denied Litigation Funding Agreement Disclosure 

Kove IO (KIO) is initiating a likely contentious patent infringement litigation against Amazon Web Services (AWS). KIO has sued AWS with a complaint that alleges abuse of patent infringement as a business model, with respect to KIO patents for large-scale cloud computing data storage technology. Meanwhile, KIO held various discussions with litigation funders. Even though KIO did not take litigation investment, AWS sought to require KIO to disclose litigation funder discussions as part of discovery proceedings.       Validity Finance recently published insights into the case discovery requests made by AWS, and how KIO responded. When KIO asked the judge for a protective order related to litigation investment, AWS petitioned the judge to deny the motion and demand KIO’s litigation investment disclosure(s).  KIO suggested that the litigation finance discussions were not materials that AWS should be privy to. AWS argued that the nature of KIO’s litigation finance discussions are of interest in determining the value of any potential AWS patent violations.      The theme of denying litigation funding agreements as part of discovery has been a hot topic of late, involving giants like Google, Apple, Facebook and now Amazon. With the deep pockets of publicly-traded companies, if a litigation funding agreement was required as part of discovery, it could be argued that the litigation budgets of these companies would be of interest as well. Discovery motions of this nature could be argued, given that they are fighting against the rule of international law and justice.  Meanwhile, it appears that such disclosures are not required on either side by the recent precedent.  
Case Developments Commercial

Follow-Up: When Clients Go Bankrupt, Who Pays? 

An update to a story LitigationFinanceJournal.com recently reported on: The case in the United Kingdom involving Cadney and their former client Peak Hotels & Resorts Limited has a new decision issued by the UK Supreme Court. 
  • The case involves Peak’s insolvency and inability to pay £4.7M in fees and outstanding costs. The UK Supreme Court justice presiding over the case stands to grapple with the thematic undertones of litigation finance, and whether a lien should be considered litigation funding or not. 
  • It appeared that the case may hinge on whether Cadney’s “deed” or “lien” against Peak is structured as a litigation finance agreement.
  • Cadney tried to argue that they did not forgo the right to payment when re-organizing terms and conditions and a new agreement. 
This week new details were presented by the liquidators in charge of Peak Hotels & Resorts Limited. The liquidation attorneys argued that Cadney’s intent was to end its lien against Peak’s assets through the creation of a new security (a litigation investment contract). The argument was furthered by asserting that if the lien was not expressly preserved in the new litigation agreement, then it is clear that the lien came to an end with the execution of the new agreement.  Ruling on the case is expected later this year, and we will continue to report updates on the story as they happen.