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Regulatory Issues

Kosovo Welcomes Third-Party Legal Funding

In recent years, Kosovo has taken a number of steps to promote foreign investments. Among these is the ratification of bilateral investment treaties with Switzerland, Luxembourg, Austria, and Belgium, among others. In 2014, a Law on Foreign Investment was adopted, which outlines the use of arbitration for investor-related disputes. Michelman & Robinson LLP, along with Bench Walk Advisors, explains that while Kosovo has not adopted the full measures of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, its Laws on Arbitration accomplishes many of the same things. As the financial climate improves, Kosovo is taking steps to attract more foreign investors, including third-party funding. Specific criteria are utilized when evaluating risks associated with cases:
  • Merits. Obviously, cases must be meritorious in order to qualify for funding.
  • Legal Team: Funders rely on the plaintiff’s legal team to win a satisfactory result for the client. Legal teams with a strong history of success and expertise in the area of dispute are essential.
  • Dispute Forum: Funders will specialize in specific forums for disputes. Some may want to avoid jurisdictions known to be unreliable, notoriously slow, or otherwise lacking in procedural stability or predictability.
  • Budget v Damages: Generally funders will have a minimum and maximum budget limitation. This means either a limit on how much funding they will deploy on a single case, or a minimum potential recoupment before considering a case for funding.
  • Enforcement and Defendants Financial State: Winning an award doesn’t help investors if the award cannot be collected. Most funders will examine the defendant’s ability to pay, as well as consider other potential enforcement issues such as hidden assets, or cross-jurisdictional issues.
Kosovo has taken some excellent first steps toward encouraging outside investment—with litigation funding strengthening investor confidence.
Announcements Fundraising

Liti Capital Token wLITI Lists on HitBTC, Bringing Litigation Financing to the Masses

Liti Capital, the Swiss-based litigation financing company that has made private equity investing accessible to everyone through blockchain technology, has listed its wLITI token for the first time on a centralized exchange (CEX) - HitBTC. wLITI’s first CEX listing follows its recent listings on decentralized exchanges (DEXes) Uniswap and 1Inch Exchange. Having launched earlier this year, Liti Capital is already making waves in traditional investing by bringing litigation financing — an investment practice traditionally monopolized by hedge fund heavyweights and elite investors — to the masses. “We are very excited to list on HitBTC,” said Liti Capital CEO Jonas Rey. “This represents a major milestone toward our goal of leveling the playing field for litigation finance. Legal claims are an extremely appealing asset class because they can be so lucrative, and we provide a means for anyone to get in on this exciting investment opportunity.” Founded in 2013, HitBTC is one of the oldest and largest spot-trading cryptocurrency exchanges in the world. It is well-known for its state-of-the-art matching engine, high security measures and low trading fees. With a trading robot-friendly API and 24-hour customer service, HitBTC is a popular exchange with over 800 trading pairs and more than 400 spot instruments. Putting traditional investing on the blockchain Litigation financing is the practice of bringing in investors to cover the cost of a lawsuit or arbitration in exchange for a portion of the profit. Litigation financing specialists, such as Liti Capital, purchase litigation assets for cases they deem to have a high chance of winning. While litigation financing often requires an initial investment of USD 500 K to USD 1 million from an investor, Liti Capital makes it accessible for anyone with as little as USD 50. They do this by tokenizing shares in LitiCapital, and paying out dividends to LITI equity token holders when a case in Liti Capital’s portfolio is won. wLITI, or “Wrapped LITI” — the token listed on HitBTC today — is Liti Capital’s ERC-20 liquidity token. It doesn’t provide access to dividends like LITI does, but wLITI can be exchanged for LITI tokens at a 5000 to 1 ratio. However, both tokens give holders the power to vote on how Liti Capital assets are used to finance crypto fraud cases that affect Liti Capital community members, an initiative that the company is dedicated to allocating between five and ten percent of their yearly investment budget for. Boasting a billion-dollar case portfolio Liti Capital has already secured a healthy case portfolio, with their largest case potentially worth more than USD 1 billion when it finally settles. Cases like these, which tend to be commercial rather than consumer or personal lawsuits, usually target large-scale corporate disputes valued at more than USD 10 million. While they could take years before a settlement is reached, successful litigation funders can expect to pocket between three and five times their initial investments, according to estimates by litigation finance expert Steven Friel (Bloomsbury, The Law and Business of Litigation Finance, 2020). To attain this goal, Liti Capital onboarded seasoned industry leader David Kay as CIO and Executive Chairman. Boasting more than a decade of experience as Funding Partner and Portfolio Manager of a billion-dollar private equity fund in the litigation financing space, Kay successfully enforced what was at the time the largest international arbitration award in history, bringing in over USD 1 billion in cash and securities. “Litigation assets generally don’t correlate with the state of the economy, allowing litigation financing to thrive even in a bear market,” Kay explained. “A relative newcomer to the modern investment ecosystem, litigation financing is expected to double in market value within the next six years. Our investment team at Liti Capital is actively seeking out the top opportunities in litigation assets, and aims to add at least five more multi-million dollar cases to our portfolio by this time next year.” Listing details Trading Date: August 17, 2021 3:00 pm UTC Deposit Opening: August 16, 2021 3:00 pm UTC Trading Pairs: wLITI / BTC wLITI / USDT About Liti Capital Switzerland-based Liti Capital is a Swiss Limited Liability Co. specializing in litigation finance and fintech. Liti Capital buys litigation assets to fund lawsuits and provide a complete strategic solution along with connections with top law firms to help clients win their cases. Tokenized shares of the company lower the barrier of entry for retail investors and give token holders a vote in the company’s decision-making process. Dividends are distributed to LITI 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.
Case Developments

