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Announcements Commercial

Litigation Capital Management (LCM) announces its third corporate portfolio transaction

Litigation Capital Management Limited, a global provider of disputes funding, publicly listed on the London Stock Exchange’s AIM market, is pleased to announce it has executed an agreement to finance a corporate portfolio transaction to provide a significant finance facility to a subsidiary of a global building and infrastructure contractor to fund a portfolio of its construction claims. The transaction, which originated through LCM’s strategic alliance with Norton Rose Fulbright and involved members of LCM’s team from Sydney, London and a specialist team established in the UAE, includes an agreement by LCM to finance up to 20 separate claims seated in jurisdictions ranging from Dubai to London, subject to the satisfactory completion by LCM of its due diligence. LCM has achieved recent results on two of its existing corporate portfolio facilities – one for a global aviation business and the other with a building and construction company, which both delivered four resolutions each for the respective clients within the last financial year; a relatively short timeframe compared with traditional single-case projects, demonstrating LCM’s capabilities in providing sophisticated and bespoke client-focused solutions that truly meet the needs of corporate clients. Commenting on the new corporate portfolio, Patrick Moloney, Chief Executive Officer of LCM, said: “We are delighted to be announcing a further corporate portfolio transaction which originated through our strategic alliance with Norton Rose Fulbright. LCM has the most experienced team in the market for originating and executing such industry-changing disputes financing solutions.” Nick Rowles-Davies, Executive Vice Chairman of LCM, added: “This corporate portfolio further cements our position as leading the global market in corporate portfolio transactions and comes at a time of considerable growth and increased opportunity for LCM.” Cameron Harvey, Head of Disputes of Norton Rose Fulbright, commented: “LCM’s finance facility will be of great benefit to our client and its ability to manage legal claims across multiple jurisdictions. Norton Rose Fulbright entered into a strategic alliance with LCM because we foresaw a growing need for corporate litigants to be able to engage in necessary dispute resolution without having the experience cripple their balance sheets, something which is even more crucial during the COVID-19 pandemic. We look forward to continuing to work with LCM to offer financing and legal solutions to our international and domestic clients as they adjust to the impact of the pandemic and emerge during the eventual recovery.” This month, LCM welcomed Non-Executive Director Gerhard Seebacher to its Board, while Helene Roins joined as an Investment Manager based in Sydney. In April 2020, Investment Manager James Foster and Chief Financial Officer Mary Gangemi both joined LCM in London. About LCM Litigation Capital Management (LCM) is a leading international provider of litigation financing solutions. This includes single-cases and corporate and law firm portfolios across class actions, commercial claims, claims arising out of insolvency, including assignments, and international arbitration. LCM has an unparalleled track record, driven by effective project selection and robust risk management. Headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT.
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Commercial

