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The LFJ Podcast
Hosted By Mani Walia |
In this episode, we speak with Mani Walia, Managing Director, General Counsel and Chief Compliance Officer and Siltstone Capital. Siltstone is a Houston-based alternative investment firm that invests in litigation finance claims, focusing on $500,000 to $5 million funding requests. Siltstone is also producing LitFinCon, the inaugural litigation finance conference in the Houston area, set to take place on March 2nd and 3rd of 2022. [podcast_episode episode="9316" content="title,player,details"]
Commercial Regulatory Issues

Australia Debates Litigation Payout Cap 

Class action reforms are being assessed across Australia. Concern has been raised over a proposed 30% cap on litigation funding payouts. Critics say that the cap would seriously hamper access to justice for the most disadvantaged Australians.  The Australian Financial Review reports that Western Australia’s Attorney General has asked Canberra for good governance in striking down the proposed litigation payout cap. So far, the Commonwealth’s litigation finance amendments are held up in Parliamentary debate. A blanket litigation agreement payout cap stands as an imposition to many established litigation finance operations across Australian states and territories.  Resistance to the litigation payout cap stretches into the regional Australian Outback. Proponents argue that indigenous Australians historically have benefited from litigation finance as a class action facility. And funders say that it is not always feasible to adhere to a ‘cookie cutter’ payout provision, given individual case dynamics.  The ethical and moral question of litigation funders manipulating claimant returns is at the heart of the debate. We will have to wait and see how Australia will rule on the proposed 30% litigation payout cap. 
Commercial

The Booming Litigation Finance Market

According to Advanced Market Analytics, the world-wide litigation finance market is expected to continue its acceleration. The company's research explores litigation finance’s evolving trends, opportunities, drivers and red flags across international markets. Expert research suggests that the dawn of global litigation finance is a product of strong research and development budgets. 

Akshay Mishra recently previewed Advanced Market Analytics’ research on litigation finance. Opportunities continue to emerge as global public awareness of the sector continues to mature. Key advantages of litigation finance agreements seems to be fueling cross-continental growth in Europe, North America, Africa and the Middle East. 

However, with all the promise of a prosperous litigation finance market economy, challenges loom for the industry. For example, cyber security and data privacy are compliance concerns still begging to be flushed out through innovation.   

We contacted Advanced Market Analytics to learn more about their research findings. They shared a sample of their new report here.  

Commercial Legal Innovation

The History of Litigation Finance

The emergence of litigation finance in mainstream society over the last decade is built upon a rich history. With the invention of legal systems and processes, third party investment of issues related to law span centuries, and range across all continents.  ValidityFinance.com profiled the history of ligation finance. Here are some highlights:
  • Contingency litigation agreements have been the foundation of the industry. More or less, attorneys bear the responsibility of funding litigation with hope of winning and sharing rewards with the claimant. 
  • Pro-bono third party financing is a donor-based facility that is considered a highly respectable practice 
  • Informal solutions such as friends, family and/or associates serving as benefactors to fund litigation is the historical bread and butter of the industry. Paving the way for pro-bono and contingency marketplaces.   
Validity suggests that litigation finance is not a revolution, but rather a steady legacy of evolution. Check out their insights to learn more about the industry’s history. 
Commercial

NYSBA Seminar, Litigation Finance In 2022

On Thursday February 3, 2022 the New York State Bar Association (NYSBA) will host a seminar titled, “Litigation Finance In 2022: Ethical Considerations For Attorneys And Current Marketplace Trends.” The discussion will be hosted by Lexshare’s CEO Cayse Llorens and Vice President of Business Development and Investments Matt Oxman. Both will explore ethics behind litigation finance business innovation. The discussion aims to correlate maxim client value with attorney ethical decorum. The seminar will survey developments to New York’s rapidly evolving litigation finance community.  NSBA will be issuing 0.5 Ethical and Professionalism credits for attendance. Tuition assistance is available for those in need.
Commercial

Video: Third Party Funding Enforcement

Olivia de Patoul, Senior Legal Counsel for the Asia-Pacific region at third-party funder Deminor, recently discussed enforcement issues with third party funders.  In a new video, De Patoul shares some background since opening her Hong Kong office in 2018. Deminor saw opportunities in Asia, specifically, Hong Kong and Singapore, which have both been a focus of Deminor’s as third party funding investment opportunities expand.  De Patoul notes that the market still needs to familiarize itself with new ways of pursuing third party claims; she expects third party investment to be more commonly pursued over the coming years.  The video comments are part of an update to Conventus Leadership’s essay on drivers to Asia’s adoption of third party funding.
Commercial Regulatory Issues

What is Federal Rule 26? And Why Does it Matter?

