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Commercial

Leveling the Playing Field with Litigation Finance

It is well understood that Litigation Finance offers plaintiffs a means to pay legal teams, experts, researchers, and others who can make or break a legal matter. But what else does third-party litigation finance accomplish? Hedgeweek explains that when third-party legal funding is used by plaintiffs, its presence can change the way that case strategies are formulated by the defense. In a David v Goliath-style case, a well-monied defendant may choose to drag a case out until a plaintiff of low means runs out of funds. Litigation funding prevents that scenario, by creating a level ground for a more fair legal proceeding. Ultimately, litigation funding is a net gain for the community at large since it holds corporations responsible when they’re not meeting environmental standards. This is true regardless of jurisdiction—though the venue in which a case is tried can have a significant impact on how litigation funding is viewed. Disclosure and transparency, security for costs, and even the funding agreements themselves may have different applicable laws depending on where a case is being heard.   For investors, returns from a legal finance investment can be very high. At the same time, time frames are unpredictable and there’s always the risk of losing a case—and therefore one's entire investment. Despite these risks, Litigation Finance remains a profitable and socially responsible investment.
Commercial

Litigation Funding a Decade From Now—What Can We Expect?

Litigation Finance has changed dramatically in the last decade-plus. Boosted by a global health and financial crisis, third-party legal funding has risen to the occasion with spectacular adaptability. But as regulations evolve and societal understanding of the practice grows—how will that impact the industry in the years to come? Validity Finance shares several viewpoints on what we can expect in the next decade of Litigation Finance. Managing Directors of Berkeley Research Group suggest that law firms will increasingly have their own funding arms. These are likely to include single case funding as well as portfolio arrangements. It’s likely that future cases will inspire new regulations that will impact the industry in several jurisdictions. Erika Levin of Fox Rothschild suggests that advancements in legal technology and expanded use of AI will lead to greater sophistication in the industry. She anticipates increased uniformity across jurisdictions regarding disclosure, fee-sharing, conflicts, and security for costs. What about case size? As more people discover the benefits of third-party funding, and with boutique funding entities popping up all over the globe—cases that were once considered too small to fund are now receiving interest from funders. Lucian Pera of Adams and Reese expects that trend to continue. No doubt, smaller cases being funded could lead to an explosion of new requests for funding. Validity Finance Investment Manager William Marra anticipates even more widespread use of legal funding in the coming years. While a decade ago, most people hadn’t heard of the practice—ten years from now it will be an expected feature of the legal system. Marra expects that even large firms still clinging to the hourly fee model are likely to make more use of legal funding. Will litigation funding gain wider acceptance, or be subjected to increased regulations in the next decade? The correct answer is likely a combination of both.
Commercial

Therium Funds Norwegian Class Action

A class-action lawsuit against Sector Alarm and Verisure accuses the companies of over billing customers to the tune of NOK 1-2 billion. Norway Today explains that the suit, with support from third-party funder Therium Group Holdings, could represent about 400,000 consumers. The case comes after both companies were fined NOK 1 billion by the Norwegian Competition Authority. Therium has been operating in Scandinavia as Therium Nordic AS since 2016.
Announcements Commercial

Delta Capital Partners Announces the Expansion of the Global Asset Recovery Consortium into India

Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, has announced the expansion of the Global Asset Recovery Consortium (the "GARC" or "Consortium") to provide bespoke litigation finance and asset recovery solutions for projects having an India nexus ("GARC India"). Building on its experience providing a solutions-based funding approach for such claims, Delta has formed GARC India and is adding Darshan Hiranandani of the Hiranandani Group, a leading Indian company with expertise in large-scale technology, real estate and investment projects to the Advisory Board of GARC.  Through GARC India, the members of the Consortium will be able to better service the needs of claimholders in India and elsewhere that desire to pursue asset recovery or litigation with an India nexus. GARC India will offer state-owned enterprises, government agencies, banks, investment funds, and businesses a complete solution to enable them to pursue asset recovery projects and/or litigation having an India nexus, including:
  • In-Bound Work - Claimholders outside of India that seek to recover assets within India and/or pursue litigation against parties in India; and
  • Out-Bound Work - Claimholders in India that seek to recover assets outside of India and/or pursue litigation against parties outside of India and/or in foreign jurisdictions.
The Consortium will typically be engaged by claimholders to undertake work on a purely success fee basis, meaning that such claimholders would pay nothing unless and until a successful outcome is achieved, in which case the Consortium receives a negotiated percentage of the fair market value of the successful recovery or litigation.  In connection with such engagements, the Consortium will work with prominent Indian law firms for the provision of legal services to claimholders on a case-by-case basis, with such arrangements and the professional fees paid thereunder being separate from success fee arrangements between the Consortium and the claimholders, consistent and compliant with Indian law. In addition to Delta, GARC India is comprised of top tier professional service firms, including law firms, investigators, forensic accountants, public relations professionals, government relations specialists, and consultants, each of which have many years of experience pursuing litigation, arbitration, and/or enforcement actions across the globe, and all of whom are respected leaders in their field.  GARC India consists of the following members:
  • Aarna Law LLP – a boutique Indian law firm that delivers quality and excellence in specialized areas of the law. The firm works on litigation and transactions within India that the Consortium undertakes.
  • Delta Capital Partners Management LLC – is the lead funder and project manager for the Consortium.
  • DLA Piper LLP – is the Global Lead Legal Counsel for the Consortium.
  • FTI Consulting (SC), Inc.– is the Global Lead Media and Public Relations Firm for the Consortium.
  • KPMG Assurance and Consulting Services LLP – is the Global Lead Forensic Accounting Firm for the Consortium.
  • Mintz Group LLC – is the Global Lead Investigative and Intelligence Firm for the Consortium.
  • Shardul Amarchand Mangaldas – a full-service law firm that is one of the largest in India, known globally for its work in dispute resolution and arbitration and regulatory litigation. The firm handles Indian litigation and transactional work for the Consortium.
  • WestExec Advisors LLC – the Global Lead Geopolitical Firm for the Consortium.
Christopher DeLise, Delta's CEO and Co-CIO, stated, "Delta is very pleased to be launching the India initiative of the Global Asset Recovery Consortium, where extensive regulatory change has led to the encouragement of third-party funding in-country.  Litigation finance is a young industry in India, and Delta believes that the Consortium will be able to service a relatively untapped and growing litigation finance market, as well as other markets across Asia, and thereby allow claimholders within and outside of India to pursue their claims having an Indian nexus with much greater confidence.  The Consortium's work will be invaluable in enabling Indian and non-Indian claimholders alike to obtain fully-funded, bespoke recovery and litigation solutions for projects having an India nexus.  This should in-turn materially increase the likelihood that their projects will be successful and that they will obtain justice for the harm caused them." For additional information about the Consortium, GARC India, or its members, please visit www.theglobalarc.com or call +1(312) 414-0840. 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.
Commercial

Shariah Compliance in Litigation Finance

The use of third-party legal funding is gaining acceptance around the world. In the Middle East, both civil and Shariah jurisdictions exist. This implies various concerns in regard to ensuring that legal funding is Shariah-compliant. Omni Bridgeway explains that transferring legal risk in a Shariah-compliant manner is something participants and the institutions that serve them will need to be aware of when investing in this region of the world. So, what are the essential principles of sharia-compliant finance? Islamic Business Transactions must meet these conditions:
  • The transaction cannot involve charging or paying interest.
  • A valid contract must contain an offer, an acceptance of that offer, a record of the parties involved, and the stated purpose of the contract.
  • ‘Uncertain’ transactions must be avoided—which can include allegations of fraud.
  • The matter at hand must be lawful in accordance with Islamic law.
Because litigation funding is a net gain for the communities it serves, the Shariah law “Maslahah” can apply to its use. This law determines whether or not something is permissible based on whether it is beneficial to the Muslim community. Of course, Shariah Law prohibits gambling—which it defines as the gaining of wealth by chance or financial gain without effort that comes at the cost of another. This facet of Shariah impacts how funding agreements can be worded to keep them compliant. This can involve two structure types for agreements:
  1. Mudarabah, in which capital is provided, and then a strategy is developed for its recovery.
  2. Musharakah is similar, but involves both parties making an investment in the outcome.
By taking these structures into account, and carefully wording a funding agreement to avoid violating any of the aforementioned conditions, litigation funding can become Shariah compliant.
Commercial

Kenneth A Brause Becomes New CFO at Burford Capital

Kenneth A Brause, a 35-year veteran of the financial services industry, has been appointed the new CFO of Burford Capital. He’ll be fulfilling his duties in the New York office after a three-month period where the current CFO, Jim Killman, will aid in the transition. Monitor Daily details that Brause emerged as the best candidate after a months-long search to replace Killman. Brause’s previous experience includes executive positions at CIT Group, OnDeck Capital, American General, Bankers Trust, and Bank of New York. Christopher Bogart, CEO of Burford Capital, expressed confidence in the hiring choice. He stated that Burford is sure to benefit from Brause’s wealth of expertise.
Commercial

Wivenhoe Dam Class Action Impacts Omni Bridgeway Stock Price

Speculation is rampant that a recent 5.6% drop in Omni Bridgeway stock was precipitated by a partial settlement in the Wivenhoe class action. The funded case, which involved over 6,500 claimants, sought damages of roughly $880 million. Defendants included the Queensland government, and two state-owned companies: Seqwater, and Sunwater. The Motley Fool explains that the announced settlement represents half of the case. State of Queensland and Sunwater have settled, while Seqwater has not. That portion of the case is expected to go to court later this month. New South Wales supreme court approved the settlement, which is now unconditional. While appeals could still be made, a spokesperson for Omni Bridgeway stated that this was unlikely. As the funding provider for the class action, Omni Bridgeway will receive $30 million from the settlement. Depending on what happens with the other half of the case, Omni Bridgeway’s share may change. The funder remains optimistic that the case will come to a favorable conclusion. Shares of the ASX-listed company are down roughly 20% on the year.
Commercial

