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Commercial

European Class Actions Report Findings Rankle Litigation Funders

Are claimant-focused legal firms and litigation funders intentionally creating a rise in class actions? That’s one assertion of CMS’s European Class Actions Report 2021, which claims that even powerhouse corporates should be wary about litigation funding's impact. Global Legal Post details that between 2018-2020, class actions in the UK and EU have increased 120%. Moreover, technology cases have dramatically increased—as much as 15x—in the last four years. Is this, as the report suggests, because of opt-out procedures recently adopted in the UK? Or is it simply a matter of litigation funders creating an environment where more cases can be successfully pursued? Anna Morfey of Hausfeld explains that there is a widely held, but false belief, that lawyers and funders are the only ones who profit from opt-out class actions. Chair of the ILFA, Leslie Perrin, points out that it’s not necessarily a bad thing for businesses to fear class-action suits. Fears of being held accountable may lead to better, more fair business practices that negate the need for legal action. Perrin went on to say that changes in the law aren’t encouraging spurious class actions so much as leveling the playing field so consumers may more easily defend their rights.
Announcements Commercial

William Panlilio joins Litigation Capital Management (LCM) in Singapore

Litigation Capital Management Limited, a global provider of disputes funding, publicly listed on the London Stock Exchange’s AIM market, is pleased to announce the hire of William Panlilio as an Investment Manager based in Singapore. With extensive experience in international arbitration and cross-border disputes, William joins LCM after more than five years with King & Spalding where he was part of that firm’s Trial and Global Disputes practice, operating in the energy, infrastructure, construction, technology and mining sectors, and conducting arbitrations involving States and State-owned or affiliated entities. Prior to that, William was an Assistant Legal Counsel at the Permanent Court of Arbitration in The Hague, The Netherlands for close to two years. While at the court, he assisted arbitral tribunals in treaty and commercial arbitrations involving various combinations of States, State entities, international organisations and private parties. William is a US qualified lawyer who started his career Orrick, Herrington & Sutcliffe in New York, specialising in complex commercial litigation, financial institutions litigation, and cases involving U.S. foreign relations law, including the Alien Tort Statute. Commenting on William’s hire, LCM’s Head of Investments (APAC), Susanna Taylor said: “We are very pleased to welcome William to the LCM team. He is a highly experienced practitioner with an impressive track record of commercial and treaty arbitrations as well as broader corporate and commercial expertise. We are experiencing a significant uptick in funding applications in the APAC region, particularly those originated from Singapore, and William is well placed to assist LCM to take advantage of the recent changes in Singapore to allow litigation funding for domestic arbitration and International Commercial Court claims. William is a valuable addition to our global team of high-performing investment managers”. Litigation Capital Management (LCM) is a leading international provider of dispute financing solutions. This includes single-cases and corporate and law firm portfolios across international arbitration, commercial claims, class actions and claims arising out of insolvency, including assignments. LCM has an unparalleled track record, driven by effective project selection and robust risk management. Headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT.
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Announcements Commercial

Apex Litigation Finance launches second investor fund

Less than two years since launching the company and its first investor fund, Apex Litigation Finance has begun marketing its second fund. The firm is inviting commitments from investors keen to add an asset class alternative investment to their portfolio. The UK based litigation funder is seeking to raise £50m to continue its focus on investing in small to mid-size claims. The firm specializes in supporting access to justice for claimants who either cannot afford to pursue their claim or are wary of the financial risk involved should they lose their case. Speaking about the launch of the Fund, CEO Maurice Power says: “We initially launched a relatively small fund to enable Apex to quickly demonstrate the opportunity present in investing in small and mid-size claims. Since launch we have successfully invested the fund’s capital in a high volume of cases, with claim sizes ranging from £30k to £40m+. “With our high volume/low value focus, innovative use of predictive analytics technology and supportive funding solutions, we have established Apex as a litigation funder of choice. With funding applications growing at an ever-increasing rate and the pipeline of meritorious cases close to exceeding the first fund’s limit, now is the perfect time to launch our second fund.” Apex say that litigation finance investments are an attractive alternative asset class as they are decorrelated from equity or fixed income investments. Investors wishing to explore the opportunity available are encouraged to contact Apex on enquiries@apexlitigationfinance.com. About Apex Litigation Funding: Apex Litigation Finance Limited is a company which brings together experienced individuals from the litigation funding, legal and finance sectors to provide third party litigation funding to litigants (corporates, liquidators, and individuals) who are unable to pursue a claim due to the prohibitive cost of litigation. Although the litigant’s case may have merits, uncertainty over the total costs and the potential risk of being ordered to pay the defendant’s costs, should they lose the case, prohibits access to justice for many claimants. Following an assessment of the merits of the litigant’s case, through use of Artificial Intelligence (software utilising predictive analytics to ascertain the likely outcome, duration, and settlement value of the case), legal and commercial expertise, Apex will commit funds to pay legal and other costs associated with the case in return for an agreed share of any award upon a successful conclusion. If there is no recovery, or if the case is lost, there is no debt for the litigant to repay.
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Commercial

