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Commercial

Is Climate Litigation a New Frontier for Litigation Funding?

As the science becomes more definitive, climate-related lawsuits are growing in number and size. Since 2018, legal actions relating to climate change have almost doubled—at over 1,700 cases globally. Thus far, nearly ¾ of the total lawsuits have been aimed at governments. This is sure to continue as closer attention is paid to the stated goals of the Paris Climate Accord. Capital Monitor explains that this development may be a boon to the Litigation Finance industry on the whole. The emphasis on climate change lawsuits is likely to shift from governments to private businesses, with numbers that may even rival cigarette lawsuits. Maurice MacSweeney, director at Harbor Litigation Funding, stated that his firm has been increasingly investing in commercial disputes. He’s seeing a higher number of climate claims, which is a good opportunity for funders, partly because of the possibility of high awards. At the same time, pursuing cases against climate-destroying corporates is a net gain for the Earth. Sometimes the possibility of a lawsuit is the only thing forcing businesses to behave ethically with regard to the environment. Head of Clyde & Co law firm, Nigel Brook, details that these last few years have been transformational—even before COVID. Human rights cases are being presented with new thinking and theories of culpability. When these lawsuits are won by plaintiffs, a precedent is created and more cases emerge. Product liability legislation can be used to address climate change—for example, an oil company being held accountable for environmental damage. While that hasn’t happened yet, it may eventually, leading to huge changes in the way such cases are argued. Litigation costs can be high, but surely not as high as the price we pay when corporations poison the world we live in. Legal funding provides a viable solution.
Commercial

UKs Largest Divorce Case Ends With $100 Million Award to Ex-Wife

 Temur Akhmedov, the adult son of divorced Russian oligarchs Farkhad Akhmedov and Tatiana Akhmedova, has been ordered by a judge to pay his mother GBP 100 million. The judge, Gwynneth Knowles, reportedly called the younger Akhmedov “dishonest,” saying he would stop at nothing to assist his father. Bloomberg reports that after being awarded a  GBP 627 million divorce judgment, Tatiana Akhmedova’s ex-husband refused to pay. When she learned that her son was helping hide assets from her, she decided her only recourse was legal action. Temur reportedly moved millions into his account from his father’s, later claiming he lost GBP 50 million in stock trades. Akhmedova’s cases in six countries have been funded by Burford Capital. It’s expected that Burford will also finance the recovery of the award, as both Temur and Farkhad have expressed reticence to pay. Because this recent ruling occurred in an English court, Temur’s local assets are likely to be forfeited. Temur described this development as ‘upsetting.’ Tatiana Akhmedova is also seeking to seize a superyacht currently anchored in Dubai, access to a luxury London apartment, as well as a trove of modern artworks being stored in Liechtenstein. She describes her current relationship with her son as ‘very strained.’
Commercial

RBG Holdings Adds Memery Crystal to its Menagerie

RBG Holdings is the parent company for a number of legal entities including legal firm Rosenblatt Limited, Convex Capital Limited, and LionFish Litigation Finance. Now, RBG has added boutique law firm, Memery Crystal, to its stable of businesses. Global Legal Post details that the sale will not impact management as both entities will maintain separate offices and their own management teams. Memery Crystal and Rosenblatt will comprise RBG’s legal services arm to the tune of 29 partners and 66 attorneys. CEO of Memery Crystal, Nick Davis, explains that the purchase will allow the firm to better serve clients by providing a wider range of services via cross-referrals. Staffers will also enjoy more opportunities to add to their skill sets. Subject to regulatory approval, the purchase will be paid in GBP 12 million in cash, and just over GBP 11 million in RBG shares, plus more cash payouts over the next year. The sale is similar to other notable mergers of late—including Kemp Little, bought by Deloitte, and boutique firm Paul Tweed, recently purchased by Gateley.
Commercial

