Gian Kull has been appointed head of special situations at SYZ Capital. His investment experience spans more than a decade, making him an excellent choice to manage portfolios and handle private marketing investments.Wealth Adviser details that Kull’s past experience includes structured litigation investments at Multiplicity Partners AG, director of sourcing at Valtegra LLP, as well as opening a European office in Zurich for Brigade Capital Management. He began his career at Merrill Lynch as a research analyst.CEO of SYZ Capital, Marc Syz, explains that Kull’s contribution to the team will center on his expertise in private market investments, sourcing niche investments, and in portfolio construction. His experience with structuring litigation investments will be a boon to the team.As an investment, litigation funding is uncorrelated to the rest of the market. Kull’s expertise will be used to identify opportunities to find ways to generate capital within structural imbalances, specific niche access, or utilizing obscure information effectively.
It could be argued that Burford Capital is handling the pandemic better than most. The company transitioned to a remote working platform early on, and have adapted to what’s being called “the new normal” with aplomb. In the months that followed, courts, businesses, and even schools shifted to remote operations—meaning court cases could finally continue.Burford Capital explains that the importance of legal finance has only grown in the era of COVID. Litigation funding can make it possible for class actions, or any meritorious action, to proceed with help from investors. As the legal world forges ahead, there are three specific developments in the industry that all lawyers should be aware of.Solutions in legal finance. The idea of solutions, as opposed to mere transactions, is essential to understanding Litigation Finance. The process offers choices—far more than a simple loan/repayment structure. Litigation funding offers opportunity, peace of mind, and expertise to all parties involved. What’s more, experienced funders will provide an array of options that address specific client needs and concerns. The best funders offer more than funds, they offer years of industry knowledge and tech-fueled insights.The International Legal Finance Association. This organization recently launched as a way to protect the industry from overzealous regulation. It also informs the public about the benefits of litigation funding and does so with transparency and clarity. Welcoming the ILFA as a valuable resource is the right move for businesses, financial institutions, and legal professionals.Corporate partnerships. These are a vital part of what Burford does, especially now that interest in Litigation Finance has exploded. Because Burford is a publicly-traded company (currently on AIM, soon NYSE) functioning with obvious transparency, they’re a strong choice for in-house legal teams or finance departments that demand predictable capital and unparalleled compliance. Now that settlement activity is on the rise, and courts are slowly getting back up to speed—a relationship with an experienced funder is more vital than ever.
One of the most attractive aspects of Litigation Finance as an investment is that it’s uncorrelated with the rest of the market. Even as the Coronavirus pandemic became increasingly impactful, funders assured investors that returns would remain high.Bloomberg Law explains that while investment opportunities in Litigation Finance are plentiful, it hasn’t become the big money generator that legal professionals anticipated.Insurance disputes make up a large percentage of new litigation since the pandemic began. While these cases are plentiful, they don’t offer investors the kind of certainty they’re looking for. Rather than seeing nuclear verdicts in favor of plaintiffs, a number of significant rulings have come down in favor of insurers. This has led to even more caution among investors.Burford Capital, one of the largest funders, endured a sharp decline in business in the first part of this year. At the same time, Burford had a smaller cash outlay this year due to fewer new cases and ongoing court delays.Burford’s Christopher Bogart has stated that it’s impossible to know with certainty what’s coming. Speculation changes every week. In contrast, Ralph Sutton of Validity Finance, is encouraged by the 40% increase in investment opportunity his firm has shown this year.
A claim of over $115 million in damages, filed by Russian oligarch Farkhad Akhmedov (along with owner Straight Establishment) has been dismissed by the high court of Dubai. The claim revolved around a 115-meter superyacht, the MV Luna, which had been held as part of a divorce settlement.The National details that Mr. Akhmedov sought to recover lost earnings he would have made had he been able to charter the superyacht. However, this contradicted Akhmedov’s earlier assertion that the boat was not a commercial vessel and was not being used as a means to profit. The dismissal is considered a final decision by the courts and is not subject to appeal.The former Mrs. Akhmedova’s case was funded by Burford Capital. Akhmedov’s claim for damages was brought specifically to prevent Akhmedova and Burford representatives from taking possession of the MV Luna. However, the court prevented Akhmedova from taking the yacht—which means that this recent dismissal is a hollow victory.The ongoing injunctions mean that the superyacht is still in Port Rashid while proceedings continue to determine its rightful owner. To date, it has been in dry dock for two years—since London’s high court ruled that Akhmedov must pay 40% of his fortune to his ex-wife.
Australian coal giant Prairie Mining has begun international arbitration proceedings that assert a breach of bilateral treaties. The action centers around Poland’s decision to block investment in the Jan Karski and Debiensko mines.The Economic Times reports that Prairie Mining secured roughly $12 million from a litigation funder in July of this year. Still, the company stated it is willing to engage in good faith discussions to resolve the dispute. As yet, the Polish government has opted not to engage.Exact amounts sought in the action have not been released. It’s unclear whether purported losses will include lost profits, damages, costs spent developing the mines, and costs associated with arbitration.
