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Commercial

Burford Responds to Proposed Fee Cap for Litigation Funders

One would think that if new laws are being created to regulate an industry, prominent members of that industry would be consulted. That doesn’t seem to be the case regarding Australia’s proposed law that would place an arbitrarily determined cap on fees for law firms and litigation funders in class action cases. Burford Capital took the opportunity to respond to the proposal, pointing out that the proposal itself is not based on existing data or case law. Capping fees, Burford explains, will lead to cases being settled for less than their true value. Burford also points out that the costs and subsequent risks of class action cases in Australia often necessitate the use of litigation funding. The practice is a vital part of securing access to justice for those who can afford it least.
Commercial

Inheritance Funding Simplifies the Probate Process

When a loved one dies, thinking about money may be the last thing on anyone’s mind. But it may also be an introduction to the complex and time-consuming world of probate. MONDAQ Canada details that even a simple inheritance claim could take months or longer to be resolved, not including time to transfer property and assets. The process can also be expensive, necessitating legal fees, new taxes, accounting services, and maintenance of properties. BridgePoint, a third-party legal funder, now offers an inheritance loan. This is short-term funding that’s available quickly to help manage an estate until a payout can happen. Trustees and beneficiaries may be eligible for this type of funding. Such a loan can relieve a lot of pressure and worry from an already emotionally draining situation. Cindy Williams, VP of BridgePoint Financial, explains that even when entitlement for inheritance is clear, the timeline may not be. Inheritance funding can give everyone room to breathe.
Commercial

Nanoco Litigation Against Samsung Continues

Nanoco Group recently released an update in their legal action against tech giant Samsung. The suit alleges the willful infringement of Nanoco IP. The patent infringement suit was filed against multiple Samsung entities in February of last year. Nanoco has accepted financial assistance from a third-party litigation funder in order to pursue the case. Directors Talk Interviews explains that an inter partes review, or IPR, is a standard facet of intellectual property infringement cases. The Patent Trial and Appeal Board for the Eastern District of Texas Court instituted IPRs on all five patents relevant to the case. There is a predetermined timeframe for these reviews, which means a decision should be reached and released before May of next year. Nanoco has petitioned the court to wait until after the IPR decisions have been made before moving forward with a trial. Brian Tenner, CEO of Nanoco Group, has affirmed that the company must win the trial and the IPRs to achieve success here. He remains confident in the merits of the case. Tenner also detailed that support from shareholders, along with the involvement of a third-party litigation funder, is a key factor in Nanoco’s ability to pursue the case while maintaining normal business operations. IP litigation is a common investment for legal funders due to the potential for high payouts.
Announcements Commercial

