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Announcements Commercial

Validity Welcomes Marlon Becerra and Shao-Jia Chang for the 2021 Equal Access Fellowship

Validity Finance is pleased to welcome Harvard law students Marlon Becerra and Shao-Jia Chang for its 2021 Equal Access Fellowship. The program, in its third year, provides a 10-week paid summer fellowship to first-year law students of diverse backgrounds. The Equal Access Fellows spend the first half of their summer at Validity learning basic principles of litigation funding, and the second half working at a legal non-profit of their choice. Validity, which covers Fellows’ salary for the entire 10-week program, is one of the only litigation funders to provide such a program for first-year law students. Mr. Becerra and Ms. Chang will both work at Validity for the first five weeks of their fellowship, from June 1 through July 3. They will assist in analyzing potential case investments, participating in meetings with claimants and lawyers, and conducting legal research on topics related to litigation and dispute funding. Like many major law firms, Validity is introducing a hybrid return to work, mixing in-person visits to its New York office with remote work, as the rest of its team has been doing in recent months. “We’re proud to have Marlon and Shao join us as Equal Access Fellows for the summer of 2021,” said Validity Finance founder and CEO Ralph Sutton. “Both have outstanding backgrounds, including personal histories that may not have suggested they’d end up at one of the nation’s top law schools. We’re also pleased to have arrived at a point in the pandemic where we can offer an in-person experience for Marlon and Shao.” The two Fellows were chosen from a pool of 36 applicants from 18 top-tier law schools. Candidates submitted academic transcripts and essays addressing their interest in litigation funding and describing how they have overcome personal challenges. Mr. Sutton commented, “Given the past year’s events — pandemic-related and in terms of social justice — there is a heightened need for young lawyers interested in helping to expand equal access to the civil justice system, which is one of Validity’s core mandates as a litigation funder.” About Equal Access Fellow Marlon Becerra A native of Jackson Heights, New York, Marlon was the first member of his family to attend college. He obtained his B.A. in Economics from Political Science from Hampshire College and is now a rising second year student at Harvard Law. Having to return to New York in the middle of his first year of law school, Marlon created an initiative called Civic Engagement and Social Justice for Legal Outreach, Inc. The non-profit teaches New York City high school students of color how to be more proactive leaders in addressing social issues. “As many of the students come from the inner-city, they are particularly interested in addressing the obstacles preventing them from having an equal opportunity to succeed in high school and in college,” he wrote in his personal statement. “I partnered with attorneys from firms across the city to support the students’ efforts to develop and implement campaigns to address their social justice issues.” During the summer of 2020, Marlon worked for the NYC Department of Social Services’ Employment Law Division. As he notes, “I had the opportunity to write a memorandum recommending how COVID-19 guidelines will impact the agencies’ accommodation policies. I saw the importance of considering people’s access to resources and justice, as we focused on urgent issues impacting one of the city’s largest agencies that both hires and serves primarily minority communities.” At Harvard, Marlon is a member and Section Representative of the law school’s chapter of the American Constitutional Society for Law and Policy, which promotes progressive legal change in order to realize economic and social justice. He is also a member of La Alianza, a student-run organization composed of Latinx and Latin American students interested in issues affecting the Latinx community at Harvard Law, and a member of HLS First Class, a student affinity group for first generation law students. About Equal Access Fellow Shao Chang Shao Chang grew up in a rural Northern California town of only 4,500 residents, where she notes, “few families lock their front doors, and many people proudly leave their keys in the ignition.” She writes of frequent bias against her own parents and her own early struggles with proficiency in English. Shao obtained her B.A. in Psychology and Legal Studies from the University of California, Berkeley, in 2017. She received Dean’s Honors and Highest Honors in Legal Studies, and is a member of Phi Beta Kappa. Following college, Shao spent several years as a field representative and aide for Napa-area Congressman Mike Thompson. She recalled taking on projects and facing circumstances that were considered too difficult to accomplish in rural parts of the district, which included her hometown. Motivated by a desire to increase equity and access, she asserts, “I did not believe that infeasibility is a reason not to try, especially when it came to the neediest area in the district.” At Harvard Law, Shao is the External Vice President of the school’s Mock Trial Association and Willem C. Vis Moot Team, and is a sub-citer for the Harvard Journal on Legislation and the Harvard Negotiation Law Review. She is also a member of the Social Committee of the Asian Pacific American Law Students Association at Harvard, a member of the Reproductive Justice Team of the Mississippi Delta Project at Harvard, and serves on the board of the Women’s Law Association. About Validity Validity is a commercial litigation finance company that provides non-recourse investments for a wide variety of commercial disputes. Validity’s mission is to make a meaningful difference in our clients’ experience of the legal system. We focus on fairness, innovation, and clarity. For more, visit www.validityfinance.com.
Consumer Special Features

