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Harvard Law Students Marlon Becerra and Shao-Jia Chang Selected for Validity Finance’s 2021 Equal Access Fellowship

Leading litigation funder Validity Finance has selected Harvard law students Marlon Becerra and Shao-Jia Chang for its 2021 Equal Access Fellowship. The program, in its third year, provides a 10-week paid summer fellowship to first-year law students of diverse backgrounds.

The Equal Access Fellows spend the first half of their summer at Validity learning basic principles of litigation funding, and the second half working at a legal non-profit of their choice. Validity, which covers Fellows’ salary for the entire 10-week program, is one of the only litigation funders to provide such a program for first-year law students.

Mr. Becerra and Ms. Chang will both work at Validity for the first five weeks of their fellowship, from June 1 through July 3. They will assist in analyzing potential case investments, participating in meetings with claimants and lawyers, and conducting legal research on topics related to litigation and dispute funding. Like many major law firms, Validity is introducing a hybrid return to work, mixing in-person visits to its New York office with remote work, as the rest of its team has been doing in recent months.

“We’re proud to have Marlon and Shao join us as Equal Access Fellows for the summer of 2021,” said Validity Finance founder and CEO Ralph Sutton. “Both have outstanding backgrounds, including personal histories that may not have suggested they’d end up at one of the nation’s top law schools. We’re also pleased to have arrived at a point in the pandemic where we can offer an in-person experience for Marlon and Shao.” The two Fellows were chosen from a pool of 36 applicants from 18 top-tier law schools. Candidates submitted academic transcripts and essays addressing their interest in litigation funding and describing how they have overcome personal challenges. 

Mr. Sutton commented, “Given the past year’s events — pandemic-related and in terms of social justice — there is a heightened need for young lawyers interested in helping to expand equal access to the civil justice system, which is one of Validity’s core mandates as a litigation funder.”

About Equal Access Fellow Marlon Becerra

A native of Jackson Heights, New York, Marlon was the first member of his family to attend college. He obtained his B.A. in Economics from Political Science from Hampshire College and is now a rising second year student at Harvard Law.

Having to return to New York in the middle of his first year of law school, Marlon created an initiative called Civic Engagement and Social Justice for Legal Outreach, Inc. The non-profit teaches New York City high school students of color how to be more proactive leaders in addressing social issues. “As many of the students come from the inner-city, they are particularly interested in addressing the obstacles preventing them from having an equal opportunity to succeed in high school and in college,” he wrote in his personal statement. “I partnered with attorneys from firms across the city to support the students’ efforts to develop and implement campaigns to address their social justice issues.” During the summer of 2020, Marlon worked for the NYC Department of Social Services’ Employment Law Division. As he notes, “I had the opportunity to write a memorandum recommending how COVID-19 guidelines will impact the agencies’ accommodation policies. I saw the importance of considering people’s access to resources and justice, as we focused on urgent issues impacting one of the city’s largest agencies that both hires and serves primarily minority communities.” At Harvard, Marlon is a member and Section Representative of the law school’s chapter of the American Constitutional Society for Law and Policy, which promotes progressive legal change in order to realize economic and social justice. He is also a member of La Alianza, a student-run organization composed of Latinx and Latin American students interested in issues affecting the Latinx community at Harvard Law, and a member of HLS First Class, a student affinity group for first generation law students.

About Equal Access Fellow Shao Chang Shao Chang grew up in a rural Northern California town of only 4,500 residents, where she notes, “few families lock their front doors, and many people proudly leave their keys in the ignition.” She writes of frequent bias against her own parents and her own early struggles with proficiency in English. Shao obtained her B.A. in Psychology and Legal Studies from the University of California, Berkeley, in 2017. She received Dean’s Honors and Highest Honors in Legal Studies, and is a member of Phi Beta Kappa. Following college, Shao spent several years as a field representative and aide for Napa-area Congressman Mike Thompson. She recalled taking on projects and facing circumstances that were considered too difficult to accomplish in rural parts of the district, which included her hometown. Motivated by a desire to increase equity and access, she asserts, “I did not believe that infeasibility is a reason not to try, especially when it came to the neediest area in the district.” 

At Harvard Law, Shao is the External Vice President of the school’s Mock Trial Association and Willem C. Vis Moot Team, and is a sub-citer for the Harvard Journal on Legislation and the Harvard Negotiation Law Review. She is also a member of the Social Committee of the Asian Pacific American Law Students Association at Harvard, a member of the Reproductive Justice Team of the Mississippi Delta Project at Harvard, and serves on the board of the Women's Law Association.