How Legal Funders Help Victims of Investor Fraud

In the United Kingdom, investor fraud is a growing problem. According to the UK’s own national reporting, Action Fraud received more than 17,000 reports of investment fraud—to the tune of over GBP 650 million. So what’s the good news? The Litigation Finance industry can be instrumental in helping defrauded people receive remuneration through collective actions. Pinsent Masons details that the stats we see with regard to fraudulent investment schemes may be just the beginning—because the data collected comes from reported fraud. There may be thousands of investors who don’t realize they were defrauded, and still others who are aware but choose not to report for a variety of reasons—including embarrassment. The numbers surrounding investment fraud are staggering. The UK’s police think tank, the Police Foundation, estimates that over GBP 4 billion has been scammed from pensioners in 2018 alone. As the general public, via the media, becomes increasingly aware of widespread fraud, the government has stepped up its efforts to identify and contain it. Litigation funding is already playing a part in helping defrauded investors find justice. Sadly, defrauded investors are less likely to have the disposable income needed to invest in a legal team. England and Wales are considered strong jurisdictions for litigation funders and claimants due to factors including robust freezing orders and increased use of legal technology. Massive fraud cases with multiple plaintiffs can result in awards in the tens of millions. So it makes sense that funders and legal pros alike are turning their attention to collective actions for investment fraud. As funders step up to provide wronged parties the resources they need to seek justice, fraudsters may soon realize that fleecing average citizens will come with a price. Ultimately, group litigation in fraud cases promises to be a major growth area for third-party legal funders in the coming years.
Commercial

Examining Litigation Funding Models

Managing Director of Bench Walk Advisors, Adrian Chopin, makes it his business to dissect and quantify different aspects of the litigation funding market. Recently, Chopin examined the impact of operating costs by comparing two hypothetical cost structures used by funders. Dispute Resolution Blog details Chopin’s analysis as it focuses on hypothetical Funder 1 and Funder 2. F1 has high operating costs. Over a year, it deploys a total of $250 million into various single case investments. This winds up making $150 million in net profits, minus $100 million in annual operating costs—leaving the funder with a profit of $50 million. Presuming the funder wins 2/3 of all funded cases, it needs to charge just over two times the invested capital just to break even. Meanwhile, Funder 2 has lower operating costs and according to Chopin, only needs to charge 1.77 times the invested amount in order to cover costs—again, presuming a 2/3 win rate. Obviously, these numbers are simplified. Most firms don’t take on solely single-case investments, for example. But they do illustrate that when it comes to price, there are many factors that must be considered, and even the most careful planning can be upset by one negative outcome. Does it make sense to carry high operating costs? Some funders say yes—that the extra investment required to keep due diligence in-house nets better results and a higher percentage of wins than outsourcing. There’s no definitive answer to be found, since adequate statistics aren’t available to determine whether keeping vetting and due diligence in-house is worth the extra expense. The results a funder produces can snowball over time. A funder with a higher win rate will attract more client interest than a smaller firm with a lower win rate. More client applicants mean funders can be more discerning, leading to better case selection and more wins.
Announcements Commercial

Delta Capital Partners Management Announces New Hire and Promotions

Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, is pleased to announce a new senior executive hire and promotions within the firm. Todd Schneider has joined Delta as Chief Financial Officer and Chief Compliance Officer; and Gabriel Olearnik and Daniel Bond have been promoted to Director of Investor Relations and Director of Underwriting, respectively.

Todd Schneider Hired as CFO and CCO.

Mr. Schneider will oversee the implementation and management of all financial activities for Delta and also will work closely with Delta’s senior management and investment committee. Mr. Schneider has served as the Chief Financial Officer and Chief Compliance Officer of Shorehill Capital LLC, a private equity firm focused on investing in middle market industrial products, industrial services, and distribution businesses. Mr. Schneider also served as the Chief Financial Officer and Chief Compliance Officer of CHS Capital LLC, the precursor firm of Shorehill Capital. Throughout their histories, CHS Capital and Shorehill Capital made investments in more than 400 businesses and invested over $3 billion of capital. Prior to CHS Capital, Mr. Schneider was the Chief Financial Officer of Conversus Asset Management, the asset manager for Conversus Capital L.P., formerly the world’s largest publicly traded private equity fund of funds designed to provide investors liquidity in a historically illiquid asset class. Mr. Schneider has also held positions as a Senior Vice President and Chief Accounting Officer of FBOP Corporation, as well as a senior manager at KPMG, where Mr. Schneider began his professional career.