Both Law Firms and Plaintiffs Benefit from the Expanding Consumer Legal Funding Industry

The following piece is a contribution by Charles W. Price, CEO of Capital Now Funding, LLC.  The following scenario was once all too common – plaintiffs injured in an accident, waiting impatiently for a complex lawsuit to settle. With the clock ticking and the plaintiff often unable to work, there was little they could do except wait for the phone to ring while medical and other bills kept piling up. Meanwhile, their attorneys must candidly tell them that it will be weeks to months or years before they might receive their settlement money. Faced with this situation, it was not at all surprising that clients grew increasingly frustrated, gradually giving way to worry, fear and anxiety. And dealing with this level of stress, plaintiffs were capable of placing unneeded pressure on their attorneys to settle before the legal process had fully played out. Attorneys, who naturally want to get the best possible settlement for their clients, were often faced with having to settle prematurely even though they knew that a much better resolution could soon be reached. Fortunately, a better solution has emerged in recent years that meets the needs of all parties – Consumer Legal Funding. Consumer Legal Funding is often mislabeled and referred to as a pre-settlement loan or a loan against a lawsuit, but it is not technically a loan. Consumer Legal Funding is legal funding that is advanced from a portion of the consumer’s future settlement proceeds. As defined by Eric Schuller with the Alliance for Responsible Consumer Legal Funding, providing a client with consumer legal funding is merely the purchase of an asset – a portion of the consumer’s future settlement proceeds. In essence, plaintiffs are borrowing from their own future settlement funds. How Do All Parties Benefit? The real story of consumer legal funding is best viewed in light of the benefits it provides. For the plaintiffs, the benefits include:
  • Immediate, much-needed financial assistance to pay medical, housing and living expenses while their legal claim is in process
  • Zero to no risk to the consumer, since consumer legal funding is non-recourse (which means that if the plaintiff loses the case, they do not have to pay the funding company back)
  • Better relationships with their attorneys, as attorneys generally play a positive role in approving consumer legal funding
  • Avoids the need to turn to other, riskier forms of borrowing, which may result in unnecessary debt
  • Plaintiffs are in a much better position to receive the best possible legal settlement
For attorneys representing the plaintiffs, the benefits include:
  • Reduced pressure to settle a case too soon and accept a settlement that is less than deserved
  • Adequate time to get the best possible outcome for clients
  • Immediate relief for plaintiff clients struggling with bill payments when they may be unable to work due to accident injuries
  • Better relationships with their clients, who need the legal funding as well as the added time for the attorney to properly settle their case
  • Improved communications with their clients during the course of the case, as clients who are under less financial pressure will make for a better settlement outcome
  • More favorable attorney reviews and increased referrals from happier clients
Understanding The Basics of Consumer Legal Funding Once you know how the consumer legal funding process works, it’s easy to see what a valuable solution it is for both plaintiffs and attorneys. Pre-settlement legal funding is a great description of this funding, because the funding company actually provides funds to a plaintiff prior to the legal settlement of their case. The pre-settlement funds are usually taken from the portion of the total funds that will be dispersed at the time the case is settled. Pre-settlement funds are intended to help a plaintiff cover medical and living expenses until the case settles and settlement funds are received. But it all begins with the attorneys. Why Law Firms Should Be Involved In The Process It is essential for the law firm to approve the funding amount given to the plaintiff, as the attorney must confirm that the case is legitimate and has a strong likelihood of being settled favorably. This approval by the attorney is the signal for the funding company that the plaintiff’s case is deserving of legal funding. Pre-settlement funds do not have to be repaid if the plaintiff were to lose the case. Most often, when the plaintiff wins or favorably settles their case, the attorney will repay the pre-settlement amount to the funding company out of the settlement funds at the time the case is settled. Clearly, providing plaintiffs with the ability to receive financial assistance while their legal claim is in process is a benefit when they have nowhere else to turn and no other assets of significance to leverage for capital. As The Consumer Legal Funding Industry Has Evolved, It Has Greatly Improved In the past, some attorneys may have been hesitant to recommend pre-settlement funding for their clients because they may have been concerned over the perception of getting involved in the process, or worried about it from an ethics compliance standpoint. However, over recent years, bar associations and state licensing agencies have upheld, and now agree, that pre-settlement legal funding is a highly beneficial product. Additionally, in the past, when there were not a lot of options for pre-settlement legal funding companies, clients may have been charged unnecessarily high fees and interest on funds with an indefinite payback period. As a result, if the case went on longer than expected, the client could be left with a payoff that was more than their settlement. This just isn’t the case any longer. As the industry has matured and evolved, products and options have improved. States have implemented laws regulating the amount of fees that can be charged by pre-settlement funding companies and have required increased disclosure and transparency. Additionally, the fees being charged have become more competitive, and companies like Capital Now Funding have joined the industry who are dedicated to providing fully transparent payoffs that are fixed for the life of the case with zero interest. What is most essential in order to benefit the consumer is that law firms have access to legal funding companies they trust and can recommend to their clients. It is important that the attorney helps their client properly evaluate the funding company. Always look for a legal funding company with positive reviews, and one that is forthcoming about its fee structure. Everyone Wins As an attorney or law firm, you’re only going to see the benefits of pre-settlement funding if you choose the right consumer legal funding provider. Different providers have different terms and conditions, different fees and interest rates, and different levels of service and communication. Make sure you choose a good fit for you and your clients’ needs. About the Author Charles W. Price is Chief Executive Officer of Capital Now Funding, LLC, a nationwide provider of pre-settlement funding for personal injury cases. Capital Now Funding provides industry leading Fixed Fee funding with zero interest, which protects clients and preserves their ultimate settlement amount. For more information, you can contact Charles at cwprice@capitalnowfunding.com.
Commercial

