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Commercial

IPO Wealth Class Action Targets Trustee

A class action involving IPO Wealth is proceeding in a Victoria Federal Court. The case was filed against Vasco Trustees and names associated company DH Flinders. Law firm Slater and Gordon is running the class action. Australian Financial Review details that the IPO Wealth Fund was the debut product of Mayfair 101, an upstart investment firm. Earlier this year, two other Mayfair 101 entities have also had their assets frozen. The class action currently involves more than 50 investors, including several retirees or those who invested workers comp monies. While the fund was reserved for investors with high net assets—the investors in question were largely inexperienced. The lead plaintiff, Helen Batey-Smith, put $1 million into the fund as of November 2018. She rolled it over multiple times until the investment was frozen. In the claim, some aspects of the promotional material are at issue—including eye-catching declarations of “attractive returns” and the phrase “term deposit.” This seemed, to some, deliberately intended to obfuscate or mislead investors. A memorandum on the fund released between 2017-2019 omitted the significant risk of the fund’s underlying investment. Vasco should have known (or did know) that the investments were speculative at best. Mayfair 101 insists that they have not broken any laws but nor would they comment on the accusations regarding advertising. Similar cases have been adjudicated recently in the investor’s favor. However, litigation funding firms and legal fees absorbed much of the settlements. This new class action is not utilizing litigation funding.
Consumer

‘Real Housewives’ Husband Held in Contempt Over Missing Settlement Payouts

The husband of reality TV star Erika Jayne is being held in civil contempt along with his law firm. A federal judge in a Chicago court made the decision after Thomas Girardi and the Girardi Keese law firm failed to identify the whereabouts of more than $2 million in payments for survivors and family of the Lion Air Flight 610 plane crash. Chicago Sun-Times explains that Judge Thomas Durkin froze the assets of the lawyer and his firm. He then affirmed that payment to at least four families owed half a million dollars would cure the situation. Girardi is also being sued by multiple litigation finance firms over non-payment and leaving funding contracts unfulfilled. He and his wife are accused of embezzling settlement money in order to maintain the appearance of being wealthy celebrities. The couple, ostensibly in the midst of a divorce, claims to be staring at ever-growing debt. It’s been alleged that the couple misdirected large amounts of money from both funders and clients for their own personal use. Jayne herself describes the case as “high drama.”
Commercial

Canterbury Class Action Against Southern Response Launches

Policyholders with Southern Response got a rare bit of good news as their class action against the insurer was launched. New Zealand’s top litigation funder, LPF, will provide financial support for the action. Those homeowners who were insured by Southern Response and made a claim after their home was damaged in the earthquake are eligible for inclusion—if their settlement was lower than it should have been. Scoop reports that roughly 3,000 homeowners were allegedly shorted by the insurer in settlements related to the Canterbury earthquakes. This new class action is an alternative to an earlier claim—run by GCA lawyers and funded by Claims Funding Australia. A recent opt-out ruling could lead to claimants becoming part of the GCA lawyers class action, which carries high fees. This new class action carries no success fees and is free to sign onto. Funders will receive a max payout of 15% of the award if the case is successful. If the case is resolved successfully within two years, and costs are under $2 million, LPF Group will get 10% of the settlement. If it takes longer though or costs more, the 15% return will come into play.
Commercial

Mastercard Case Moves Forward as UK Inches Toward US-Style Class Actions

Litigation Finance received a holiday gift in the form of a new UK Supreme Court decision allowing a GBP 14 billion case to proceed against credit giant Mastercard. The claim, which could involve over 46 million claimants, alleges that the credit card group charged excessively high fees and overcharged customers regularly. Proactive Investors explains that the ruling opens the door to a bevy of new collective claims. A similar claim was filed last year against five big banks alleging price manipulation. Many have presumed that litigation funders are salivating at this news. Neil Purslow, CIO of Therium Capital, has stated that Therium will be making investments in these types of cases as a result of this ruling.
Commercial

Arbitration Against Tanzanian Government Begins

Indiana Resources, an ASX-listed gold mining company in Australia, is proceeding with its case against the Government of Tanzania. The case involves the alleged illegal expropriation of a nickel mining project. The action is led by two incorporated UK companies: Ntaka Nickel Holdings, and Nachingwea UK. Mining Review explains that the case, which is funded by Litigation Capital Management, is expected to convene in the first quarter of next year. An arbitral tribunal will be appointed, followed by filing the claimant’s evidence and supporting documents. Original estimates of losses are close to $1 billion. The government of Tanzania has allegedly been reticent to participate in every step of the process. Plaintiffs claim they refused to come to the negotiation table when claimants invited them to negotiate in good faith, and that they refused to engage concerning the formation of the tribunal. Bronwyn Barnes, executive chair at Indiana Resources has stated that she is pleased to see such progress in recent months. She goes on to affirm that there is adequate litigation funding in place and that the memorial is well underway. According to Barnes, $95 million is the minimum claim for expected compensation.
Commercial

