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Commercial

London Legal Merger Creates 15 Partner Firm

Competition between law firms in London just got a little more fierce. Byrne and Partners and PCB Litigation have merged—with Burford Capital’s blessing. The deal will go live next month when PCB Litigation moves into the Byrne and Partners offices. This will result in a firm led by 15 partners. Global Legal Post details that PCB entered into a deal last year with funding giant Burford Capital, which now holds a 32% stake in the firm. The new firm stated that there is an ambitious plan for growth, part of which will involve portfolio financing. The larger goal of the legal merger is to establish a platform to grow specific portions of the practice—including arbitration, corporate crime, and insolvency claims. The firm hopes to expand its reach in Asia, the Middle East, Russia, and elsewhere. The merger is being called a ‘landmark moment’ for the firms, both of which are considered dynamic leaders in the field.
Commercial

Proposed 30% Cap on Legal Funding Returns Could Devastate Class Actions

Australia’s predilection for over-regulating litigation funders is on display again. A proposed 30% limit on gross returns to funders could devastate funding for class actions. New research from PwC’s Jeremy Thorpe suggests that even a 36% return rate for funders would fail to cover even basic legal costs. Financial Review explains that the report, which was commissioned by Omni Bridgeway, illustrates that a cap of as much as 50% could still leave funders wanting. If class actions become a losing proposition for funders, Australians in need of financial support will lose access to justice. Caps may leave some claimants receiving higher payouts. But the net loss to the public becomes apparent when viable claims that deserve adjudication cannot be pursued. Omni Bridgeway’s Andrew Sacker is adamant that caps on returns for funders would deny justice to a significant number of Australians. The firm supports a 50% cap on funder returns. Unfortunately, the Australian parliament still views the funding industry as a cynical means to profit from other’s legal woes. The proposed cap is based on allocation and proportionality, rather than a consideration of potential returns and risks. As such, funders believe it doesn’t represent a reasonable compromise.
Commercial

Alternative Investment Mania

The financial world has been on the receiving end of investor-related whimsy of late. Bizarre and unexpected high-end investments are taking financial pros by surprise. But what is driving these unusual, sometimes even hilarious, investments?

New York Times reveals that some folks are making money hand over fist during the pandemic. While many Americans struggle, others are flourishing as they seek out less traditional investments. Equity and bond investments are becoming less attractive than ever owing to market volatility and a general uncertainty surrounding the pandemic. This is the rationale behind investment in legal funding as well; not as exciting as owning a Tom Brady rookie card, perhaps, but still a worthwhile diversification play.

New tools like Robinhood and Coinbase have enabled unsophisticated retail investors to win fortunes (or perhaps lose everything). Some liken the rise of alternatives to a form of childish expression, explaining that money with nowhere to go may lead to choices that would normally be inadvisable. Robinhood is currently being accused of coaxing users toward addictive gambling behavior. So while these financial blips are interesting, most say that they don’t present any real risk to our financial system on the whole.

Some investments are related to pop culture. Sneakers, sports trading cards, NF tokens (proving the authenticity of digital goods), and outsider art are all selling for incredible sums. It’s been suggested that investments with pop culture significance can retain their value for years—with sneakers being a more stable investment than some might think.

It’s hard to predict how this boom in kitschy investments will end. It’s been suggested that as the COVID vaccines bring a return to normalcy, we could be looking at prosperity and celebration not seen in the US since the roaring ’20s. Here’s hoping the ensuing crash will be easier to weather than the last one.

Commercial

Is Kenya the Next Frontier for Litigation Funding?

