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Case Developments Commercial

Semiconductor Claim Against Apple Uses Third-Party Funding

Patent filings are on the rise, as 38 Patent Trial and Appeal Board petitions and 71 district court filings occurred last week alone. There have also been a spate of dismissals, settlements, and district court terminations. IP Watchdog explains that some cases are being voluntarily dismissed and refiled due to recent rulings and precedents. Courts have also seen an uptick in new non-practicing entity campaigns. Continental Circuits LLC has successfully sued several tech giants like Samsung, Intel, AMD, and MediaTek—collecting awards. Now, with the support of third-party legal funding,Continental Circuits is suing Apple and TSMC (Taiwan Semiconductor Manufacturing Company) over a set of expired circuit board patents. These originally came from a Florida circuit board company that is now bankrupt. In the case against Intel, the judge ordered disclosure regarding the legal funding in place. After this, the case closed after arbitration.
Announcements Consumer

USClaims Completes Its Seventh Securitization and Continues U.S Growth

USClaims (USClaims.com), the longest continuously operating pre-settlement funding firm in the U.S., today announced its $77.5MM 144A litigation finance securitization. This marks the company's seventh securitization transaction involving this asset class.  It primes USClaims to continue its run of impressive growth across the United States.

USClaims CEO, Steve Bashmakov, commented, "We are excited with the market's response to this continuously growing asset class." He continued, "This positions USClaims for amazing growth and further energizes our pursuit to make Litigation Funding Simplified®. We are changing the perspective about the pre-settlement funding industry by being a major asset to trial attorneys and their clients."

Scott Shey, USClaims CFO, added, "We were delighted to see the level of interest we had in this deal.  Stifel (the arranger) continues to be a key partner and really helped us achieve a great result on pricing and syndicating to a diverse investor mix.  This deal continues to highlight the growing acceptance and adoption of the asset class. "

USClaims was established in 1996 and has been consistently voted among the best in the nation within the pre-settlement funding category. In 2021 alone, USClaims earned first place rankings by the audiences of national legal publications in several categories, including "Best Consumer Litigation Funding Provider," "Best Law Firm Funding Provider," and the coveted "Hall of Fame" award from the New York Law Journal.

About USClaims: For 25 years, USClaims has been one of America's largest providers of non-recourse financial support to personal injury victims, some of whom may have suffered catastrophic injuries from defective products, unsafe premises, motor vehicle accidents, and other types of accidents. This financial support provides the injured plaintiff with the means to pay bills and endure the often long and arduous litigation process. USClaims is here to help plaintiffs and their attorneys stay in the fight. For additional information on USClaims pre-settlement funding, please call (877) 872-5246 or visit USClaims.com.

Commercial Deals

LegalPay Closes Interim Financing Transaction with Yashomati Hospitals

India-based tech-focused startup LegalPay announced that the company has closed an interim finance transaction with Yashomati Hospitals Private Ltd—currently insolvent. Economic Times details that this type of finance is short-term lending, typically 6-12 months. The amount of financing being deployed to Yashomati Hospitals is undisclosed, but is expected to be used for operational costs, payroll, and keeping the company running until the Insolvency and Bankruptcy Code provisions kick in. LegalPay is planning a dozen or more such interim financing agreements. Interim financing is most often used by large corporates. LegalPay focuses on mid-level companies that are undergoing insolvencies. The interim financing trend is expected to grow as an investment opportunity, largely due to the potential for high profits, and the provisions under the IBC which work to the advantage of lenders.
Consumer

