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Commercial Regulatory Issues

Lawyers for Civil Justice Submits Letter to House Subcommittee in Support of Funding Disclosure Rules 

By Harry Moran |

As LFJ reported last month, a committee hearing in the US House of Representatives brought a renewed focus on the issue of disclosure and transparency in the use of third-party litigation funding. Since that hearing, the debate has continued to evolve, with advocacy groups lending their voices to the discussion, as funders and law firms try to influence the direction the legislature will take.

In a letter submitted to the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, Lawyers for Civil Justice (LCJ) responded to the Subcommittee’s hearing on third-party litigation finance. The letter, signed by LCJ’s president, Molly H. Craig, laid out its argument that “there are numerous compelling reasons why uniform rules requiring disclosure will benefit federal courts and parties while improving the transparency and fairness of the federal court system.”

LCJ listed the following reasons why it supported the introduction of new rules governing the disclosure of litigation funding:

  • Reduce the risk of conflicts of interest
  • Ensure that decision makers participate in court proceedings
  • Identify the actual interests of parties
  • Evaluate discovery requests and allocate costs and sanctions in accordance with the FRCP
  • Protect the interests of class action members
  • Ensure counsel represent their client’s interests, not third-party funders
  • Inform trial rulings on evidence admissibility and acceptable lines of questioning

LCJ also highlighted four proposals that it has previously put forward and continues to advocate for, which would introduce specific amendments to existing rules in order to “support or require such appropriate TPLF disclosures”. These include amendments to Rule 26 disclosure, Rule 16 disclosure, Rule 26.1 of the Federal Rules of Appellate Disclosure, and FRCP Rule 7.1 disclosure.LCJ describes itself as “a national coalition of corporations, law firms, and defense trial-lawyer organizations that promotes excellence and fairness in the civil justice system and supports measures to secure the just, speedy, and inexpensive determination of civil cases.”

More information about LCJ can be found on its website.

Community Spotlights

Member Spotlight: Stuart Price

By John Freund |

Stuart Price is the Chief Executive Officer, Managing Director and co-founder of CASL. Mr Price worked in the United Kingdom, the Middle East and Australia during his 30+ year career in banking and investment banking, legal and litigation finance. Mr Price has held senior positions in litigation finance for over a decade with a career highlight being the resolution of a class action against the Queensland State Government for ‘Stolen Wages’ for $190m, on behalf of over 12,000 First Nations peoples.  

Mr Price was instrumental in the establishment of The Association of Litigation Funders of Australia (ALFA), where he was the inaugural CEO and Managing Director from 2018. Mr Price continues as a Director of ALFA.

Mr Price has a 1st Class Honours Degree in Applied Mathematics from the University of St. Andrews, is a Fellow of the Institute of Chartered Accountants in England & Wales, a member of the Institute of Chartered Accountants in Australia & New Zealand, a Fellow of the Governance Institute of Australia and a Fellow of FINSIA.

Company Name and Description: CASL was founded in 2020 by John Walker and Stuart Price with the objective of creating a level playing field and providing access to the legal system for claimants to prosecute meritorious claims.

CASL is a significant litigation funder in the Australian market, raising investment capital of $156m in 2022 that represents one of the largest dedicated pools of capital to this market.

Company Website: https://www.casl.com.au/

Year Founded:  2020

Headquarters: Sydney

Area of Focus: Litigation Finance

Member Quote: CASL has one of the most experienced litigation finance teams which when combined with substantial financial resources, enables it to be a leading provider of litigation finance with local decision making.

Case Developments Commercial

Latam Advisors Director says Argentina’s President Should Negotiate a Deal for $16B YPF Judgement

By Harry Moran |

One of last year’s biggest stories of the legal funding world was the $16 billion judgement in the Argentina YPF case, standing out as a significant win for litigation funder Burford Capital. However, the pressing question since this judgement has been how Argentina’s government would deal with this mammoth sum, especially since Burford Capital has continued to demonstrate its commitment to judgement enforcement and foreign asset recovery.

An article in the Buenos Aires Times, which analyses the current state of Argentinian President Javier Milei’s government, offers a small but interesting insight into the direction that Argentina’s leader could choose to take in regards to the $16 billion judgement in the YPF case. The article highlights recent comments from Sebastián Maril, director of Latam Advisors, who suggested that the Argentine government could attempt to negotiate a deal to end the dispute with Burford Capital over the $16 billion sum, with payments made over time in return for a lower total amount paid.

