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Community Spotlights

Member Spotlight: Julian Coleman

By Julian Coleman |

With a background in Physics, Engineering and Software, Julian Coleman has 30+ years’ experience at the COO level conceiving new products and leading the project management, system design, engineering, software development, manufacturing, compliance and delivery teams.

Company Name and Description: 10th Mind is an e-discovery company that has been created with a major focus on innovation, not only for general e-discovery activities but in particular to assist litigation funds to overcome their specific challenges and threats  –  a special approach demanding a change of mindset.

Our name reflects our focus on innovation and is derived from the intelligence community – the Tenth Man principle. It requires that, where a group of ten analysts is working on the same data and nine of the group reach the same conclusion, it is the duty of the 10th person, the 10th Mind, to examine the issue on the premise that the other nine are wrong.

The ‘group think’ consensus may be right most of the time, or even mostly right all of the time, but tends to favour business as usual. The 10th Mind is there to challenge the consensus view and proffer different solutions.

10th Mind has defined (and addressed) four key areas:

  • Costs – there is in our view an increasing understanding that costs must be reduced
  • Process management and recording – not only does a very efficient process drive costs down, but it can (and must) include extensive record keeping of the entire process in order to support effective litigation
  • Technology will play an ever increasing role
  • Litigation Funds – a rapidly expanding market both in terms of finance available and in market sectors, funds are naturally focused on profit, a critical part of their business being case selection – and costs are a major factor here too. Funds have their own challenges, but also are having a significant impact on the wider litigation landscape.

Addressing these issues has been very interesting. As a seasoned C level executive it has been interesting to analyse and then dispense with so much convention. A business structured around what is today rather than yesterday can look very different and cost far less whilst being intrinsically more responsive and adaptable. In terms of what we can do, having no legacy structures to worry about has major benefits which transfer to the client:

  • Costs are reduced.  Many expensive overheads can be dispensed with.
  • We have developed our own project management and recording systems; based on PRINCE2 and facilitated by our unique software, integrated with selected new commercial products, management processes are vastly improved. Full traceable record keeping and transparency are built in and automated, essentially at zero cost.
  • …and finally but crucially, 10th Mind will work with funds on special terms:
    • if the fund is prepared to take on a case we will work on a CFA basis
    • we will also work with the fund on a CFA basis to undertake early stage investigations, in our view crucial to improving the evidence on which to base case selection and ultimately, therefore, profitability.

At 10th Mind we are convinced that not only is such an approach necessary now, but there will be ever-present forces driving the need for continued evolution:

Costs are becoming a major issue.  Significant concern has emerged in the English litigation funding community over last year's Paccar judgement. Omni Bridgeway’s Co-chief Information Officer, Matt Harrison, has said that some litigation funders may not survive the economic instability as “they don’t have the money available to them to invest in cases and in law firms.”  Bloomberg Law also recently noted that some litigation funds are currently facing financial difficulty.

Burford, one of the biggest litigation funds in the world and which describes itself as "the institutional quality finance firm focused on law", undertook surveys from which they report:

"[Over half of respondents to its poll] (52%) say drastic steps are needed to better manage legal costs, such as moving away from the billable hour, limiting outside firms and more innovation from outside counsel."

and

"Finance and legal professionals agree: the legal department’s top priority for the next 15 years is to minimize legal costs. But they are also unified in prioritizing that the legal department simultaneously find new ways to recover value."

It is clear there is a consensus that costs, specifically cost reduction, must be considered, and in our view, litigation funds will be a driving force.

Litigation funds have a very different focus from law firms, crucially they exist to make profits and that means winning cases, which in turn places a focus on the initial assessment stage.  And, as previously observed, the sector is expanding both in terms of available funds and in scope, driving change and posing challenges for dispute litigation as a whole. 

Logically as funding takes over a larger percentage of dispute litigation, the greater the overall impact this will have on costs. Arguably as saturation approaches, such pressures can only increase.

Process management and recording is in our view now essential, not merely tracking the ingestion and processing of data from collection to court, but the recording of all the management processes which defined the data management: who did what, when and why, recorded in forensic detail. This not only, if done well, improves business processes but it evidences them should legal challenges arise. Hence this data must be ‘forensics ready’.

Technology can and will help. But it must be the right technology which assists the first two objectives, ie improving practises whilst reducing costs. Having found critical gaps in commercial offerings, we have worked on our own solution.