About Validity Validity is a commercial litigation finance company that provides non-recourse investments for a wide variety of commercial disputes. Validity’s mission is to make a meaningful difference in our clients’ experience of the legal system. We focus on fairness, innovation, and clarity. For more, visit www.validityfinance.com

KBRA Assigns Preliminary Rating to TVEST 2021A, LLC Note

Kroll Bond Rating Agency (KBRA) assigns a preliminary rating to one class of notes from TVEST 2021A, LLC, an asset-backed securities (ABS) transaction collateralized by litigation finance and medical receivables serviced by Experity Ventures LLC ("Experity"). TVEST 2021A represents Experity’s second ABS transaction collateralized by litigation finance and medical receivables, following the issuance by TVEST 2020A, LLC in August 2020. Experity, formed in April 2019, is the parent company of the various receivable originators including Thrivest Legal Funding, LLC, a direct to market pre-settlement legal funding company with a history of originations dating back to 2009 and ProMed Capital Venture LLC, a leading medical lien funding company that has been originating since 2017. Experity is also the parent of six other litigation finance receivable originators that were formed in connection with strategic financing and operational partnerships with third parties. The portfolio securing the transaction has an aggregate discounted receivable balance ("ADPB"), of approximately $70.3 million as of the April 30, 2021 cutoff date. The ADPB is the aggregate discounted cash flows of the collections associated with the TVEST 2021A portfolio’s litigation funding receivables and medical receivables. The discount rate used to calculate the ADPB is a percentage equal to the sum of the assumed interest rate on the Class A Notes, the servicing fee rate of 1.00%, and an additional 0.10%. As of the Cutoff Date, medical receivables comprise 56.7% of the portfolio by advance amount and have an average advance to expected settlement case value ("Expected Case Worth Ratio") of 22.84%. Litigation receivables comprise the remaining 43.3% of the portfolio by advance amount and have an Expected Case Worth Ratio of 7.92%.
The Receivables are sold by the various originators, and two special purpose vehicle affiliates, to the seller who then sells the Receivables to the issuer. The Class A and B Notes are issued pursuant to an indenture under which the issuer pledges the Receivables to the trustee. The Class A Notes benefit from credit enhancement in the form of overcollateralization, subordination and a cash reserve account. Click here to view the report. To access ratings and relevant documents, click here. 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.

Delta Capital Partners Management Launches Delta Defense Solutions – Lit Fin Industry’s First Comprehensive Set of Funding and Risk Mitigation Solutions for Defendants and Respondents

Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, is pleased to announce the launch of a new venture, Delta Defense Solutions ("DDS"). DDS offers defendants and respondents funding to pay the legal costs associated with their defense, including professional fees, experts, tribunal costs, and the cost of any utilized risk mitigation solutions. Much like a typical plaintiff-side litigation funding arrangement, Delta typically provides DDS solutions on a non-recourse basis such that if the defendant loses then it is not obligated repay Delta its capital investment. There are many ways that defense solutions can be structured, and each solution offered through DDS is unique and highly customized. Defense solutions are quite versatile and can be used by a range of defendants and respondents, including those in cost-shifting jurisdictions and whether involving court-based litigation or arbitration. Defendants benefit from DDS by obtaining funding and gaining access to risk mitigation solutions that otherwise may be very difficult and/or costly to obtain, including customized insurance solutions and structured financial products offered through Delta's venture partners.  Additionally, if a party is involved in multiple pieces of litigation (whether as a defendant, respondent, or plaintiff), then DDS offers portfolio financing solutions that provide more favorable terms compared to individual case funding arrangements for defendants or plaintiffs. Christopher DeLise, Delta's Founder, CEO, and CO-CIO, stated, "Delta's years of experience and success with offering litigation funding solutions for plaintiffs has enabled Delta to develop proprietary solutions for defendants and respondents.  By partnering with top-tier insurance and structured finance professionals, Delta is pleased to be able to offer bespoke, comprehensive, cutting-edge defense solutions across the globe.  As the market continues to evolve, we believe defense-oriented legal finance solutions will become very popular and we are proud to be the first in the industry to offer a comprehensive set of funding and risk mitigation solutions for defendants and respondents." 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.

