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Announcements Commercial

DLA PIPER AND LCM COLLABORATE WITH NEW THIRD-PARTY FUNDER FOR DLA PIPER CLIENTS

DLA Piper has entered into a non-exclusive arrangement with publicly listed disputes financier Litigation Capital Management (LCM), and a newly formed litigation funder, Aldersgate Funding Limited to offer clients of DLA Piper access to £150m for funding large-scale litigation and arbitration. This will be offered on a financial risk-free (non-recourse) basis with a streamlined approval process embedded within the offering. Intended to be available in all applicable international jurisdictions, Aldersgate Funding has been structured to provide DLA Piper clients "best-in-class" funding terms, fast decision-making and enhanced due diligence that will allow actions to be pursued without any financial downside to claimants. With access to funding secured from LCM and Aldersgate Funding, DLA Piper will be able to provide the firm's clients with non-recourse finance for 100% of the costs of bringing a claim and additionally the ability to ‘source in’ adverse cost cover and security for costs as necessary. LCM, which is listed on the London Stock Exchange’s AIM market, has a proven and successful track-record spanning more than two decades of providing bespoke financing solutions, including corporate portfolios, to clients in various industry sectors across Europe, the Middle East, Africa, and Asia-Pacific. This funding offering opens up the opportunity to DLA Piper clients to pursue claims that would have otherwise been untenable due to capital constraints. Aldersgate Funding will be led by former DLA Piper Corporate partner Jim Holding. Jean-Pierre Douglas Henry and Jamie Curle (DLA Piper Co-Heads of Global Litigation & Regulatory and UK Litigation & Arbitration respectively) have spearheaded the portfolio funding initiative which has ultimately led to the creation of Aldersgate Funding. They will continue to lead DLA Piper’s engagement in this area and for this offering in particular. Former Global Co-Chair of Litigation & Regulatory at DLA Piper, Stephen Sly, has retired from the Firm and will also serve as Chairman of the Investment Committee of Aldersgate Funding, bringing decades of disputes experience to the table. DLA Piper will be offering this funding service as part of its enhanced legal offering named Law&. Speaking on the collaboration, Simon Levine, Global Co-CEO, DLA Piper commented: "We are working at pace to develop a stream of bold and innovative products and services as part of our enhanced legal offering Law&, that will allow clients to seize opportunities. As part of this mission, our collaboration with Aldersgate Funding and LCM gives clients access to capital to fund claims with a speed, ease and at a quantum hitherto unheard of and represents a sea change in the traditional approach to litigation funding." Jim Holding, Managing Director of Aldersgate Funding added: "This offering provides the ability for DLA Piper clients to pursue recourse through litigation and arbitration on a risk-free basis, opening up opportunities that may have previously been unavailable to them. With the benefit of our valuable collaboration with LCM, Aldersgate Funding provides a streamlined and efficient service that provides corporates with efficient access to capital, providing increased financial freedom within their businesses, an ability that is especially relevant against the current backdrop of global economic uncertainty.” Nick Rowles-Davies, Executive Vice-Chairman, Litigation Capital Management, commented: “We are delighted to be working with DLA Piper and Aldersgate Funding on this facility which not only demonstrates that LCM collaborates with the most forward-thinking law firms globally, but also the maturing of the industry where clients now demand sophisticated disputes finance solutions that move beyond the traditional templated funding model,” Funding through Aldersgate Funding is only available to clients of DLA Piper and can only be accessed via the firm.
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Commercial