Website: www.10thMind.com

Founded: 2023

Headquarters: UK (London)

Member Quote: We feel it crucial that providers must always question the legacy thinking and structures that entrench lack of efficiency, accuracy, and high costs.  By applying the 10th Mind principle, we are providing services in a new way: shared risk, formal (and unique) project management and software, along with specialised services specifically to assist funds combine to make us, to our knowledge, unique in the e-discovery sector.

If you would like to find out more as to how we can assist you and your clients, we would be delighted to meet you. Please contact us through our website (www.10thmind.com) or email our COO directly at julian.coleman@10thmind.com.

Announcements Commercial Legal Innovation

Darrow Expands PlaintiffLink to Support Mass Arbitration

By Harry Moran |

Darrow, the leading legal intelligence platform, today announced the launch of Darrow’s PlaintiffLink platform for mass arbitration.  With tens of thousands of plaintiffs already uniquely vetted on PlaintiffLink, the platform offers unparalleled quality of service for law firms in the pursuit of justice. 

PlaintiffLink is a revolutionary plaintiff-connecting tool for law firms, now built to support the complexity of mass arbitration cases. PlaintiffLink enables attorneys to plan, review, and approve potential clients through a centralized portal. It allows attorneys to connect with the large volumes of clients needed for mass arbitration. Using the platform, attorneys can gain data driven insights that power effective filing strategies and streamlined case management, backed by Darrow’s top-tier legal consultancy. 

“PlaintiffLink provides a cutting-edge solution to the risks and costs associated with mass arbitrations, and makes it easier for attorneys to promptly connect with the tens of thousands of clients needed for these types of cases,” said Evyatar Ben Artzi, Co-Founder and Chief Executive Officer of Darrow. “We’re committed to delivering technology that helps victims connect with the best law firms to ensure justice is served, even in the most complex matters that require expert attention.”

PlaintiffLink addresses the biggest barrier for attorneys considering mass arbitration cases: connecting with a large volume of qualified plaintiffs and managing them seamlessly. Through a centralized portal, attorneys can now leverage PlaintiffLink to connect with tens of thousands of thoroughly vetted, qualified plaintiffs needed for arbitrations. The service operates on a unique contingency model, shifting financial risk away from attorneys.

“We’ve built a dedicated solution to enable visibility into client cohorts in a single matter  so that attorneys can effectively file and manage cases,” said Gila Hayat, Co-Founder and Chief Technology Officer of Darrow.

PlaintiffLink enables lawyers to swiftly review through thousands of individual clients. Users can drill down into specific claim cohorts, download raw CSV data files containing all details about each claim, and review insight reports to get a more visual and statistical analysis of the case. PlaintiffLink also employs a comprehensive review process, with two tiers of expert vetting, to streamline client acquisition and reduce invalid claims. 

Darrow is committed to delivering products that drive firm growth and profits per partner, and it is planning additional releases throughout 2024 to support its users.

For more information, visit: https://darrow.ai 

About Darrow

Founded in 2020, Darrow is a legal tech company on a mission to fuel law firm growth and deliver justice for victims. Darrow's AI-powered justice intelligence platform leverages generative AI and world-class legal experts and technologists to uncover egregious violations across legal domains spanning privacy and data breach, consumer protection, securities and financial fraud, environment, and employment. Darrow is based out of New York City and Tel Aviv.

Community Spotlights

Member Spotlight:  Michael Klaschka

By Mike Klaschka |

Michael Klaschka is a Managing Principal and head of the Financial Institutions team based in EPIC’s Jersey City office.  He has over 32 years of industry experience and is a highly respected and skilled negotiator in the professional liability marketplace. 

Mike has extensive experience working with financial institution, investment management, litigation finance, real estate, venture capital, private equity and complex risks with strong technical knowledge of D&O, E&O, Cyber, Fidelity, Fiduciary, Media and Employment Practices Liability. 

Mike joined EPIC in August 2016.  Prior to joining EPIC, Mike was the national leader of Integro’s Management Risk Practice where he spent 11 years.  Prior to Integro, Mike spent 10 years at Marsh & McLennan where he held various positions including head of their E&O Center of Excellence Group based in NY as well as the west coast FINPRO placement leader for their financial institution, technology and commercial accounts group based in San Francisco.  Mike earned a Bachelor of Arts Degree from Drew University in 1991, and majored in Economics with a minor in Political Science.

Company Name and Description:  EPIC Insurance Brokers & Consultants

We are a unique and innovative retail risk management and employee benefits insurance brokerage and consulting firm, founded in San Francisco, California in 2007 with offices and leadership across the country.