The current legal climate in Kenya isn’t much different than that of the developed world. Access to justice is often limited to what the litigant can afford or raise. Those who cannot afford to fund their cases may sell off assets or crowdsource funds. But as of now, the option to seek third-party litigation funding on a non-recourse basis is not available to Kenyans. Business Daily African explains that non-recourse legal funding is not a well-known concept in Kenya. Increasing public understanding of the risks and benefits of the practice may be the first step in widespread acceptance. Funding litigation is risky for investors because of the long time frames between investment and return, and because of the non-recourse nature of the funding. Employing an analyst and an independent lawyer are recommended to anyone considering making an investment in litigation. According to Legalist, 80% of cases funded by the firm have ended in awards or settlements. In general, funders enjoy a high ROI. But this depends greatly on the vetting processes used, and the types of cases in which funders specialize. Right now, demand is high for legal funding in Kenya. And with global funders now flush with capital, it's plausible to believe that some may venture into this somewhat risky, yet untapped market. 
Commercial

Litigation Funders Delighted by DBA Ruling

Regulations regarding damages-based agreements can create havoc in a collective action. Recently, all eyes were on a Court of Appeal ruling regarding truckers and the Road Haulage Association, as well as the third-party funders financing the collective action. Law Gazette details that the Court of Appeal determined that the funding did not constitute a DBA. Had they ruled otherwise, the agreement between funders and claimants could become unenforceable—putting the whole case in jeopardy. The ruling has consequences beyond this one case. Indeed, an affirmative ruling on this issue could have negated most current litigation funding agreements. Lord Justice Henderson referenced a 2006 law—the Compensation Act—as part of the basis for his decision. Lawyers for the Road Haulage Association explain that the ruling is excellent news for litigation funding as an industry, as the judgment affirms that funding contracts are not DBAs.
Consumer

Trademark Case Lands $3 Million Award for Consumer Legal Funder

Oasis Legal Finance was awarded more than $3 million in costs and attorney’s fees after winning a trademark case against its former CEO. Bloomberg Law reports that the case was deemed ‘exceptional’ by Judge Robert W Gettleman, who stated that the company proved most of its claims. He also noted that the defendants were ‘unreasonable’ in their litigation strategy. Oasis fired its CEO in 2013, and later sued him and one other party for trademark infringement after he allegedly launched a similarly named business.
Commercial

How Men Can Best Challenge Gender Inequities

Aviva Will is the founder of The Equity Project, as well as the Co-CEO of Burford Capital. In honor of International Women’s Day, she led a panel on how men can better challenge gender inequities in the legal field. Burford Capital details that the panel was comprised of business leaders from Freddie Mac, Hogan Lovells, and the International Diversity Forum. Despite advancements made by women, men still eclipse women in managerial or leadership roles in law firms and in the business world at large. While legal firms recruit women at greater levels than ever—partnership numbers haven’t changed nearly as much. GC’s can play a role in encouraging gender diversity simply by discussing it. Asking how many women hold leadership roles, or ensuring that everyone working on their case is being fairly credited and compensated for their contributions can go a long way. As firms take steps toward making workplaces and leadership more friendly toward women, attitudes toward diversity are changing dramatically. One panelist explains that there are three specific aspects of law firm culture that need to be updated and expanded—vulnerability, empathy, and humility. These involve listening, sharing honestly, and recognizing that there’s always more we don’t know. Better communication and a willingness to listen to marginalized voices can clear a path for a more diverse future.
Announcements Commercial

Augusta Ventures funds Which? in landmark collective action against Qualcomm

Augusta Ventures, the largest litigation and dispute funding institution in the UK by volume of cases, has provided financing to help the Consumers’ Association (known as Which?) launch an opt-out collective claim, litigated by Hausfeld, against Qualcomm, Inc. for over £480 million, on behalf of a class of around 29 million UK consumers.

Which? is alleging that Qualcomm abuses its dominance in the markets for smartphone chipsets and standard essential patents, the result of which is that Qualcomm is able to overcharge smartphone manufacturers like Apple and Samsung for its technology.  Which? says that those extra costs, which are calculated as a percentage of the price of phone handsets, have been passed on to UK purchasers of Apple and Samsung smartphones.

Which?’s claim will automatically include compensation claims for consumers who had purchased particular models of Apple or Samsung smartphones, either direct from the manufacturer, from a network operator or smartphone retailer, since 1 October 2015.

Robert Hanna, Managing Director of Augusta Ventures, said:

“This claim is about seeking redress for the millions of consumers who are the ultimate victims of Qualcomm’s anticompetitive conduct.  We are very pleased to be working with Which? in their first claim utilising the opt-out regime introduced by the Consumer Rights Act 2015.”  