German Asset Manager Sues Over Wirecard Bankruptcy

A lawsuit brought by Union Investment, Germany’s third-largest asset manager, is not welcome news for banks and bondholders. Wirecard is accused of making more than 70 statements, including corporate press releases, that are being described as fraudulent. FR24 News reports that Nadine Hermann of Quinn Emanuel stated that because Union Investment made decisions based on misleading statements, its claims should positioned alongside those of more senior creditors, such as banks and bondholders. This lawsuit has the potential to set precedent for other shareholders impacted by the Wirecard bankruptcy. The case is being funded by Burford Capital, a leading third-party litigation funder. So far, more than 14 billion Euros in claims have been filed against Wirecard with Michael Jaffe, the administrator. Jaffe has amassed about 600 million Euros from the sales of Wirecard assets. Should this lawsuit be successful, Union Investment would receive a share of the accumulated capital currently earmarked for Wirecard’s creditors, as would Burford. The banks and bondholders have filed multiple legal opinions rejecting Union’s claims.
Regulatory Issues

Omni Bridgeway CEO Andrew Saker Responds to Proposed Statutory Price Cap

It cannot be denied that third-party litigation funding is a boon to justice. In many instances, it’s the only way that impecunious plaintiffs can have their day in court. At the same time, legal funding is a business that depends on ROI for investors. That’s why funders have a lot to say about a proposed new regulation in Australia, legislating a standard minimum return to class members in funded class actions. Some have suggested this guaranteed percentage be as high as 70%. Is that reasonable? Omni Bridgeway CEO Andrew Saker penned his opinion on the matter, based on years of experience in the industry. Saker begins by pointing out that the 70% figure doesn’t appear to be based on any available data. It’s an arbitrary figure arrived at without input from funding groups like ILFA, nor does it factor in the significant risk undertaken by funders who deploy funding on a non-recourse basis. Since the Hilmer Review in the 1990s, it’s been established in Australia that the government should only intervene in those markets where there has been a market failure. That’s simply not true of the funding industry. While dire warnings of frivolous class actions haven’t abated, this explosion of opportunistic cases never materialized. Saker is clear in stating that funding is already subject to checks and balances, self-regulation by industry leaders, and increased court input on settlement approval and even funding agreements. The proposed allocation of 70% of awards or settlements to class members would negatively affect over 90% of cases, according to an analysis by PwC. In some instances, the remaining award funds wouldn’t be enough to cover legal expenses, or would reduce funder commission so drastically that it loses value as an investment. Leading funders like LCM, Woodsford, and Burford Capital all agree that an arbitrary price cap will hurt funders, lawyers, and potential claimants who may find themselves with no financial help when they need it most.
Fundraising

Litigation Finance Product for Retail Investors Launches in India

One Delhi-based startup has created a litigation funding platform with retail investors in mind. Investors may now fund cases as a third party for as little as 25,000 rupees, or about $335 USD. Called LegalPay, the startup is focusing on late-stage commercial arbitrations. Business Today explains that LegalPay is backed by LetsVenture and 9Unicorns, among other venture capital firms. It plans to develop an SPV of about a dozen cases to diversify risk. The focus will be on commercial B2B cases with big-ticket defendants and a predictable timeline. Investing in third-party funding is typically only available to the wealthy. LegalPay makes this opportunity more accessible to average investors. Potential investors should have a clear understanding of how third-party funding works, and especially its non-recourse model—before making an investment. Founder Kundan Shahi details that his business model is such that even winning as few as one in six cases will mean that invested capital will be secure.
Commercial