EPIC Insurance Brokers & Consultants has a depth of industry expertise across key lines of insurance, including risk management, property and casualty, employee benefits, unique specialty program insurance and private client services.

Company Website: https://www.epicbrokers.com/

Year Founded: 2007

Headquarters: San Francisco, CA

Area of Focus: Property & Casualty Insurance with expertise in Directors’ & Officers’, Errors & Omissions, Employment Practices, Fund, and Cyber Liability.

Member Quote: Procuring insurance for litigation finance companies can be a challenge as many insurers view the industry as driving up their costs.  Several even prohibited their underwriters from offering terms.  In addition, litigation finance companies have unique exposures that are not addressed in “off the shelf” products offered by insurers.  At EPIC, we have the knowledge and experience as well as the relationships with key insurers that gives us the ability to negotiate and place coverage tailored to each client.

Commercial

An LFJ Conversation with Stuart Price

By Stuart Price |
Stuart Price is the Chief Executive Officer, Managing Director and co-founder of CASL. Mr Price worked in the United Kingdom, the Middle East and Australia during his 30+ year career in banking and investment banking, legal and litigation finance. Mr Price has held senior positions in litigation finance for over a decade with a career highlight being the resolution of a class action against the Queensland State Government for ‘Stolen Wages’ for $190m, on behalf of over 12,000 First Nations peoples.   Mr Price was instrumental in the establishment of The Association of Litigation Funders of Australia (ALFA), where he was the inaugural CEO and Managing Director from 2018. Mr Price continues as a Director of ALFA. Mr Price has a 1st Class Honours Degree in Applied Mathematics from the University of St. Andrews, is a Fellow of the Institute of Chartered Accountants in England & Wales, a member of the Institute of Chartered Accountants in Australia & New Zealand, a Fellow of the Governance Institute of Australia and a Fellow of FINSIA. At CASL, we actively pursue opportunities to apply our financial and intellectual resources in situations where they can serve as a means of accountability for claimants against those who hold wealth and power. Below is our LFJ Conversation with Stuart Price. What makes Australia an attractive jurisdiction for litigation funders? What are the advantages of funding in Australia vs. other notable jurisdictions? 

Australia has an adversarial legal system in which the Courts apply active case management discipline throughout the life cycle of each proceeding. This generally provides that civil and commercial cases have a timely and predictable trajectory to mediation and hearing. In addition, most jurisdictions operate in accordance with the ‘loser pays’ principle, meaning that the litigant who loses the case must pay the opponent’s legal costs; this provides a strong incentive for both sides to settle prior to hearing. Finally, the legality of third-party funding is well-established in Australia, and we have a mature class action jurisdiction with a strong thread of precedent legitimating funders’ entitlement to directly share in claim proceeds, subject to the Court’s satisfaction with the fairness of such arrangements on a case-by-case basis.

Some of the major trends in the industry involve an increased regulatory push, the inclusion of insurance products, funders getting more involved in arbitration and mass torts, etc. Which major global trends would you say are most salient in the Australian market, and which are less applicable? 

Regulation of litigation funding in Australia peaked in 2020-21, under the previous federal parliament. Reforms included extending the consumer protections available to investors in managed investment schemes (MIS) to participants in class actions, and a proposed minimum return to class members. Both reforms were in search of an actual systemic problem and proved redundant in practice, and were ultimately revoked by the successive parliament upon taking office in early 2022.

You have a background in finance, having been the CEO and founder of an investment bank. From an underwriting perspective, what are the most challenging aspects of funding a claim?  What are the red flags that you watch out for, which might indicate that a meritorious claim isn't worth financing? 

CASL’s due diligence process for potential investments doesn’t focus solely on the legal arguments of a claim, it also involves an assessment of whether the litigant and their legal team will be sufficiently aligned with CASL’s commercial objective to achieve a feasible resolution as quickly and as cheaply as possible.

With that in mind, claims that have sound legal merits may still represent an uncommercial proposition to CASL for three main reasons. Firstly, the amount of funding required for the legal costs estimated to run the matter may be disproportionate to the likely size of the claim; often this will be a factor in cases that involve many defendants. Secondly, there may be particular characteristics of a case that entail a substantial potential for delay in achieving resolution; this could include novel legal issues which increase appeal risk, or litigants prone to intractable rather than commercial conduct. Finally, we may be unable to reach an acceptable level of confidence in the defendant’s capacity to meet a settlement or judgment sum.

