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Commercial

Arbitral Awards and Limitation Periods

Arbitral awards are widely enforceable, which is a bonus for the parties involved. However, this enforcement is finite. There are limitation periods which, once surpassed, can render an arbitral award unenforceable. Omni Bridgeway explains that award creditors disregard or underestimate the risk involved in failing to observe limitation periods. If a debtor is not inclined to make payment, local limitations can actually work to their advantage. Once the limit for the arbitral award passes, the award might become unenforceable in jurisdictions where available assets are located. To add even more complexity, there is no uniform regulation on time periods of arbitration awards. The time period varies from one jurisdiction to the next, and may differ based on other factors. In a 2010 case, the Canadian Supreme Court ruled that the laws on limitation periods for enforcement of an award from outside the country apply as “rules of procedure.” Differences in limitation periods between countries is substantial. In Canada, various provinces have time limitations of between 2-10 years. In the US, 3 years is standard. Russia is also 3 years, while China allows only 2. Common law jurisdictions like England and Wales state that awards cannot be enforced after 6 years from the time of the cause of action. Given these facts, a timely enforcement strategy is vital. This should include a thorough discovery process, detailing the attachable assets and a clear delineation of which limitation periods may apply. Blind enforcement is also an option, though the time consuming, complex, and comparatively expensive nature makes this an unattractive option in most situations. Surely, a creditor is free to wait for a debtor to negotiate a settlement or simply pay what they owe. But a savvy creditor will devise a strategy for enforcement and recovery in the event that a debtor does not pay up.
Commercial

Burford Capital Roundtable: Industry Research

A recent roundtable of law firm leaders featured Jason Peltz of Bartlit Beck, Frank Ryan of DLA Piper, and Jason Leckerman of Ballard Spahr. They discussed industry trends, the ongoing impact of COVID, and how to best educate the public about legal funding. Burford Capital Director Christine Azar led the discussion, beginning with the high number of law firm mergers. The panel did not agree with the notion that ‘bigger is better’ when it comes to firm size. Leckerman states that it can be more advantageous to focus on core areas that clients already want and need. It’s likely that firms will focus on attracting those clients who need their specialized expertise, rather than trying to be all things to all people. Certainly, firms will want to focus on factors other than size. The ESG initiatives being adopted are likely to attract new clients who share those values. This includes more than just donating time and money; it involves joining forces with groups that get things done. That said, attracting talent can be challenging regardless of firm size—and finding strong lawyers is vital to client growth and retention. More than 65% of lawyers assert that their firms are considering risk-based practices. Peltz notes that institutional constraints may impede the shift from billable hours to risk-based models. For the panel, it seemed unlikely that big firms are willing or able to develop risk-based practices, even though alternative fee arrangements are becoming increasingly common. Ultimately, the growth of third-party litigation funding depends on clients understanding its value. Helping clients consider this option realistically and accurately is of vital importance—especially when funding is an ideal way to meet the goals of clients.  
Commercial

UK Insurer Launches $1 Billion Litigation Finance Firm

Thomas Miller, UK Insurer, has recently acquired the litigation insurance business—TheJudge Group. This merger has launched Erso Capital, a litigation finance firm with a staggering $1 billion in capital, housed within discretionary funds, single managed accounts, and co-investment funds.  Bloomberg Law details that the litigation finance arm will be led by founders from TheJudge Group, including James Blick, Matthew Amey, and James Delaney. It is expected to provide funding in single cases as well as portfolios, and will engage in claims monetization. The Judge Group is known for offering litigation insurance as an alternative to traditional litigation finance. Litigation insurance is often used to cover lawyer fees in losing cases. CEO of Thomas Miller Group, Bruce Kesterson, explains that TheJudge is a respected entity in this industry, and has a top-notch management team.
Announcements

