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Commercial

What’s Ahead for 2022 in Islamic Litigation Finance?

Last year was uneventful as far as UK disputes in the Islamic Finance sector. COVID has impacted funders and borrowers, as businesses and potential plaintiffs all seek to lower risk and preserve funds. Islamic Finance News suggests that 2022 will be a busy year. The use of third-party legal funding is on the rise, and ESG issues are capturing the attention of funders and investors. Meanwhile, as national moratoriums on insolvency expire, an increase in defaults and insolvencies is expected soon. Perhaps the most notable judgement of last year came down from Justice Zacaroli in the Golden Belt case. In it, Golden Belt claims that the Saad Group defaulted on a $650 million loan, bringing about questions as to how the case addresses Shariah principles—and how this might relate to the larger Islamic finance sector. The judgement focused on contractual interpretation and whether Golden Belt was legally able to enter settlement negotiations or restructuring in Saudi Arabia without a go-ahead from certificate holders. This question, which was answered with a resounding Yes, took precedence over Shariah principles. Other factors sure to make 2022 even busier include:
  • Increased use of litigation funding, both globally and in the Islamic finance sector in particular. Funding is largely regarded as being Shariah compliant.
  • A growing trend toward class action cases thanks to the proliferation of litigation funding. All sectors will likely be impacted by this, including Islamic finance.
  • ESG investing will continue to grow, spurring more litigation on issues relating to environmental protections, social justice and civil rights, and government-related litigation and activism.
Commercial Legal Innovation

 Blockchain Technology: Emerging Legal Use Cases 

Multiple use cases are emerging for the integration of blockchain technology into modern global law practices. Traditionally, many legal enterprises start out as small to medium businesses which have been risk averse when it comes to new technologies.  The Spanish publication ObservatorioBlockchain.com reports that while the infancy of blockchain technology is obvious, the benefits for the legal community and litigation finance are real. The programmatic facilities of blockchain technology allow for litigation finance contracts to be more or less automated.   Document manipulation in litigation finance agreements is somewhat of an unspoken problem today. Blockchain technology could help small law practice businesses evolve into proper global enterprises, complete with enterprise document management systems. Smart legal documents are the forefront of law, many argue.  Check out Observatorio’s full outline of blockchain technology and law. Use your browser's translation tool to toggle between Spanish/English, or your preferred language.
Commercial Deals

Bloomberg Reports on Patent Litigation Financing  

Patent litigation growth is expected to increase, with innovation gracing the sector. In terms of a risk/reward profile, IP litigation is one of the most profitable areas of litigation finance.  Bloomberg Law reports an expected uptick in investment across patent litigation claims. Bloomberg notes that 2020 patent law funding saw a 19% increase. 2021 saw a 24% increase in patent litigation funding.   Investment firms have started to hire in-house patent experts to weed out and invest in best-in-class cases. One such case in 2021 was LSVI vs. Intel, scoring the second largest patent verdict in history at $2.19B.  Bloomberg forecasts that 2022 will usher in investment dollars to explore funding patent licensing, as well. Not only will patent litigation grow and evolve, but so too will enforcement of patent licensing claims, according to experts. Bloomberg outlines that the top level patent litigation investment houses are developing bespoke due diligence frameworks to help set the foundation for long-term success. To see all of Bloomberg's findings, click here to access their survey results.
Commercial

Emily O’Neill of Deminor Discusses Litigation Funding and IP Claims

Emily O’Neill is an expert in structuring and financing IP litigation in multiple jurisdictions. O’Neill says that an authentic, personal approach to clients is key. Pointing to a 30-year history and an 80% success rate doesn’t hurt either. I am Media asks O’Neill five questions about her approach and experience in IP and litigation funding. First, she explains her methods for building trust with clients, despite third-party legal funding being a comparatively new industry. When asked about her proudest professional achievement, O’Neill reveals that she was recently appointed to the council of the Law Society. This is an opportunity to improve diversity and social mobility within the finance sector, and the legal one. Questioned about her impressions of patent litigation in the UK, she states that like many legal areas, the UK patent court is in recovery from an unpredictable and difficult couple of years. Delays, increased costs, and longer case durations have caused multi-jurisdictional matters to lag. But O’Neill also points out that new IP specialist judges in the UK High Court are bringing improvements. In discussing Spectris plc’s global IP management system, O’Neill details that making employees aware of their responsibility to safeguard IP is the foundation of a successful system. Implementation was then tailored to the needs of specific subsidiaries that could be used between teams—allowing for collaboration while protecting IP. Finally, O’Neill cautions those embarking on multi-jurisdictional litigation to ensure coordination between the different jurisdictions. Not all teams will coordinate well, but having everyone working together is essential to see a successful case through to completion. 
Consumer

