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Case Developments

Burford Capital Announces Conclusion of Akhmedov Divorce Enforcement

The divorce settlement between Farkhad Akhmedov and Tatiana Akhmedova has been in contention since it was first ruled on in 2016. London’s High Court determined that Akhmedova should receive over GBP 453 million of his more than GBP one billion estate. According to her, that judgment was not enforced. Bolly Inside explains that Akhmedova enlisted help from Burford Capital to enforce the judgment. This led to an asset search that spanned the globe and included art, a superyacht, multiple homes, and a private jet. Sadly, the case even saw Akhmedova suing her son, alleging that he helped his father hide assets from his mother. Ultimately, the court agreed that son Temur Akhmedov should pay his mother GBP 75.9 million, saying he participated in a scheme to keep money beyond his mother’s reach. Since the first hearing in London, Farkhad Akhmedov has claimed that an earlier divorce in Russia predates the later judgment—therefore invalidating the London judgment. The Luna, the family superyacht, remains in the possession of Farkhad Akhmedov. Burford Capital recently announced its receipt of over AU $103 million for its efforts on behalf of Mrs. Akhmedova. Burford funded efforts to enforce the London court judgment in the Akhmedov matter. This payment represents a roughly $20 million addition to 2021 profits. The matter has generated over $70 million in realized gain since its undertaking. Last December, Burford announced that it spent roughly $25 million in its enforcement efforts. An analysis by Canaccord Genuity called the settlement a “good result” for the funder. The Akhmedov divorce case is one of the largest ever in a London court—often called the divorce capital of the world—known for high awards to non-working spouses. Justice Gwynneth Knowles compared the facts of the case to the Tolstoy novel, Anna Karenina, calling the family the ‘unhappiest ever to have appears in my courtroom.’
Commercial

Why Third Party Legal Funding Continues its Rapid Growth

A recent study into the future of legal funding resulted in several interesting insights. These include potential market growth, use of funding by corporates, expense, and strategic input into cases. Alix Partners explains that between 2017 and the end of 2019, assets held by litigation funders in the UK increased 46%. When surveyed, however, more than 90% of respondents say they expect funding to increase in use and expand the types of cases it is used for. Roughly 15% of in-house counsel surveyed have used litigation funding. Private practice solicitors and barristers are more likely to have used it, or worked with those who have used it. Some corporates haven’t used funding because they say they don’t need it. But is that accurate? Or could companies be missing out on the benefits of legal funding because they don’t know how to best utilize it? That is especially possible, given how many misconceptions there still are about third-party funding. Funding your own litigation makes sense if you win—but taking a sizable risk with your own assets is just that—a sizable risk. Betting on a sure thing is nice, but funding allows corporates to take a chance on a less predictable case without risking assets. Working with a funding entity also provides legal expertise from a third party. This can help with strategy, evaluation, and more—yet this is rarely touted as an obvious benefit of the practice.
Consumer

Seth Lovis Struck from Rolls After Double Funding Discovered

Seth Lovis, former managing director of Seth Lovis & Co, has been struck after admitting to failing to meet his obligations to various lenders. An investigation by the SRA determined that the personal injury lawyer accepted funding from multiple lenders for the same case more than a dozen times. Law Gazette reports that Lovis’s attorney argued that this was not a premeditated plan to cheat lenders. Rather, it was ‘a mistake’ made in an effort to save his troubled firm. Lovis is described as having treated litigation funding as a line of credit. In addition to being struck from the roll of trusted attorneys, he’s been ordered to pay GBP 35,000 in costs.
Consumer Special Features

