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Commercial

Information Asymmetry and Litigation Investment Returns 

The Journal of Alternative Investments has released its Spring 2022 issue (Volume 24, Issue 4), profiling legal scholars Thomas Healey, Michael B. McDonald and Thea S. Haley’s take on third party litigation investment returns (Pages 110-122). In their concluding remarks, the authors suggest the marketplace may be overcoming information asymmetry. Furthermore, the authors debate principles of third party litigation investment returns (ROI), which may correlate with general awareness of the ecosystem. ESG seemingly has the potential to help solidify litigation investment’s core application(s) in the future.  The authors note significant foundational frameworks have been constructed to support the blossoming of litigation finance. Barriers to acceptance of litigation finance products and services potentially reside with the embryonic nature of the space. The authors state that potential opportunities reside in offering diversified investment structures to litigation finance agreements. Similarly, engaging technology (via online platforms, or similar) may hold significant opportunities for litigation investors with the mission of attracting broader market penetration.  Check here to read the Journal of Alternative Investments’ full take on the matter.
Commercial Regulatory Issues

The Rise of Worldwide Asset Freezing Injunctions

The notion of worldwide asset freezing is coming into play as a court approves Harbour Underwriting’s cross-undertaking insurance policy, one of only a handful in the history of global litigation. Given the unusual nature of the policy, many legal scholars expect worldwide cross-undertaking insurance policies to grow in demand as the litigation finance industry becomes aware of its utility.  Harbour Underwriting depicts the scenario, where shares are held by defendants in the energy sector. The claimant, who is funded by a United Kingdom litigation funder, is seeking a worldwide freezing injunction to recover awarded damages. Harbour Underwriting issued a policy to cover adverse costs that will cover claimant liability for defendant legal fees, should the claimant lose the case.   Read more about Harbour’s unusual approach to issuing the insurance policy by clicking here.
Consumer

New York Daily News: Lawsuit Lending ‘Out of Control’ 

A new op-ed published by the New York Daily News profiles Stanford Rubenstein’s personal injury, medical malpractice and civil rights law experience in New York City. Rubenstein is calling for New York State regulation to rein in what he considers 'unscrupulous litigation finance agreements.' Rubenstein claims (without much evidence) that hedge funds and other wealthy investors are siphoning claims awards away from some of the most vulnerable New Yorkers.  The New York Daily News op-ed asserts that many of Rubenstein’s clients are everyday people who comprise families that, in one way or another, are wronged by mistreatment or injury. Rubenstein goes on to say that when claimants are unable to pay for food or rent, they sometimes resort to non-recourse loans by litigation investors. According to the op-ed, issues related to unjust litigation agreements are prolific in New York with no regulation in place by state legislators in Albany.   Check here to read Rubenstein’s complete take on litigation finance regulation in New York State.
Commercial

The Ever-Evolving Nature of Fraud and Financial Crime

The 2022 ICC FraudNet Global Annual Report comprises 252 pages of insights into the nature of asset recovery associated with fraud and other financial crimes. The eight part expose’ includes 29 chapters written by some of the world’s foremost civil attorneys and experts. The report aims to cover some of the most sophisticated frauds, including banking, insurance and grand corruption. As an added bonus, Litigation Finance Journal has collated 91 highlights to the report, spotlighting the ever-evolving nature of fraud and financial crime.  The goal of ICC FraudNet’s 2022 Global Annual Report is to aggregate the insights of the world’s foremost academics, whose careers are devoted to researching economic crimes and financial compliance. According to the report, litigation finance is becoming a cross-border vehicle to strategically fund some of the most historic cases that are being awarded significant damage awards. Furthermore, the report underscores clever tactics financial criminals engage in to hide assets across the planet.   ICC FraudNet’s 2022 Global Annual Report underscores the importance of international financial justice through innovative asset recovery strategies. 
Commercial Regulatory Issues