Liti Capital Announces Identifying Information of Their First Crypto Con Artist

Geneva, Switzerland – June 29, 2021 – Liti Capital SA, a Swiss Litigation Finance company, has just found and identified the perpetrator of a cryptocurrency scam. This comes days after their commitment to push back against fraud in the crypto community and help create a safe atmosphere for innovation and investment moving forward. By tokenizing their equity, Liti Capital introduces litigation finance to the blockchain, providing retail investors with a new asset class and giving them the opportunity to fight back against crypto criminals.
Joel “Coach K” Kovshoff, a popular cryptocurrency influencer, was recently the victim of an elaborate con, resulting in the loss of $250,000 for himself and his investors. This is a common story in the crypto community, and the victims are rare to voice their misfortunes, particularly if they live in the public eye and their income is contingent on their reputations. As one of the few public figures to announce this potentially embarrassing story, he was able to catch the attention of Liti Capital through their mutual contact, Kurt Ivy at Splyt. The con artist used a unique tactic: he created a fake identity, complete with documentation, did extensive research on “Coach K,” and found him in public to slowly befriend him over time. This is how he was able to gain trust and eventually walk away with the money. He directed Joel to JD Capital, with whom Joel has worked with before, about a fund of CertiK he could purchase. After some more convincing, Joel paid the cost of the CertiK and waited for a response that did not come. However, the con artist may not have been as sophisticated as it seems. “These guys are acting with complete impunity,” David Kay, international litigator and CIO of Liti Capital said, “They’re so sure they won’t get caught that they don’t even cover their tracks. They don’t think anyone’s coming. Well, we’re coming.” Joel Kovshoff had given the con artist a chance to return the money, plus interest, before taking legal action. Liti Capital is on standby with a powerful team that has seen worldwide success. “The same tools we deploy to investigate international cases are the ones we will use to identify and pursue crypto scammers,” Jonas Rey, Co-Founder and Managing Director said, “My team of investigators and intelligence officers have found the con artist in question, his personal information, where the money is, and have engaged with counsel and security at his location. We will give him the weekend to reach out to us.” Liti Capital launched the LITI token yesterday, Thursday, June 24, 2021, at 11:59 PM EDT, and the wLITI on Tuesday, June 29, 2021 at 6:00 PM EDT. The LITI token will be available for purchase on their website after passing KYC requirements. The wLITI will be available to trade for on Uniswap. About Liti Capital Liti Capital is a Swiss Limited Liability Co specializing in Litigation Finance and FinTech based out of Switzerland. Liti Capital buys litigation assets to fund lawsuits and provide a complete strategic solution along with connections with the best law firm to help its client win the case. Tokenized shares of the company lower the barrier of entry for retail investors, give token holders a vote in the decision-making process, and distribute dividends to token holders upon the success of the plaintiff. Co-Founder Jonas Rey heads one of the most successful intelligence agencies in Switzerland, Athena Intelligence. His two co-founders, Andy Christen and Jaime Delgado bring operational, innovation and technical skills together to round out the leadership team. David Kay, CIO, ran a billion-dollar NYC private equity litigation finance firm before joining Liti Capital.
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Commercial

The Tom Girardi Saga Continues

Remember the lawyer from Erin Brockovich? He married a former cocktail waitress. They bought multiple luxury houses and two private jets. If that sounds like the sensationalized stuff of reality TV, that’s because it is! The Girardis eventually wound up on The Real Housewives of Beverly Hills. So what happened? Institutional Investor details that Girardi applied for, and received, a loan of over $5 million from an Arizona-based litigation funder—Stillwell Madison. Ostensibly, the money was to be used for cases against Shell Oil, Eli Lily, GlaxoSmithKline, and others. If the cases made money, a portion was to be paid to the funders under the terms of the funding agreement. Instead, Girardi’s firm defaulted on their payments to the funders. Eventually, Girardi’s firm made a payment deal with Stillwell Madison, though Girardi neglected to mention that he had defaulted on another funding agreement with a different funder—Law Finance Group. Later, Girardi allegedly stiffed at least ten families in a case against Boeing. The families had lost loved ones in the Lion Air Flight 610 crash. As lawsuits for non-payment flooded in, it came to light that Girardi had taken out multiple loans—often reusing the same collateral. Erika Girardi filed for divorce against her husband in late 2020, just before Jay Edelson filed to sue both Girardis, the firm Girardi & Keese, and two litigation finance firms among others. Edelson alleges that Girardi has embezzled settlement proceeds that rightly belonged to clients so that he could continue to fund an absurdly lavish lifestyle. Stilwell Madison and California Attorney Lending, two litigation funders named in the suit, are accused of structuring an intercredit agreement among themselves. Erika Girardi remains on the reality series and affirms that she had no idea that her husband embezzled funds from anyone.
Commercial

How Litigation Funders Price Based on Risk

Critics of Litigation Finance appear to be celebrating Australia’s proposed cap of 30% on potential returns for litigation funders. It’s hard to argue that such a move would not have enormous, industry-wide consequences. Some say it’s ‘unfair’ for funders to reap high profits while claimants, who were actually damaged by the factors in their cases, receive a paltry sum. But who is really taking on the most risk? Dispute Resolution Blog details what it describes as the ‘real’ value of risk in litigation finance. It also reveals that when educating the public about the benefits of litigation funding, funders failed to impress upon consumers the reasons that lead to litigation funds being priced as they are. Commonly, prices are structured as either a share of the award (usually 30-40%) or a multiple of the capital provided (usually about 3 times). While this might seem high to the uninitiated, this is the same basic pricing structure that was used during the development of litigation funding in the 90s. There are two main approaches to pricing litigation funds: Capital Structure Pricing and Probabilities Pricing. Capital structure pricing is similar to basic accounting, where assets and liabilities are matched. Liabilities are tiered from cheapest to most expensive—starting with senior debt and ending with equity. This model is not unlike getting a good interest rate due to a lifetime of good credit. Someone without any credit could not get that rate because they’re considered inherently riskier. Probabilities pricing is a more academic pricing philosophy basing the cost of the funds on the probability of success. That means occasional losses are factored into the costs of the funding deployment. Time is also a factor since it can be years between deploying funds and receiving an award. Ultimately, the funding industry would do well to be more transparent not just about funding agreements, but about how current pricing is calculated.
Commercial

