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Commercial

What Will We Learn from the New Jersey Disclosure Rule?

On June 21st, Local Civil Rule 7.1.1 went into law. Signed by Chief Judge Freda Wolfson, it requires disclosure of third-party funding in New Jersey. Currently pending cases will be given 45 days to submit disclosure that includes names and addresses of third-party funders. If they are legal entities, their place of formation is required as well. Above the Law explains that the required disclosure includes a description (but not the actual funding agreement) of the funder’s interest, and whether or not funder approval is needed for decisions related to litigation or settlement. After this, additional discovery may be required on a case-by-case basis. Some say there is a need for this new rule because of the potential ethical concerns in litigation funding. Conflicts of interest, questionable fee-sharing, and a fair distribution of knowledge surrounding the case and participants are all cited as good reasons for the new rule. But what will it really accomplish? Marla Decker, managing director of Litigation Finance firm Lake Whillans, acknowledges the importance of avoiding conflicts and not allowing funders to control litigation. But she maintains that funders routinely or inappropriately controlling litigation is just not happening. Claimants, as one might imagine, are not keen to give up control over litigation strategy or the terms of a potential settlement. It’s likely that the outcome of this new law will be that courts will see that litigation funding is an above-board practice with a strong ethical foundation. Decker expresses concern, however, that the new rule could result in a spike in unnecessary and even onerous discovery. She explains that it makes more sense for courts to address discovery on a case-by-case basis. Disclosure is a regular part of cases, and devising a one-size-fits-all regulation is counterproductive and potentially damaging.  
Commercial

Legal Equity Partners Acquires JustKapital Litigation from Law Finance

LawFinance recently announced the completion of the sale of its litigation funding arm—JustKapital Litigation—to Legal Equity Partners Pty Ltd. Lawyers Weekly reports that the sale, which was announced in January and approved by shareholders one month ago, is a step forward in de-risking the company. The company stated that it experienced a lower probability of recovery than expected. As chief executive Daniel Kleijn explains, the sale will ensure that LawFinance can continue focusing on aspects of the business that generate the strongest returns for shareholders. LawFinance plans to continue pursuing active cases.
Commercial

Hedge Funds and Burford Capital

A decade ago, all eyes were on hedge funds as they were believed to be the most shrewd investors. After a decade of sub-par returns, that reputation has soured somewhat. Still, hedge funds currently maintain over $3.5 trillion in assets under management.   Yahoo! Finance reports that Burford Capital found its way into the portfolios of six different hedge funds as of the end of Q1 2021. But at the end of December 2020, that number was seven. In fact, recent calculations suggest that Burford isn’t even in the top 30 most popular stocks among hedge funds. How serious is that? And what does it say about Burford? Several hedge funds remain confident that Burford's stock is a good buy. These include Orbis Investment Management, as well as Arrowstreet Capital, Springhouse Capital Management, Glendon Capital Management, and Citadel Investment Group. Still, there has clearly been a dulling of Burford’s shine among prominent hedge funds. Total hedge fund stock holdings in Burford decreased 14% from the fourth quarter of last year. Hedge fund interest in Burford is still well below average. With that in mind, Burford receives a hedge fund sentiment score of 32.3, which ranks similarly valued stocks based on their relative hedge fund positions, present and past. It’s worth noting that since the end of the first quarter, Burford stock returned 19.4%. Several smaller hedge funds bet on Burford with great results—since it outperformed the market by a significant margin.
Commercial

Burford Responds to Proposed Fee Cap for Litigation Funders

One would think that if new laws are being created to regulate an industry, prominent members of that industry would be consulted. That doesn’t seem to be the case regarding Australia’s proposed law that would place an arbitrarily determined cap on fees for law firms and litigation funders in class action cases. Burford Capital took the opportunity to respond to the proposal, pointing out that the proposal itself is not based on existing data or case law. Capping fees, Burford explains, will lead to cases being settled for less than their true value. Burford also points out that the costs and subsequent risks of class action cases in Australia often necessitate the use of litigation funding. The practice is a vital part of securing access to justice for those who can afford it least.
Commercial

