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Commercial

Litigation Finance as an Asset Class

Despite existing for more than a decade, Litigation Finance is considered a relatively new asset class. The market for litigation funding is enormous—as global law firm fees reach $860 billion annually. According to a recent study from Ernst & Young, the market is set to expand even more as post-pandemic litigation is expected to sharply rise. Net Interest details that funding individual cases or class actions is what litigation funding is commonly known for. But that’s far from all they do. Legal funding doesn’t have to focus on one specific case. Portfolio funding is becoming increasingly common. It’s provided on a non-recourse basis, which means if the case is lost, a funder can lose the entire investment. Outcomes in litigation funding, more often than not, are either a sizable payout, or a total loss.  Burford Capital funds a variety of cases, and is the only large litigation funder to have an asset recovery team in-house. As Burford’s CEO explains, the integrity of the legal system depends not only on fair judgments but on ensuring that judgments are enforced. Burford recently funded enforcement of a divorce judgment in favor of Tatiana Akhmedova, ex-wife of a Russian businessman. Burford has utilized cross-jurisdictional asset tracing and recovery experts to ensure that court orders are upheld. As an asset class, litigation funding has the potential for astronomical returns. But with the prospect of a big payday comes significant risk. The cost of this risk can be high, and funding agreements are underwritten accordingly. Time frames can be unpredictable, as cases can take years to reach completion. It’s also worth noting that reported ROICs are sometimes touted as illusory because of the way portfolio funding is reported. Still, returns from litigation or arbitration are speculative, even when a legal team believes a case is strong. Ultimately, litigation funding holds the potential for high payouts, but also carries significant risk.
Commercial

What’s Next for Litigation Finance? Mergers and Specialization

In the UK, the litigation funding market has reached maturity as an asset class, and as a facet of the legal system. A new report from RPC states that litigation funding assets (both deployed and held by funders) topped GBP 2 billion as of 2020. There’s no reason to believe this won’t continue to increase. Law Gazette explains that litigation funding has aided consumers in getting recompense from Volkswagen, Amazon, and even the Post Office. Litigation is often prohibitively expensive. Corporations and governments have used their financial firepower to avoid responsibility for wrongdoing—and litigation funding is instrumental in leveling that playing field. It’s expected that more small players will attempt to stake a claim in the litigation funding space. Many, it seems, may attempt this without developing the infrastructure needed to effectively vet cases and make funding decisions based on the right factors. If one looks to the banking industry for clues as to how litigation funding might develop, mergers seem unavoidable. In 2019, two powerhouse funders—Omni Bridgeway and IMF Bentham, entered a strategic merger that ultimately led to increased funds, greater scale, and a larger global presence. Specialization is also a likely industry-wide development. By focusing on deep knowledge of a specific sector, funders gain the advantage of more complete vetting of cases, while building an in-house team of experts. Of course, it’s equally likely that successful specialist or boutique funders will move toward more mainstream cases. Asertis achieved this recently, to great effect. In all likelihood, specialization and mergers will increase, as will the types of cases being funded and the size of industry capital.
Commercial

Australian Class Action Pits Jewelers Against Lloyd’s

Underwriters at Lloyd’s are currently facing a class action in Australia. Omni Bridgeway is funding the action, which is being run jointly by Berrill & Watson and Gordon Legal. Insurance Business Mag details that the case stems from non-payment of business interruption policies after closures related to COVID. It alleges breach of contract, and the proceeding has been filed as ‘open class.’ Gordon Legal explains in its FAQ that if Lloyd’s is found liable, the policy will determine how losses are calculated.
Commercial

LCM Funds Class Action Against Go-Ahead Group

A collective action against Govia Thameslink Railway Ltd and its parent companies is underway. Litigation Capital Management, a UK funding leader, has entered into a litigation funding agreement to pursue the case. Proactive Investors explains that the claim asserts that GTR breached the Competition Act 1998 by restricting travel and then artificially inflating prices. LCM CEO Patrick Moloney states that there has been an increase in competition-based claims. Vice-chair Nick Rowles-Davies adds that this clearly demonstrates the value of litigation funding in holding businesses accountable.
Commercial

Clarion Law Firm Promotes Stephanie Kaye to Legal Director

Clarion, the Leeds-based law firm, has recently announced three new promotions. Stephanie Kaye, formerly senior associate, was promoted to legal director. Insider Media Limited details that Kaye oversees apprentices at her firm, and has been a cornerstone of the growth and success of Clarion. Two members of the costs and litigation funding team: Tanya Foran and Bridie Sanderson, have been promoted to associates. Ella Wilkinson, a team member since 2018, recently completed her apprenticeship and is now a qualified paralegal. Andrew McAulay, head of costs and litigation funding and Clarion, stated that he looks forward to helping them enhance their skills.
Commercial

Hiscox Settles with Action Group Over Unpaid Claims

Around 400 companies are breathing a little easier now that insurer Hiscox has reached a settlement agreement with the Hiscox Action Group. The amount of the settlement will remain confidential, according to both sides—though a recent test case in January 2021 suggests that the total payout from the six largest insurers should be around GBP 1.2 billion. The Guardian explains that as pandemic-related business closures began, multiple insurers refused to pay business interruption claims. Harbour Litigation Funding provided the means for claimants to pursue this case, which is another example of legal funding as a means to hold wrongdoers accountable. The insurer released a statement in March saying that the anguish caused by non-payment is regrettable—though they had already set aside more than GBP 300 million for COVID-related payouts.
Commercial