Appeals Courts Clarify Litigation Funding for Bankruptcy

At present, the United States has about 40 litigation funding entities actively funding cases. Assets under management are estimated to be close to $10 billion. In the bankruptcy arena, some say legal funding isn’t growing. But there are two recent appeals court decisions that may change that. Pullman & Comley detail the two relevant appeals decisions. First, Dean v Seidel, in the US District Court for the Northern District of Texas. Courts approved a legal funding agreement where $200,000 was given to a trustee to prosecute claims. The recovered funds would be distributed in order: trustee commission, reimbursement of the advancing creditor, a 30% return on investment, and finally the balance would go to creditors. The arrangement was challenged as unfair to creditors, as one would receive a larger share, and again because the recovery was not strictly for the benefit of the estate. Courts were unmoved by these arguments and pointed out that the trustee did attempt to reach an agreement on a contingency fee arrangement, but was unsuccessful. Ultimately a lack of applicable case law meant that despite legitimate concerns in regard to ethics, there was no actual wrongdoing. In another case, Valley National Bank v Warren, funders sought to finance litigation against the bank for its role in fraudulent transfers, and for aiding and abetting breach of duty. Courts approved what many considered an unusual funding agreement in which funders would cover monthly expenses, and would later be reimbursed plus a whopping 85% of any recovery. The bank objected to the agreement, saying it would hinder efforts to liquidate and negotiate a settlement. The appeals court held that the bank did not have standing to appeal, and that in fact, the bank was not aggrieved because it wasn’t directly impacted by the approval of the agreement. In all likelihood, litigation funding in bankruptcy will increase in usage.

How Might Cryptocurrency Impact Litigation Funding?

It was big news last year when Ava Labs debuted an ILO or Initial Litigation Offering. The ILO was released through the open-source platform Avalanche. Without going into minute details, Avalanche provides the ability to connect existing blockchain platforms into a single ecosystem in which digitized assets can be bought, sold, or traded. FRT Services details that these ILOs are similar to better-known Initial Coin Offerings. But instead of being applied toward digital coins or services, ILOs are used to directly fund litigation. In essence, it’s a micro-investment in a lawsuit. Ava Labs is currently working out the regulatory details. How might this impact the industry on the whole? For starters, micro-investors will likely choose cases to fund based on trends or subjects rather than by the individual merits of a case. ILOs might also lead to more funded cases with a larger funding pool. For now, all eyes will likely be on the first ILO-funded case, Apothio LLC v Kern County et al. Time will tell how blockchain impacts litigation funding on the whole.

Harbour Founder Discusses Litigation Funding Trends

Susan Dunn, a founder at Harbour Litigation Funding, recently gave a wide-ranging interview discussing pertinent issues regarding Litigation Finance, including global trends, the debate over value, defendant-side funding, and more. HFW Litigation had an array of relevant questions for Dunn. The topic of cross-jurisdictional litigation came up early, as Harbour alone funds in 17 jurisdictions and growing. Dunn is even in talks with a nation state looking to utilize funding to recoup capital that has left the country. Brazil, for example, is considered to be an up-and-coming growth area for legal funding. Portfolio funding is still growing in usage and remains one of the more flexible, adaptable funding models. Dunn explains that while legal funding is discussed as a way to get legal matters off company balance sheets, that isn’t what she sees in her work. Dunn also expressed that the discussion of value needs to be more common and possibly more forceful. Ultimately, legal funding has to make money for investors. Dunn explained why Harbour doesn’t fund much arbitration, saying that results are often “mixed.” She states that Harbour has done better in courts than in arbitration. And of course, appeals aren’t an option in arbitration cases. Insolvency is on everyone’s mind since COVID, but Dunn states that these cases will take longer than expected. When contracts are canceled, for example, it’s because of an inability to pay. Such defendants aren’t good choices for funders—since there’s little chance of recovering an award even with a winning case. A ‘good case’ is only good when defendants have assets. In the coming years, Dunn suggests that law firms will need to improve their tech for better data management and analysis. 
Litigation Finance News

Australia: The Evolution of a Litigation Finance Market

On Tuesday, June 15th, 6pm EST, Litigation Finance Journal is hosting a roundtable discussion on the evolution of Litigation Finance in Australia. Topics will include the increasing threat of industry regulation, the Joint Parliamentary Committee's perspective on litigation funding and class actions, how Australia may serve as a blueprint of sorts for global jurisdictions including the US, UK and EU, and the structural and cultural differences inherent to running a litigation funding firm in Australia.

As followers of the lit fin industry are well aware, Australia is the nation where Litigation Finance was born. The funding industry has come a long way since then... so far, in fact, that there is increased talk of regulation given the massive class actions that are taking place. But will such regulation be fruitful or counterproductive? And what about the many benefits Litigation Finance brings to Australian society, such as increased access to justice and a more robust legal landscape?

