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Commercial Regulatory Issues

Class Action Reform Spurs Intense Response from Funders

The Australian government’s bid to reform class actions, and by extension third-party litigation funders, is nearing its climax. A parliamentary committee assembled to examine the bill has expressed support. A key argument in favor of increased legislation is that funders ostensibly make profits that are out of proportion to the risk taken and the costs incurred. Australian Financial Review explains that while this may seem reasonable on its face, the new legislation failed to consider some vital aspects of funding and class actions. The haste inherent in the consultation process seems unnecessary, even suspicious. Non-government members of the committee had less than one day to read and respond to the 68-page report. The report is expected to be put before the chamber for debate. The response from the Labor and Green parties, who have combined their efforts to block the bill, suggests concerns about the constitutionality of the bill. Legal firm Phi Finney McDonald was quoted in the report from the Labor party, describing the government’s efforts to paint this reform bill as a consumer protection win as “Orwellian gaslighting.” The fate of the bill seems to rest on a a few swing votes, including Stirling Griff, Jacqui Lambie, Pauline Hanson, and Rex Patrick. Patrick has already stated that his position is emphatically in support of access to justice. As such, he is unlikely to support the bill. The Green party also submitted a dissenting report, which claims the bill is designed to attack the business model of litigation funders in order to lower the number of class actions. Greens insist that the intention of the new bill is to protect the wealthy and empowered, while reducing the ways in which ordinary people can access justice. Aside from the ethical aspects, there are numerous questions of the constitutionality of the bill. If it is passed, there would likely be a spate of litigation to parse constitutional questions—which most believe is a poor solution to an already complex issue.
Consumer

The Impact of Small Verdicts and Settlements on the Trucking Industry

After last year’s report on nuclear verdicts in trucking cases, the American Transportation Research Institute has released a new study—this time examining the impact of small verdicts and settlements on the trucking industry. In it, it’s suggested that smaller verdicts may be causing a spike in insurance prices. Landline Media details that the report points to an increasingly litigious society spurred on by the relatively new practice of Litigation Finance. By describing funders and the lawyers who work with them as ‘collecting small awards as part of a booming business,’ the ATRI tips their hand as being anti-funding. Third-party legal funding allows those who have been harmed by a big company to have their day in court. That’s a net benefit, regardless of a rise in insurance rates. ATRI’s report suggests that it’s not so much ‘nuclear verdicts’ driving insurance premiums, but the sheer volume of smaller payouts. The report also refers to “settlement mills,” which may sound nefarious, but simply refer to a small efficient firm making short work of viable claims. It cannot be denied that litigation funding leads to an increase in lawsuits. That’s because many people with valid claims lack the financial resources to pursue them. The ATRI seems to suggest that addressing the inaccessibility of justice is less important than insurance rates, even as it affirms that the majority of reported claims never see a courtroom. With regard to verdicts versus settlements, the report suggests that settlements tend to include higher payouts. Further, more severe injuries increase the likelihood of settlements. In terms of cost, verdicts have a much higher overall legal spend than settlements. Ultimately, the best way to keep insurance premiums low is to be above reproach—not to impede injured parties seeking justice.
Case Developments Commercial

Tinder Founder Alleges He Was Misled About App’s Value

As difficult as it might be to imagine someone being misled by a Tinder communique, Sean Rad, a co-founder of the app, alleges that’s exactly what happened. Last week, Rad testified that Match Group (which also owns Hinge, OKCupid, and PlentyOfFish) undervalued Tinder by billions. PoliticSay reports that Match valued Tinder at about $3 billion. This figure was accurate two years earlier, but since that time, revenues increased fourfold. Rad alleges that Match “intentionally cooked the books” in order to lowball the founders on their purchase. According to Rad, the proper value of Tinder was at least $13.2 billion. An already complicated legal proceeding is being further clouded by allegations of conflicts of interest. One witness, Jonathan Badeen, had to drop out of the suit as a plaintiff due to an arbitration agreement. Attorneys for Match seized on this, attempting to paint the agreement as a conflict, saying Badeen’s agreement entitles him to a large (but undisclosed) payment if the case is concluded in Rad’s favor. Two other witnesses, former Tinder execs Rosette Pambakian and James Kim, also have deals with litigation funders. They say the money is not in exchange for testimony, and that the deal was necessary to make up for income lost when they joined the lawsuit. While the judge is allowing witnesses with funding agreements to testify, the defense may raise the issue during trial. More recently, Rad’s lawyers took issue with a juror who repeatedly arrived in court with a copy of the New York Post. Jurors are not allowed to view outside media during trials. Greg Blatt, who set the value of Tinder in advance of the sale, continues his testimony this week.
Announcements Consumer

LawCash®, Momentum Funding®, and Ardec Funding Will Merge to Form Cartiga — Push the Legal Tech and Financial Industry Forward