Litigation Funder Arrested in Slip-and-Fall Fraud Scheme

A fifth member of a slip-and-fall fraud ring was arrested and charged in a Manhattan Federal Court. The scheme, which amounts to more than $30 million, appears to have begun in 2013. Adrian Alexander, age 75, has been charged with mail fraud, wire fraud, and conspiracy to commit mail and wire fraud for his alleged attempts to gain fraudulent insurance reimbursements. The case will be heard by US District Judge Sidney H Stein. Justice.gov details that Alexander, a litigation funder, allegedly deployed funding for the fraudulent lawsuits. He is accused of knowingly financing multiple cases and profiting from the desperation of others. Lawyers and doctors have already been charged as part of the massive scheme. According to the indictment, the allegations include:
  • Staged or false claims of accidents involving 400+ recruits
  • Referrals to specific lawyers who were involved in the scheme
  • Fraudulent lawsuits filed
  • Referrals to specific chiropractors who were involved in the scheme
  • Recruits paid to have unnecessary surgery
Many of the hundreds of people recruited to partake in the scheme were homeless, very poor, substance addicted, or otherwise financially vulnerable. Some were recruited directly from shelters or rehab facilities. Medical and legal bills were paid by legal funders, including Alexander. This is true even in cases where the patient had insurance coverage or was on a government medical program. The scheme was successful in terms of financial success. Alexander reported annual returns of at least 30%. Meanwhile, he owned an MRI facility that was used in the fraud. After charging excessive interest rates to patients, proceeds from the scheme went almost entirely to the lawyers, doctors, and funders, rather than the patients. The maximum sentence for crimes like this is 20 years in prison. However, sentencing, in the event of conviction or a guilty plea, is determined by the judge.
Commercial

Cross Border Patent Dispute? Legal Funding Can Help

Cross-border patent cases are becoming increasingly common. We all watched as the Apple v. Samsung battle raged. It’s not unusual to see cases spanning multiple jurisdictions in the US, Europe, Asia, and elsewhere. Sounds expensive, right? Omni Bridgeway explains that while the US is noted as the largest global venue for patent disputes, some litigants are seeking global strategies. Different markets lead to different rulings and different theories on injunctive relief. These can dramatically impact the probability of success and the size of potential awards. Patent cases can result in massive recoveries in the hundreds of millions. The cost of pursuing such a case, however, can also be very high. That’s why legal finance is an increasingly popular service for those looking to pursue, or even defend, patent litigation. Finding a funder with a global presence and a solid understanding of a variety of jurisdictions can make a significant difference in the success of a case. Having the funds needed to pursue a case is a great start, but combining that with global expertise is a game-changer.
Commercial Regulatory Issues

Regulations are Coming for Litigation Funders

Despite evidence to the contrary, some still insist that third-party litigation funding is a greed-fest for the already wealthy. In reality, the practice allows increased access to justice for those who can afford it least. But all that non-recourse funding comes at a steep price. The Australian reports on funding reforms, using caustic terms like “honey pot for crooks and profiteers.” A proposed law promises to cap funder shares in awards and settlements—providing a larger share to claimants. While this makes sense in the abstract, it discounts two important factors:
  1. Third-party funders take 100% of the financial risk
  2. Claimants often cannot bring actions without funding in place
Why all the acrimony? It may have started about a decade ago when funders were exempted from rules governing banks and other financial services. This was viewed by some as an invitation to overcharge consumers. But was it? The move kicked off a spate of class action filings that led to consumer payouts. Surely that benefits consumers and funders alike? Despite a constant flow of evidence that third-party legal funding benefits claimants and increases access to justice—further regulations are en route. The debate about opt-in vs opt-out class actions may lead to laws requiring that all claimants opt-in to be considered part of a class. Talk of “speculative” class actions and “astronomical” rates of return fuel the fires that lead to demands for more oversight and regulations to keep funders in check. Current proposals state that as much as 70% of awards or settlements should go to plaintiffs directly. Regardless of the verifiable facts, funders will always be viewed by some as greedy, opportunistic, and even predatory. Luckily, professional organizations are committed to educating the public on the realities of what funding can do, how it helps people—and how funders making sizable returns actually benefits everyone.
Commercial Regulatory Issues