Bill Farrell, Co-Founder of Longford Capital, Speaks to K&L Gates

William Farrell, Jr., Managing Director and Co-Founder of Chicago-based Longford Capital, recently appeared on a podcast hosted by K&L Gates. Farrell shared his personal journey from working as a prosecutor in the Cook County prosecutor's office to founding and managing litigation funding powerhouse Longford Capital. Below are some highlights of the 50-minute long podcast, which can be found here. Q: Are there any thoughts you have about what we need to be thinking about to be appropriate allies to influence or change systemic racism in our legal system? A: One thing that has struck me, in Chicago anyway, is that since the horrific incident that involved Mr. Floyd, we have had dozens of shootings in Chicago in the south and west side neighborhoods, and dozens of African Americans have died as a result of those shootings. And their lives matter, very much. I wish we’d spend time focusing on more of a grass roots community-driven effort to increase educational opportunities for all of our citizens, which I think will lead to progress and success.  Q: What are some things you carry with you from being a prosecutor that might have given you a leg up? Was there something in particular from the Cook County prosecutor’s office that you took with you into the litigation realm? A: One of the things I enjoy most about my job has been interacting with people, and trying to understand people. I learned an awful lot about that as a prosecutor. Taking the skills of being able to listen to people coming from extreme situations and trying to understand them and their motivations, whether they’re telling me the truth, they’re trying to skirt the truth—and how to motivate them to tell me the truth has been really important, and I’ve carried it with me throughout interacting with juries, which is a very personal experience. Trying to understand each and every juror and trying to get them to understand me and my client’s position is a quality that was borne in my time at the state’s attorney’s office. Now, as a commercial litigation funder at Longford Capital, we have a policy that we must meet our clients in person whenever possible. That’s been a little tough as of late, with the stay at home orders. But we think making a personal connection and understanding the intangibles is important. We might understand that a client might have a meritorious breach of contract claim, but at Longford, we want to understand—what’s the motivation for trying to enforce those legal rights? What is the client trying to achieve? Is it to just have a judge rule in their favor so that they have a feeling of justice? Is it to achieve a commercially reasonable financial result? Everybody has a different approach to litigation. I want to understand it from a very personal level. Q: So you and your brother, I assume, talked about forming this company, which—even today, it’s not a road that’s normally traveled. Tell us how you came up with the idea, and some of the bumps in the road that might have occurred? A: It was in 2009 that we first learned of this idea of third party commercial litigation finance—the notion that a third party, not the client or the law firm, would participate in the funding of attorney’s fees and expenses incurred in connection with pursuing a meritorious legal claim. It was a very novel idea; in fact, I had never heard of it before. I don’t think anyone in the US had heard of it before. My initial reaction is that it’s too bad it’s prohibited in the United States, because I thought it was such a smart idea. A solution to the ever-increasing call by corporate clients for alternatives to the billable hour model. I thought it was unfortunate that it was somehow impermissible in the United States. But I took the time to research why, or what rule prohibited this, but I couldn’t find the rule. There was no prohibition against litigation funding in the US, and in fact it blended in quite well with the range of possibilities that corporate clients involved in litigation used as a means of paying for their legal services—the first and most obvious being paying their lawyers. I immediately thought of it as a solution for clients approaching me and my firm seeking alternatives to the billable hour. I thought it would be a great alternative to saying ‘I’m sorry, my firm doesn’t offer contingency agreements.’ And I began to study it, and at some point included my brother Tim in the discussion. At that point, Tim was representing about a thousand US manufacturing companies, ranging from multiple billion dollar publicly-traded companies, down to hundreds of family-owned businesses. His reaction to this also helped form our future pursuit of Longford Capital. His reaction was, ‘almost every one of my 1,000 member companies is involved in litigation, virtually at all times. And you’re now telling me that they have an option, an alternative to paying their lawyers monthly, and that option is to transfer that cost to a third party—a funding organization—specifically designed for that purpose, and that the funding will be in the form of an equity non-recourse agreement that’s only required to be repaid if the company is successful in the litigation. It’s not a loan but rather an investment in the outcome of the case.’ He said, ‘I’ll do the survey but I don’t even need to do it. I’ll tell you what the answer is. Companies will want that alternative, easily more than 50% of the time.’ Q: From there you had to take that to investors and try to get that money out the door. Talk about that process—did you have a hard time convincing people to buy into this concept? What were some of the struggles you had in those early fundraising periods? A: From the time we learned about this idea of litigation finance in 2009, we studied a lot over a two-year period, and we tried to surround ourselves with experts in the field. We tried to find answers to all the questions that might be asked of us by investors, firms, and lawyers and clients. After vigorous investigations over two years, we thought we had the answers to all those questions, and they all suggested that litigation finance would be attractive in the United States. However, there was a leap of faith: We didn’t know whether institutional investors would embrace the idea of a new investment strategy that had never really been tried or tested. There were no benchmarks or track record, and maybe worse yet, being advocated by a group of people that weren’t professional investors who had never worked investing the money of other people.   The reason I think it was successful, is that some of the characteristics of litigation finance from an investor’s perspective are very attractive. Mainly that the outcomes of commercial litigation are not correlated to major investment indices. Meaning that whether the stock market is up or down on the day the jury is coming back really has no impact—and that extends to credit markets, equity markets. The outcomes of commercial litigation are not affected by presidential elections, weather patterns, geopolitical events—as a result, investment in the outcome of legal claims serves to diversify investment portfolios. And that is a very attractive feature for institutional investors. It turned out that that was the key to getting interest from investors.
Commercial