Key Takeaways from The LFJ Podcast with Ben Moss, Portfolio Advisor at Orchard Group

The latest episode of the LFJ Podcast features Ben Moss, Litigation Finance Portfolio Advisor at Orchard Group. Ben discussed the benefits of Orchard's asset manager model, how Orchard is approaching the market, the types of claims it is looking to fund, and outlined his predictions for the industry as the global legal landscape emerges from COVID-induced lockdowns.  Below are some key takeaways from the episode, which can be found in its entirety here.  LFJ: Let’s start by discussing Orchard’s foray into Litigation Funding. When did Orchard first enter this space? Why don’t you tell us what the investment strategy is, and how that strategy has evolved over time? BM: Sure. Orchard was founded back in 2005, and has a presence not only in the UK but also across North America and Singapore, and currently has assets under management of around six and a half billion US dollars. Since its inception, the business has consistently demonstrated very strong performance across its multiple funds. And that meant it really was an attractive platform from which to launch a dedicated Litigation Finance strategy as part of its existing specialty lending business. It did that in late 2015. Since then, we’ve invested in more than 100 opportunities across the UK, the US, mainland Europe, and Australia.  Our approach is really very finance-led. These are financial products to us at the end of the day, but of course this approach is then coupled with legal analysis and deal structuring expertise. What we’re committed to at Orchard, is we want to build a portfolio that is diverse, that’s granular but also that is grounded in these financially driven insights into the investment selection and the overall portfolio design. We also believe that funding these mid-market-sized claims ensures quite a highly diversified portfolio of assets. Because it consists of a large number of separate claims.  LFJ: Broadly speaking about the industry itself, this is a very crowded space right now...how is Orchard positioning itself within that market? What is the differentiation strategy?  BM: Good question. It’s definitely getting more crowded. One way of looking at it is to say that growth increases competition, innovation, they’re all linked. So new entrants don’t necessarily concern us. Actually we would say they’re symptomatic of an attractive industry and perhaps one that’s yet to reach its peak.  In any event, we hope that we are uniquely positioned in the market as a multi-strategy asset manager with its own dedicated and well-established Litigation Finance team. If I can just highlight a few elements of our offering that I think are relevant:
  • Firstly, one big differentiator is that we can point to our existing and very positive track record. Our experience in the market over the last five years or so has allowed us to establish a reputation in providing innovative financing solutions to claimants, to law firms, and also to develop very strong origination networks.
  • We lead with the finance-forward approach that I’ve spoken about in my response to the first questions. And that’s perhaps different to the strategists on the dedicated pure play litigation funders, founded by litigators rather than finance professionals. I have a financial background myself which postdates my initial legal practice.
  • We also have access to top-tier financial instruction expertise at Orchard as part of the wider business. If you combine that mindset with the legal expertise of our team, we think we can bring an unparalleled mix of both the financial and legal expertise to each case that we consider for investment.
  • Finally, repeat business is important to us. It represents roughly 70% of our claim origination. It’s so important to us to focus on these strong, sustainable, and collaborative relationships with law firm partners and also with our co-funders.
LFJ: The previous guest on our podcast, Elana Rey of Brown Rudnick, is working on standardizing documentation for litigation funding agreements for the UK and also the EU. So I want to get your take on this as a UK-based funder. What is the need for standardized documentation? How helpful will something like that be in optimizing the funding process and potentially bringing down costs as well? BM: I enjoyed listening to that episode. Of course I would absolutely support any move toward transparency to assist claimants in understanding the operation and the effect of the funding arrangement. I think Elena said that the model documents hadn’t yet been produced, that they were on call for Q2 this year. As Orchard is not part of the Working Group, I can’t comment on any working draft. But in our industry, the funding and security arrangement are typically concluded in advance of the claim, and in some cases they may not be referred to for four to five years afterward. In the most basic single case financing structure, there are already three counter-parties: funder, claimant, and lawyer. It’s just not helpful for anyone to be scrutinizing an opaque funding agreement years later. There’s plainly a requirement for clear drafting that insures that you capture the rights and obligations of each party clearly at the outset.
The LFJ Podcast
Hosted By Ben Moss |
In this episode, we speak to Ben Moss about Orchard Group's foray into litigation funding. We learn what benefits the asset manager model offers in the commercial litigation funding sphere, how Orchard is approaching the market, the types of claims it is looking to fund, and what Ben's predictions are for the industry as the global legal landscape emerges from COVID-induced lockdowns. [podcast_episode episode="7824" content="title,player,details"]