Christopher DeLise, Delta’s Founder, CEO and CO-CIO, stated, “Delta is pleased to have Todd join our team as Chief Financial Officer and Chief Compliance Officer. Todd’s extensive background as a senior financial professional and organizational leader, knowledge of various asset classes, and intimate familiarity with all aspects of operating, financing, and successfully scaling private equity firms, will enable Delta to continue its remarkable growth and position the firm to be a funder of choice for sophisticated claimants and respondents across the globe.”

Gabriel Oleanrik Promoted to Managing Director and Director of Investor Relations.

Mr. Olearnik is currently a Managing Director overseeing international deal origination, operations, and strategic alliances and ventures for Delta. Now, Mr. Olearnik also will serve as Director of Investor Relations, where he will be responsible for overseeing global investor relations for Delta. Prior to joining Delta, Mr. Olearnik was the General Counsel of a major private equity firm in London and a Partner and Chair of the Private Equity Practice Group at Kochanski & Partners, a leading independent European law firm. Prior to those roles, Mr. Olearnik was a corporate finance attorney at Clifford Chance, Mayer Brown and at Dentons.

DeLise noted, “Gabriel has done a tremendous job representing Delta as a litigation funder throughout Europe. Gabriel’s experience with Delta and many successes since joining the firm, his prior experience as the General Counsel of a private equity firm, and his intimate knowledge and familiarity with all legal and operational facets of private investment funds, makes him the perfect choice to serve as Delta’s Director of Investor Relations. In that role, Gabriel will materially contribute to the firm’s growth plans by expanding and enhancing Delta’s relationships with its existing investors.”

Daniel Bond Promoted to Managing Director and Director of Underwriting.

Mr. Bond is currently a Managing Director for Delta, where he oversees intake, evaluation, due diligence, and monitoring efforts in connection with new equity investment opportunities. Now, Mr. Bond also will also serve as Director of Underwriting, where he will be responsible for overseeing all facets of litigation and arbitration underwriting for Delta across all of its product and service offerings worldwide, including equity and credit solutions for plaintiffs and defendants. Prior to joining Delta, Mr. Bond was a Partner at Kirkland Ellis and had an over-10-year law firm career with experience in the conduct, management, and planning of commercial litigation and dispute resolution. Mr. Bond’s experience encompasses a range of intellectual property and complex civil litigation matters and he has successfully litigated numerous high-profile lawsuits for blue chip clients in a variety of fields.

DeLise remarked, “Daniel’s tremendous success managing litigation and arbitration underwriting for Delta’s equity-oriented investments makes him the ideal choice to serve as worldwide Director of Underwriting across all of Delta’s product and services offerings as Delta continues to expand its platform to include litigation finance solutions for defendants, municipalities and governments; managed solutions for businesses; and credit-based products.  With these new offerings all coming online within the next several weeks, and with Daniel at the helm of our underwriting process, Delta expects to be able to significantly increase deal capacity while diminishing throughput time.”

About Delta

Delta Capital Partners Management LLC is a global private equity firm specializing in litigation and legal finance, judgment enforcement, asset recovery, and related strategies. Delta provides capital and related services to individuals, businesses, private investment funds, law firms and other professional service firms across the world that seek to hedge their financial exposure, reduce legal spending, enhance the probability of a successful and timely resolution of claims, and maximize the effectiveness of their core businesses.