False Claim Act Ruling Stuns Litigation Funders

The False Claims Act has long been a source of contention in modern courts. The law, which dates back to 1863, allows anyone aware of fraud against the federal government to make a claim. The act is often cited by litigation funders, however, a court decision from earlier this week rules that such cases can be easily dismissed. Insurance Journal explains that the ruling means that the Justice Department may dismiss any suit filed under the False Claims Act if the suit is deemed meritless. This ruling, made by the 7th Circuit Court of Appeals, represents a reversal of an earlier decision stating that the government needed a rational basis to dismiss a case filed under this act. The False Claims Act leads to cases that are long, complicated, and expensive to bring to completion. Even when a case is utterly without merit, defendants face pressure to settle rather than incur the expense of fighting. Nearly every sector of the economy is impacted by the False Claims Act—which also allows cases to proceed without government involvement. Relators are those filing a claim under the False Claims Act, which states that the Justice Department may usurp the prosecution of a relator’s case. They may or may not share an award for damages with the relator, at their discretion. As of 2018, nearly 600 new filings are received yearly. This led to a memo from Michael Granston, then director of the Justice Department’s commercial fraud unit—insisting that US attorneys dismiss claims that were lacking in merit, which in turn presaged the recent ruling. 
Commercial

UK Class Action-Style Suit Proceeds Against Marriott International

A data breach impacting at least 500 million guests is the foundation of a class-action-style suit filed against Marriott International. The alleged breaches took place between July 2014 and September 2018, and involve guests around the world, including about 30 million EU residents. Tech Crunch explains that UK citizen Martin Bryant has filed the legal action on behalf of the millions of guests who made reservations at the hotel brand throughout England and Wales. Beginning in 2014, hackers broke into Starwood Hotels group databases, stealing guest names, email and phone numbers, physical addresses, credit card data, gender, and more. In 2016, Starwood was acquired by Marriott, but the data breach was not discovered until 2018. Global litigation funder Harbour Litigation Funding is fully funding the case, signaling the funding industry’s willingness to fund representative actions in UK cases. Some suggest this is a stepping stone to a larger payout. Hausfeld, an international law firm specializing in class actions, is representing Martin Bryant on behalf of the group. Michael Bywell, a partner at Hausfeld, stated that Marriott International failed to secure data or improve technical mechanisms in order to protect guest information. Their actions represent a clear breach of data protection laws, specifically written to protect the data of private citizens.   This claim is brought under Rule 19.6 of civil procedure rules, and includes any member of the claimant class who has not opted out. Those who wish to register may do so, provided they made reservations at one of the impacted brands. These include (but are not limited to) Sheraton Hotels, Aloft, The Luxury Collection, and any other hotels owned or operated by Marriott International or Starwood during the relevant time period. There are no fees or costs associated with registering interest in the case.
Announcements Commercial

CrosstownHelp™: BridgePoint Financial announces Expropriation and Business-Loss Consulting for those affected by delayed LRT project

TORONTO, Aug. 20, 2020 /CNW/ - In response to the more than 3,000 small businesses negatively affected by the Eglinton Crosstown LRT project, BridgePoint Financial has launched CrosstownHelpTM, an expropriation and business-loss consulting and financing program to help recoup losses and restore financial and business stability to those impacted by the delayed infrastructure project. BridgePoint Financial provides businesses with access to legal representation, expert advice, and financing that business owners can use for working capital, relocation costs, or to pay for the costs of litigation allowing them to withstand the negative financial effects of the government's actions. "BridgePoint Financial launched CrosstownHelpTM to educate businesses and provide them with the guidance and financial support they need to pursue expropriation claims and receive the fair compensation they are entitled to," said John Rossos, Co-founder and Principal of BridgePoint Financial Services Inc. "The cost of expropriation is significant, and while the Eglinton LRT is a much-needed infrastructure project, hundreds of businesses have received substantially less than fair value to cover the loss and interruption of business." Unfortunately, the Eglinton Crosstown LRT project, as with many road construction projects, has come at a big cost to business owners who often have to borrow, relocate or close down altogether. The Ontario Expropriation Act provides that businesses will receive fair compensation for business interruption, relocation and ancillary costs, and loss of business and goodwill. To date, $6.6 million has been given to Business Improvement Areas for marketing, parking, and maintenance support, while the Province of Ontario recently announced $3 million to support the areas impacted by the construction. "For small business owners operating along Eglinton Avenue, the transit project is a threat to their livelihood," added Rossos. "In many cases, these business owners feel intimidated and aren't aware of their options or that they have any.  BridgePoint's goal is to give businesses the best opportunity to level the playing field to advance their claims." BridgePoint's consulting services provide access to the best expropriation expertise across Canada and allow business owners to hire top lawyers and experts without being forced to settle for less due to cash flow related issues, assuming full recoverability of costs from the government. BridgePoint will also provide businesses with financing to assist with:
  • Costs associated with loss of revenue including legal and expert fees or business relocation;
  • Costs due to business interruption including working capital to stabilize the business, preserve goodwill and cover damages; and
  • Access to the best legal representation and expert advice including experts in expropriation and funding to pay for those costs.
The Eglinton Crosstown LRT is one of the largest transit projects in Canada and, once completed, will include 25 stops along a 19km corridor across Eglinton Avenue in Toronto. Since construction began in 2011, more than 140 businesses along Eglinton Avenue West have closed. Recently, the City of Toronto announced that construction will continue well into 2022. About BridgePoint Financial
BridgePoint Financial is Canada's leading provider of specialized financing solutions for the Canadian legal services market, addressing the needs of plaintiffs, lawyers, and the experts involved in advancing legal claims. BridgePoint's goal is to level the litigation playing field and to protect its clients' rights to full and fair access to justice. For more information about the expropriation consulting and financing services available from BridgePoint Financial, visit crosstownhelp.com.
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The LFJ Podcast
Hosted By Michael Weisz |
In this episode, we spoke with Michael Weisz of YieldStreet. Michael discusses how YieldStreet's platform operates, allowing accredited investors to participate in alternative asset deals (including litigation finance) typically reserved for institutional players. Michael also explains the advantages of the platform provided to both investors and deal partners, as well as how the funding industry has evolved over the five years since YieldStreet's inception, and why he believes the litigation funding industry is headed for a $50-$100 billion valuation by 2030. [podcast_episode episode="6099" content="title,player,details"]
Commercial