When Litigation Finance was still making a name for itself, the American Bar Association was among the first organizations to write researched commentary on it. The white paper published by the ACA Commission on Ethics remains influential today.Above the Law details that simply publishing a best practices guide legitimizes Litigation Finance and affirms its widespread importance and acceptance. According to the introduction, the best practices guide is just that—guidance. It details what it considers to be the most pressing issues to consider before utilizing litigation funding for any of its most common purposes.Much of what can be found in ABA’s best practices guide is already standard operating procedure in many firms. For example, funders staying out of material decisions regarding the cases they fund is typical. Being aware of responsibilities regarding privilege, safe document handling, and the construction of litigation funding agreements are all commonplace.Some have suggested that the recommendations in the guide are too conservative and do not factor in current trends or commercial realities. For example, the guide cautions against lawyers and funders discussing the viability of a case. It’s outlandish to think such a thing wouldn’t be discussed, or that it would be in any way inappropriate to do so. Investors require information in order to make sound investment decisions, and the merits of a case are certainly relevant to that.One thing the ABA guide does well is differentiate the different types of Litigation Finance currently in use—client funding versus lawyer funding, for example. As the industry adapts to changing circumstances, these distinctions will grow in relevance. It also advises that lawyers presume that litigation funding agreements will be made public. This is not always true, but specific types of arbitration require it. Overall, the guideline recommendations are expected to lend legitimacy to an already entrenched part of the legal world.
On Wednesday October 7th, Litigation Finance Journal hosted a quarterly roundup on the major issues impacting the commercial litigation funding industry. The 45-minute panel discussion was moderated by Ed Truant, founder of Slingshot Capital. Panelists included Jim Batson, Senior Investment Manager of Omni Bridgeway, Nick Pontt, Managing Director of Affiniti Finance, Mick Smith, founder of Almatura, and Paul Haskel, partner at Richards, Kibbe & Orbe, LLP. Below are some key takeaways from the event: Ed Truant: On the issue of Burford's dual listing, is this about providing the US market with an option to invest in litigation finance, with the benefit of improving Burford’s stock price, post-Muddy Waters? And given the Muddy Waters issue, is a dual listing in the more litigious US market a good move?Paul Haskel: I should say first that I don’t represent Burford and I have not spoken to anyone at Burford about this. I think my view is that in some sense this is a response to the Muddy Waters short selling incident that occurred to them. I guess in the fall or the spring, that as a retort to Muddy Waters, they’re saying we’re going to be transparent, we’re going to be much more transparent than we’ve been historically. No more sort of black boxes which is what Muddy Waters has complained about. And we’re going to be very open, we’re going to have quarterly SEC filings, far beyond what was required by them for their AIM listing. Part of it may also be a marketing ploy, so it may be that customers looking for funding, many of which, may feel more comfortable coming from a public company that’s subject to public disclosure.Obviously, it provides liquidity to their investors, but I do point out that it also provides liquidity to short sellers as well, which is interesting.Mick Smith: Like Paul, I haven’t had the inside scoop from anyone at Burford about what was driving the listing, but in my experience you’ve got to go to the US market because it’s probably the deepest capital market around. So you have to assume that Chris is seeking a US listing because it gives them access to more capital and they’ve always been interested in raising money from different pools of capital, so this seems like a logical extension to the biggest capital market of all.Ed Truant: IMF Bentham at the time, made a big acquisition of Omni Bridgeway, and so probably no one better suited to this question than Jim. Jim, maybe you can give us some insights in terms of the strategic compulsion to do the acquisition. How has the acquisition benefitted formerly IMF, now Omni more broadly, and have there been benefits both ways to this merger?Jim Batson: We really do view it as a merger whether or not it’s technically considered an acquisition. Yes, the first obvious benefit was the geographic scope that the company now has, so with the merger we have 18 offices in 10 different countries. And if you think about how litigation has gotten so global, and the litigation finance industry really needs to adapt to that. We want to be able to serve corporations that are international in scope and also law firms in the same respect, but also when we’re working with corporations that have offices in multiple jurisdictions, the lay of the land in each particular region is different. And being sensitive to that, we’re doing more than just providing a single product and providing it globally, but rather we're able to provide litigation finance solutions in all these different regions that have very unique attributes. The class action regime in Australia is very different from that in the US, and yet we support it very heavily in Australia and through law firm portfolios here in the US. By the same token, we’ve got offices now in Singapore and Hong Kong, where international arbitration is becoming more and more popular and readily accepted, and litigation finance is becoming readily accepted in the international arbitration sphere. The second sort of big picture benefit that it provided was giving us a comprehensive beginning-to-end support for litigants and lawyers and corporations in the litigation finance sphere.Ed Truant: What about the surging demand for portfolio funding? Paul, is that something you’ve noticed in the marketplace as COVID struck?Paul Haskel: Will there be litigation specifically related to COVID? I’m not sure we’ve seen a flood of business interruption insurance or business interruption litigation yet. But I do think that law firms have become increasingly accepting of litigation finance as being a source of not just financing but actually their ability to get more work, because it’s just generally becoming more accepted. And I think the fear of COVID and the slowdown has driven many firms to seek that type of financing, and where previously they had contingency work, were comfortable just simply waiting to get paid, they’re seeing an advantage of accelerating that capitalization from that work. So I do think there’s been increased demand from law firms that we’re seeing. I also am seeing a trend where some of the big New York corporate firms, which traditionally might have stayed away from this type of arrangement, have started doing a little more contingency work to boost profits, so that does lend itself to litigation financing. So yes, it’s definitely a trend we’re seeing in the market.Ed Truant: From the panelists perspective, what do you think should be the first course of action for the ILFA?Jim Baston: It’s really not so much that litigation funders have been objecting to regulation as a concept. The problem has been more, ‘Who’s supporting it?’ and ‘What type of regulation are we talking about?’ and so forth. I’ve always thought it was ironic that the Chamber of Commerce purports to want to increase regulation and to minimize the use of litigation finance, when at the end of the day, some of their members are the biggest users of litigation finance—and it really is to the detriment of the smaller companies.Paul: I think it’s a great idea, the ILFA. It is an industry that is unregulated, trying to prevent regulation. It has a “bad reputation” among some, and I think the need to have an organization that can lobby for the asset class, be an advocate for the asset class, perhaps come up with best practices and codes of conduct to prevent outside regulation and to work with regulators which I think is a great step.