Maril argues that “Argentina should start viewing international legal proceedings as assets and not liabilities”, and that the government should seek to build relationships with these companies so that “beneficiaries of foreign judgments should understand that, by helping the Republic they’ll be helping themselves.” Maril places the YPF judgement in the context of a wider pattern of Argentina already having to pay out ‘US$16.35 billion in closed and settled legal judgements since 2000’, with an additional $10.245 billion in open judgements beyond the YPF settlement.

Commercial Regulatory Issues

Paper Published on the Funder’s Perspective of International Arbitration

By Harry Moran |

In a post on LinkedIn, Francesca Mastragostino, junior associate at Bonn, Steichen and Partners, announced the publication of a paper titled ‘Third-Party Funding in International Arbitration: the Funder’s perspective’, which covers “the complex dynamics between the client and the funder during legal proceedings.” The paper, published by Club de l’arbitrage as part of Les Dossiers Du Blog De L’Arbitrage, includes an examination of the funding of these proceedings, including disclosure requirements for funders, rights and obligations, and security for costs.

In the paper, Mastragostino discusses the differences in disclosure rules between jurisdictions, highlighting the compulsory requirements in Hong Kong and Singapore versus the lack of any mandatory disclosure in Luxembourg. Mastragostino notes that despite the continuing conflict between advocates and critiques of the legal funding industry, “there might be indeed potential benefits to such transparency”, such as the possibility for this transparency to enhance the image of a claim as meritorious enough to have attracted funding.

Mastragostino also examines the nature of the relationship between a client and their funder, explaining that a positive model for this relationship is “characterised by continuing monitoring and dialogue.” She also highlights the value, beyond pure financial resources, that a funder can bring to these proceedings through the expertise and experience that litigation finance professionals can bring having worked on similar cases in the past.

The full paper can be found on the Club de l’arbitrage website.

Announcements Case Developments

SdK Offers Litigation Finance to Enforce Claims for Additional Payment for Former Shareholders of STADA Arzneimittel AG

By Harry Moran |

Former shareholders of STADA Arzneimittel AG who tendered their Stada shares as part of the takeover offer by Nidda Healthcare Holding AG in August or September 2017 are entitled to an additional payment of €8.15 per share. This was decided by the Federal Court of Justice in May 2023. Since Nidda Healthcare Holding AG refuses to make a voluntary additional payment to all former STADA shareholders, SdK Schutzgemeinschaft der Kapitalanleger e.V. is offering litigation financing for a legal claim without any cost risk to the affected former STADA shareholders.

On July 19, 2017, Nidda Healthcare Holding AG, a joint venture of the international financial investors Bain Capital and Cinven Partners, submitted a voluntary public takeover offer to the shareholders of STADA Arzneimittel AG to acquire their shares at a price of € 66.25 per share. Within the acceptance period (until the end of August 16, 2017), the bidder’s offer was accepted by 63.76 % of STADA shareholders and within a further acceptance period (until September 1, 2017) by a further 0.11 % of STADA shareholders. The bidder thus achieved a tender volume, including shares held by STADA, of approx. 63.87 % of STADA’s share capital and voting rights. 

On August 30, 2017, a shareholder holding 8,265,142 shares (13.26 % of the shares and voting rights) agreed to a domination and profit and loss transfer agreement between Nidda Healthcare and STADA if the amount of the compensation under the domination and profit and loss transfer agreement is at least EUR 74.40 per STADA share. Several former shareholders of STADA, who had accepted the lower takeover offer, filed a lawsuit against the bidder demanding the difference between the offer price and the compensation under the domination and profit and loss transfer agreement of EUR 74.40. 

In two identical judgments dated 23 May 2023 (case no. II ZR 219/21 and II ZR 220/21), the German Federal Court of Justice (BGH) ruled in favor of two plaintiffs pursuant to sections 31 (5) and (6) WpÜG, referring to the principles of the so-called Celesio case law. In principle, all former shareholders of Stada AG who had initially exchanged their regular shares for the securities tendered for sale with ISIN DE000A2GS5A4 or for securities subsequently tendered for sale with ISIN DE000A2GS5B2 and had subsequently tendered these in the takeover offer are entitled for the payment of the difference. 

Following a request of the Federal Financial Supervisory Authority („BaFin“), the Bidder published a corresponding notice in the Federal Gazette, but pointed out that, in its view, any payment claims by former shareholders could be based on the defense of the statute of limitations. In the opinion of the Bidder, the statute of limitations generally began at the latest at the end of 2017. However, this is incorrect. The claims of the former shareholders of STADA are not yet time-barred: This is because after the courts of the 1st and 2nd instance had still rejected the claim for subsequent payment, only the BGH confirmed this claim for additional payment. The claim for additional payment is therefore not yet time-barred.