Why Choose a Reliable Legal Funder? Ask Feltex Carpet!

Can failure to provide security for costs derail an otherwise meritorious case? It appears that’s what happened in a New Zealand-based collective action against Feltex Carpets. The case was funded, but stopped abruptly when funders failed to provide security for costs. Why did that happen? Omni Bridgeway details that in a funded class action, defendants are entitled to security for costs. The judge gave a specific “unless” order, stating that the case would end if the security was not filed. An appeal was lodged and it failed. Courts stated that it was against the public interest to allow the case to go forward. The judge stated his skepticism that the funders could meet their obligations to the court. What can others do to avoid the fate of the Feltex case? Here’s what to consider when choosing a litigation funder:
  • Reputation. Is the funder well-suited to the type and subject matter of your case? Are there experts on staff? Will funders assist or encourage the use of investigations or experts?
  • Relationships. Does the funder have experience or connections in the jurisdiction where your case will be tried? Are they connected to a specific law firm or larger business entity?
  • Transparency. Is there adequate capital? What about insurance? Can funders meet their obligations as stated in the funding agreement?
  • Track record. Do they make money for investors? What is their record of choosing successful cases?
  • Peace of Mind. Does the funding agreement seem clear, straightforward, and fair? Are the representatives of the funder listening to you and answering your questions fully and completely?
Asking the right questions will go a long way toward finding a reliable funder in which you can feel confident. The legal funders you partner with are a vital part of the team you’re building, so ensure they meet the above criteria.
Commercial