Key Takeaways from LFJ’s Podcast with Ben Phi

On the latest episode of the LFJ Podcast, Ben Phi, Partner at Australian class action law firm Phi Finney McDonald, discussed his recent response to the Senate Economics Committee in regard to the proposed regulation of class actions. Ben outlined his response to the ‘rising D&O insurance’ and ‘social inflation’ arguments being made by Big Insurance, and the negative consequences that could emerge if large class actions are over-regulated. Ben's summary of his testimony regarding Australia’s continuous disclosure laws: BP: Our position is that the proposed changes are both misconceived and dangerous. Essentially, what the government is trying to do is to make it more difficult to bring shareholder class actions in Australia. Their thinking requires plaintiffs to establish fraud, recklessness, or negligence to establish a continuous disclosure breach. And they also require the regulator to establish those elements to pursue civil penalty claims. This is something the regulator is definitely opposed to. Our position is that this is going to weaken the regulatory framework that governs corporate disclosure in Australia. LFJ: I want to ask about the notion of Social Inflation. This is something the insurance industry has been pushing lately. It’s the idea of a perfect storm of litigation funding, what they call aggressive tactics being used by plaintiff’s attorneys, and rising anti-corporate sentiment that is influencing the size of jury awards. What’s your response to this argument? BP: That is an argument that may carry some weight in other jurisdictions, but it simply doesn’t apply in Australia. At the threshold level, we don’t have jury trials in Australia for class actions, all of the class actions that have been before the courts have been in front of our judiciary, which is excellent and independent. Shareholder class actions rarely go to trial. The vast majority of cases settle here and they do so for sizable amounts, and provide really strong returns to group members--even after accounting for legal costs, solicitors, and litigation funding costs. One of the key differences in our jurisdiction is that we’ve got an adverse costs regime that takes a lot of the excesses out of the system and also most of the entrepreneurship. Basically, anybody that’s involved in financing or conducting shareholder class action litigation—there’s no interest in taking on speculative claims. The thresholds that get jumped through before a claim is actually commenced are very very high.  LFJ: A potential consequence of this regulation is increased corporate malfeasance, because at the heart of these class actions is that issue—corporate malfeasance. Essentially if you’re looking to regulate class actions, you want to make it harder to hold corporations accountable. So to me...I hear that and think that’s an argument the public can get behind. From your perspective, is there a PR push being made by plaintiff law firms, litigation funders, and others, or is the issue just too esoteric for the general public to care about? BP: There have been PR campaigns at least in relation to the previous round of class action reforms. And there’s absolutely no doubt that the Australian public is against corporate misconduct and malfeasance with a high degree of sensitivity to that. In particular, Australians have been conditioned by a series of commissions like these judicial inquiries into the financial services industries—and each of those inquiries has exposed absolutely disgraceful conduct on behalf of corporations. And that’s been met with widespread outrage, and followed by class actions supported by litigation funders. I actually think there is scope for this to become an issue in the next federal election—and that election is due to take place sometime in the next twelve months. LFJ: Where do you think the government is ultimately going to come down on this? Do you think there will be enough of a pushback to stem onerous regulation, or—how do you think this will play out? BP: Those who follow the Australian market will know how dangerous it is to predict the future. One thing I can say for certain, is that I really don’t see the government’s position changing—the government has really put a stake in the ground and we don’t expect them to shift from that position, particularly in an election year, and particularly given the promises that have clearly been made to the insurance industry and areas of big business. There doesn’t appear to be any political advantage in them backing down. Click here to listen to the entire episode.
Commercial

Is ‘Conscious Uncoupling’ Becoming a Legal Trend?

The concept of ‘conscious uncoupling’ was widely mocked when actor Gwyneth Paltrow mainstreamed it during her divorce from musician Chris Martin. In short, conscious uncoupling is a five-step process that helps couples separate and divorce in a less acrimonious, more amicable way. Spears details that the thrust of the concept is solid—ending a marriage should be as painless and amicable as possible. This has become a dominating principle in family law of late—resulting in concepts like hybrid mediation, collaborative divorce, and various other styles of alternative dispute resolution. This trend led to the unveiling of a new model of divorce, Uncouple, which aims to lessen polarization. This advancement comes alongside an impending change welcoming no-fault divorce to England and Wales. This means that during a divorce, it is no longer necessary to determine who is at fault, which is also likely to lower acrimony. Not all divorces are amicable, however. When separations, custody of children or pets, or asset division becomes contentious, one party often finds themselves with significantly fewer resources than their spouse. The first step to moving forward may be having the financial war chest needed to litigate effectively. This is why George Williamson founded The Level Group—which offers litigation funding to divorcing spouses. This may include covering legal fees or even living expenses so that clients can’t be financially manipulated by their spouse—and thus can maintain their bargaining capability. A recent divorce, the most expensive in London’s history, involved Farkhad Akhmedov and his ex-wife, Tatiana Akhmedova. The case dragged on for years, backed by funders Burford Capital, who will receive a portion of the eventual settlement. Burford is also funding the forced compliance of various court orders to relinquish funds and assets. While it’s definitely preferable for divorces to be amicable, it’s nice to know that when they aren’t—litigation funders are standing by to help.
Commercial