The SdK is offering affected former STADA shareholders legal cost financing to enforce their claims for additional payment. The claims can thus be enforced without any cost risk. The SdK, as the financier of the legal costs, assumes all costs of the legal proceedings in return for a profit participation of 30% of the proceeds in the event of success. For more information please contact us at info@sdk.org.The SdK will be happy to answer any questions from its affected members by e-mail at info@sdk.org or by telephone on +49 89 / 2020846-0.

Announcements Commercial Legal Innovation

CourtCorrect, Leader in Complaints AI, Completes Funding Round from Industry Veterans

By Harry Moran |

CourtCorrect, the market leader in complaints resolution with AI, is pleased to share that we have successfully completed a funding round from industry veterans to fuel our growth and product development.

CourtCorrect is an AI startup based in London, focusing on the safe deployment of artificial intelligence technologies to improve the efficiency, quality and root cause analysis of complaints resolution. We work with clients across financial services and other regulated industries and process thousands of cases every week.

Investors participating in the round include both existing and new investors such as Alain Dehaze (former CEO of Fortune 500 The Adecco Group), Philippe Verboogen (Managing Director at BlackRock and the driving force behind the Growth of eFront Solutions prior to being acquired by BlackRock for >$1bn) and Dr. David Wicki-Birchler (Head of Compliance at a Swiss Banking Group).

This further funding, coming on top of over £2m in Seed Funding raised from 20VC, Visionaries Club, Ascension VC and Concept Ventures will allow CourtCorrect to invest in its growth trajectory as clients scale their use of the platform and new firms onboard to the future of complaints resolution.

Additionally, this funding enables CourtCorrect to further invest in product development, including assisting clients with root cause analysis as we continue to position the company as the market leader for complaints resolution with AI.

Alain Dehaze had this to say about the funding round:

“We are delighted to support CourtCorrect in her growth ambitions and to build on the strong impact her clients have been seeing from AI. We are looking forward to continuing our collaboration with Ludwig and the team by providing a strategic investment as well as guidance on scaling up the sales function. Good luck to the whole team!”

Ludwig Bull had this to add following the completion of the round:

“This investment comes at the perfect time for CourtCorrect. Following tremendous growth in the last 12 months, we are looking forward to investing directly in our Go-To-Market strategy as well as continue to build out the platform in close collaboration with our clients. I’m sure that this vote of confidence in our team, product and business model will propel CourtCorrect to new heights.”

Thank you to our investors, team members and advisers who supported this investment round.

About CourtCorrect:

CourtCorrect works with clients across financial services and other regulated markets to improve the efficiency, quality and root cause analysis of complaints resolution. By leveraging the most recent advances in AI and with an expert team drawn from machine learning and financial services compliance backgrounds, CourtCorrect processes thousands of cases every week to create a win-win-win for consumers, businesses and regulators.

CourtCorrect assists clients across the resolution process, including generating letters and other correspondence, structuring and extracting key insights from documents, assessing potential outcomes against the backdrop of internal policies and regulations and identifying root causes both in individual cases and in aggregate. As a result, businesses save time, improve the quality of resolution, remediate complaints causes effectively, improve customer retention and align more closely with regulatory rules, including Consumer Duty.Please feel free to contact us at hello@courtcorrect.com or request a free trial of the platform on our website: https://platform.courtcorrect.com/signup

Announcements Commercial Deals

4 Rivers and Case Legal Media Form Strategic Alliance

By Harry Moran |

4 Rivers and Case Legal Media (“CASE”) are pleased to announce a strategic alliance to collaborate to assist law firms which operate in the mass torts space with case origination and funding. 

Law firms acting for mass tort claimants are often in the position where they require external funding to provide working capital for themselves, as well as case costs and expenses, while the claims are in progress. Law firms must therefore be properly funded so that they can pursue further actions which benefit from CASE’s acquisition and intake expertise.  4 Rivers has extensive know-how and bespoke tools which can be used to secure such finance from diverse sources of capital.  

The two firms have recognised that there will be considerable value in working with each other on projects and generally from sharing intellectual capital, and contacts in the legal and funding sectors, as well as deriving further benefits from sharing support, resources, and infrastructure.

Peter Petyt, Chief Executive Officer of 4 Rivers, said: “I am delighted that 4 Rivers and Case Legal Media will be working together to help law firms to secure the right type and amount of finance to allow them to acquire meritorious cases and run the cases with sufficient resources to give them every chance of a successful outcome.”   George Young, Founder of CASE Legal Media, said: 

“CASE Legal Media is excited for the opportunity to partner with Peter and his team.  We are always looking for ways to improve our services and add value to our law firm partners, and we think the resources provided by 4 Rivers can give our clients a unique level of market intelligence to navigate the world of litigation finance.”