Litigation Finance Arrangements in the United States

Like a lot of things in America, the pursuit of justice can be out of reach for all but the wealthy. To pursue a case in the US, litigants have to cover the costs of lawyer fees, out-of-pocket expenses, and any other associated costs. Depending on their situation, potential claimants may be expected to do this while unable to work, injured, or having recently lost significant financial resources. MONDAQ explains that because of the prohibitively high cost of litigation, well-capitalized wrongdoers can deflect lawsuits with threats of high costs, or with lowball settlement offers. Contingency fee agreements may be helpful for plaintiffs in some situations. But rates can be as high as 50%, and still do not cover filing fees, discovery, and deposition costs. So while CFAs can be helpful for some, it’s not a solution to the widespread, runaway costs of modern litigation. Litigation Finance is a rapidly growing industry for good reason. It allows investors to fund individual cases, or a portfolio of several, in exchange for a stake in any award given or settlement reached. TPF can be utilized for consumer and commercial litigation and can be used at any point in the legal process—including enforcement of an award. Before accepting a case, funders conduct due diligence on the case itself, and those involved in it. Essentially, funders are providing funds in a situation where the case itself is the only collateral. The non-recourse nature of funding means that if the case is not successful, funders can lose their whole investment. 
Commercial Regulatory Issues

Singapore Allows No-Win, No-Fee Arrangements in Arbitrations

As of January 12, conditional fee arrangements—once banned outright in Singapore—are now permitted in some case types. No win, no fee agreements are allowed in international and domestic arbitrations, some mediations, and certain proceedings in the Singapore International Commercial Court. Straits Times details that the proceedings in question are those involving high-end commercial disputes. According to Singapore’s Minister for Law, Edwin Tong, allowing conditional fee arrangements will help domestic lawyers compete with lawyers outside the country who are not bound by rules prohibiting CFAs. He also explained that conditional fee agreements increase access to justice, allowing businesses with meritorious claims to pursue cases despite lacking the available funds with which to do so. Conditional fee arrangements could take the form of ‘no win, no fee’ agreements, or ‘no win, less fee’. Lawyers may also choose to charge an uplift fee on successful claims. Singapore is not the only jurisdiction to abolish prohibitions against CFAs. The United States, Canada, Australia, England, and Wales are among those who now allow CFAs in a variety of forms. According to Tong, the Singapore ministry is examining whether the use of CFAs should be expanded to other case types. He notes that CFAs should not be considered a replacement for traditional fee structures. He also affirms that safeguards, such as written agreements signed by lawyers and clients, will be put in place to protect clients from potential abuse.
Commercial Legal Innovation

Litigation Funding via ILO

Litigation finance has a new tech savvy way of doing business, with the emergence of Initial Litigation Offerings (ILO). So far, there has been only one group to gain notoriety employing an ILO. Weed vs. Hemp crop destruction is the controversial ILO investment subject.  RounTabelGroup.com reports that a $1B+ California based hemp operation was allegedly destroyed by agricultural mercenaries sponsored by the government. The operation has launched an ILO to gain investment dollars to start litigation.  The ceiling to the ILO offering is $5M, and is being brokered in $100.00 increments. This is the world’s first approach to litigation funding via ILO.  SEC regulation requires registration of such funding levels under certain conditions related to crowdfunding. However, the SEC has remained silent on the specifics of ILOs.
Commercial

Stonward’s 2022 Litigation Finance Predictions

Stonward forecasts a bright future for litigation finance and third party investment opportunities for 2022. Cash flow is the heart of every successful enterprise, as such Stonward finds liquidity being an extremely attractive bonus for third party clients.  Stonward recently published a LinkedIn feature outlining five trends for litigation finance developments in 2022. Here are some of the highlights:
  1. Regulatory clarity will bring cross-border litigation finance opportunities to fruition. 
  2. COVID-19 bears new opportunities for litigation finance agreements.
  3. Class action and antitrust litigation is set to increase, with third party investors sure to follow.
  4. Litigation portfolio finance will mature with risk mitigation facilities forefront. 
  5. Long term relationships will foster legacy profitability. 
Check out Sonward’s report to learn more about their 2022 predictions.
Commercial

Litigating Universal Cognitive Liberty

Freedom of thought is recognized by the Universal Declaration of Human Rights (UDHR). Interestingly,, cognitive liberty is not recognized as an international human right. Some want to change that, making the argument that humanity has the right to be free to think whatever they want (freedom of thought).   The Ottawa Citizen reports that the Canadian armed forces have launched ‘psychological operations’ as an experiment in government propaganda to counter civil disobedience. International human rights scholars are quick to point out that the lack of protection of cognitive liberty in such instances is due to the relative lack of technology capable of directly interfering with mental autonomy at the time the core human rights treaties were created.   Similar to a ransomware attack, the technology behind such operations can be abused. Canada is said to have exploited advanced technologies without the authority to do so. Even worse, it is alleged that Canada forcefully abused technology in the unsanctioned production of reports that appeared to be aimed at cognitive activities of Canadians. 
  • Other reports highlight similar technologies being explored by the New York City Police Department. 
  • In 2021, members of the National Lawyers Guild won $650,000 in litigation financed fees from abuse of the technology in New York. 
The semantics empowering freedom of thought as a human right hold new opportunities for modern international recognition of the right to cognitive liberty.