Your website indicates that you finance class actions, arbitration, insolvency and commercial claims. How do you think about these varying legal sectors in terms of capital allocation? Are some riskier than others (broadly speaking), and therefore you won't commit more than a certain percentage of your portfolio to that legal sector? Or do you rate each claim on its own merits, regardless of legal sector? 

Generally speaking, CASL’s approach is to assess each claim on its own merits, as we don’t perceive certain types of claims as inherently riskier than others, and don’t target a particular composition of the portfolio by claim type.

Whilst class actions typically have a longer life cycle than other types of case, that of itself does not increase their relative risk profile; in any class action, as indeed any type of case, the level of risk will primarily arise from the underlying legal and factual questions the Court is being asked to determine. For that reason, we gauge concentration risk in the portfolio by reference to the existence of any overlap in the legal questions being litigated across existing investments, rather than by type of case.

What do you view as the key drivers of industry growth over the coming years? 

The litigation finance industry is a reflection of the evolution of the civil justice system rather than a driver itself. The civil justice system is adapting and responding to a growth in disputes arising in areas such as privacy and data breaches, consumer claims including product liability, and climate including greenwashing. These types of claims are prominent or growing in other jurisdictions throughout the world, and Australia will benefit from these experiences or will lead the development of such claims given the strength of the legal system and its capacity to adapt.

As a result of the global relevance of certain claims, the law firms and funders are forging closer relationships across borders to ensure the efficient prosecution of claims.

Inevitably the law plays ‘catch-up’, but it is vitally important that law firms and funders continue to push legislators to design effective laws to require accountability, responsibility and high levels of governance within the social fabric to benefit society as a whole.

Commercial

ALFA Welcomes HFW as Newest Associate Member

By Harry Moran |

In a post on LinkedIn, The Association of Litigation Funders of Australia (ALFA) announced that it is welcoming HFW as its newest Associate Member. HFW becomes the 15th Associate Member of ALFA, following the inclusion of YIMBA last month.

HFW is a leading global law firm in the aerospace, commodities, construction, energy, insurance, and shipping sectors with a proud history of 140 years in practice. HFW boasts a truly international network with more than 700 lawyers across the Americas, Europe, the Middle East, and Asia Pacific.

In the post, ALFA said it was looking forward to working with Maurice Thompson, Equity Partner and Global Head of Litigation Funding, along with the rest of the team at HFW.

In a comment on the announcement, Thompson said “I'm very pleased to have joined ALFA with HFW, In the contact I have had with the Association and its members in the past few weeks, I have been impressed with the collegiality across the membership, notwithstanding the competition in this growing sector. To me, it showcases an appreciation that this is a vibrant and fluid sector and that we can all benefit from having open discussions on opportunities and challenges.”

More information about HFW can be found on its website. More details about ALFA and its members can be found here.

Case Developments Commercial

Nera Capital Acquires 50,000 Claims in Spanish Car Cartel Collective Action

By Harry Moran |

As LFJ reported last month, Nera Capital has already made headlines with its foray into funding claims brought against the truck cartel. The funder is building on this momentum with an announcement that it has acquired a large number of claims in the Spanish car cartel proceedings.

Reporting by CDR reveals that litigation funder Nera Capital has purchased 50,000 claims in a Spanish collective action being brought against 20 car makers and dealers, with the Dublin-based funder indicating that it planned to acquire another 200,000 claims in this class action. The claims are part of legal action being brought against these car companies over allegations that they took part in a cartel scheme which resulted in a 10 to 15% increase in prices for consumers.

Nera’s chief underwriting officer, Amy Fowler provided the following statement to CDR: “With 9.7 million cars sold during the cartel period, it is imperative that justice is served and the motorists who worked hard to purchase their vehicles are remunerated.” This move to purchase the cartel claims is reportedly part of Nera Capital’s wider strategy to expand into the Spanish market, with the jurisdiction being seen as an attractive proposition due to lower litigation costs and relatively quick legal proceedings.

The action follows a 2015 investigation by the National Commission of Markets and Competition (CNMC) into the sharing of commercially sensitive information between these businesses, which resulted in €117 million in fines for their breach of the Competition Protection Act. 

The fined companies include: Automóviles Citroën España, Fiat Group Automobiles Spain, B&M Automóviles España, BMW Ibérica, Chevrolet España, Chrysler España, Ford España, General Motors España, Honda Motor Europe, Hyundai Motor España, Kia Motor Iberia, Mazda Automóviles España, Mercedes Benz España, Nissan Iberia, Peugeot España, Renault España Comercial, Snap-on Business Solutions, Toyota España, Urban Science España and Volvo Car España. 