Cryptocurrency Class Action Seeks Funding

Did social media giants like Twitter, Google, and Facebook conspire to kill cryptocurrency in 2018? JPB Liberty, led by Andrew Hamilton, is filing a class action against social media. In a recent statement, Hamilton claimed the assertions would be “pretty easy” to prove. CoinTelegraph explains that Hamilton is accusing several prominent social media entities of behavior more fitting a cartel than a web platform. Allegations assert that there was a coordinated attack on competing cryptocurrencies. Facebook, for example, is alleged to have banned competitors from advertising on its site while developing its own Libra currency. Similarly, Twitter CEO Jack Dorsey banned ads for cryptocurrencies while taking his own payment processing app, Square, into the crypto realm. Together, a handful of social media giants allegedly managed to squash the ICO (initial coin offering) market. $600 million in claims have already been amassed, with Hamilton stating that claims could grow as high as $300 billion. This suggests that the case is ripe for third-party funding. The case is being brought to Australia, a country where Litigation Finance is booming. If non-recourse funding is provided for this class action, funders will receive 30% of any award, with the remaining 70% going to costs and claimants. Anyone wishing to sign on as a claimant has until August 21 to do so.
Consumer

Litigation Finance Data Suggests a Need for Post-Settlement Regulation

Non-recourse funding is the backbone of the Litigation Finance model. It’s what exempts the practice from usury laws and allows funders to charge higher interest rates than other lenders. An as-yet-unpublished article suggests that funders actually made higher profits from individual car accident claims than from mass tort cases. That is to say, cases where a small number of people are injured or killed made more money for funders than large cases with multiple impacted parties. Reuters points out that if funders aren’t really taking on high risk, what justifies the high-interest rates Moreover, post-settlement cases are increasingly taken on by funders, and carry little, if any, risk. An upcoming paper suggests capping post-settlement interest rates at 15%. Lynn Baker, a law professor at the University of Texas, Ronen Avraham of the University of Tel Aviv, and Anthony Sebok of Cardozo Law examined data from thousands of funded cases. Their conclusions were striking, and suggest a need for increased oversight of the industry. Most interesting were the advances made near the end of cases. Post-settlement advances accept almost no risk—which becomes evident when case vetting is examined. Funders vet cases carefully before extending any funds. Pre-settlement cases are evaluated on their merits and potential awards. But the veracity of the claim has almost no relevance to funders in post-settlement claims. This is presumably because the key issue for funders is the net recovery. Baker points out that in the data she reviewed, post-settlement cases were limped into an ‘other’ designation, ostensibly to de-emphasize how financially valuable they are to funders. Data suggests that as much as 68% of funder profits stem from post-settlement cases. This in turn suggests that post-settlement advances are a different sector than pre-settlement funding and should be regulated differently. Ultimately she maintains that if there’s no real risk, the ‘non-recourse’ designation should not apply.
Announcements Commercial

Legal Industry Rebounds in June

The UK's Legal industry generated revenues of £2.79bn in June 2020. Whilst 3.6% down on June last year, that month was the highest billing June on record. June 2020 was the third best June in history for the UK’s legal industry, according to Office of National Statistics data released on 12th August.

Month on month, June 2020 saw revenues grow 19.5% since May 2020, but as May is traditionally the weakest month of the year for the Legal profession, the year on year comparison is more telling.

Louis Young, MD at Augusta said: “June’s revenue data shows the green shoots of recovery are now here for the UK’s legal industry. Firms will welcome this news, having been hit hard by the pandemic. Many will however take time to recover, having geared up for a record year in 2020. Leaders continue to look for options to manage costs and enhance their balance sheets, whilst planning for an improvement in trading conditions in Q3”.

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About the ONS Data

  • ONS Monthly Business Survey data shows Legal Activities revenue as £2.79bn in June 2020 compared to £2.33bn in May 2020 and £2.89bn in June 2019.
  • The overall Services sector (including Legal) grew by 24.5% since May 2020.
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Commercial