Woodsford Promotes Alex Hickson to Senior Investment Officer

Woodsford Litigation Funding has recently announced the promotion of Alex Hickson to Senior Investment Officer. Hickson joined the firm in 2019. Woodsford went on to explain Hickson’s return to Australia to grow business in that market—along with Clare Owen. The firm recently earned its AFSL, allowing it to fund new class action claims under new Australian regulations. That makes Woodsford the first non-Australian based funder allowed to fund such claims in the land down under. 
Commercial

LCM Funds Carillion Claim against KPMG

Litigation Capital Management is providing capital in a High Court claim against KPMG. The case revolves around KPMG’s audits of Carillion’s financials amid losses of GBP 250 million. Proactive Investors explains that LCM has a long tradition in funding insolvency cases. Some refer to LCM as the ‘insolvency funder of choice’ in the UK. LCM executive vice chair Nick Rowles-Davies stated that the funder is delighted to be supporting creditors who have suffered due to KPMG’s actions. Nearly 200,000 employees lost their jobs when Carillion underwent compulsory liquidation after amassing nearly GBP 1.5 billion in debt—despite receiving a ‘clean bill of health’ from KPMG. The FRC is expected to publish its findings on KPMG’s audits soon.
Commercial

Federal Equity Receivers Can Improve Recoveries with Legal Funding

Contingency arrangements are often used by federal equity receivers when financial constraints keep them from pursuing litigation against fraudsters. These arrangements can shave off a sizable portion of the expected recovery—up to 50% in some cases. Omni Bridgeway explains how litigation funding can maximize recoveries in a way that’s flexible and adaptable. Portfolio claims in particular—but how else can litigation funding help receivers?
  • Funders often conduct research to confirm the strength of a claim.
  • Sometimes funders can cover fees and expenses pursuant to a preliminary evaluation of a prospective case. This allows limited budgets to be maximized.
  • Estates that use funding have more flexibility in planning and forming a legal team.
  • Hybrid approaches may be used, and portfolio funds may be released on a case-by-case basis.
Portfolio funding is a growing industry that can be applied to estate recoveries to maximize returns. Diversifying the portfolio creates less risk than bundling similar cases, and is more likely to attract funders.
Announcements Commercial

Harvard Law Students Marlon Becerra and Shao-Jia Chang Selected for Validity Finance’s 2021 Equal Access Fellowship

Leading litigation funder Validity Finance has selected Harvard law students Marlon Becerra and Shao-Jia Chang for its 2021 Equal Access Fellowship. The program, in its third year, provides a 10-week paid summer fellowship to first-year law students of diverse backgrounds.

The Equal Access Fellows spend the first half of their summer at Validity learning basic principles of litigation funding, and the second half working at a legal non-profit of their choice. Validity, which covers Fellows’ salary for the entire 10-week program, is one of the only litigation funders to provide such a program for first-year law students.

Mr. Becerra and Ms. Chang will both work at Validity for the first five weeks of their fellowship, from June 1 through July 3. They will assist in analyzing potential case investments, participating in meetings with claimants and lawyers, and conducting legal research on topics related to litigation and dispute funding. Like many major law firms, Validity is introducing a hybrid return to work, mixing in-person visits to its New York office with remote work, as the rest of its team has been doing in recent months.

“We’re proud to have Marlon and Shao join us as Equal Access Fellows for the summer of 2021,” said Validity Finance founder and CEO Ralph Sutton. “Both have outstanding backgrounds, including personal histories that may not have suggested they’d end up at one of the nation’s top law schools. We’re also pleased to have arrived at a point in the pandemic where we can offer an in-person experience for Marlon and Shao.” The two Fellows were chosen from a pool of 36 applicants from 18 top-tier law schools. Candidates submitted academic transcripts and essays addressing their interest in litigation funding and describing how they have overcome personal challenges. 