Background on the legal case

Which?’s claim will state that Qualcomm employs two harmful and unlawful practices:

  • It refuses to license its patents to other competing chipset manufacturers and,
  • it refuses to supply chipsets to smartphone manufacturers, such as Apple and Samsung, unless those companies obtain a separate licence and pay substantial royalties to Qualcomm.

It is argued that these abuses enable Qualcomm to charge Apple and Samsung higher fees for the licences for its patents, than if Qualcomm behaved lawfully.  Qualcomm’s royalties are charged as a percentage of the price of smartphones and which have to be paid by  smartphone manufacturers even when they don’t use Qualcomm’s chipsets.

Which? says that the higher costs are ultimately passed on to consumers and Which? will attempt to recover these under the collective regime which allows Which? to apply to pursue a claim for an aggregate award of damages on behalf of affected UK consumers.

Now the case has been filed, the next step will be for Which? to obtain permission from the Competition Appeal Tribunal to serve proceedings on Qualcomm.  If granted, the Tribunal will then decide whether or not Which? can act as the class representative and whether the claim can proceed to trial.

Hausfeld & Co LLP are supported by a counsel team at Monckton Chambers (Jon Turner QC, Anneli Howard, Michael Armitage and Ciar McAndrew).  Which?’s economic experts are Oxera Consulting LLP and the claim is funded by Augusta Ventures.

About Augusta Ventures 

- Augusta is the largest litigation and dispute funding institution in the UK by # cases. Augusta’s scale enables us to make decisions in market-leading timeframes and fund cases of any size. 

- Augusta is organised into a series of specialist practice groups: Arbitration, Class/Group Action, Competition, and Consumer Litigation, and sectors including Financial Services and Construction & Energy. 

- At the beginning of 2021, with over £300m of capital, Augusta had funded over 240 claims with a market leading ratio of over 70% 

- Augusta has offices in the UK, Australia and Canada. 

About Which? 

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone.  

About Hausfeld 

Hausfeld & Co LLP, a leading international law firm with offices in Europe and the US, specialises in claimant litigation and collective redress.  The firm filed the first standalone opt-out collective actions on behalf of rail passengers in 2019 and is leading an opt-out action against six banks over their participation in unlawful price-fixing of the foreign exchange currency markets.  Hausfeld leads on Trucks cartel claims in the UK, Germany and the Netherlands. It has acted on some of the most complex damages claims of the last decade: on the ‘Interchange Fee’ litigation against Visa and Mastercard and the Air Cargo litigation against British Airways and 13 other airlines.  It is also presently instructed in ‘Google Shopping’ claims on behalf of price comparison websites against Google and in claims against Marriott International, YouTube and Facebook in data breach and privacy litigation.

Commercial

Australian High Court Rules on Competing Class Actions

Australia’s High Court determined by a slim 3-2 majority that first-come-first-serve will not apply to overlapping or competing class actions. Some have suggested that there should be a presumption that the first case filed should proceed, and later cases stayed. The High Court disagreed, and instead suggested numerous factors that should be considered. Lexology details the list of considerations courts weighed in a recent determination on class actions against AMP. These included:
  • the scope and nature of the cause of action
  • working theory of the case
  • class size
  • availability of legal funding and other resources
  • progress made
  • experience of the legal team
  • estimated net return to claimants
Third-party funding played an important part in the judge’s decision. The funding agreement largely determines any hypothetical payout to class members based on percentages spelled out in the funding agreement. The High Court asserted that a first-in-line presumption could lead t a mad rush to file cases as quickly as possible. This could negatively impact class members and clog court dockets. Moving forward, it appears that litigation funding agreements will play a big role in determining case order when there are overlapping or competing class actions. If courts continue to weigh proposed payouts to claimants, the exact terms of third-party funding agreements will be subjected to even greater scrutiny by courts. This in turn may lead to more competitive agreements and greater competition between funders. Still, this High Court ruling doesn’t necessarily set a national binding precedent. Many are calling for greater uniformity in how cases are prioritized across the country. The Federal Government is likely to step up as they continue their efforts to regulate third-party legal funding.