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Commercial

Third-Party Funding Webinar: Dispute Resolution

As financial uncertainty grows, potential clients of every stripe are looking for ways to finance cases, see their day in court, and improve their bottom line. Legal finance offers a variety of creative solutions to keep balance sheets in the black, and to improve access to justice for those who need it most.

LCM details that Nick Rowles-Davies appeared in a webinar hosted by the UAE branch of the Chartered Institute of Arbitrators. Rowles-Davies began with an overview of litigation funding—specifically detailing the difference between single case funding, class actions, insolvency and liquidation, and portfolio funding arrangements.

Portfolio funding is of particular interest as the fastest growing funding agreement type. Rowles-Davies asserts that corporate clients, in particular, take issue with how funders vet cases.

Legal funding was once predominantly about David v Goliath situations where citizens found themselves at the mercy of corporate or government entities with seemingly limitless funds. But as ‘legal funding’ morphs into ‘providing legal capital’, some fear that average citizens in need might be pushed aside in favor of corporate clients that can ultimately provide larger rewards.

Globally, litigation funding is only increasing in acceptance. Some countries have, or are in the process of creating, new laws to invite and loosely regulate the industry. A few countries are poised to become desirable hubs for international or cross-jurisdictional litigation.

The COVID pandemic has pushed the industry forward in several ways. In the early days of COVID, some corporate clients put cases on hold, fearing that looming budgetary issues could arise. Businesses considering launching a dispute may have decided against it for budgetary reasons. Law firms representing corporate clients share these concerns—all of which have led to a rise in litigation funding.

That trend is expected to continue for many years to come.

Commercial

Mastercard Class Action Set to Return to Court in March

One of the largest class actions in UK history is set to return to court for a hearing next month. Millions of consumers in the UK could see payouts of hundreds of pounds each in an action claiming the credit giant charged unlawfully high fees between May 1992 and June 2008. Money Saving Expert details that law firm Quinn Emanuel launched the action against Mastercard in 2016. The case alleges that in addition to businesses enduring fees, the costs were likely passed on to consumers regardless of what payment methods they used for purchases. As such, anyone over age 16 who made purchases during the impacted time frame is represented in the case, provided they lived in the UK for three consecutive months. The Mastercard case is the first mass consumer claim being brought under the provisions of the Consumer Rights Act of 2015. The case is made possible because of the new collective action regime, and thanks to funding from Innsworth Capital Limited. The funder has pledged GBP 60 million toward the case and will take a percentage of any monies awarded. Mastercard insists that the claim is actually being pushed by US litigators as a money-making scheme. Spokespeople from Mastercard disagree with the claims made and assert that their payment technology has provided benefits to UK citizens. The March hearing will determine if the case will proceed.
Commercial

Steinhoff Shareholders Unmoved by Settlement Offer

Claimants in the Steinhoff class action can’t shake the suspicion that former chair Christo Wiese is getting far more than he should. A proposed global settlement in the class action has Wiese’s recovery rate estimated to be at least eight times more than that of shareholders—and possibly as much as 15 times more. Money Web details that around 20% of the shareholders affirmed their desire to fight the proposed settlement. That number may be growing. The settlement, announced in June 2020, stated that almost GBP 1 billion is available to be allocated among the claimants. The total amount itself is not in question—but the allocation amounts are very much in dispute. If the parties cannot reach an agreement, liquidation could occur—leaving shareholders with very little incentive to move forward. However, the threat of liquidation has not been sufficient motivation for shareholders to accept a settlement they deem patently unfair. It had been thought that Conservatorium’s settlement with Steinhoff would add some degree of certainty moving forward. Conservatorium had, after all, filed at least four challenges to Wiese’s claim against Steinhoff. Instead, the settlement served as a reminder of the difficulty in getting claimants on board with any settlement. Some have speculated that Wiese’s obvious preferential treatment in the proposed settlement is so egregious that claimants would rather risk liquidation than accept it. One sticking point appears to be the dichotomy between contractual claimants like Wiese and his affiliates, and MPCs who purchased their shares on the open market. If the proposal isn’t amended to rectify this imbalance, it’s likely to be formally rejected.
Commercial

LCM Successfully Secures $50 Million Credit Facility

Responding to increases in legal finance applications, Litigation Capital Management announced that the company has secured $50 million in credit. This will increase the funder’s ability to bankroll cases. Proactive Investors reports that the facility comes via Northleaf, a private markets investment firm with global reach. The cost of the facility has a cap of 13% per annum. Northleaf has extensive experience with Litigation Finance. Chairman of LCM, Jonathan Moulds, explains that the credit facility represents an opportunity for growth.
Commercial

Commercial Dispute Negotiation Strategies

Part Two of Omni Bridgeway’s podcast features input from Robert Bordone, Senior Fellow at Harvard Law. This portion features discussion around unproductive behaviors of others, alternative negotiation methods, positional bargaining, and takeaways from the Harvard Negotiation Institute Workshop. Omni Bridgeway’s Clive Bowman leads the discussion, which begins with positional bargaining. This concept involves two parties with drastically different opening positions—not unlike children and parents negotiating a bedtime. Trying to reach a compromise between two extreme stances often leads to both sides digging in. Escalation leads to impasse, or worse yet, results that mean almost nothing to either party. Untethered bargaining (that which doesn’t account for what each side values), can be so random that the results become downright arbitrary. Preferably, principled negotiation (AKA, mutual gains negotiation) is a more nuanced and effective approach. In this bargaining style, we look past the stated positions of each side and discover what each actually values. Once everyone’s true goals are understood, it becomes feasible to create an agreement that allows everyone to have their needs met. How can a negotiation take place when one party’s intransigence impedes open discussion? Active listening is one suggestion Bordone offers. Of course, this is more than just listening. It’s taking steps to see that the other party feels heard and respected. That can go a surprisingly long way toward getting someone to actively sit at the bargaining table. Asking pointed questions about individual requests or provisions can shed light on what they value. Even people who only seem to complain can be reached this way—by simply asking them what doesn’t work for them. This information can then be used to deduce what the other party is looking for, even if they refuse to say so outright. Given his insights, Bordone’s experience with difficult negotiators is obviously varied and thorough.
Commercial