Insights Into the Energy Industry

The COVID pandemic has wreaked havoc on many industries, energy included. Energy usage fell, production disruption was rampant, regulations changed all over the world, and at least 19 energy companies filed for bankruptcy last year. Burford’s newly commissioned 2021 Asset Report explores the ways in which energy companies can use their legal assets to create revenue. Burford Capital details that while energy litigation can be costly and time-consuming, it’s also among the most lucrative. When polled, more than ¾ of senior finance professionals in the energy sector say that even extensive affirmative recovery programs aren’t meeting the needs of the company. This could be addressed by better communication between legal and financial departments. Greater reliance on quantitative analysis over qualitative analysis when vetting pending legal claims would also be helpful. Burford Capital’s recent roundtable featured some top legal minds in the energy field. Mark Baker, global co-head of international arbitration at Norton Rose Fulbright,  states that volatility in the energy sector has been the norm long before COVID. Oil and gas are constantly in a state of flux depending on investment regimes, politics that alter energy policy on a global scale, and a transition toward green energy, which all impact pricing and availability. Michelle Gray, a founding partner at Fogler, Brar, O’Neil, and Gray, speaks to the uncertainty that’s still clouding active lawsuits. There has been precious little precedent with regard to COVID-centric litigation. Until that happens, it’s impossible to predict how litigation—or even arbitration—will progress. The use of litigation funding along with quantitative financial analysis makes perfect sense. The expertise provided by experienced funders can be instrumental in identifying which litigation is worth pursuing, and then maximizing its value. Non-recourse funding can mitigate expenses and legal fees while creating untapped revenue and reducing risks--without adding costs to the balance sheet.
Regulatory Issues

Australia Eases Continuous Disclosure, Extends Virtual AGMs

While class action attorneys and litigation funders are fuming, publicly-listed companies in Australia are breathing easier after continuous disclosure laws were relaxed. This move is expected to protect company officers against liability for deceptive, misleading, or incomplete disclosure to stockholders—unless fault is proven affirmatively. Yahoo! Finance explains that the move is meant to stifle “opportunistic” shareholder class actions, according to Treasurer Josh Frydenberg. The new rules also allow annual general meetings to be held virtually rather than in-person, through March 31 of 2022. These new rules are described as ‘temporary relief,’ though Frydenberg noted that more lasting reforms are expected to be introduced before the end of 2021. There are concerns, however, that these new relaxed rules may limit shareholder’s legal options for holding executives to account.
Announcements Consumer

Legal-Bay Lawsuit Funding Enters Attorney Funding Market with Law Firm Loans Up to $25MM