Porsche Ibérica, SEAT SA, and Volkswagen Audi España, did not receive fines following their pleas for clemency for their role in providing evidence to the CNMC investigation.

Case Developments Commercial

CAT Requires Foreign Funder to Comply with ALF’s Rules as Condition of Granting CPO

By Harry Moran |

One of the key talking points following the Supreme Court’s PACCAR ruling was how funders could alleviate external concerns about third-party funding through a rigorous adherence to the industry association’s code of conduct. A recent ruling by the Competition Appeal Tribunal (CAT) has taken this idea and applied it a step further, by holding a foreign funder to a written commitment to adhere to these rules.

An article in Legal Futures details a ruling by the CAT that requires Softwhale Holdings, a foreign litigation funder, to comply with the UK Association of Litigation Funders’ (ALF) code of conduct before it will grant a collection proceedings order (CPO) in the claim Softwhale is funding. Whilst the company, which is part of the Ayre Group owned by Canadian billionaire Calvin Ayre, had already stated that it would voluntarily comply with ALF’s rules, the CAT ruling has enshrined this commitment as a written condition of being awarded the CPO.

The claim at the heart of the issue is targeting four cryptocurrency exchanges which allegedly colluded to delist the Bitcoin Satoshi Vision (BSV) cryptocurrency in 2019. Softwhale is providing up to £18.6 million in funding to bring the claim on behalf of over 240,000 investors who allegedly suffered approximately £10 billion in financial losses as a result of the actions undertaken by Binance, Bittylicious, Kraken and Shapeshift. The class representative for BSV Claims is the former chair of the Competition & Markets Authority, Lord Currie, with Veltior Law providing legal representation.

Softwhale’s funding agreement was first signed in July 2022 and has since been reworked to comply with the requirements imposed by the Supreme Court’s PACCAR ruling. To support the litigation funding agreement, after-the-event insurance of has been secured which covers £2 million pre-certification and £14 million post-certification.

Announcements Commercial Deals

Nakiki SE: Letter of Intent regarding Covid mask litigation; value in dispute up to EUR 34 million

By Harry Moran |

Nakiki SE announces that its subsidiary Legal Finance SE has signed a Letter of Intent for the financing of a so-called corona mask lawsuit with a value in dispute of up to EUR 34 million including costs and interest.

The company that concluded a contract with the Federal Republic of Germany for the supply of Covid masks in 2020 has not been paid and is suing for payment. The case is before the Court of First Instance.

Depending on the outcome of the litigation, the letter of intent provides for a graduated participation of Nakiki SE or its subsidiary in the outcome of the litigation of 15 - 35%.

This is not the lawsuit mentioned in the ad hoc announcement of 9 May 2024, which is still under review, but a different, independent lawsuit.

Commercial Regulatory Issues

UK Delays Litigation Funding Bill Until Summer 2025

By John Freund |

One year ago, the UK Supreme Court shook up the litigation funding landscape with its now infamous PACCAR ruling. There has since been a push to reintroduce the Litigation Funding Agreements (Enforceability) Bill, but it appears the decision to do so will now be delayed until this time next year, at the earliest.

City A.M. reports that Lord Sandhurst Guy Rhys wrote to the Ministry of Justice asking if the bill would be reintroduced, and the decision by the Ministry is to wait until an official review has concluded, which should take us into the middle of next year. In its announcement, the Ministry noted "the critical role third-party litigation funding plays in ensuring access to justice," yet also recognized that "concerns have been raised about the need for greater regulation of Litigation Funding Agreements."

The Civil Justice Council is currently reviewing the issue of litigation funding regulation and access to justice in the UK, and aims to conclude its review by the summer of next year.

As expected, litigation funders were not thrilled with the Ministry's response. Neil Purslow, chairman of the International Legal Finance Association, said “it’s deeply disappointing the government has taken the decision to seemingly deprioritise access to justice for people like the sub-postmasters by kicking the can down the road.” Of course, industry opponents such as the U.S. Chamber of Commerce rejoiced at the decision, with Seema Kennedy, executive director of Fair Civil Justice proclaiming that "despite the claims from funders and law firms about the existential risk to the industry, there has been a surge of new group action claims, with funders able to find work-arounds to existing agreements and proceed much the same as before.”

If that sentiment is correct, it dose pose the question as to the purpose of the regulation in the first place. Perhaps the Civil Justice Council will consider that in their forthcoming review.