Mr. Sutton commented, “Given the past year’s events — pandemic-related and in terms of social justice — there is a heightened need for young lawyers interested in helping to expand equal access to the civil justice system, which is one of Validity’s core mandates as a litigation funder.”

About Equal Access Fellow Marlon Becerra

A native of Jackson Heights, New York, Marlon was the first member of his family to attend college. He obtained his B.A. in Economics from Political Science from Hampshire College and is now a rising second year student at Harvard Law.

Having to return to New York in the middle of his first year of law school, Marlon created an initiative called Civic Engagement and Social Justice for Legal Outreach, Inc. The non-profit teaches New York City high school students of color how to be more proactive leaders in addressing social issues. “As many of the students come from the inner-city, they are particularly interested in addressing the obstacles preventing them from having an equal opportunity to succeed in high school and in college,” he wrote in his personal statement. “I partnered with attorneys from firms across the city to support the students’ efforts to develop and implement campaigns to address their social justice issues.” During the summer of 2020, Marlon worked for the NYC Department of Social Services’ Employment Law Division. As he notes, “I had the opportunity to write a memorandum recommending how COVID-19 guidelines will impact the agencies’ accommodation policies. I saw the importance of considering people’s access to resources and justice, as we focused on urgent issues impacting one of the city’s largest agencies that both hires and serves primarily minority communities.” At Harvard, Marlon is a member and Section Representative of the law school’s chapter of the American Constitutional Society for Law and Policy, which promotes progressive legal change in order to realize economic and social justice. He is also a member of La Alianza, a student-run organization composed of Latinx and Latin American students interested in issues affecting the Latinx community at Harvard Law, and a member of HLS First Class, a student affinity group for first generation law students.

About Equal Access Fellow Shao Chang Shao Chang grew up in a rural Northern California town of only 4,500 residents, where she notes, “few families lock their front doors, and many people proudly leave their keys in the ignition.” She writes of frequent bias against her own parents and her own early struggles with proficiency in English. Shao obtained her B.A. in Psychology and Legal Studies from the University of California, Berkeley, in 2017. She received Dean’s Honors and Highest Honors in Legal Studies, and is a member of Phi Beta Kappa. Following college, Shao spent several years as a field representative and aide for Napa-area Congressman Mike Thompson. She recalled taking on projects and facing circumstances that were considered too difficult to accomplish in rural parts of the district, which included her hometown. Motivated by a desire to increase equity and access, she asserts, “I did not believe that infeasibility is a reason not to try, especially when it came to the neediest area in the district.” 

At Harvard Law, Shao is the External Vice President of the school’s Mock Trial Association and Willem C. Vis Moot Team, and is a sub-citer for the Harvard Journal on Legislation and the Harvard Negotiation Law Review. She is also a member of the Social Committee of the Asian Pacific American Law Students Association at Harvard, a member of the Reproductive Justice Team of the Mississippi Delta Project at Harvard, and serves on the board of the Women's Law Association.

About Validity Validity is a commercial litigation finance company that provides non-recourse investments for a wide variety of commercial disputes. Validity’s mission is to make a meaningful difference in our clients’ experience of the legal system. We focus on fairness, innovation, and clarity. For more, visit www.validityfinance.com. 