Legal-Bay, The Pre Settlement Lawsuit Funding Company, announced today that they are now assisting a large number of attorneys with their funding needs. The premier lawsuit funding company is currently working with lawyers and law firms, generating a renewed focus on cash flow needs that may have arisen due to Covid-19 shutdowns and a severely slowed court system. Chris Janish, CEO of Legal-Bay, commented, "We have secured ample capital in our quest to assist our many law firm clients. We're able to get them the money they require to help them carry on with their professional needs, as case settlements have slowed down due to Covid-19. Legal-Bay is now positioned to be a full-service funding firm–and invaluable resource–for law firms and their clients alike by helping with cash-flow needs and building case value through our multitude of funding products." If you are a lawyer or law firm who needs an immediate cash advance and are interested in discussing how law firm loans can help you, please visit Legal-Bay HERE or call toll-free at 877.571.0405. When it comes to case cost funding, funding for experts, trial cost, or medical procedure / surgical funding for a client, attorney loans are invaluable to lawyers and medical providers. Many law firms have walked away from great cases because they couldn't pull the funding together for personal injury clients that don't have insurance. Also, smaller firms sometimes need to bring in additional counsel for bigger cases because they cannot self-fund things like expert costs, excessive trial costs, or general case costs needed to properly prosecute a valid claim. Plus, now that surgery centers are strapped for cash as well due to Covid they are more hesitant to undertake personal injury surgery on lien or Letter of Protection (LOP). Now, law firms can go to Legal-Bay to help finance the surgery by paying the medical provider upfront. This greatly improves the case value for the client, and the medical provider is more than willing to work with the law firm. Legal-Bay can structure large and small transactions mostly on a non-recourse basis depending on the nature of each transaction. Legal-Bay has helped lawyers in New York, New Jersey, Florida, Pennsylvania, California, Texas, and Ohio, but they work with attorneys from all states, even outside of NY, NJ, FL, PA, CA, TX, and OH. Let them provide immediate capital to scale your operation with credit lines up to $25MM. They are a leader in the industry with access to large capital portfolio companies. They offer the fastest approvals with less underwriting than traditional banks, and interest rates/usage fees have simple terms ranging from 12% to 40% per annum with no upfront fees or hidden costs built into the contracts. They can tailor transactions and paybacks, so your cash-flow remains strong. Legal-Bay's goal is to work tirelessly to help get your firm the capital it requires. If you are a lawyer or law firm who needs an immediate attorney loan or law firm loan, please visit Legal-Bay HERE or call toll-free at 877.571.0405. Keep in mind, there are some key requirements to be eligible for funding: 1. Diversified portfolio of personal injury cases and/or other contingency fee type cases 2. Track record of success in settling and/or trial wins 3. Steady cash-flow and profits each year 4. Reputable principals within the firm with a history of integrity Legal-Bay provides fast attorney loans for your law firm and your clients in need. Their staff is trained to make things as efficient for your team as possible. They want to be a resource to help your clients hold out for a fair settlement while also not inundating your firm with unnecessary document requests. Legal-Bay's loans for lawyers provide the lowest industry rates so that any funding liens do not get in the way of settling your client's case… and most importantly, put more money back into their pocket! If you are a lawyer or law firm who needs an immediate cash advance for trial cost funding, funding for experts, or surgical funding, please visit Legal-Bay HERE or call toll-free at 877.571.0405. Legal-Bay remains vigilant in helping clients with their professional and personal needs. Any clients who need cash now can apply for funding to help them get through their financial crises. Legal-Bay funds all types of law firm loans including funding off personal injury cases, attorney lines of credit, attorney fee acceleration, advancement of attorney fees, case cost lines of credit, case cost funding, case cost disbursement funding, and many more. Legal-Bay works directly with many top law firms to provide the best cash advance rates in the industry in as little as 24 - 48 hours. They can assist with acquiring needed loans for law firms in circumstances such as:
  • Portfolio loans
  • Funding for trial costs, trial cost loans, case cost funding, or lines of credit
  • Law firm loans, law firm portfolio loans, law firm portfolio financing
  • Attorney funding, Lawyer funding, law firm funding, law firm advance
  • Non-recourse law firm advance, law firm financing
  • Attorney pre-settlement funding or attorney post-settlement funding
  • Legal Receivable Factoring
  • Appellate funding, appellate financing
  • Judgement on appeal loans, judgement on appeal funding
  • Verdict loans, verdict financing
  • Commercial litigation loans, commercial case funding, commercial case advance, commercial case loans, commercial lawsuit advance, commercial lawsuit loans, commercial lawsuit funding, commercial loans, commercial advance, commercial funding
  • Whistleblower loans, whistleblower advance, whistleblower funding
  • Qui-tam loans, Qui-tam funding, Qui-tam advance
  • Patent infringement funding, copyright infringement loans
Legal-Bay's law firm funding programs are designed to provide immediate cash for attorneys who need advance capital to meet their firm's financial demands. To apply right now, please visit the company's website HERE or call toll-free at: 877.571.0405 where agents are standing by to answer any questions.
Regulatory Issues

Insight on the Development of Litigation Funding in Ontario

Canada has joined the US, UK, EU, Singapore, and Australia (and now many others) in having fully embraced third-party legal funding. Courts are seeing the value in the practice and are ruling accordingly. Combined with the increase in contingency fee arrangements—Canadian plaintiffs are seeing access to justice increase. Woodsford Litigation Funding explains that legal funding began with a desire to help plaintiffs have their day in court—especially against a rich defendant, corporation, or even a government. Since then, the scope and benefits of litigation funding have adapted to the needs of the market. Now, third-party funding is used by CFOs and GCs to manage legal expenses and share risk with other parties. In single plaintiff and class action cases, funding often leads to more equitable settlements, due to a variety of factors, including the added legal expertise and the capability of rejecting lowball offers thanks to a lack of financial constraints. The Ontario Trial Lawyers’ Association recently developed best practices standards for lawyers and funders. These are similar to the codes of conduct used by the Association of Litigation Funders. In January 2020, a Quebec Court of Appeal decision requiring a litigation funding agreement be given to creditors as ‘a plan of arrangement' was overturned. An earlier order by the supervising judge was reinstated. Thus, third-party funding used as interim financing should be determined on a case-by-case basis. Judges may permit third-party funds as interim financing when it is in the interests of justice to do so. Third-party funding for class actions has been approved several times—including David v Loblaw, where courts allowed the use of funding under the following conditions:
  • Plaintiffs, not funders, direct litigation decisions
  • Funder is able to cover an adverse cost order
  • Courts must approve if funder backs out of the case
  • Plaintiffs are given independent legal counsel on the funding agreement terms
Ontario residents now have more options with which to pursue meritorious claims.