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Announcements Commercial

Siltstone Capital Raises Initial Litigation Finance Fund

Siltstone Capital, LLC ("Siltstone"), a Houston, Texas based investment and advisory firm, announced the successful closing of Siltstone Capital Litigation Fund, L.P. (the "Fund"). Siltstone, through its affiliate Litigo Financial, LLC ("Litigo"), will invest in commercial litigation across the United States, and welcomes the opportunity to provide capital to litigants to pursue their claims fully. The Fund will focus on commercial litigation, with a unique focus on energy and patent litigation. Founded in 2013, Siltstone strives to create lasting value for its stakeholders though organically sourced alternative investment opportunities that offer downside protection with significant upside potential. Siltstone believes that its rare combination of investment and legal expertise will help solve real-world legal problems on behalf of clients, in a budgetary sensible way. Siltstone's mission is to make a meaningful difference for clients by focusing on clarity, fairness, and innovation. Robert Le, Siltstone's Co-Founder and Managing Partner, commented, "With our investment acumen, in-depth sector focus, and unique skillset to identify compelling legal cases to fund, we believe that we will be able to deliver significant value to our litigants and investors for years to come." Litigo handles all of the legal due diligence in-house and uses a proprietary software platform that integrates with AI in order to efficiently assess the merits of each case. Mani Walia, who serves as Managing Director and General Counsel at Siltstone, leads the Fund's efforts. Earlier in his career, Mr. Walia clerked for both Judge Jane R. Roth of the United States Court of Appeals for the Third Circuit and Chief Judge Hayden W. Head of the United States District Court for the Southern District of Texas. Additionally, Mr. Walia practiced law at Susman Godfrey in the Houston Office, where he litigated high-profile cases. Mr. Walia stated, "We believe that there are significant opportunities when it comes to investing in litigation finance. We are also particularly excited to bring our in-house legal expertise, investment, and technology experience to this space and are honored to help plaintiffs who need capital to pursue their claims even the playing field."
Commercial

Burford Roundtable: CFO Wish List for Legal Teams and Firms

Litigation funders already know that legal assets can be a source of revenue for businesses—especially those left strapped for operating funds during COVID. The problem? Finance departments may not realize funding is an option. To bridge this knowledge gap, one leading funder conducted an informal survey of finance professionals. Burford Capital details a range of perspectives on various subjects. Below are some key takeaways: Subject: Challenges of Affirmative Recovery Amanda Parness: A good CFO must balance cash flow, timing, and the overall impact that litigation can have. Planning for every step in the process with estimates and cost caps are essential. Michael Curran: General counsel often doesn’t consider the legal department to be a money-maker and therefore may be applying the wrong metrics when determining how to proceed with a case.  Subject: The Illiquid Nature of Corporate Legal Assets Jim Kilman: Commercial claims are often overlooked by CFOs, but if they understood how easily those claims can be turned into liquid assets—they’d probably find that option attractive. Parness: CFOs are less likely to consider that a potential award is a monetary asset, and this needs to change. Subject: Barriers to Facilitating Legal Finance Curran: Valuation can be a stumbling block if CFOs don’t have a credible person to determine the value of legal assets. CFOs must be fully informed of the facts in order to make a decision with confidence. Kilman: A partner with deep expertise or relevant niche experience can make a profound difference. Ideally, a CFO needs someone to offer unique, relevant, new ideas and can back them up with funding and experience.
Commercial Covid-19

Is Big Law Ready to Accept the Death of the Billable Hour Model?

A new survey by Blickstein Group and Legal Value Network suggests that large law firms may be more open to the idea of non-traditional fee arrangements. At the same time, more than half of the survey respondents assert that attorneys' resistance to change is the most difficult aspect of adopting new payment models. Bloomberg Law details that since 2013, lawyers at major law firms have been asked about adapting and updating the way they charge for legal services. Since that time, lawyers have indicated that they haven't been all that interested in doing so. One co-author of the survey, David Cambria, believes that COVID brought an urgency that illustrates the importance of flexibility in pricing structures. This may not be an obvious result of COVID, but the general turbulence has spurred the legal world to make changes that are likely to last even after a return to normalcy. Remote working has led to increased use of technology. In turn, the tech itself has become more advanced and specialized. Software is commonly used to hold remote meetings, facilitate collaboration, and even obtain signatures from across the globe. Partner compensation is another sticking point in some firms—even though partner payouts have increased dramatically during the pandemic. Partners who are making huge annual profits are unlikely to want to explore new pricing models that add value for clients. Will big law firms become less averse to change over time? Only time will tell. 
Commercial