European Class Actions Report Findings Rankle Litigation Funders

Are claimant-focused legal firms and litigation funders intentionally creating a rise in class actions? That’s one assertion of CMS’s European Class Actions Report 2021, which claims that even powerhouse corporates should be wary about litigation funding's impact. Global Legal Post details that between 2018-2020, class actions in the UK and EU have increased 120%. Moreover, technology cases have dramatically increased—as much as 15x—in the last four years. Is this, as the report suggests, because of opt-out procedures recently adopted in the UK? Or is it simply a matter of litigation funders creating an environment where more cases can be successfully pursued? Anna Morfey of Hausfeld explains that there is a widely held, but false belief, that lawyers and funders are the only ones who profit from opt-out class actions. Chair of the ILFA, Leslie Perrin, points out that it’s not necessarily a bad thing for businesses to fear class-action suits. Fears of being held accountable may lead to better, more fair business practices that negate the need for legal action. Perrin went on to say that changes in the law aren’t encouraging spurious class actions so much as leveling the playing field so consumers may more easily defend their rights.
Announcements Commercial

William Panlilio joins Litigation Capital Management (LCM) in Singapore

Litigation Capital Management Limited, a global provider of disputes funding, publicly listed on the London Stock Exchange’s AIM market, is pleased to announce the hire of William Panlilio as an Investment Manager based in Singapore. With extensive experience in international arbitration and cross-border disputes, William joins LCM after more than five years with King & Spalding where he was part of that firm’s Trial and Global Disputes practice, operating in the energy, infrastructure, construction, technology and mining sectors, and conducting arbitrations involving States and State-owned or affiliated entities. Prior to that, William was an Assistant Legal Counsel at the Permanent Court of Arbitration in The Hague, The Netherlands for close to two years. While at the court, he assisted arbitral tribunals in treaty and commercial arbitrations involving various combinations of States, State entities, international organisations and private parties. William is a US qualified lawyer who started his career Orrick, Herrington & Sutcliffe in New York, specialising in complex commercial litigation, financial institutions litigation, and cases involving U.S. foreign relations law, including the Alien Tort Statute. Commenting on William’s hire, LCM’s Head of Investments (APAC), Susanna Taylor said: “We are very pleased to welcome William to the LCM team. He is a highly experienced practitioner with an impressive track record of commercial and treaty arbitrations as well as broader corporate and commercial expertise. We are experiencing a significant uptick in funding applications in the APAC region, particularly those originated from Singapore, and William is well placed to assist LCM to take advantage of the recent changes in Singapore to allow litigation funding for domestic arbitration and International Commercial Court claims. William is a valuable addition to our global team of high-performing investment managers”. Litigation Capital Management (LCM) is a leading international provider of dispute financing solutions. This includes single-cases and corporate and law firm portfolios across international arbitration, commercial claims, class actions and claims arising out of insolvency, including assignments. 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.
Announcements Commercial

Apex Litigation Finance launches second investor fund

Less than two years since launching the company and its first investor fund, Apex Litigation Finance has begun marketing its second fund. The firm is inviting commitments from investors keen to add an asset class alternative investment to their portfolio. The UK based litigation funder is seeking to raise £50m to continue its focus on investing in small to mid-size claims. The firm specializes in supporting access to justice for claimants who either cannot afford to pursue their claim or are wary of the financial risk involved should they lose their case. Speaking about the launch of the Fund, CEO Maurice Power says: “We initially launched a relatively small fund to enable Apex to quickly demonstrate the opportunity present in investing in small and mid-size claims. Since launch we have successfully invested the fund’s capital in a high volume of cases, with claim sizes ranging from £30k to £40m+. “With our high volume/low value focus, innovative use of predictive analytics technology and supportive funding solutions, we have established Apex as a litigation funder of choice. With funding applications growing at an ever-increasing rate and the pipeline of meritorious cases close to exceeding the first fund’s limit, now is the perfect time to launch our second fund.” Apex say that litigation finance investments are an attractive alternative asset class as they are decorrelated from equity or fixed income investments. Investors wishing to explore the opportunity available are encouraged to contact Apex on enquiries@apexlitigationfinance.com. About Apex Litigation Funding: Apex Litigation Finance Limited is a company which brings together experienced individuals from the litigation funding, legal 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. Although the litigant’s case may have merits, uncertainty over the total costs and the potential risk of being ordered to pay the defendant’s costs, should they lose the case, prohibits access to justice for many claimants. Following an assessment of the merits of the litigant’s case, through use of Artificial Intelligence (software utilising predictive analytics to ascertain the likely outcome, duration, and settlement value of the case), legal and commercial expertise, Apex will commit funds to pay legal and other costs associated with the case in return for an agreed share of any award upon a successful conclusion. If there is no recovery, or if the case is lost, there is no debt for the litigant to repay.