Inheritance Funding Simplifies the Probate Process

When a loved one dies, thinking about money may be the last thing on anyone’s mind. But it may also be an introduction to the complex and time-consuming world of probate. MONDAQ Canada details that even a simple inheritance claim could take months or longer to be resolved, not including time to transfer property and assets. The process can also be expensive, necessitating legal fees, new taxes, accounting services, and maintenance of properties. BridgePoint, a third-party legal funder, now offers an inheritance loan. This is short-term funding that’s available quickly to help manage an estate until a payout can happen. Trustees and beneficiaries may be eligible for this type of funding. Such a loan can relieve a lot of pressure and worry from an already emotionally draining situation. Cindy Williams, VP of BridgePoint Financial, explains that even when entitlement for inheritance is clear, the timeline may not be. Inheritance funding can give everyone room to breathe.
Commercial

Nanoco Litigation Against Samsung Continues

Nanoco Group recently released an update in their legal action against tech giant Samsung. The suit alleges the willful infringement of Nanoco IP. The patent infringement suit was filed against multiple Samsung entities in February of last year. Nanoco has accepted financial assistance from a third-party litigation funder in order to pursue the case. Directors Talk Interviews explains that an inter partes review, or IPR, is a standard facet of intellectual property infringement cases. The Patent Trial and Appeal Board for the Eastern District of Texas Court instituted IPRs on all five patents relevant to the case. There is a predetermined timeframe for these reviews, which means a decision should be reached and released before May of next year. Nanoco has petitioned the court to wait until after the IPR decisions have been made before moving forward with a trial. Brian Tenner, CEO of Nanoco Group, has affirmed that the company must win the trial and the IPRs to achieve success here. He remains confident in the merits of the case. Tenner also detailed that support from shareholders, along with the involvement of a third-party litigation funder, is a key factor in Nanoco’s ability to pursue the case while maintaining normal business operations. IP litigation is a common investment for legal funders due to the potential for high payouts.
Announcements Commercial

Liti Capital Announces Identifying Information of Their First Crypto Con Artist

Geneva, Switzerland – June 29, 2021 – Liti Capital SA, a Swiss Litigation Finance company, has just found and identified the perpetrator of a cryptocurrency scam. This comes days after their commitment to push back against fraud in the crypto community and help create a safe atmosphere for innovation and investment moving forward. By tokenizing their equity, Liti Capital introduces litigation finance to the blockchain, providing retail investors with a new asset class and giving them the opportunity to fight back against crypto criminals.
Joel “Coach K” Kovshoff, a popular cryptocurrency influencer, was recently the victim of an elaborate con, resulting in the loss of $250,000 for himself and his investors. This is a common story in the crypto community, and the victims are rare to voice their misfortunes, particularly if they live in the public eye and their income is contingent on their reputations. As one of the few public figures to announce this potentially embarrassing story, he was able to catch the attention of Liti Capital through their mutual contact, Kurt Ivy at Splyt. The con artist used a unique tactic: he created a fake identity, complete with documentation, did extensive research on “Coach K,” and found him in public to slowly befriend him over time. This is how he was able to gain trust and eventually walk away with the money. He directed Joel to JD Capital, with whom Joel has worked with before, about a fund of CertiK he could purchase. After some more convincing, Joel paid the cost of the CertiK and waited for a response that did not come. However, the con artist may not have been as sophisticated as it seems. “These guys are acting with complete impunity,” David Kay, international litigator and CIO of Liti Capital said, “They’re so sure they won’t get caught that they don’t even cover their tracks. They don’t think anyone’s coming. Well, we’re coming.” Joel Kovshoff had given the con artist a chance to return the money, plus interest, before taking legal action. Liti Capital is on standby with a powerful team that has seen worldwide success. “The same tools we deploy to investigate international cases are the ones we will use to identify and pursue crypto scammers,” Jonas Rey, Co-Founder and Managing Director said, “My team of investigators and intelligence officers have found the con artist in question, his personal information, where the money is, and have engaged with counsel and security at his location. We will give him the weekend to reach out to us.” Liti Capital launched the LITI token yesterday, Thursday, June 24, 2021, at 11:59 PM EDT, and the wLITI on Tuesday, June 29, 2021 at 6:00 PM EDT. The LITI token will be available for purchase on their website after passing KYC requirements. The wLITI will be available to trade for on Uniswap. About Liti Capital Liti Capital is a Swiss Limited Liability Co specializing in Litigation Finance and FinTech based out of Switzerland. Liti Capital buys litigation assets to fund lawsuits and provide a complete strategic solution along with connections with the best law firm to help its client win the case. Tokenized shares of the company lower the barrier of entry for retail investors, give token holders a vote in the decision-making process, and distribute dividends to token holders upon the success of the plaintiff. Co-Founder Jonas Rey heads one of the most successful intelligence agencies in Switzerland, Athena Intelligence. His two co-founders, Andy Christen and Jaime Delgado bring operational, innovation and technical skills together to round out the leadership team. David Kay, CIO, ran a billion-dollar NYC private equity litigation finance firm before joining Liti Capital.
Commercial