Republic of Cyprus Law: Engaging Litigation Finance Across Europe, UK 

Public policy from the Republic of Cyprus has evolved to support the use of litigation finance and third party investment. A judge in Cyprus has recognized litigation agreements from all European Union countries, the United Kingdom and common law jurisdictions. Litigation Finance Journal has collated 11 highlights to the new policy out of Cyprus.  The January 2022 case from the District Court of Larnaca cites the Kazakhstan Kagazy claim. The judge followed Brussels Regulation, ruling that Cyprus law recognizes litigation finance agreements originating from all European Union member countries. Cyprus also now recognizes third party agreements from the United Kingdom and other common law jurisdictions. Cyprus has been home to disputes since the middle ages, giving birth to a well-known legal precedent: champerty. With the Republic of Cyprus’ recognition of litigation investment, Cyprus is now taking the proper steps to ensure access to justice for those who couldn’t otherwise afford it. 
Commercial

Latin America’s Dawn of Complex Cross Border Litigation Finance 

Latin America is home to 33 countries, representing a unique collection of legal jurisdictions. With litigation finance maturing, Omni Bridgeway recently participated in a summit, titled ‘International Dispute Funding,' to discuss and explore funding cross border litigation structures spanning continental South America.   The International Association of Restructuring and Bankruptcy Professionals (or, better known as INSOL International), hosted a seminar to discuss evolving trends in Latin America. The group comprises a who’s-who of global attorneys and accountants that specialize in bankruptcy litigation.  Omni Bridgeway hosted the association of panelists, including: 
  • Tim DeSieno, global director of distressed debt and senior investment manager, Omni Bridgeway, who moderated the discussion.
  • Henrique Forssell, Sao Paulo, Brazil-based founding partner of Duarte Forssell Avogados.
  • Enrique González, Mexico City-based founding partner of González Calvillo.
  • Nyana Abreu Miller, counsel at Sequor Law in Miami.
Check out Omni Bridgeway’s profile of the event here.
Commercial Legal Innovation

Pioneering Smart Contracts as Digital Assets via Legal Investment(s)  

Smart legal contracts could be the future of law, as digital assets begin to include cross-border transaction(s) and blockchain-based legal utilities. The English Commission has promoted legal scholars to architect new and sophisticated smart contract systems that will hopefully drive litigation agreement systems and processes. In law, digital contracts have innovated the market, now digital contacts are being bundled under the multifaceted definition of digital assets.  Stewarts Law profiles the firm’s approach to digital assets, dissecting the role of smart contracts and the role that legal funding agreements will play in engaging end-to-end design functionality of blockchain and quantum blockchain 5.0 theories. This theory aims to connect parachains (multiple blockchain architecture) with quantum commuting and forward thinking semantics.   Stewarts suggests that a hybrid approach to legal digital assets is the future. 
Commercial Regulatory Issues

American Bar Association on Litigation Investment Misconceptions 

The American Bar Association (ABA) serves as the United States’ legal representative aiming to further national ideals related to liberty and justice. ABA provides members with various tools to maximize professional success, while setting a high standard for legal innovation across the nation. ABA suggests that litigation finance is a tool to increase attorney/firm profitability, that also facilitates clients with required cash-flow to fund quality litigation.   AmericanBar.org outlined five key educational concepts that the ABA finds a high priority for attorneys to embrace, as litigation investment continues to mature across the United States:
  1. Funding risk is mitigated by success scenarios. As such, normally funders only consider cases with a high likelihood of success. 
  2. Litigation funding is not exclusively used for funding legal bills. Proceeds from litigation agreements often serve as a cash-flow lifeline. 
  3. Funders are not decision makers in a case. Meaning, the client is in charge and the funder serves as third party to the claim. 
  4. Discovery of litigation agreements are broadly privileged. 
  5. Attorney client privilege is a point attorneys and clients must clarify at the outset, given various jurisdictional rules.
Case Developments Commercial

Delaware’s Supreme Court Shifts Fees to Losers 

The state of Delaware is home to some of the world’s largest corporate entities. New designs to litigation funding agreements are beginning to include provisions for the losing parties’ financial responsibility in covering some (if not all) of the case costs). Delaware's Supreme Court has stopped short of billing losing parties for state costs associated with facilitating trial. All this, part of a new Supreme Court decision out of Delaware, in Shareholder Representative Services LLC (“SRS”) v. Shire US Holdings, Inc. (“Shire”). Lake Whillans profiles the $20M case award, where a third of the award went to attorney case costs. The concept is broadly called “fee shifting” … Where in this instance the award could potentially total $20M+ to cover attorney representation.  Delaware is world renowned for innovating business structures, now helping pioneer litigation finance investment theory. Check out Lake Whillans’ profile of the case here.