KBRA Assigns Preliminary Rating to Oasis 2021-1

Kroll Bond Rating Agency (KBRA) assigns a preliminary rating to one class of notes issued by Oasis 2021-1 LLC ("Oasis 2021-1"). The notes are newly issued asset backed securities (ABS) backed by litigation finance receivables. Oasis 2021-1 represents the third ABS collateralized by litigation finance receivables to be sponsored by Oasis Intermediate Holdco, LLC ("Oasis") and the first to include Oasis’ MedPort-branded ("MedPort") medical lien receivables. The previous transaction, Oasis 2020-2 LLC, closed on June 2, 2020. Oasis, through its operating subsidiaries, has a long history as an originator, underwriter and servicer of litigation finance receivables. Oasis is a wholly-owned subsidiary of Oasis Parent, L.P. which is majority owned by Parthenon Investors IV, L.P. The MedPort receivables are originated by various originators with operating histories dating back to 2003. Oasis acquired the various MedPort originators on January 5, 2021. The portfolio securing the notes has an aggregate discounted receivable balance ("ADPB") of approximately $139 million as of the statistical cutoff date. The ADPB is the aggregate discounted collections associated with the Oasis 2021-1 portfolio’s litigation funding receivables, litigation loan receivables, medical funding receivables and medical loan receivables. The discount rate used to calculate the ADPB is a percentage equal to the sum of the anticipated interest rate on the notes, the servicing fee rate of 1.50%, and an additional 0.10%. As of the statistical cutoff date, litigation receivables, Medport medical receivables and Key Health medical receivables comprise approximately 36%, 58% and 6% of the aggregate funded amount of the Oasis 2021-1 pool and have average advance to expected case settlement values of 9.5%, 31.6% and 29.5%, respectively. Disclosures Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above. A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here. Information on the meaning of each rating category can be located here. Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com. About KBRA Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
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Commercial

Is the Shell Ruling a Harbinger of More Large Class Actions?

Some say that Britain is in the midst of a third wave of class actions. After the US and Australian markets embraced the practice of collective actions against big businesses and governments, class actions—especially those backed by third-party legal funders—have gained popularity around the globe.

City A.M. explains that some see the combination of claimant firms and litigation funders as having created an exploitative market where businesses find themselves at the mercy of class action claimants. Perhaps what those people really fear is increased access to justice and a fair fight on behalf of those who would previously be steamrolled by huge corporations with limitless resources. A prime example of this is when Shell Oil had to compensate Nigerian farmers for damage resulting from two oil spills.

Fears of large class actions are amplified by COVID, and by the outcry from insurers who assert that they can’t possibly honor all of their policies in the wake of a global pandemic. Complications stemming from Brexit may also bring with them a spate of class actions involving logistical issues. It’s possible that companies will rally together to file a collective claim addressing the impact on their businesses.

Chris Bushell, partner at HFS, warns that a wave of new class actions could be coming. At the same time, others at HFS assert that it’s unlikely that US trends in class actions will repeat themselves in the UK. One main difference between these jurisdictions is ‘opt-out’ (where every impacted class member is considered a claimant unless they specifically ask not to be) and ‘opt-in’ (where claimants must register to become part of the case).

Commercial

Business Challenges of Law Firm Leaders

A recent roundtable of law firm leaders featured a discussion on the most challenging aspects of the COVID crisis. Moderator Christine Azar is a director at Burford and a leading litigator. Participants include Jason Leckerman, Litigation Chair at Ballard Spahr, Jason Peltz, managing partner at Barlit Beck, and Frank Ryan, Global Co-Chair and Co-CEO of DLA Piper. Burford Capital details the main points of the discussion, along with forecasts for the future of Litigation Finance. Frank Ryan began by explaining that first and foremost, safety is everyone’s most pressing issue. Beyond that, responding quickly and effectively for sophisticated clients is more important than ever. Jason Peltz asserted that an unrelenting uncertainty combined with the already tenuous world of high-stakes commercial litigation has engendered a nearly untenable amount of doubt, frustration, and fear. Jason Leckerman agreed and explained that addressing and improving legal tech has made a profound difference in the ability of firms to meet their goals. Participants were not exactly optimistic about a return to normalcy. At the same time, all three expressed pride in the way their firms have adapted and risen to difficult circumstances. Jason Peltz affirmed that client success is indistinguishable from firm success. Firms that evolve, adapt and work together as a team have seen the most impressive results during the pandemic. Frank Ryan is impressed by how quick and agile his team has become, which is a necessary part of staying competitive in this new climate. Jason Leckerman detailed the difficulty in addressing delays, anticipating upcoming challenges, and maximizing the value of existing assets. Ongoing, proactive communication with clients is essential—along with creativity and flexibility in developing cost and fee arrangements. Being able to offer clients value in a climate with some predictability and appropriate risk-sharing is a vital part of successfully meeting client needs in the time of COVID.
Commercial

Third-Party Funding Webinar: Dispute Resolution

As financial uncertainty grows, potential clients of every stripe are looking for ways to finance cases, see their day in court, and improve their bottom line. Legal finance offers a variety of creative solutions to keep balance sheets in the black, and to improve access to justice for those who need it most.