Lloyds & QBE Face Class Actions Over COVID Business Interruption Claims

Book building has begun in two class actions against Lloyds and QBE—accusing them of failing to pay on valid business interruption policies during the COVID pandemic. Both claims are being underwritten by Omni Bridgeway, a leading litigation funder. The Sydney Morning Herald details that as many as 25,000 businesses in Australia may be eligible to sign on to the class action, which was started by Gordon Legal—the firm which famously won $1 billion for those harmed by a government debt recovery scheme. The actions are seeking compensation for rejected payments, missed opportunities, and other losses relating to the non-payment of valid claims. Business interruption policies often cover natural disasters. Many insurers remain adamant that policies had never been intended to cover global disasters like a pandemic. They claim it was unclear, even mistaken, wording in policies that suggested pandemics would be covered. One insurer, Insurance Australia Group, stated that it could owe as much as AU $1 billion if forced to make good on the policies. QBE has declined to comment on the impending actions.
Commercial

What Will We Learn from the New Jersey Disclosure Rule?

On June 21st, Local Civil Rule 7.1.1 went into law. Signed by Chief Judge Freda Wolfson, it requires disclosure of third-party funding in New Jersey. Currently pending cases will be given 45 days to submit disclosure that includes names and addresses of third-party funders. If they are legal entities, their place of formation is required as well. Above the Law explains that the required disclosure includes a description (but not the actual funding agreement) of the funder’s interest, and whether or not funder approval is needed for decisions related to litigation or settlement. After this, additional discovery may be required on a case-by-case basis. Some say there is a need for this new rule because of the potential ethical concerns in litigation funding. Conflicts of interest, questionable fee-sharing, and a fair distribution of knowledge surrounding the case and participants are all cited as good reasons for the new rule. But what will it really accomplish? Marla Decker, managing director of Litigation Finance firm Lake Whillans, acknowledges the importance of avoiding conflicts and not allowing funders to control litigation. But she maintains that funders routinely or inappropriately controlling litigation is just not happening. Claimants, as one might imagine, are not keen to give up control over litigation strategy or the terms of a potential settlement. It’s likely that the outcome of this new law will be that courts will see that litigation funding is an above-board practice with a strong ethical foundation. Decker expresses concern, however, that the new rule could result in a spike in unnecessary and even onerous discovery. She explains that it makes more sense for courts to address discovery on a case-by-case basis. Disclosure is a regular part of cases, and devising a one-size-fits-all regulation is counterproductive and potentially damaging.  
Commercial

Legal Equity Partners Acquires JustKapital Litigation from Law Finance

LawFinance recently announced the completion of the sale of its litigation funding arm—JustKapital Litigation—to Legal Equity Partners Pty Ltd. Lawyers Weekly reports that the sale, which was announced in January and approved by shareholders one month ago, is a step forward in de-risking the company. The company stated that it experienced a lower probability of recovery than expected. As chief executive Daniel Kleijn explains, the sale will ensure that LawFinance can continue focusing on aspects of the business that generate the strongest returns for shareholders. LawFinance plans to continue pursuing active cases.
Commercial

Hedge Funds and Burford Capital

A decade ago, all eyes were on hedge funds as they were believed to be the most shrewd investors. After a decade of sub-par returns, that reputation has soured somewhat. Still, hedge funds currently maintain over $3.5 trillion in assets under management.   Yahoo! Finance reports that Burford Capital found its way into the portfolios of six different hedge funds as of the end of Q1 2021. But at the end of December 2020, that number was seven. In fact, recent calculations suggest that Burford isn’t even in the top 30 most popular stocks among hedge funds. How serious is that? And what does it say about Burford? Several hedge funds remain confident that Burford's stock is a good buy. These include Orbis Investment Management, as well as Arrowstreet Capital, Springhouse Capital Management, Glendon Capital Management, and Citadel Investment Group. Still, there has clearly been a dulling of Burford’s shine among prominent hedge funds. Total hedge fund stock holdings in Burford decreased 14% from the fourth quarter of last year. Hedge fund interest in Burford is still well below average. With that in mind, Burford receives a hedge fund sentiment score of 32.3, which ranks similarly valued stocks based on their relative hedge fund positions, present and past. It’s worth noting that since the end of the first quarter, Burford stock returned 19.4%. Several smaller hedge funds bet on Burford with great results—since it outperformed the market by a significant margin.