Consumer Legal Funding is Even More Necessary Post-Pandemic

The following piece was contributed by Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC).  Consumer Legal Funding is when a company provides funds to a consumer who has a pending legal claim, typically a car accident, while their case is making its way through the legal system. The funds are used for household needs such as mortgage, rent, car payments, keeping the light on and putting food on the table. The funds are not used to pay for legal fees associated with the claim or case. This financial product is needed now more than ever as we recover from the pandemic caused by COVID-19. According to MarketWatch, almost half of Americans have saved less than $500 in the past three months. The article goes on to state that 56% are living paycheck to paycheck, and that 48% have experienced an unexpected financial setback in the past three months. In early July of 2021, Wells Fargo shuttered all of its personal lines of credit. This cut off thousands of consumers from accessing funds that they might need in an emergency, such as being involved in a car accident. So where are these consumers to go when, by no fault of their own, they are involved in an accident and become injured and cannot work, and therefore have either no income or limited income. These individuals often fall behind in their financial obligations such as their rent and car payments, and with limited-to-no savings, they are stranded. Banks, such as Wells Fargo, are cutting off their access to financial assistance at a time when consumers need it the most. In addition, according to BankRate “nearly three times as many Americans say they have less emergency savings, versus more since the pandemic”. Consumer Legal Funding is a non-recourse financial product, meaning you only have to meet the obligation if you are successful in your legal claim. This affords consumers the ability to meet their everyday financial obligations, while they make their way through the legal system. Because of COVID-19, legal claims are taking longer to make their way through the process. Even insurance companies are saying that it will take longer to get ahold of them. Consumers should learn more about their options when they have a pending legal claim and not be forced to take the first offer that comes along, just because they are financially stressed. Consumer Legal Funding can serve as a source of financial protection and comfort for consumers with nowhere else to turn—and as we emerge from the Covid-19 pandemic, this type of product is needed now more than ever. Note: When dealing with a funding company, make sure to ask if they follow the industry set of Best Practices that have been set out by ARC and the ARC companies. Eric Schuller President Alliance for Responsible Consumer Legal Funding (ARC)
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Consumer

What You Need to Know About Pre-Settlement Lawsuit Funding

As litigation funding expands and adapts to the needs of consumers, it is becoming known by an increasing array of names: lawsuit loans, car accident loans, pre-settlement funding, etc. That’s because third-party funders are always developing new ways for non-recourse legal funding to help those in need. National Law Review explains that pre-settlement funding can be a boon to those who have been hurt in an accident and have a pending case. Even if the case is a slam dunk, it will take time for a settlement or judgement to be achieved. In the interim, there are bills to pay and lost wages to contend with. This kind of funding, which does not require good credit, can provide much-needed wiggle room to plaintiffs waiting to be compensated. The caveat is that their eventual payout could be much less than it would have been if a funding agreement was not in place. Funders use a variety of criteria when selecting who to fund:
  1. Litigation often must be active and be handled by a lawyer.
  2. Cases should be likely to end in a judgement for the plaintiff.
  3. Personal injury cases are among the most commonly funded.
  4. Client is in a funding-friendly jurisdiction.
  5. Potential for a high settlement.
  6. Defendant has the ability to pay an award to the plaintiff.
  7. The plaintiff and attorney should both be committed to a positive outcome.
A pre-settlement advance differs from a structured settlement in a few key ways. Structured settlements benefit defendants, as they’re used when defendants cannot pay the full award at once. Specific terms may vary depending on various factors. Pre-settlement funding is provided in a lump sum before a case is settled, benefiting the plaintiff. Given the inherent benefits to investors and plaintiffs alike, it’s likely that pre-settlement funding will continue to grow.  
Commercial

IP Dispute? Legal Funding Makes a World of Difference

Not all companies are enthusiastic about filing an IP lawsuit—even a highly meritorious one. Such cases are costly, complicated, and may not resolve for years. At the same time, the potential for a large recovery is high.

Omni Bridgeway suggests that Litigation Finance may be the key that allows companies to defend their intellectual property without tying up working capital. When a case is likely to succeed, using non-recourse funding to pursue it is an ideal solution that keeps operating funds free for running day-to-day operations.

A look at some recent cases illustrates the high recoveries that are possible with effective IP litigation. Last year saw an unparalleled spate of high awards in IP cases—some reaching $100 million, and a few even surpassing $1 billion. Similarly, cases involving trade secrets have also yielded large awards, with several moving from state to federal courts thanks to the provisions of the Defend Trade Secrets Act.