About 4 Rivers

4 Rivers is a legal finance advisor and brokerage which originates claims either from claimants direct or through law firms. It has relationships in place with the major third-party funders based throughout the world, as well as multi-strategy funds, family offices, private equity funds, and private credit funds.

It also advises on law firm strategy and mergers and acquisitions in the wider legal services sector.  4 Rivers also has long established relationships with lawyers and attorneys, barristers, valuation experts, forensic accountants, e-discovery vendors, investigations companies, asset tracers, costs companies and other specialists in order to assemble the right team to enable third-party funding to be secured and/or a contingency arrangement to be negotiated.

About Case Legal Media 

CASE Legal Media helps law firms procure thousands of cases in both national mass tort and local personal injury campaigns, using the power of television, radio, and digital media together to deliver low cost and high-quality case acquisition. CASE assists clients in all aspects of client acquisition, from marketing to intake to records retrieval. They are currently active in a number of case acquisition marketing campaigns for their law firm partners, including Asbestos, Camp LeJeune, Hair Relaxer, MVA, NEC, and PFAS, amongst others. CASE has a database of approximately 4,000 law firms with whom it has had a range of contacts in the past. 

Case Developments Commercial

Apple Asks Delaware Court to Force Omni Bridgeway to Answer Subpoena

By Harry Moran |

The fight over disclosure and transparency around third-party funding of patent infringement litigation continues to generate high-profile cases, as one of the world’s largest technology corporations is asking a court to force a litigation funder to respond to its subpoena.

Reporting by Bloomberg Law provides an overview of a recent filing from Apple Inc., which sees the technology giant file a motion to compel compliance with a subpoena for Omni Bridgeway. Apple is asking the US District Court for the District of Delaware to force the litigation funder to answer a December 2023 subpoena, seeking information about Omni Bridgeway’s involvement in a California patent infringement suit. The original patent lawsuit was brought by MPH Technologies Oy in 2018, claiming that Apple had infringed on its patents with Apple’s iMessage and FaceTime products.

The filing of the motion to compel compliance has come after Apple says that several discussions have taken place between lawyers for the company and Omni Bridgeway, but none of these conversations have resulted in the litigation funder being willing to disclose the requested information. In a declaration in support of the motion, Hannah Cannom, an attorney at Walker Stevens Cannom who represents Apple in the patent infringement case, confirmed that the funder “has not produced any responsive documents to the Amended Subpoena nor offered any witness for a deposition.”

A letter from Omni Bridgeway, that was included as an exhibit for another declaration by one of Apple’s lawyers, shows that the funder objected to the subpoena and asserted 20 separate objections to the request. In the summary of its objections, Omni Bridgeway’s counsel stated that “the subpoena does not coherently state what information it seeks; why the information sought by the subpoena is discoverable in the underlying litigation; and why information requested by the subpoena cannot be obtained directly from a party to the underlying action.”

Neither representatives from Apple nor Omni did not respond to Bloomberg Law’s requests for comment.

Case Developments Commercial

CASL Funding Class Action Over Surcharges Imposed on Foreign Property Purchasers 

By Harry Moran |

Australia remains one of the top jurisdictions for litigation funders looking to engage in funding opportunities for class action claims, as demonstrated once again by CASL’s financing of case in the Federal Court which is seeking compensation for foreign persons who paid surcharges on property purchases or ownership.

An article in the Australian Financial Review (AFR) highlights an ongoing class action brought against the Victorian State Government over its imposition of stamp duty and land tax surcharges on foreign parties who purchased or own property in Victoria. The central argument of the claim is that the state government imposed at least two of these surcharges on foreign purchasers, in breach of existing Commonwealth agreements with certain countries that ensure taxes are equitable. 

The class action is seeking up to $500 million in compensation for persons who paid one of these surcharges, and is a foreign national from Finland, Germany, India, Japan, New Zealand, Norway, South Africa, and Switzerland.

The Foreign Purchaser Surcharges class action was filed in the Federal Court of Australia earlier this year, with law firm Johnson Winter Slattery representing the claimants and litigation funder CASL supporting the case. AFR spoke with the founder of CASL, John Walker, who explained that the government “promised all these countries which they created treaties with that they’d deal with taxes in a non-discriminatory way”, and that after evaluating their options, “the only real possibility of having commercially viable compensatory proceedings commenced was in Victoria.”

Kim May, senior investment manager at CASL, also explained that whilst the case has been filed in the Federal Court, its final destination may lay elsewhere. May said that the claim contains “constitutional issues”, and that from CASL’s perspective “the place for that to be ventilated is the High Court”.For more information, visit the Foreign Purchaser Surcharges class action website.