LawCash, Momentum Funding, and Ardec Funding, three companies that have pioneered the legal financial services industry for over 20 years, announced their new unified brand, Cartiga. Cartiga's focus is providing three primary legal services: plaintiff funding, attorney working capital, and risk management technology. Its mission is to map the way to a better future with fair and innovative solutions that help law firms and their clients navigate challenges, identify opportunities, and optimize litigation outcomes. "By combining these three industry leaders, our goal is to create a transformative organization that will drive change and innovation in the legal services industry through technology and personal connection," says Cartiga CEO Charlie Platt. "Aligned now with a common vision and data-first technology strategy, Cartiga will continue to provide for the financial needs of law firms and plaintiffs across the nation while charting a new path for the litigation industry." Cartiga's name reflects a long history of cartographers who have helped travelers and explorers find their way across challenging and often uncharted terrain through the practice of making maps. It represents the company's vision to enable better decisions by providing more insightful direction for legal industry stakeholders by utilizing technology and data. Cartiga aims to pioneer the next generation of legal services through strategic partnerships and industry-leading resources to help attorneys and law firms improve their businesses and better assess risk. About Cartiga
Cartiga combines deep legal experience and expertise to provide industry-leading products for plaintiff and attorney funding, as well as data-driven solutions that help law firms build stronger, more profitable businesses. Learn more at Cartiga.com.
Commercial

Insights on the Healthcare Industry from the 2012 Legal Asset Report

Perhaps more than any other industry, healthcare companies have scrambled to keep up with the changes brought about by COVID-19. Now that some of the changes made are destined to stay, healthcare companies are taking steps to further innovation. Burford Capital reports that according to Deloitte’s Healthcare Outlook for this year, doctors are prioritizing preventative care over treating conditions as they arise. Virtual appointments and more readily available data sharing and analytics are increasingly utilized to great effect, and collaborations in developing immunizations and other therapeutics appear to be an integral part of this newer, more modern medical landscape. Litigation relating to COVID, IP relating to pharma patents, opioid litigation, and other business challenges leave some companies under pressure and seeking solutions. Pandemic-related disruptions have manifested differently across the industry, as revenue was lost when elective care was put off or canceled altogether. This might be good news for some insurers, while others are building affirmative recovery programs—putting insurers in a position to pursue litigation as a plaintiff. How else are healthcare companies managing corporate litigation assets?
  • Increased affirmative recoveries are increasingly popular because they work. Employing third-party portfolio legal funding allows companies to pursue meritorious cases with a minimum of financial risk.
  • Adding value and controlling costs should both be included in the commercial targets for healthcare companies. A lack of knowledge or a failure to understand how to apply quantitative analysis to litigation assets can lead to missed opportunities to create increased value.
  • When financial departments and legal teams work together, the results can be significant. Developing commercial targets as well as employing better cost control can lead to increased opportunities to generate revenue.
Commercial Regulatory Issues

Key Points from the Global Class Actions Symposium

ICLG's Global Class action Symposium discussed the dynamic and evolving issues surrounding class actions and litigation funding. One takeaway is clear: attitudes about class actions and their funding are evolving with the industries themselves. Growing pains and a constant stream of regulatory changes point to new opportunities for claimants seeking compensation, and the lawyers and funders who serve them. ICLG.com details the increased popularity of a belief in class actions as a means to improve access to justice. Class actions can be a boon to average people who have been harmed by a government, utility, or big business they could never hope to take on alone. Experts from Harbour Litigation Funding and Berger Montague agree that while government regulation may serve to keep businesses honest—there are no provisions that address the losses experienced by those who have been wronged. In the end, governments will simply not be as motivated to seek recompense for claimants, even in large numbers. As laws change and precedents are set, businesses increasingly take steps to identify and address potential class actions before they become realities. The recent ruling in Lloyd v Google illustrates that even mundane choices like the precise subsection of law being referenced can make or break a case involving millions of claimants. Another theme discussed was the uneven maturity of class actions from one jurisdiction to the next. Australia has long enjoyed an amply regulated regime for class actions, while other parts of the world still struggle to set up a legal framework governing class action cases. Jurisdictional issues can complicate class actions, especially regarding securities, damages, and the overlapping legal constraints of cross-border litigation. Finally, ESG class actions are a growing focus. These actions focus on environmental, social, and governmental issues that can cover everything from corporate malfeasance to climate change.
Commercial Deals