Patent Litigation and IP Trends

Widespread economic uncertainty often gives rise to an increase in IP lawsuits, as companies seek to extract value from IP assets. Right now, regulatory changes are taking place around the world that will make things easier for patent holders. Burford Capital explains some of the trends taking shape around the world. Companies based in Asia often see the US as an attractive jurisdiction for IP enforcement, partly due to the large damage awards doled out to plaintiffs. Meanwhile, China is endeavoring to create a more friendly environment for IP litigation. New law in China is set to take effect in June of this year. This includes several industry-specific protections and increases in damages for intentional infringement. It’s predicted that China will see an uptick in IP litigation in 2021 and beyond. Some trends suggest that there is pent-up litigation activity in China that will reveal itself in the coming months. Germany is also seeking to expand its reputation as a desirable legal venue. The Unified Patent Court Agreement was ratified in November. Some say this heralds the passing of Unitary Patent legislation in the years to come. That would allow one European Patent Office request to seek IP protection in as many as 25 EU member states. This would make filing for patent protection simpler and less expensive. In the EU, so-called Big Tech is already facing increased regulation. There is speculation that this will generate a thirst for IP litigation. Recently, the EU announced investigations into Amazon and a continued inquiry into Google and Facebook. The upcoming Digital Services Act is poised to further transform the landscape for competing Tech companies. While no one can be 100% certain of what’s to come, it’s clear that IP litigation shows no signs of slowing. Indeed, there is already expanded interest in monetizing strategies for patent holders.
Commercial

Burford Capital Portfolio Performance Sees Best Year Ever

Burford Capital has announced that it will resume shareholder payouts this year, after suspending dividend outlay in 2020. Reports from the funder indicate that group-wide portfolio claims rose 8%, totaling $4.6 billion. Global Legal Post details that Litigation Finance has experienced much less business disruption than anticipated. While the first part of the year was impacted by slowdowns, there was a rebound in the later months. Much of this is credited to an increase in portfolio funding agreements. Christopher Bogart, Burford CEO, reveals that the firm is positioned to grow and expand. Burford’s balance sheet stood at $336 million as of the end of last year when the funder experienced an all-time high return of 92%.
Commercial

Dispute Resolution Negotiation Strategies

Negotiation strategy in commercial dispute resolution is a nuanced and complicated endeavor. Chief Investment Officer at Omni Bridgeway, Clive Bowman, discusses the issue with Robert Bordone, Senior Fellow at Harvard Law. Omni Bridgeway details some of the theories behind specific negotiation strategies, how to best achieve the outcome you want, and how and why negotiations should create value. Bordone begins by explaining that negotiating isn’t just a meeting to settle litigation. Negotiation is happening any time one party seeks to influence or persuade another—which is ongoing in the legal world. In any negotiation, part of the challenge is to get what you want while ensuring that what you’re offering the other party is a reasonable and attractive option. Obviously, dispute resolution will be more complex and contentious than simply making a deal. Disputes may be tinged with anger, fear, outrage, or they may be emotional over a loss. That aside, the idea that one can either ‘win’ or ‘lose’ a negotiation can make some overly intransigent, which makes mutually beneficial agreements even more difficult to reach. Preparation for negotiation is essential, even for skilled negotiators. Preparing a flexible settlement offer, considering how much leeway they have to change terms, and locating and addressing potential blind spots are all essential. Bordone goes on to explain that sometimes there’s not enough information to have effective negotiations—sometimes parties try to negotiate too early. Waiting until crucial facts are known by all parties, and letting emotions die down can go a long way toward achieving an effective negotiation.
Commercial

Class Action Regimes in the UK

The UK takes great pride in its legal system and the ability of that system to mete out justice for everyone. This was demonstrated last year, when a test case brought by the FCA was adjudicated in only seven months. It was ultimately resolved by the Supreme Court, which ruled that insurers must cover COVID-related losses for their policyholders. Lawyer Monthly asserts that as class actions increase in number, the UK needs to catch up with the class-action regimes enjoyed by the rest of the world. Indeed, as clients and legal teams can now seek out the best jurisdictions for their cases, the UK would do well to strengthen and solidify laws surrounding class actions. One dominant issue with class actions is opt-in versus opt-out. The Hiscox Action Group, for example, is an opt-in collection of hospitality businesses allegedly harmed by the same entity. This action requires impacted parties to register and agree to the funding arrangement. Opt-out claims, considered preferrable by lawyers and funders, include all impacted parties in the claim unless they specifically ask not to be included. This structure is simpler and more inclusive by most measurements. Currently, UK class actions may only involve competition claims. These claims are presided over by CAT, the Competition Appeals Tribunal. If this regime is successful, it may be used as a blueprint for other claim types. Some say there’s good reason to keep class actions on a tight leash. Tales of spurious litigation backed by opportunistic funders have some legal experts worried about clogging courts with frivolous class actions. Realistically, funders have no interest in supporting cases without merit. And the goal of litigation funding is to increase access to justice.