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Commercial Legal Innovation

Claimants in Brazil Seek Faster Rewards 

Four years and three months; that is the average time it takes to be rewarded with justice in Brazil, according to research data released by Brazil’s National Council of Justice (CNJ). Four years to win a claim can then lead to a lifetime of seeking to execute any monetary judgements. Four years is a long time for the potentially guilty to shift cash and assets across Brazil and abroad, in a bid to exhaust any potential victims.  Fecomercio.com recently profiled the idea of claimants having the opportunity of selling their claim, or having a third party investor cover legal costs on their behalf. The benefits of this are twofold, 1): The claimant does not have to worry about funding the claim throughout the judicial system, and 2): Oftentimes, when the claimant is funded by a reputable third-party, the potentially guilty cave to pressures related to facing the heavy hand of justice.  Fecomercio.com is right to suggest that litigation funders are tasked with the responsibility of evaluating the merits of cases that come before their review. More and more, technology is being engaged to assess the validity of a claim being investable. As litigation finance continues to flourish, it may become a powerful cross-border exercise in linking technologies, where appropriate. 
Commercial

The Czech Republic’s First Litigation Funder

The Czech Republic is beginning to embrace litigation finance with the announcement of the country's first litigation investment firm, LitFin. According to Ondřej Tyleček, a partner at LitFin, the agency plans to model itself after other successful European Jurisdictions such as Germany and the United Kingdom.  Pravniprostor.cz recently profiled LitFin’s journey in the Czech Republic. Basically, LitFin is taking a successful blueprint for litigation finance and promoting the concept with hopes of exponential rewards. LitFin seems to be funding personal injury claims, which the firm itself represents (legally) in some cases. LitFin suggests that their investment in the space is a legacy play, with hopes that access to justice in the Czech Republic will increase, given the company’s funding initiatives. As litigation funding is a novel practice in the Czech Republic, LitFin’s emergence may help usher in standardized regulation. We’ll have to wait and see. 
Consumer

Politician Alleges “Lawsuit Abuse” Against Consumer Legal Funders

Is there “lawsuit abuse” happening in Iowa and elsewhere? If so, is Consumer Legal Funding to blame? One former trucker and current Iowa state senator alleges exactly that—and Governor Kim Reynolds is on board. Several bills are in the works to limit award sizes and prevent litigation funders from increasing access to justice for those who have been hurt in traffic accidents. Transport Topics News details that Republican state senator Adrian Dickey (owner of a transport company and board member of Iowa Motor Truck Association) wants to outlaw the use of litigation funding to sue trucking companies. But isn’t there a conflict of interest when the owner of a trucking company introduces a bill which protects his own company from well-funded lawsuits?  According to “experts,” consumer legal funding is on the rise and puts defense attorneys at a disadvantage. While it’s true that the funding industry is growing, it’s equally true that funders seek out cases with merit. Funding a weak case is financially irresponsible and would deplete cash reserves that could be used to support stronger, more meritorious claims. At present, Dickey’s bill SF 2085 has not moved forward. Some felt the bill required a clarifying amendment defining the ‘litigation funding’ it hopes to ban. If passed, the bill would make Iowa the only US state to outlaw third-party legal funding, leaving many average citizens without recourse should they require legal representation. Governor Reynolds spoke out in favor of the bill that advocates for a $1 million limit on awards in cases involving trucking accidents and medical malpractice. But who does this bill protect? Not legal professionals, and certainly not those who have been injured by medical malpractice. The question then becomes, who is advocating for them?
Commercial Fundraising

Funders Continue Raising Large Capital

The litigation funding boom continues. LionFish (owned by RBG Holdings) recently agreed to a GBP 20 million funding deal. Balance Legal Capital recently raised GBP 130 million for a new fund—tapping eight institutional investors. With this, Balance’s total assets under management have surpassed the GBP 20 million mark.

Legal Futures UK explains that Balance now has access to even more co-investment capital from investors. Robert Rothkopf, managing partner, stated that this is the second multi-investor fund launched in two years. He went on to say that this demonstrates an ongoing and fervent demand for the services the company provides.

LionFish, which is part of RBG Holdings PLC, funds cases run by lawyers outside RBG. Its recent deal with a sizable alternative investment firm means that the firm will fund 75% of all cases over the next two years. LionFish then would be eligible to collect a significant share of returns after the return hurdle is met. This could provide the potential for high returns well beyond LionFish’s initial investment.

LionFish will also have sole discretion on the cases they pursue, and exercise great capital flexibility. This allows the funders a more diversified risk portfolio while moving away from the current investor sales model. Managing director Tets Ishikawa explains that the new arrangement will allow for greater funding investment without returning to deployment-focused management with lower margins.

Burford Capital has made over AU $1.1 billion in new funding commitments, deploying roughly AU $841 million. Case realizations have remained lower than expected, however, due to court delays and stoppages caused by COVID. Still, as Chief executive Christopher Bogart details, writing over a billion dollars in new commitments during a pandemic is an impressive feat. It also bodes well for future returns, as these cases come to fruition.

Commercial Regulatory Issues

Should We Be Concerned About Funder/Law Firm Partnerships?