How a Rise in ‘Nuclear Verdicts’ Impacts an Industry

Trucking-related lawsuits are on the rise, as are the potential awards. When a driver is negligent, the company pays the price. This has led to a comparable increase in insurance premiums and shipping costs, much of which is passed down to the consumer. What’s causing this? Some point the finger at Litigation Finance. Logistics Management details tips from the American Transportation Research Institute, which has some suggestions on how to mitigate litigation. Most of the suggestions are obvious—settlement is often better than a trial, make safety a paramount concern, avoid accidents. Trucking companies describe the current conditions as a free-for-all, where well-funded lawyers choose welcoming jurisdictions or use shady medical testimony to reap a big payout. In one recent case, a driver ignored a stop sign and caused two deaths. Is this simple driver error, or is the real culprit here a set of policies that leave drivers too exhausted to follow the rules of the road? In the last decade, the average dollar amount of awards was just over $3 million. Now they average around $7 million. The rate of increase in the awards outstrips inflation and is even more pronounced than the rise in healthcare costs. This has inspired some states to legislate ‘damage ceilings’ that limit total awards per incident. Is it fair to blame Litigation Finance for the current predicament of truckers? It’s true that third-party litigation funding has grown in popularity in recent years. It’s also true that ordinary citizens have better access to justice than ever before. It makes sense that trucking companies would long for the days when awards were small and most people couldn’t afford to take them to court. After all, the growth of an industry is a signal that their services are in demand.
Announcements Commercial

Pravati Capital Launches Fifth Specialized Litigation Finance Fund with $200 Million

PHOENIX, Aug. 11, 2020 /PRNewswire/ -- Pravati Capital, leading litigation finance pioneer and consulting firm, today announced the launch of its fifth specialized litigation finance investment fund with $200 million, following the success of its four previous funds launched since 2013. Pravati Investment Fund V (Fund V) will allow for the first time non-US and US-tax exempt international qualified investors the opportunity to invest in a specialized litigation finance alternative investment vehicle. Fund V, as its four predecessors, is structured using the proven methodology of stringent due diligence in selecting and structuring investments, while providing opportunities for law firms to restructure, regain financial footing and build their asset portfolios. The firm's focus remains to invest in non-correlated assets with limited risk independent of the economic cycles offered by the growing litigation finance sector. Pravati founder's 18 years of specialized experience in financial litigation has contributed to the launch of four successful funds, which together with the newly launched Fund V, will continue to provide breakthrough capital solutions that allow firms to restructure and emerge stronger in distressed markets throughout the United States. "We are pleased to offer Fund V as an alternative investment vehicle in the litigation finance sector. Given the current climate litigation financing has never been more critical. As a result, we have shifted the focus of this fund to meet those needs and the social impact we want to create. The present crisis has exacerbated the need for capital to continue operating or is the only solution to implement a restructuring process that allows smaller law firms to survive or explore the possibility to merge with others given the existent distressed environment," commented Alexander Chucri, Chief Executive Officer and Portfolio Manager of Pravati Capital. Mr. Chucri added, "The past few months have affected multiple sectors across the economy, and litigation finance has not been unscathed. Our mission remains as solid as ever, we believe we can have a positive impact by helping capitalize in need of resources firms, either to continue funding their operations or providing the necessary funding to implement changes that will allow them to persist in the current scenario or to restructure by merging with other firms and guarantee their relevance." Pravati Capital acts as the middle-market lender, merchant bank and advisor to mid-size law firms around the world and provides non-recourse, and recourse cash advances to law firms that are generally collateralized by underwriting a portfolio of cases. The company invests in a broad range of high probability, complex, plaintiff commercial disputes. Pravati Capital Fund V is expected to have short-term duration of 36-48 months. The fund aims to deploy funds in excess $200 million in the following 18 months. The fund's strategy will continue to build an international all-weather non-correlated alternative investment fund with a solid risk-reward profile that is not affected by economic cycle changes compared to traditional equities and fixed income funds. About Pravati Capital As a leader in the litigation financing field, Pravati Capital has changed how law firms envision their future. For more than a decade, we have been at the forefront of litigation financing solutions, creating innovative sources for bridge capital. It is our mission to provide innovative, efficient capital solutions for law firms, compassionate assistance to plaintiffs, and a secure alternative investment option for accredited investors. For more information, please visit our website at Pravati Capital or call 1.844.772.8284. You can also follow us on LinkedIn and Twitter.
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Commercial