Virtual Depositions Coming from Remote Legal

Remote depositions have become part-and-parcel of remote legal work during the pandemic. Now, one litigation funder has taken steps to partner with a remote deposition legal tech solution. LexShares reveals that it has partnered with Remote Legal, a legal services provider that lends expertise to video conferencing for depositions, court reporting, and arbitrations, among other proceedings. This technology differs from standard video chat applications, as it was specifically tailored to meet the needs of legal proceedings to facilitate socially distant meetings. Some of the features available include virtual exhibition of documents, live voice-to-text, a tech-enabled court reporter, and dedicated private chatrooms for privileged discussions. It’s expected that even after COVID, virtual proceedings will continue as they are a cost and time-saving measure.
Announcements Commercial

Deminor successfully raises EUR 40m to expand the growth of its litigation funding portfolio

Deminor Recovery Services announces the closing of a financing round consisting of equity, senior bank loans and mezzanine finance for an amount up to €40 million to support its rapidly growing litigation funding activities globally. 

The financing round is supported by the current shareholders as well as new investors including Saffelberg Investments, Finance&Invest Brussels and various other investors. The bank financing portion is provided by KBC Bank.  

Along with its current cash position and expected realizations from the existing portfolio, Deminor expects to be able to commit €90 million in new litigation funding investments over the next 2-3 years. These investments will be on Deminor’s own balance sheet, allowing the company to continue to make fast decisions and propose flexible funding terms. Crucially, Deminor’s Investment Committee retains the ultimate decision making authority as to which cases to invest in. 

Deminor’s core mission is to help investors and businesses monetise their legal claims by supporting individual and group litigation. We put our own money at stake:  we pay all legal costs and only receive a return if a case is successful and our client achieves a recovery. Originally started in the field of collective securities actions where Deminor has built and occupies a leading place in non-US jurisdictions, the business has been extended and now also includes private antitrust litigation and B2B commercial litigation.  

Deminor prides itself on providing more than just funding. We only take on good causes and we never compromise on our values. We stand by our clients and are determined to achieve recoveries for them. Clients can benefit from Deminor’s 13 year-long expertise in supporting complex international litigation and, where legally permitted, its unique claims management and back-office execution capacity. The company boasts one of the most impressive track records (over 80%) in the industry thanks to its careful selection of cases and management of litigation risks.  

To serve its growing client base in the US, UK and Asia, Deminor has opened offices over the last 3 years in New York, London and Hong Kong. The team is composed of 30 legal, finance, marketing and claims management professionals speaking 13 different languages.  

“This funding round is a milestone in the history of Deminor. We are thrilled to welcome our new investors and expand our success story thanks to their support. The additional capital will allow us to respond to the growing demand that we are seeing for litigation funding in our core markets and to achieve our mission statement: to give businesses access to the best legal representation and highest standards of justice when pursuing their legal claims.”, says Erik Bomans, CEO of Deminor. 