LCM details that Nick Rowles-Davies appeared in a webinar hosted by the UAE branch of the Chartered Institute of Arbitrators. Rowles-Davies began with an overview of litigation funding—specifically detailing the difference between single case funding, class actions, insolvency and liquidation, and portfolio funding arrangements.

Portfolio funding is of particular interest as the fastest growing funding agreement type. Rowles-Davies asserts that corporate clients, in particular, take issue with how funders vet cases.

Legal funding was once predominantly about David v Goliath situations where citizens found themselves at the mercy of corporate or government entities with seemingly limitless funds. But as ‘legal funding’ morphs into ‘providing legal capital’, some fear that average citizens in need might be pushed aside in favor of corporate clients that can ultimately provide larger rewards.

Globally, litigation funding is only increasing in acceptance. Some countries have, or are in the process of creating, new laws to invite and loosely regulate the industry. A few countries are poised to become desirable hubs for international or cross-jurisdictional litigation.

The COVID pandemic has pushed the industry forward in several ways. In the early days of COVID, some corporate clients put cases on hold, fearing that looming budgetary issues could arise. Businesses considering launching a dispute may have decided against it for budgetary reasons. Law firms representing corporate clients share these concerns—all of which have led to a rise in litigation funding.

That trend is expected to continue for many years to come.

Commercial

Mastercard Class Action Set to Return to Court in March

One of the largest class actions in UK history is set to return to court for a hearing next month. Millions of consumers in the UK could see payouts of hundreds of pounds each in an action claiming the credit giant charged unlawfully high fees between May 1992 and June 2008. Money Saving Expert details that law firm Quinn Emanuel launched the action against Mastercard in 2016. The case alleges that in addition to businesses enduring fees, the costs were likely passed on to consumers regardless of what payment methods they used for purchases. As such, anyone over age 16 who made purchases during the impacted time frame is represented in the case, provided they lived in the UK for three consecutive months. The Mastercard case is the first mass consumer claim being brought under the provisions of the Consumer Rights Act of 2015. The case is made possible because of the new collective action regime, and thanks to funding from Innsworth Capital Limited. The funder has pledged GBP 60 million toward the case and will take a percentage of any monies awarded. Mastercard insists that the claim is actually being pushed by US litigators as a money-making scheme. Spokespeople from Mastercard disagree with the claims made and assert that their payment technology has provided benefits to UK citizens. The March hearing will determine if the case will proceed.
Commercial

Steinhoff Shareholders Unmoved by Settlement Offer

Claimants in the Steinhoff class action can’t shake the suspicion that former chair Christo Wiese is getting far more than he should. A proposed global settlement in the class action has Wiese’s recovery rate estimated to be at least eight times more than that of shareholders—and possibly as much as 15 times more. Money Web details that around 20% of the shareholders affirmed their desire to fight the proposed settlement. That number may be growing. The settlement, announced in June 2020, stated that almost GBP 1 billion is available to be allocated among the claimants. The total amount itself is not in question—but the allocation amounts are very much in dispute. If the parties cannot reach an agreement, liquidation could occur—leaving shareholders with very little incentive to move forward. However, the threat of liquidation has not been sufficient motivation for shareholders to accept a settlement they deem patently unfair. It had been thought that Conservatorium’s settlement with Steinhoff would add some degree of certainty moving forward. Conservatorium had, after all, filed at least four challenges to Wiese’s claim against Steinhoff. Instead, the settlement served as a reminder of the difficulty in getting claimants on board with any settlement. Some have speculated that Wiese’s obvious preferential treatment in the proposed settlement is so egregious that claimants would rather risk liquidation than accept it. One sticking point appears to be the dichotomy between contractual claimants like Wiese and his affiliates, and MPCs who purchased their shares on the open market. If the proposal isn’t amended to rectify this imbalance, it’s likely to be formally rejected.