Of course, there’s more to litigation funding than just handing out cash. Funders apply due diligence to cases being considered, with an eye toward possible recoveries, expected time frames, and the ability of defendants to pay. Even if a funding agreement is not reached, consulting with a funder can give plaintiffs a clear, unbiased idea of the strength of their claim.

Litigators speak to the ‘unexpected benefits’ of funders underwriting patent litigation. To wit, the involvement of funders is likely to improve the quality of the case. Funders will pose many of the same questions that will be asked in court—such as the plaintiff’s efforts to protect their IP or to keep it restricted to secure networks. Ultimately, consulting with a legal funder is a net gain for plaintiffs.

Commercial

CAT Hearing Will Determine if Class Action in Forex Claim Can Proceed

Banks like Barclays, JP Morgan, and Citigroup may believe that the fines levied against them in 2019 mark the end of a long road, yet that may turn out to be far from the truth.  Law Gazette reports that after a five-year investigation showed rampant market rigging during the period between 2007-2013, banks were fined more than 1 billion Euros. And now, the same banks may now face a class action claim led by asset managers, hedge funds, corporates, and pension funds. A Competition Appeal Tribunal will hear arguments on whether the class action should proceed. The claim is supported with funding from Therium Capital Management—demonstrating once again the value of funding for increased access to justice.   Lawyers for claimants stated that the case should proceed on an opt-out basis, arguing that the Consumer Rights Act protects not just individual consumers—but small businesses harmed by illegal, anti-competitive conduct.
Commercial

Litigation Capital Management Secures Another Major Funding Agreement

Prominent third-party litigation funder LCM (Litigation Capital Management) has secured a trio of major legal funding agreements in the last seven weeks. These include cases against rail services giant Govia, French electrical retailer Darty, and former Carillion auditor KPMG. As expected, investors have noticed LCM’s success; share prices rose 25%. Many analysts, including Simon Thompson, are lauding the stock and calling it a ‘buy.’ Investor Chronicle details that COVID has created conditions favorable for third-party funders. The increase in insolvencies, restructurings, and business closures drives a spike in funding requests. This, in turn, creates more investment opportunities. LCM anticipates an even larger financial windfall as the company awaits the launch of a $150 million third-party fund. It will see a payout of 25% of profits after an 8% soft hurdle rate. This is considered a very lucrative and achievable revenue stream, especially considering LCM has achieved a 78% IRR during the last ten years.
Consumer

SPAC Deal Seeks to Conjure Tens of Billions

A newly formed SPAC (special purpose acquisitions corporation) unveiled a plan to take MSP Recovery public. Lionheart Acquisition Corp II is valuing MSP at around $32 billion, or roughly 10.5 times the anticipated 2023 revenues. Some are calling this a new high in financial wizardry. If the market jibes with Lionheart’s predictions, CEO John Ruiz would hold a stake worth more than $20 billion, with Frank Quesada (Ruiz’s partner) holding a $7 billion stake. Forbes explains that MSP’s business model begins with buying up medical claims. By determining which claims were paid by governments instead of other responsible entities, MSP will collect the billed amount, which is often different than what was assessed by the healthcare system. There may also be double damages in some instances. MSP has constructed a powerful set of analytics and data infrastructure with which to sort through millions of claims to seek out cases worth pursuing. It’s been suggested by MSP that about 11% of the annual Medicare and Medicaid budget is paid in relation to accidents, misconduct, and fraud—meaning that the government should not be held responsible for paying. Currently, MSP reports owning almost $50 billion in claims from a long client roster that includes hospitals, doctors, and Medicare Advantage insurance companies. It could recover as much as $27 billion from its current portfolio of claims. Some might argue that this is a business model that shouldn’t exist. Money can only be made here due to the failings of the US healthcare payment systems and its lack of effective accountability. Ruiz, however, is not shy about touting the genius of his plan—explaining that this business model exists in a space that is essentially devoid of competition. After receiving $440 million in backing from Virage Capital Management, Ruiz began his pursuit of more than $50 billion in claims.