The Tom Girardi Saga Continues

Remember the lawyer from Erin Brockovich? He married a former cocktail waitress. They bought multiple luxury houses and two private jets. If that sounds like the sensationalized stuff of reality TV, that’s because it is! The Girardis eventually wound up on The Real Housewives of Beverly Hills. So what happened? Institutional Investor details that Girardi applied for, and received, a loan of over $5 million from an Arizona-based litigation funder—Stillwell Madison. Ostensibly, the money was to be used for cases against Shell Oil, Eli Lily, GlaxoSmithKline, and others. If the cases made money, a portion was to be paid to the funders under the terms of the funding agreement. Instead, Girardi’s firm defaulted on their payments to the funders. Eventually, Girardi’s firm made a payment deal with Stillwell Madison, though Girardi neglected to mention that he had defaulted on another funding agreement with a different funder—Law Finance Group. Later, Girardi allegedly stiffed at least ten families in a case against Boeing. The families had lost loved ones in the Lion Air Flight 610 crash. As lawsuits for non-payment flooded in, it came to light that Girardi had taken out multiple loans—often reusing the same collateral. Erika Girardi filed for divorce against her husband in late 2020, just before Jay Edelson filed to sue both Girardis, the firm Girardi & Keese, and two litigation finance firms among others. Edelson alleges that Girardi has embezzled settlement proceeds that rightly belonged to clients so that he could continue to fund an absurdly lavish lifestyle. Stilwell Madison and California Attorney Lending, two litigation funders named in the suit, are accused of structuring an intercredit agreement among themselves. Erika Girardi remains on the reality series and affirms that she had no idea that her husband embezzled funds from anyone.
Commercial

How Litigation Funders Price Based on Risk

Critics of Litigation Finance appear to be celebrating Australia’s proposed cap of 30% on potential returns for litigation funders. It’s hard to argue that such a move would not have enormous, industry-wide consequences. Some say it’s ‘unfair’ for funders to reap high profits while claimants, who were actually damaged by the factors in their cases, receive a paltry sum. But who is really taking on the most risk? Dispute Resolution Blog details what it describes as the ‘real’ value of risk in litigation finance. It also reveals that when educating the public about the benefits of litigation funding, funders failed to impress upon consumers the reasons that lead to litigation funds being priced as they are. Commonly, prices are structured as either a share of the award (usually 30-40%) or a multiple of the capital provided (usually about 3 times). While this might seem high to the uninitiated, this is the same basic pricing structure that was used during the development of litigation funding in the 90s. There are two main approaches to pricing litigation funds: Capital Structure Pricing and Probabilities Pricing. Capital structure pricing is similar to basic accounting, where assets and liabilities are matched. Liabilities are tiered from cheapest to most expensive—starting with senior debt and ending with equity. This model is not unlike getting a good interest rate due to a lifetime of good credit. Someone without any credit could not get that rate because they’re considered inherently riskier. Probabilities pricing is a more academic pricing philosophy basing the cost of the funds on the probability of success. That means occasional losses are factored into the costs of the funding deployment. Time is also a factor since it can be years between deploying funds and receiving an award. Ultimately, the funding industry would do well to be more transparent not just about funding agreements, but about how current pricing is calculated.