As the litigation funding industry grows, many newcomers are flocking into the sector. This in turn has led to a number of mergers and new partnerships between funders. But what about partnerships between legal firms and litigation funders? Is this a conflict of interest? Will clients be limited in their choice of funders? MONDAQ reports that there are strong arguments to be had on both sides of the issue. While it can be true that clients may feel some pressure to accept funding from those associated with their legal firm of choice, these partnerships can also increase the client’s chances of getting appropriate funding for their case. This, of course, increases access to justice. Most clients are looking for fast access to funding capital, and to fully understand the terms they’re agreeing to. If clients are getting this, choice of funders will likely take a backseat. Some jurisdictions may still maintain prohibitions on champerty and maintenance, which then have to be excised or diminished in order to allow legal funding to operate effectively.
Commercial Regulatory Issues

Singapore Introduces Path to Conditional Fee Agreements

Singapore recently passed a Legal Professional (Amendment) Bill that permits CFAs (conditional fee arrangements) in international arbitrations. This change, introduced by the Legal Professional (Amendment) Act 2022, is said to improve the options to share risk among the involved parties. Burford Capital explains that these reforms represent a natural progression of Litigation Finance in international arbitration cases, which was adopted into law in Singapore in 2017. The legislation is similar to what was passed in Hong Kong last year, which uses outcome-related fee structures for arbitrations. Singapore is poised to become a destination jurisdiction for certain types of cases—and this legislation promises to expand that. To wit, Singapore is currently on par with London as a preferred locale for arbitration. Runaway legal costs have increased demand for flexibility in payment structures and risk tolerance. The new legislation promises to give Singapore a more competitive standing, as many surrounding jurisdictions already allow a greater array of risk-sharing options. This will also be a benefit to those pursuing arbitration—affording parties access to better legal representation and minimizing legal costs. That begs the question: Who is best able to take on the risks associated with these cases? Litigation Finance professionals can provide funding as they take on the risk associated with the cases they choose to fund. Funders are adept at evaluating cases for funding, ensuring that the most meritorious cases have their day in court. Those funders who already maintain a presence in Singapore are perhaps best suited to take advantage of this new legislation.
Announcements Consumer

Oasis Financial Becomes Libra Solutions as Offerings Grow

Oasis Financial announced today the change of its parent company name to Libra Solutions. The change was filed on January 10, 2022, and the company formally launched the new name February 23, 2022. “The name Oasis Financial is synonymous with pre-settlement funding, and it will remain the name of the country’s preeminent pre-settlement funding solution,” said Greg Zeeman, Chief Executive Officer of Libra Solutions. “But our recent growth and acquisitions significantly expand our ability to support current and new customers and necessitated a name change. We are much more than pre-settlement funding, and it is time for a name to match.” The growth of the Oasis Financial portfolio began in 2017 with the acquisition of Key Health, a California-based leader in medical lien funding. In 2021, Oasis Financial acquired Probate Advance, the largest provider of inheritance funding, and that same year, Oasis Financial joined forces with MoveDocs, a Nevada-based provider of medical lien management technology. Together, the portfolio offers solutions for heirs with inheritance in probate, personal injury plaintiffs awaiting settlement, and the attorneys and healthcare providers dedicated to helping them recover. “We chose the name, Libra Solutions, as a reflection of what we do,” said Zeeman. “Libra is Latin for ‘scales,’ as in the scales of justice. Our product portfolio helps balance the scales of justice for those involved in long, drawn out legal processes – providing financial options to help wait it out, and technology to help speed it along, so everyone has a chance for a fair outcome.” About Libra Solutions Libra Solutions works closely with customers and industry advisory groups with one focus – to help level the playing field in slow-moving legal processes. With origins dating back to 1996, we were founded by attorneys, healthcare providers, and innovators who saw that the legal system was not working for many. Today, our solutions have helped hundreds of thousands of clients, their attorneys, and medical providers achieve positive outcomes through funding and technology to speed and transform cumbersome processes. Libra Solutions continues to innovate, leveraging technology and financial strength to help plaintiffs, heirs, and those who serve them succeed. As of December 2021, Libra Solutions has helped over 750,000 clients, their attorneys and healthcare providers overcome slow moving legal systems. To find out more, visit www.librasolutionsgroup.com.
Commercial

Third-Party Funding Utilized by Resolution Professionals in India

Insolvency is a growing problem for businesses, especially in light of the COVID pandemic. Recently, an indebted company in Faridabad, India, was able to raise enough interim funds to cover the operations budget, despite being in the midst of insolvency. Economic Times India details that during the Corporate Insolvency Resolution Process, RPs must pay processional fees, for maintenance of machinery and workspaces. When companies cannot meet these expenses, RPs are increasingly relying on third-party interim finance. This concept is called debt-in-possession, and has become increasingly popular in Australia, Canada, the UK, and the US. LegalPay, one such funder, targets mid-market businesses for interim funding in India. Recently, LegalPay provided funds to allow Yashomati Hospitals to continue to run through the insolvency process. This type of funding is gaining steam throughout the region, where insolvency laws have recently expanded to welcome the use of third-party legal funding. As one legal professional put it, investors are willing to invest when there’s certainty toward recovery—especially for manufacturing companies or those involved with infrastructure.
Commercial Deals

How Litigation Finance Can Help with COVID Claims

Despite our best efforts, COVID is still raging. Precautions, closures, delays, and supply chain issues persist. What can businesses do to mitigate the effects of COVID? Omni Bridgeway notes some important things companies and legal teams need to consider as COVID continues to impact us. First, we need to appreciate that limitation periods may be expiring. Companies that have set aside legal claims like various commercial disputes, breach of contract, and even IP matters may find that deadlines to file may be nearing expiration. That said, legal funding may allow these businesses to pursue claims without adding debt to balance sheets. Funders can also help determine which cases are viable to pursue, and which aren’t. Opportunity exists for those who strike while the iron is hot. COVID has introduced unprecedented opportunities for mergers, public offerings, expansion, and attracting new talent. Third-party funding can provide businesses with the funds they need to pursue these opportunities. Funders can also assist in enforcing awards from slippery sources. While COVID is not a legal excuse for violating contracts, courts have come to accept that the definition ‘ordinary course’ has changed due to the virus. No business should be expected to operate as if COVID was a non-issue. Still, funders can determine whether a case exists when clients believe they’ve been harmed by COVID-related conduct.