US PE Investors to Buy UK Law Firm in the Coming Year

It’s predicted that several sizable UK law firms will find themselves in the hands of private equity investors in 2022. These investors will likely focus on large firms that are utilizing damages-based agreements (DBAs). Legal Futures explains that some firms, such as Rosenblatt, are expecting returns of 4-5 times the amount invested in various DBA cases. Regulations governing DBA cases led to many firms deciding not to utilize the practice. Steve Din, founder of Doorway Capital, details that legal professionals are increasingly investigating DBAs as an exciting new way to fund litigation. Din claims that investors aren’t interested in any specific firm or case. Rather, investors want to invest in large law firms. According to Andrew Leaitherland, former CEO of DWF and founder of Arch.law, US private equity funds will flock to UK-based firms, and create value the same way others have done with portfolio investments. One benefit of private equity investment is that investors can look at many different models and apply only the ones that already work. ScaleUp, a UK private equity firm, took a 35% stake in Keystone Law—and has successfully achieved a return on investment of 11x. There’s every reason to believe the financial sector will increase its investments in funding entities and legal firms going forward.
Announcements Commercial People Moves

Woodsford announces further international expansion, with a number of key strategic hires

Woodsford, the global litigation finance and ESG business, has announced further expansion with the appointment of Hon. Michael Barker QC to its Investment Advisory Panel and Deborah Mazer, Hugh Tait, Diane Chisomu and Oscar Moore to its global executive team.

Michael Barker was a Judge of the Supreme Court of Western Australia from 2002 – 2009 and the President of the State Administrative Tribunal of Western Australia from its foundation in 2005 until 2009. From 2009 – 2019, he was a Judge of the Federal Court of Australia.

Deborah Mazer is a U.S. lawyer and former litigator with a broad range of trial and appellate experience.  Her expertise includes complex commercial, bankruptcy, mass tort, securities, tax controversy, and IP litigation. Before joining Woodsford as an Investment Officer, Deborah worked at Davis Polk & Wardwell in New York. She is a graduate of Yale Law School.

Hugh Tait is an Australian qualified lawyer who has worked on a diverse range of complex, large-scale disputes, including class/collective actions in both Australia and England. Before joining Woodsford as an Investment Officer, Hugh was employed at Hausfeld in London, and before coming to England, was employed at one of Australia’s leading law firms, HWL Ebsworth.

Diane Chisomu and Oscar Moore have both joined Woodsford’s London team as Junior Investment Associates.

“From our foundation as a third party funder that helps level the playing field in David v Goliath litigation, Woodsford has grown into a successful ESG business, holding major corporates to account when wrongdoing occurs.  Whether it is helping consumers achieve collective redress, ensuring that inventors are properly compensated when Big Tech infringes intellectual property rights, or helping shareholders in escalated engagement with listed companies, our team is committed to access to justice. These exceptional appointments will help support continued growth in our key international markets.” said Steven Friel, Woodsford’s CEO.

Michael Barker commented, “I’m excited to have joined a flourishing business that has ambitious future plans, particularly in Australia, my home turf. I hope my expertise will facilitate further growth both here and beyond.”

About Woodsford  

Founded in 2010 and with a presence in London, New York, Philadelphia, Minneapolis, Toronto, Singapore, Brisbane and Tel Aviv, Woodsford’s team blends extensive business experience with world-class legal expertise.

Woodsford is a founder member of both the International Legal Finance Association (ILFA) and the Association of Litigation Funders of England & Wales (ALF). Woodsford’s Chief Operating Officer, Jonathan Barnes, sits on the board of both organisations.

Woodsford is continuing to grow, and we welcome approaches from experienced litigation lawyers and other professionals who are interested in joining our team.

Interviews, photos and biographies available on request.

Case Developments Commercial

Lloyd v. Google – What Have We Learned?

A Supreme Court decision was handed down in the Lloyd v Google appeal. And Google has a lot to be celebrating. In short, the question at hand was whether damages could be sought in a collective action over “loss of control over data,” without specifically listing the monetary or punitive damages of each individual claimant. Requiring individual loss statements from every claimant in a case impacting millions seems untenable. What happened here? Omni Bridgeway explains that the issue being decided is less about the individual damages and more about the type of claim filed. In the case, Lloyd, believing Goggle had secretly tracked millions of users’ internet activity. This was allegedly done without consent and for commercial purposes. Lloyd asserted a breach of section 13 of the Data Protection Act—which required evidence of damages. Lloyd argued that it was acceptable to ask for the same damages for all claimants without showing the particular losses of individual claimants. The Court of Appeal called this a “lowest common denominator” approach, saying some claimants would not recoup their full damages if such a pragmatic approach was taken. Lord Leggatt made several clear points in his decision, all suggesting that the representative claim was not the best way to pursue damages. First is the opt-out nature of the representative route when the group litigation order is better equipped for opt-in claims. Next, because the claims were of low value individually, it wouldn’t work to seek a declaration before moving forward to the quantum stage. Finally, it’s just not realistic to expect courts, attorneys, or funders to pursue loss declarations from millions of potential claimants. Obviously, it makes more sense to deal with a single representative. What we see here is clear evidence of the need to demonstrate damages in a misuse of data case.