Will New Aussie Funding Regulations Impede Class Actions?

As the federal government in Australia sets up new regulations governing the Litigation Finance industry, some fear that class actions will be much more difficult to pursue. One major change requires that all funders be licensed by ASIC—and meet its expectations of competence, honesty, fairness, and efficiency. That may not seem like a tall order, but it’s not yet certain what hurdles must be cleared to obtain the required licenses. ABC Rural (Australia) reports that smaller funders have the most to fear in this new climate. Take, for example, the Australian Farmers' Fighting Fund, which was developed to fund cases with lasting impacts on growers. Hamish Brett lost his income when an import ban went into effect in 2011. Without funding, he'd have nowhere to turn. With funds from the AFFF, his share of the class action award covered his losses. Brett has stated that more than the money, he’s glad the government will no longer be able to destroy the livelihoods of people with the stroke of a pen. Litigation Finance is also the subject of a forthcoming parliamentary inquiry. Citing concerns that the number of class actions has nearly tripled since the popularization of litigation funding, Treasurer Josh Frydenberg has called for more oversight and increased regulation. He explained that third-party funding should be treated the same way as other financial services—which are generally licensed by the Australian Financial Services Commission. 
Commercial

Class Action Against Oracle and Salesforce Backed by Innsworth

It may be the largest privacy-related class action in history, as The Privacy Collective gears up for a class action against Oracle and Salesforce. The action, which alleges the unlawful large-scale collection and storage of internet users' data in Denmark. Allegedly, the data was shared with multiple commercial and AdTech companies. Diginomics reports that the action is funded by Innsworth Litigation Funding, a London-based funder known for backing large commercial litigation and arbitration claims. Their portfolio of funded cases includes such names as Mastercard and Volkswagen. ILF’s involvement in this action is of particular interest, because Innsworth is owned and partially funded by Elliott Management Corp. Moreover, Elliott bought over $20 million of Oracle stock earlier this year, though they do not appear to have a financial interest in Salesforce. The case is being called one of the largest examples of unlawful data processing since the internet came to be. The case asserts that the rights to protect one’s privacy—including online data—is fundamental. While Oracle and Salesforce are not the only companies accused of mishandling user data, they are among the largest. Regardless of the individual players, this is the sort of case that was bound to happen at some point—given the inherent vagaries of laws surrounding privacy, consent, and data collection and processing. Privacy protection is also being examined in a similar case in the London High Court. Cadwalader partner Melis Acuner has stated that this type of case allows courts to aggregate the harm caused by data privacy violations. No doubt, these cases will set a lasting precedent no matter what the final outcome is. A statement from Salesforce explains that the company disagrees with the allegations and will demonstrate their lack of merit. Oracle also promises to defend against what the company calls “baseless claims,” though with more feisty language—using terms like “bad faith” and ‘shakedown litigation.’