Announcements Commercial

KBRA Assigns Preliminary Rating to TVEST 2021A, LLC Note

Kroll Bond Rating Agency (KBRA) assigns a preliminary rating to one class of notes from TVEST 2021A, LLC, an asset-backed securities (ABS) transaction collateralized by litigation finance and medical receivables serviced by Experity Ventures LLC ("Experity"). TVEST 2021A represents Experity’s second ABS transaction collateralized by litigation finance and medical receivables, following the issuance by TVEST 2020A, LLC in August 2020. Experity, formed in April 2019, is the parent company of the various receivable originators including Thrivest Legal Funding, LLC, a direct to market pre-settlement legal funding company with a history of originations dating back to 2009 and ProMed Capital Venture LLC, a leading medical lien funding company that has been originating since 2017. Experity is also the parent of six other litigation finance receivable originators that were formed in connection with strategic financing and operational partnerships with third parties. The portfolio securing the transaction has an aggregate discounted receivable balance ("ADPB"), of approximately $70.3 million as of the April 30, 2021 cutoff date. The ADPB is the aggregate discounted cash flows of the collections associated with the TVEST 2021A portfolio’s litigation funding receivables and medical receivables. The discount rate used to calculate the ADPB is a percentage equal to the sum of the assumed interest rate on the Class A Notes, the servicing fee rate of 1.00%, and an additional 0.10%. As of the Cutoff Date, medical receivables comprise 56.7% of the portfolio by advance amount and have an average advance to expected settlement case value ("Expected Case Worth Ratio") of 22.84%. Litigation receivables comprise the remaining 43.3% of the portfolio by advance amount and have an Expected Case Worth Ratio of 7.92%.
The Receivables are sold by the various originators, and two special purpose vehicle affiliates, to the seller who then sells the Receivables to the issuer. The Class A and B Notes are issued pursuant to an indenture under which the issuer pledges the Receivables to the trustee. The Class A Notes benefit from credit enhancement in the form of overcollateralization, subordination and a cash reserve account. Click here to view the report. To access ratings and relevant documents, click here. Disclosures Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above. A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here. Information on the meaning of each rating category can be located here. Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com. About KBRA Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
Announcements Commercial

Delta Capital Partners Management Launches Delta Defense Solutions – Lit Fin Industry’s First Comprehensive Set of Funding and Risk Mitigation Solutions for Defendants and Respondents

Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, is pleased to announce the launch of a new venture, Delta Defense Solutions ("DDS"). DDS offers defendants and respondents funding to pay the legal costs associated with their defense, including professional fees, experts, tribunal costs, and the cost of any utilized risk mitigation solutions. Much like a typical plaintiff-side litigation funding arrangement, Delta typically provides DDS solutions on a non-recourse basis such that if the defendant loses then it is not obligated repay Delta its capital investment. There are many ways that defense solutions can be structured, and each solution offered through DDS is unique and highly customized. Defense solutions are quite versatile and can be used by a range of defendants and respondents, including those in cost-shifting jurisdictions and whether involving court-based litigation or arbitration. Defendants benefit from DDS by obtaining funding and gaining access to risk mitigation solutions that otherwise may be very difficult and/or costly to obtain, including customized insurance solutions and structured financial products offered through Delta's venture partners.  Additionally, if a party is involved in multiple pieces of litigation (whether as a defendant, respondent, or plaintiff), then DDS offers portfolio financing solutions that provide more favorable terms compared to individual case funding arrangements for defendants or plaintiffs. Christopher DeLise, Delta's Founder, CEO, and CO-CIO, stated, "Delta's years of experience and success with offering litigation funding solutions for plaintiffs has enabled Delta to develop proprietary solutions for defendants and respondents.  By partnering with top-tier insurance and structured finance professionals, Delta is pleased to be able to offer bespoke, comprehensive, cutting-edge defense solutions across the globe.  As the market continues to evolve, we believe defense-oriented legal finance solutions will become very popular and we are proud to be the first in the industry to offer a comprehensive set of funding and risk mitigation solutions for defendants and respondents." About Delta
Delta Capital Partners Management LLC is a global private equity firm specializing in litigation and legal finance, judgment enforcement, asset recovery, and related strategies. Delta provides capital and related services to individuals, businesses, private investment funds, law firms and other professional service firms across the world that seek to hedge their financial exposure, reduce legal spending, enhance the probability of a successful and timely resolution of claims, and maximize the effectiveness of their core businesses.