Litigation Funding in Global Jurisdictions

As Litigation Finance makes its way around the world, some jurisdictions struggle with the finer points. Typically businesses in places like Singapore and Hong Kong have a corporate structure that encompasses entities incorporated in their own jurisdiction, as well as offshore locales like BVI, Cayman Islands, or Bermuda. ICLG details that an array of funding options are available for claims. In these jurisdictions, funding is offered on a non-recourse basis. This means funders are repaid only if the cases they fund are successful. Similarly, contingency fee agreements are increasingly common. In these agreements, lawyers aren’t paid until or unless an award or settlement is reached. Champerty and maintenance laws have been watered down or abolished in places where legal funding is welcome. Common law exceptions also exist to allow funding where needed. These exceptions include providing access to justice, the furtherance of the common good, and insolvent companies in liquidation. Still, norms vary depending on the jurisdiction. In Hong Kong, maintenance and champerty laws are in effect—so common law exceptions are vital. Contingency fees are not allowed, so the use of litigation funding is highly limited. The Cayman Islands enjoy liberal access to legal funding from third parties. Still, legislation is being reviewed to impose new regulations for third-party funders. In a move funders are already skeptical about, a proposed regulation would place maximum limits on the percentages paid to funders and attorneys working on contingency. The British Virgin Islands no longer has maintenance and champerty laws on the books. Still, it remains unclear whether funded litigations have to meet common law exceptions. Bermuda has a similar liberal attitude about funding, with impending legislation looming on the horizon. The precedent set in 2012 and affirmed in 2014 held that there is a constitutionally protected right to access the court. Ergo, third-party funding is necessary to ensure that citizens’ rights are not violated. Ultimately, funding options are growing—which is great news for funders, law firms and claimants alike.
Announcements Case Developments Commercial

Rail Passengers Cleared to Make £93m Legal Claim for ‘Boundary Fares’

London’s specialist competition court, the Competition Appeal Tribunal (the “Tribunal”) has given the green light to rail passengers to seek compensation for overcharging by the Southeastern and South Western rail franchises by not making ‘boundary fares’ sufficiently available to consumers.  In a judgment delivered today, the Tribunal has ordered that the claims, issued on behalf of millions of rail passengers, can now proceed to trial.  The standalone claim was the first of its kind to be filed in the UK and is estimated to be worth around £93m in damages for rail users.

In its judgment, which can be accessed here, the Tribunal said: ”we authorise the Applicant to act as the class representative in both these  proceedings; and we find that the claims in each action raise common issues and are      suitable to be brought in collective proceedings.”

The Tribunal has authorised the claims to continue as collective proceedings meaning that millions of passengers who have paid twice for part of their journey on Southeastern and South Western routes because they were not sold a boundary fare, will now automatically be represented at court, unless they choose to leave – or opt out – of the claim.  The Tribunal confirmed that Mr Justin Gutmann, formerly of Citizens Advice, will act as the Class Representative.

The claim was launched in the UK’s specialist competition court on 27 February 2019 by Mr Gutmann.  The application for a Collective Proceedings Application Order was heard remotely between 9 – 12 March 2021, leading to today’s decision.

The Class Representative, Mr Gutmann said: “This is a great step forward in my legal campaign to achieve justice for millions of rail passengers who have been overpaying as a result of the train operating companies not offering ‘boundary fares’. It means that we can now hold Southeastern and South Western to account by going to court. “

He added: “I am grateful to everyone involved Charles Lyndon Ltd, Hausfeld & Co LLP, Philip Moser QC, Stefan Kuppen, Alexandra Littlewood of Monckton Chambers, Woodsford and AlixPartnersfor their hard work and dedication to the claims and look forward to the next milestone in the Boundary Fares campaign for justice.”

What is the claim about? What are boundary fares?

Southeastern and South Western are alleged to have not made ‘boundary fares’ sufficiently available for Travelcard holders to purchase, nor making passengers aware of their existence. Boundary fares allow passengers who own a TfL travelcard to travel beyond the zones covered by their travelcard without doubling up on payment. Instead, the rail companies’ failures have left customers with little option but to buy a higher fare than they would have needed to because their travelcard already entitled them to travel for part of their journey. Many passengers have effectively paid twice to travel sections of their journeys.