Litigation Funding as ESG

We already know that litigation is expensive. We also know that even if a claimant can technically afford a lawyer, they can easily be outspent by corporations and other big spenders who may be practiced in avoiding responsibility. That’s why litigation funding was developed—to level the playing field between the Davids and Goliaths of the legal world. PGMBM details that litigation funding is a net gain for society in several important ways. First, it makes it easier for people of average means to pursue litigation. Second, it’s instrumental in holding corporations and governments accountable when they fail to maintain standards or protect the citizenry. Maintaining accountability for corporations, utilities, and others encourages fairness and can be a precursor to impactful social change. Third, litigation funding is increasingly the main source of funding for collective action cases. This is particularly important for rural and low-income citizens who are essentially at the mercy of governments, utility companies, and others. When these entities pollute or cause damage to farmlands or water supplies, citizens often have no recourse other than expensive legal action. With that in mind, it seems clear that litigation funding should be counted among ESG investments—those that focus on environmental, social, and governance issues. This may be coming in the EU, as a Code of Conduct for funders is en route, and will likely pave the way for funders to label themselves as ESG.  
Commercial

Singapore Widens Door for Litigation Funding Use Cases

As of yesterday, the Singapore Ministry of Law is extending the third-party legal funding framework in order to cover more types. These include domestic arbitration proceedings, some cases heard at the Singapore International Commercial Court—and related mediation proceedings. Ministry of Law details that Singapore first welcomed third-party funding in 2017, though only for international arbitration and related mediation. The funding industry has grown since then, and the response to the practice has been overwhelmingly positive. In addition to extending case categories that may now utilize TPF, the Ministry has amended several professional conduct rules. These include:
  • Lawyers involved in cases using TPF must comport with Legal Profession Rules 2015 regarding conflicts of interest.
  • Registered Foreign Attorneys may be subject to additional scrutiny when TPF agreements are used, as could foreign TPFs.
  • Amendments regarding orders for adverse costs, as well as security for costs, in cases utilizing third-party funding.
  • Singapore Statutes Online, part of Singapore’s government website, lists these amendments in full.
Commercial

New Jersey Disclosure Regulation Rankles Litigation Funders

Debate continues as to whether the New Jersey district court’s new disclosure rules impacting litigation funding are a celebration of transparency or a futile exercise in unnecessary regulation. What happened? Reuters explains that US District Court Judge Freda Wolfson signed an order amending local rules—and necessitating disclosure of all non-parties that offer non-recourse legal funding to participants in the case. Parties must also affirm that litigation funders will not make decisions regarding litigation, strategy, or settlements in the case, leaving those up to the client. Members of the ILFA expressed disappointment, not only with the content of the new rule but with the fact that the District of New Jersey did not consult with ILFA members. Executive Director Shannon Campagna stated that the passage of this rule is unnecessary and will almost certainly create more problems than it solves. Of course, issues regarding legal disclosure inspire passionate responses from every side. Even though the New Jersey rule doesn’t require the release of the entire funding contract, it does open the door to increased disclosure if there’s reason to believe funders are controlling a case. One ethics expert, Lucian Pera of Adams and Reese, said he felt that disclosure requirements haven’t had much impact on any proceedings he’s aware of. If anything, the new rule is likely to impact wording in funding agreements—and that’s all. While it is important for courts to know if funders have inappropriate control over case decisions, it’s unlikely that such information would be spelled out in a funding agreement. Harold Kim from the Institute of Legal Reform is clear in saying that disclosure rules haven’t made much difference in California and Wisconsin. Still, the passage of the New Jersey rule indicates that courts see the rise of litigation funding and its growing acceptance into mainstream legal practice. Kim believes that the new rule can best be described as ‘opening the door.’