Apex Litigation Finance (Apex) has today announced that it has cemented its position in the legal technology space by bringing its Artificial Intelligence (AI) capacity inhouse, building on an already innovative approach to case outcome predictive analytics. The deployment of AI is enabling the company to speed up the delivery of litigation funding to its client base of solicitors, liquidators, individuals and corporates. Apex now have the means to fully control the development of AI technology to meet evolving requirements. The company believe this will greatly enhance the predictive analysis of risks and outcomes and increase its success in selecting which cases to fund. The move to in-house technology follows a successful relationship with legal AI specialist CourtQuant, which saw Apex fully test and scope the capacity of AI tools in the litigation funding space. The inhouse solution will build on this experience and expertise, whilst creating value for Apex by building a best in class database The AI development will be supervised by project manager Lukas Ruttkay, who brings extensive experience of tech project leadership and AI development to the company, having brought three successful online ventures to market. Commenting on the move, Maurice Power, Apex CEO, said: “We are excited to bring the AI inhouse. Our development of AI will further inform our decision making, offer greater value funding solutions to clients, and provide comfort for investors. I am confident this capability will ensure that Apex maintains its position as a market leader in the sector.” Apex specialises in providing funding for small to medium-sized matters where litigants may not have the means to pursue meritorious claims. Legal and other costs associated with a claim are funded, in return for an agreed share of any successful outcome. If there is no recovery, or if the claim is lost, there is nothing to repay as Apex offers non-recourse funding, taking on all the risk to protect claimants. About Apex Litigation Funding Apex Litigation Finance Limited brings together experts from the legal, technology and finance sectors to provide third party litigation funding to litigants (corporates, liquidators and individuals) who are unable to pursue a claim due to the prohibitive cost of litigation. As a professional litigation funder, Apex makes available funds to pay legal and other costs associated with a claim in return for an agreed share of any successful return. If the claim is lost, there is nothing to repay. The process is augmented by artificial intelligence systems to assess risk. Apex’s service addresses the issue of claims, that may have merits, not proceeding due to uncertainty over costs and the potential risk of being ordered to pay the defendant’s cost, should the claim be unsuccessful. Apex promotes its service as enabling access to justice for all, not just those with deep pockets.
The rise in bankruptcies and business insolvencies due to COVID cannot be denied. One side effect of this involves the exploration of how best to facilitate recovery and refinancing. Ultimately, legal funding may provide the best risk/reward ratio.Burford Capital’s recent roundtable discussion parses out how these developments are affecting the industry. With regard to bankruptcy litigation, it’s clear that all parties are growing more assertive in protecting their interests. This means assets are being locked down sooner, and assets that should go to creditors are being siphoned. The increase in bankruptcy litigation also means an increase in the use of Litigation Finance.In the context of bankruptcy, legal finance is straightforward. A funder pays the legal fees and expenses associated with the case. If the case ends favorably, the funder would be refunded along with an agreed-upon percentage of the recovery. If the case isn’t successful, the non-recourse nature of funding means they lose their investment.Can legal finance be used as a business development tool? Legal funding for bankruptcy offers a viable alternative to contingency arrangements. This gives trustees more freedom in selecting bankruptcy lawyers without having to dip into estate funds.Some would say that trustees now have an obligation to investigate legal finance options in their cases. Part of acting in the best interest of creditors is to make the savviest financial decisions. In many cases, legal finance is more cost-effective than hiring counsel on a contingency basis, and can offer a tactical advantage, as it displays to the opposition that the claimants are financially capable of seeing a case to completion.
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