Independent research has shown that boundary fares are not readily available through online platforms or over the telephone from South Western or Southeastern and are rarely offered at ticket counters unless expressly requested by passengers. This imposition of an unfair price for fares is an abuse of the companies’ dominant position and in breach of UK competition laws.

Mr Gutmann has been successful at first instance with the Tribunal certifying Mr Gutmann’s claims against the rail companies. Southeastern and South Western continue to refuse to compensate passengers who have been overcharged, and the claims will now proceed to trial for the Tribunal to assess liability and damages.

Comments from the legal team and funder:

Rodger Burnett, Director of Charles Lyndon, said: “This is an important victory for rail passengers and citizens’ rights more generally.  Charles Lyndon is delighted to have represented Mr Gutmann in these claims and is pleased the Tribunal recognises the position that Charles Lyndon have long held: that dominant companies have duties to make pricing transparent, especially when dealing with consumers. We look forward to preparing for the next stage of the claims with Mr Gutmann.”

Anthony Maton, Managing Partner at Hausfeld & Co LLP said: “Millions of train passengers, often commuting daily on South Western and South Eastern, can now claim for the double charging that saw them pay twice for many journeys – once through their travel cards and once through their ticket journeys. Today the court agreed to allow the claims to proceed so that rail passengers are a step closer to obtaining restitution from the rail franchises for these long running malpractices.”

Woodsford’s Chief Investment Officer, Charlie Morris, said: “This is an important milestone in the promotion of collective redress in this country, which allows consumers and small businesses to achieve compensation for the wrongs committed by big business. With Woodsford’s support, Mr. Gutmann is now much closer to obtaining compensation for the many thousands of consumers who have been overcharged by train operators and we look forward to continuing to help those consumers achieve access to justice.”

What next?

Class members who live in the UK will be automatically included in the claim without having to take any steps, although they can choose to opt-out by sending confirmation of this to the following email address: info@charleslyndon.com or by post to: Charles Lyndon Ltd, 22 Eastcheap, London, EC3M 1EU.

Affected passengers who do not live in the UK will also be eligible to join the claim but must proactively opt-in to participate. If you are not domiciled in the UK and you wish to opt-in to join the claim, you must do so by sending confirmation of this to the following email address: info@charleslyndon.com or by post to: Charles Lyndon Ltd, 22 Eastcheap, London, EC3M 1EU.

Commercial

Former SDNY Judge Shira Scheindlin Discusses Litigation Funding

Retired justice Hon. Shira Scheindlin has a lot to say about litigation funding, as we learned in the first half of her recent interview. She is now Of Counsel at Stroock & Stroock & Lavan, in addition to being a leading neutral at CPR, FedArb, and AAA. Above the Law details the rest of her interview here, with commentary from interviewer Gaston Kroub. Kroub points out that a former trial judge might be in huge demand as part of a due diligence process for funders. At present, Judge Scheindlin has not been invited to participate in due diligence by any funders. She has, however, been asked to lend her expertise to review due diligence reports compiled by funders to determine their veracity and the probability of a win. Certainly, judges and experienced lawyers have the tools and skills needed to offer opinions on funding for specific cases. It’s noteworthy though, that Scheindlin is clear in saying that she offers an opinion—but does not have a vote in whether or not a case will receive a funding offer. Mediation and arbitration are both hot issues at present, because of court delays caused by COVID and the ready availability of legal funding. Experienced neutrals are a vital part of this process, which can bring new perspective to the facts of the case at hand. In many instances, arbitration can bring about a fast resolution that is cost-efficient. Scheindlin explains what she views as a vital misconception about legal funding—that far too many people regard funders as opportunistic and greedy. The focus of litigation funding has always been increasing access to justice. The fact that a return on investment is needed to sustain the business model is hardly evidence of wrongdoing, or even greed. Legal fees are expensive—which is why legal funding is in such high demand.