Litigation Funding Ethics in the US

The Third Annual Ethics Summit from Frankfurt Kurnit was held last month. The litigation funding panel covered a host of ethical and legal points of interest. These include coverage of the back-and-forth between the industry and the NYC Bar Association, and the ever-evolving rules of professional ethics. MONDAQ begins with an overview of the practice of Litigation Finance, including the non-recourse nature of funding and how it differs from traditional loans. This detailed the many advantages of litigation funding, including helping average citizens see their day in court without financial barriers. It also affirmed the risks—such as pushing the boundaries of attorney-client privilege, or funders attempting to make decisions about the cases they fund. The NYC Bar Association turned heads in 2018 when they asserted that Rule 5.4a disallows fee-sharing with non-lawyers—and therefore renders litigation finance prohibited. This stance has been debated, sometimes vehemently, by legal professionals. However, the opinion is not law, and litigation funding agreements have not changed because of it. The question of disclosure remains in flux. How much should a lawyer tell a potential funder? What should they be obligated to reveal? This is especially relevant in single-case funding. It only makes sense that funders want details to properly vet cases they fund, but the question of what they’re legally entitled to know remains up in the air.   When states refine professional ethics and rules regarding litigation funding, they help ordinary citizens gain access to the justice system. While questions about disclosure and privilege remain, it cannot be denied that anyone who has been wronged deserves their day in court. Further, it should not be denied that litigation funding is the most effective way to secure the rights of citizens to pursue a case even when they lack the financial resources to do so.
Commercial

Insights into Funding International Collective Proceedings

The first day of the Global Class Actions Symposium brought with it new considerations for claims filed in the US and EU. In the United States, champerty is still an issue, as nearly half of all states do not allow the practice of Litigation Finance. Some have even said that regulatory trends are moving in two directions at once—with some seeking to restrict or heavily regulate the use of litigation funding, and others laying the groundwork for its mainstream acceptance. ISLG explains that regulatory developments are often focused on changes within the industry, and mitigating their impact. In the last few years, litigation funding has shifted from funding single large cases, often class actions, to portfolio funding. This reduces risk for funders while helping legal firms manage budgets. Some have suggested that this funder-friendly approach is incongruous with the foundational concept of Litigation Finance—increasing access to justice. Disclosure is an ongoing sticking point in litigation funding, as is the fear that funders will hold sway over decision-making in the cases they fund. This, despite existing law typically requiring that funders not control any aspect of the case. In the EU, class action cases are called ‘collective redress’. The EU is expected to strengthen the laws that impact such actions. Typically, the use of litigation funding must be disclosed to the courts, regardless of which side is utilizing it. Meanwhile in Germany, Litigation Finance has been legal since 1999, but it has never gained the popularity it has elsewhere. Day one of the symposium concluded with Melissa Ferrari, president of Verein Global Justice Network, who affirmed the importance of funders not controlling any aspect of a funded case.
Commercial

Eni Will Issue Subpoenas on Nigerian Litigation Funding Arrangements

Eni, the Italian energy company, was recently given court approval to subpoena companies accused of taking part in the Nigeria OPL 245 scandal. This is expected to include asset recovery companies as well as litigation funders. Previously, Eni suggested that the government had taken action under pressure from third parties who are hoping to profit illegally. Premium Times reports that there are seven companies involved, including Poplar Falls LLC, and six Drumcliffe Partners entities, based in Delaware USA. The subpoenas are not expected to require the release of privileged documents. The evidence sought by Eni was largely unattainable by any other method, which is why court assistance was necessary. Eni insists that their request was not intended to circumvent existing restrictions or policies on gathering evidence. In fact, the discovery sought by Eni is narrow and non-intrusive. The scandal itself involves the former oil minister of Nigeria, Dan Etete. Etete is accused of controlling accounts that received more than a billion dollars from Eni and Shell—both multinational oil giants. From those accounts, over $500 million was transferred to accounts controlled by Etete, and Abubakar Aliyu—the owner of AA oil. This 2011 transaction was authorized through several ministers of the Nigerian cabinet, ostensibly as payment for OPL 245—one of the richest oil blocks in Nigeria. Initially, both Eni and Shell stated that they were unaware that the money would go to Etete and his associates. Evidence showing that claim to be false was eventually revealed—as Shell eventually affirmed. Currently, Etete, Shell, Eni, and several oil company officials are being prosecuted in Italy for their alleged roles in this scandal. The deadline to comply with subpoenas will be 30 days from the date it is served.
Commercial

New Scholarship for ASU Law Students Announced by Pravati Capital

Scottsdale, Arizona’s leading litigation finance and consulting firm has established a scholarship in support of gifted students. The scholarship will go to exceptional students attending Sandra Day O’Connor College of Law at Arizona State University. ASU reveals that the Pravati Capital Endowed Scholarship is part of the Dean’s Circle for donors, in support of law students looking for mentorship and networking opportunities. It also provides financial support to gifted students, including those attending ASU on campuses in LA, Washington DC, and downtown Phoenix. Dean of Law at ASU, Douglas Sylvester, stated that they are grateful for such a generous donation and that the money will be used to continue to provide a first-rate law school experience for students. Pravati Capital provides litigation funding to firms on a non-recourse basis.