Commercial Special Features

Key Takeaways from LFJ’s Podcast with Louise Trayhurn of Legis Finance

Louise Trayhurn, Executive Director of Legis Finance, sat down with LFJ to discuss a broad range of industry topics, including Legis’ bespoke approach to managing client relationships, the various funding and insurance products her company offers, the growing trend of GCs and CFOs extracting more value out of their legal assets, and what trends she predicts for the future of the industry. Below are key takeaways from the conversation, which can be found in its entirety here. Q: How does Legis approach the issue of pricing transparency and consistency? A: At Legis, we share with the client, the law firm, and the funder all of the returns listed. It’s very transparent. Every party can see what’s going on. If they don’t like model scenarios...then we can adjust it. ‘Pivot’ is a word that’s used frequently in our office. We’ll constantly amend, adapt, and make changes here and there to try and get everybody comfortable. Q: In the US, contingency fees have long been used by lawyers to share risk with their clients. Can you explain the benefits of DBAs as opposed to conditional fee arrangements and the billable hour model? What has Legis specifically been doing to press for this transition to DBAs? A: We formed a working group for those interested in DBAs. The idea behind it was to...discuss the possibility of a standard damages-based agreement. I, having a background as a litigator, thought this was fairly ambitious. We got a whole group of litigators together, and as well as looking at the broader picture of a standard form document, we had a more urgent task, which was to work together to provide feedback to the team looking at amending the DBA regulations. Q: In the wake of COVID, we’re seeing a mindset shift that’s been talked about for years. What have you been noticing in terms of how GCs and CFOs are considering litigation finance? What do you see happening out there? A: GCs are sitting in their board rooms and they’re acting as cost centers. They take their seat and the first thing they’re asked is ‘okay, how much is legal spend going to be this month?’. There are numerous companies out there committed to spending a certain amount each month on their litigation. It’s just money going out the door, and it’s hard for those GCs to show their value other than reducing the amount of legal spend this month for the same results. Now, you can use litigation finance to generate revenue. Instead of being a drain on the company’s cash, you can in fact add; you can be a profit center, if you use your litigation assets to make money for the company instead of costing them money. You have funders willing to do the due diligence in an independent manner—I mean, we don’t get paid for picking bad cases—and GCs have in their hands a very powerful independent check on their cases, and that can help in all kinds of ways. Q: Broadly speaking, what predictions do you have in terms of the maturation of the Litigation Finance market. What can we expect this year and down the road? A: Certainly I’m going to say increased use of funding. And apart from that, there may well be a consolidation of existing funders, or funders standing behind funding. Increased use of different financial products to back funding—insurance or other entrants to the market. Or a secondary market of products available to funders to manage their own risk, and possibly a secondary market available to investors to package these litigation assets, standardize the documentation, and buy and sell risk. That should help open the marketplace for these institutions that want to create secondary markets.
Commercial

Asset Recovery Predictions for 2021

The IMF estimates that cumulative losses of the pandemic-caused downturn will surpass $12 trillion. With that in mind, creditors will have to adapt and adjust more than ever in order to enforce judgments and hold debtors accountable. Burford Capital explains that currently, debtors are more likely to hold back cash rather than pay off debts—even after a judgment. Stalling, evading, and taking a hardline stance are all done to buy debtors more time. It’s expected that there will be an increase in debtors reneging on previous agreements—necessitating more aggressive enforcement strategies. Economists tell us to expect more high-profile insolvencies in the coming year. In addition to parsing the assets of an insolvent company, creditors will likely have to investigate officers and directors for hidden assets. Indemnity clauses may also impact the creditor’s ability to locate and seize assets. This is likely to lead to a rise in debtors evading transparency measures, which were enacted specifically to hold them accountable. Several jurisdictions are pushing for greater transparency for owners and officers. The British Virgin Islands recently committed to greater transparency on beneficial ownership. If this catches on, places like Nevis and the Cook Islands may become even more popular with those wanting to hide assets. As enforcement becomes more difficult and time-consuming, more creditors will be turning to legal funding to pursue collections. Funders who specialize in asset recovery can provide an honest, unbiased assessment of the situation, and if applicable, recommend a course of action. Funders can allow creditors to pursue debt collection without taking on increased financial risk. As insolvencies increase, savvy creditors should be formulating a plan of action they can set in motion should the worst occur.
Commercial

Greenpoint Accuses Apollo of Stealing Trade Secrets

As the Litigation Finance industry expands, competition is bound to grow increasingly fierce. A new lawsuit filed by Greenpoint Capital Management may illustrate the competitive nature of the industry. Bloomberg News details that the case, Greenpoint Capital Management v Apollo Hybrid Value Management, was filed in Manhattan federal court last week. The suit claims that GCM afforded Apollo various trade secrets during talks for a proposed investment. Apollo allegedly forwarded this information to Kerberos Capital Management—a direct competitor of GCM. The information in question includes a method to evaluate new cases for risk and potential ROI before making an offer of legal funding. Both Apollo and Kerberos dispute the claims made by Greenpoint. Kerberos, which is not named as a defendant in the suit, expressed disdain for the idea that their funding model is in any way based on Greenpoint’s materials.