Hear from prominent founders and CEOs of major Australian-based litigation funders, including Omni Bridgeway, LCM and CASL, as they discuss the evolution of the Litigation Finance market in Australia, as well as the lessons other jurisdictions such as the US, UK and EU can learn from Australia.

This is a can't miss digital event!

  • When: Tuesday, June 15h, 6pm EST (Wednesday June 16th, 8am Sydney time).
  • What: Panel discussion and Q&A with attendees. Audio-only event.
  • Who: CEOs and Founders from three major Australian litigation funders.  

This 1hr and 15min event will be recorded, and all ticket holders will receive a recording of the event. So if you can't make the time, you can still access the conference!

The event will be moderated by Ed Truant of Slingshot Capital

For more information and tickets, please visit this link.

We hope you enjoy! - The LFJ Team

LIDW Looks at Litigation Funding and Class Actions

London International Disputes Week 21 includes numerous discussions on dispute resolution. This year’s theme, Looking forward: Change, Challenge, and Opportunity, encapsulates how the legal and financial worlds have had to adapt to a rapidly changing landscape. LIDW2021 details that Tuesday’s sessions included a variety of relevant topics, from collective redress and class actions to litigation funding and the agreements that govern them. The group brought attention to some of the recent innovations the industry has made, including those pertaining to class actions. These include leveraging tech to sort through potential claimants, enabling similar smaller claims to share costs and risks, and opt-out provisions. The group discussed the recent Merricks vs Mastercard case, which led to a landmark judgment for consumers. The discussion featured Boris Bronfentrinker of Quinn Emanuel. This case, Bronfentrinker explained, ignored other classes of consumers—such as intermediate purchasers. While dissecting the issues, Bronfentrinker suggested that courts should develop the common law while innovating and adapting—but in an incremental way. Hausfeld’s Lucy Pert explained why litigation funding is unlikely to result in a glut of frivolous lawsuits. Adverse costs orders will dissuade some, but overall, funders aren’t interested in bankrolling frivolous lawsuits. Insurers are also unlikely to offer coverage for such suits. David Walker of Deminor, in his speech, juxtaposed the altruism of increasing access to justice with the pragmatism of the need to make money for investors. As he explains it, the goal is to use economic know-how to develop funding models that work for funders, lawyers, and clients. The session wrapped with an enthusiastic defense of Damages Based Agreements, and a generally positive tone about the future of Litigation Finance.

Legal-Bay Reports Class Action Filings in Peloton Treadmill Defaults

Legal-Bay, The Pre Settlement Funding Company, reports an update in the lawsuit filings against exercise equipment company, Peloton. Class-action suits have been filed in courts of both the Northern District of California and Eastern District of New York; as a result a recall has been initiated on the Tread+ model treadmill. Peloton's exercise machine is allegedly responsible for accidents involving pets and children. The high-end treadmill company is being accused of fraudulent advertising, as the images in their media and print ads show young children near the machines, indicating the product was safe for use around them. However, according to the lawsuits, pets and children can easily be trapped underneath the treads causing injury, and in one case, even death. Legal-Bay is prepared to assist with the numerous Peloton plaintiffs who may be seeking settlement loans. They are considered one of the best lawsuit loan funding companies in the industry, and offer a lightning-fast approval process. Chris Janish, CEO, commented, "We are deeply concerned with the injuries that the Peloton treadmill can cause.  As a result of the recent recall, Legal-Bay is actively considering cash advances for plaintiffs on select cases at this time." If you're a plaintiff involved in an active Peloton injury lawsuit and need an immediate cash advance against an impending lawsuit settlement, please visit Legal-Bay HERE or call toll-free at 877.571.0405. Legal-Bay remains dedicated to helping clients with their Peloton injury claims. Any new clients that need cash now can apply for loan settlement funding to help get through their financial crises. Legal-Bay funds all types of loans for lawsuits including car accidents, personal injury, medical malpractice, and more. Legal-Bay's settlement loan funding programs are designed to provide immediate cash in advance of a plaintiff's anticipated monetary award. The non-recourse law suit loans—sometimes referred to as loans for lawsuit or loans on settlement—are risk-free, as the money doesn't need to be repaid should the recipient lose their case. Therefore, the lawsuit loans aren't really loans, but rather cash advances. To apply for a loan on lawsuit now, please visit the company's website HERE or call toll-free: 877.571.0405 where agents are standing by.