NZ Class Action Secures Funding in Mountain View Case

Residents of Mountain View complex in Mt Wellington, Auckland, are fed up. After a 10-year battle to get the owners to fix rampant leaks, a class action suit is being brought against building consultant Maynard Marks. Stuff explains that the 99-unit apartment complex is currently the largest claimant of the country’s leaky home assistance. They’ve been provided with over $41 million to fix the damages. Various inspections showed leaky cladding and roofs, issues with passive fire systems, and even balconies. Still, Mountain View was certified as being in compliance with existing codes. One man, Paul Running, bought a flat in 2007, but couldn’t live there due to the need for extensive repairs. He intended to rent out the place after repairs were done, but the repair work has been consistently shoddy and expensive. Now that repairs are finished, the corporate body is in conflict with the new owners of the construction company—with residents divided over the case against Maynard Marks. Leading the class action is Adina Thorn, who asserts that owners had paid roughly twice the value of their homes because of the shoddy repairs and unrealistic estimates. Marks suggested that repairs were a more cost-effective option than tearing down and rebuilding—a move that caused an initial $8.3 million estimate to surpass $41 million. The government program offered assistance to the tune of roughly 25% of the total costs—leaving residents stuck with the remainder of the bill. Court House Capital is backing the class action. The Australian litigation funder has not released details, but it’s expected that the funds will be used for experts and legal costs. This is yet another instance of ordinary people caught up in a situation beyond their control. Without the backing of Litigation Finance, the alleged victims would have no recourse to pursue justice. 
Commercial

Institutional Ownership at Burford Capital

There’s a lot you can learn about a Litigation Finance company by looking at at its investors. Insider investment is common in firms that are newer and smaller, while more established players boast large institutions as their major shareholders.   Yahoo Finance explains how this applies to a litigation funder like Burford Capital. Burford is a large funder with institutions as major backers—over 40% in fact. At the same time, the next smallest investor group is made up of ordinary citizens. This bodes well for Burford, since it implies that the company has earned the trust and respect of regular folks, while still being attractive to institutional investors. But what happens if there is a change in how more than one institution views the company? That could spell big trouble for share prices. Burford’s recent short-selling attack is evidence that opinion can alter abruptly.  Burford’s insider investment is significant at nearly 10%. It’s good to have affirmation that those who work for the company also believe in it. One might say that number should climb even higher in the future. Over 6% of Burford Capital is owned by hedge funds. Some say this is potentially problematic. Hedge funds are sometimes known to put pressure on management to make changes, specifically to increase shareholder value. Should this conflict with what’s best for Burford’s clients, trust from the general public might erode—impacting a much larger portion of investors. Meanwhile, just over 5% of Burford shares are owned by private companies. In theory, the same issues could develop. While it doesn't comprise the entire picture, looking at investors can tell you a lot about a company.
Commercial Covid-19

COVID Brings Tech-Savvy In-House Lawyers to the Forefront

Innovation and adaptability are key factors in every business trying to stay afloat during the current pandemic. Many law firm were quick to send workers home while finding remote working solutions to stave off loss of business. But as soon as some issues were managed, others cropped up. For example, the need for cybersecurity was heightened almost immediately. Financial Times explains that savvy lawyers backed away from putting out proverbial fires and started seeking opportunities to reach out to their customers. They began by identifying issues and using creative problem-solving. Solutions included expanding the use of digital signatures for those who couldn’t go out to banks or meetings, and amping up anti-fraud protections to make distance working safer. Legal teams aren’t just innovating, they’re creating as well. WeChat has allowed the development of apps that facilitate digital transactions in bulk, and even allow for price haggling. Westpac, an Australian bank, developed a digital boot camp and training program to better help lawyers analyze and draw conclusions from data. The new reliance on technology and digital problem solving puts the traditional firm model on notice. With rare exceptions, partners with decades of legal experience will not be up-to-date on modern digital solutions. In fact, they may find themselves relying on younger, greener lawyers to help them navigate this new remote working landscape. How will that impact the way firms operate going forward? It’s easy to see COVID as a temporary disruption, even as the months pass us by. But the likelihood is that the changes being implemented now are likely to last. Staffers may continue to want to split time between home and office, while clients may prefer fewer in-person meetings. As security and safety improve, there’s more reason to rely on tech solutions for business concerns. It’s just a matter of finding a balance.