Federal Rule 26 serves as general guidance to the duty of disclosure during discovery proceedings. The question is, should litigation finance agreements fall under Federal Rule 26’s purview? Significant effort has been invested in various proposals requiring litigation funding information to be made available under Federal Rule Rule 26.  AboveTheLaw.com reports that a recent effort to amend Federal Rule 26 with a “one size fits all” provision requirement for litigation finance agreements has failed. The Federal Rules Advisory Committee on Civil Rules has upheld the notion that the decision to disclose litigation agreements resides with the litigant.  Proponents of amending Federal Rule 26 have petitioned for a Third Party Litigation Finance pilot project through an amendment to Fed. R. 26(a)(1)(A). Federal Rules Advisory Committee members signal no intent to approve any such measure, anytime soon.  Check out AboveTheLaw.com’s full deep dive into the latest news on Federal Rule 26. 
Commercial Regulatory Issues

Fifth Circuit Rejects LitFin Challenge for Lack of Standing

Anyone seeking to challenge a litigation funding agreement got a severe message from the Fifth Circuit court in December. The message is: You’d better have standing. An opinion by Judge Jacques L Weiner Jr. explained that the appellant-debtor in In re Dean did not have standing to challenge a funding agreement that had already been approved by a Texas bankruptcy court. Omni Bridgeway explains that the Fifth Circuit ruled that the debtor would not be impacted, either directly, financially, or adversely, by the funding agreement. This means that the court utilized the ‘person-aggrieved’ test to determine if the creditor was legally able to appeal an order from a bankruptcy court. The Fifth Circuit opinion was unanimous, and was joined by Judge James C Ho and Judge James E Graves Jr. The Texas case began with a voluntary Chapter 7 filing in US Bankruptcy Court for the Northern District of Texas. Scott Seidel was appointed trustee, and saw that he did not have the funds to pursue claims on behalf of creditors. He then entered a litigation funding agreement with Reticulum Management LLC. When Dean challenged the funding agreement, Seidel explained that funding was the best alternative since he couldn’t find a law firm who would take the case on contingency. Dean’s challenge centered around the idea that the agreement would disrupt the legal order of payment to creditors—putting the funders first in line. Ultimately, the ruling is good news for funders in the bankruptcy space, and good news for anyone pursing avoidance actions, breach of duty matters, tax recoveries, and insurance disputes.
Commercial Legal Innovation

Burford Capital’s Chris Bogart: Litigation Funding Innovator

After a notable career with Time Warner, Chris Bogart co-founded Burford Capital, now the global leader in litigation finance. It began with a simple idea: develop a third-party funding company that finances firms and individual claimants in exchange for a share in any settlement or award. As a moneymaker for investors and a way to increase access to justice—it’s a win-win. Carrier Management details that Bogart’s time with media giant Time Warner gave him considerable insight into the challenges of corporate legal departments. While the company had ample funds, spending on a legal budget seemed counterproductive. After drafting a contingency fee agreement for the Time Warner / AOL merger, Bogart realized there had to be a better alternative to paying lawyers by the hour. Burford Capital debuted on the London Stock Exchange in 2009. In October 2020, Burford became the first legal funder to be listed on the New York Stock Exchange. Since Burford’s formation, the insurance industry has leveled endless criticism at the funding industry. It’s no wonder, since keeping insurers honest is a common focus of funded cases. Insurers have asserted that funded cases take longer to litigate, lead to higher awards and greater expenses—all of which become ‘social inflation.’ This is what insurers cite as a reason to raise premium prices, negatively impacting policyholders. Bogart responds to this kind of criticism with a reminder that both funders and insurers are equally interested in fairness and efficiency, since they both work in the same litigation ecosystem. Litigation Finance has come a long way from its humble beginnings in feudal France. Today, funding alleviates the disparity between haves and have-nots in litigation. No longer can big businesses drag out funded cases to drain their opponents' resources. Gone are the days when class action plaintiffs are forced into accepting lowball offers because they lack the funds to move forward.