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Commercial

Insights from Emily Tillett: VP at Burford Capital

Emily Tillett is a Vice President at Burford Capital and leads investment activity and operations in Hong Kong. She recently sat down to answer questions about her career trajectory and the litigation funding industry. Burford Capital details that Tillett joined Burford after more than ten years in private practice, where she handled contentious insolvencies and cross-border litigation among other specialties. The litigation finance market in Hong Kong is still developing, and Tillett finds herself in a unique position to educate the public about the practice and its benefits. Hong Kong’s legal system is unique in that it maintains its own common law jurisdiction, apart from the Chinese government. Hong Kong is friendly toward arbitration and is well-situated both economically and geographically for cross-border litigation. The financial upheaval brought about by COVID is likely to lead to a rise in demand for claim monetization as companies struggle to stretch operating funds. Meanwhile, impending changes in laws surrounding success fees for lawyers have people talking. Some say the law should be amended to allow outcome-related fee agreements—which would enable firms to take on more risky cases, as they share costs and risks with third-party funders. How does one promote legal funding in areas where it’s not commonly in use? The first step is educating the legal and business communities about the practice and its inherent benefits. While Hong Kong lawyers may have a passing familiarity with litigation funding, many have not made use of it themselves. Opportunities for industry growth abound in Hong Kong. It’s expected that as lawyers and businesses come to understand the value and versatility of legal funding, the practice will flourish in Hong Kong, as it has in the rest of the world.
Commercial

No More Patent Reviews Means Spike in Lawsuits Against Banks

Until last September, the US Patent and Trademark Office ran a review program when financial services companies are accused of infringing patents. The program was developed to adjudicate IP violation cases in less time and with more cost-effective conditions. That program has since expired—exposing banks and other financial service providers to a greater danger of lawsuits. As Bloomberg Law explains, almost three times the typical average for patent lawsuits have been filed against banks in recent months. This includes Bank of America Corp, Bank NA, and JPMorgan Chase among others. Many banks, including the National Retail Federation, believe the program should be reinstated. Legislators seem in no hurry to do so, however. Meanwhile, the US engineer group IEEE-USA is fighting the renewal of the program, saying it has outlived its usefulness. Since August, nearly 100 suits have been filed against large companies or banks. This includes retail giant Walmart—sued for infringing multiple patents for its mobile payment app. Healthie, a telehealth app, was sued over its internet billing app. Software company ShopKeep had been sued over a patent involving secure customer transactions. Interestingly, what has been bad news for banks is good news for litigation funders. When the review program was live, portfolios of patent cases appeared less profitable to funders—which may have contributed to the dearth of patent litigation while the program was in place. The current influx in new cases should keep funders busy for a while. Overall, patent litigation increased 11% in 2020. This rise is likely to continue, and may be fueled by companies selling off patents amid financial turmoil. One study from Richardson Oliver Law Group showed a huge spike in patents being bought by non-practicing entities. That’s a trend likely to inspire even more litigation in what some are referring to as a ‘feeding frenzy.’
Commercial

IP Law Firm Faces Claim of ‘Secret Commissions’

A collective action has been filed against IP law firm Marks & Clerk. The suit alleges that the firm overcharged multiple small businesses—possibly thousands—by engaging in a scheme with CPA Global, an IP management firm. Legal Futures reports that the action is being brought by CRL, Commission Recovery Ltd. This company was founded by Peter Rouse, a former lawyer and IP specialist with the intent to help wronged businesses seeking compensation and justice. The case is being funded by a third-party legal funder whose identity has not been disclosed, and is led by Signature Litigation. The case alleges decades of overcharging businesses, and of referring clients to CPA global in exchange for commissions clients were unaware of. Existing evidence appears to suggest that more than 20% of what clients paid were related to CPA Global, and that Marks & Clerk may have made more than GBP 50 million during the time in which they ran the scheme. CRL asserts that the scheme began around 1969, when various partners from a handful of professional service companies formed a new company that eventually became CPA Global. In time, they allegedly began a system of clandestine commissions funded by clients. While the CRL remains certain that the parties concealed their scheme and commissions from clients, Marks & Clerk as well as CPA Global deny wrongdoing and plan to defend themselves vigorously.