Trending Now

All Articles

3210 Articles
Commercial Covid-19

Litigation Finance Brings Hope to Those Hurt by COVID-19 Fallout

COVID-19 does more than sicken people. It’s brought with it a recession that may take years to mitigate. Businesses across the board are enduring hiring and wage freezes, furloughs, layoffs, and even outright closures. Even the legal community is not safe from the financial ravages of the pandemic. Bloomberg Law details how Litigation Finance can actually help prop up the legal industry, allowing it to do what it’s meant to do—increase access to justice for ordinary citizens. The challenges of remote working, court delays, and lack of liquid capital are already taking a toll on law firms. It is not an understatement to claim that Litigation Finance can keep the legal field afloat. Investing in meritorious cases can help small firms stay afloat, and lets larger firms take on more cases that may take longer to resolve. Short term funding that is case or portfolio-specific helps free up working capital for firms until cases are resolved. Consider Heller Ehrman, a firm that employed over 700 attorneys, closed after the 2008 bankruptcy of Lehman Brothers left them without working capital. A shame, and one that could have been mitigated by third-party funding at the right time. While it may seem reasonable for more established firms to take out standard bank loans, this is unlikely to happen on a large scale. Banks are often reticent to lend in the midst of a recession. Compiled with ongoing court delays and a dearth of in-person meetings—it’s a recipe for stress and financial instability. As with the financial unrest of 2001 and 2008, it will be far more difficult than usual to secure a bank loan. With all that in mind, lit fin is an ideal way for firms to free up capital and relieve financial pressure. The non-recourse nature of third-party funding makes it an excellent choice for firms and cash-strapped clients alike.
Commercial

Parabellum Capital Preps for Lawsuit Boom with $450MM War Chest

It’s no secret that lawyers and firms anticipate a slew of new cases as a result of COVID-19. The Litigation Finance industry in particular is preparing for a future full of contract breaches, insolvency, and failed insurance payouts. This leads some to suspect that betting on court cases will be popular among investors in the coming months. Bloomberg Law details that litigation funding by third parties has grown dramatically since the 2008 financial crisis, and continues to expand. Parabellum Capital, which specializes in Litigation Finance, has raised over $450 million in new capital with which to fund cases. This comes from under 100 investors, though the final numbers will not be released for several weeks. Parabellum anticipates that number to exceed $450 million. Howard Shams, CEO of Parabellum, explains that the company expects many meritorious claims, some very significant, that would benefit from third-party litigation funding. Other firms no doubt agree. A 2019 survey of funders reports that almost $10 billion in capital has been raised by lit fin firms for US litigation. From mid 2018-mid 2019, funders invested over $2 billion in cases.   Shams went on to say that hedge funds were a source of stress for them, which may not be a good fit for the lit fin game. While Litigation Finance is an investment, its main goal is to increase access to justice. Returns are merely an additional benefit. Shams explains that hedge funds invading the lit fin landscape would be less than ideal.
Announcements Commercial

Australian Regulation of Litigation Funders

AIM-listed Litigation Capital Management Limited (LCM), a leading international provider of disputes financing solutions, notes the announcement on 22 May 2020 by the Federal Treasurer of Australia, Josh Frydenberg, that litigation funders operating in Australia will be subject to new regulation requiring them to obtain and maintain an Australian Financial Services Licence (AFSL). LCM believes it is the only litigation financier in Australia that currently holds and maintains an AFSL. Currently the supply of litigation finance is exempt from the requirement to hold an AFSL and such exemption is likely to be removed by August 2020. This places LCM in an advantageous position against its peers operating in Australia. As part of the new regulatory process, LCM has been asked by the Australian Federal Government to assist in a parliamentary inquiry into whether any further regulation of litigation finance is required in the context of class actions, the findings and recommendations of which will be made public. LCM has anticipated for some time that class actions in Australia would be the subject of further regulation and expressed its support for such an initiative while assisting in two prior inquiries, one by the Australian Federal Government and one by a State Government. LCM actively manages its portfolio of investments with its objective of spreading investment risk to ensure that no industry sector or type of claim dominates its portfolio. Specifically, LCM limits the number of class actions that it is prepared to invest in depending upon the size of its overall portfolio. LCM remains firmly focused on the provision of disputes financing solutions in the areas of insolvency, commercial disputes, arbitration and corporate portfolio funding. Patrick Moloney, CEO of LCM, comments: “LCM anticipated changes to regulation and as a result already holds an Australian Financial Services Licence. LCM fully supports the move to increase regulation in our industry. Regulation of litigation funding insofar as it concerns class actions is something that is not only welcomed by LCM but could provide it with a strategic advantage as the cost and compliance issues are likely to create further barriers to entry and restrict the numbers of financiers that can fund class actions.” In April, LCM appointed Mary Gangemi as its new Chief Financial Officer and James Foster as an Investment Manager, both based in London. Their appointments follow the March close of a new US$150m third-party fund backed by significant global blue-chip investors. The fund marks LCM’s return to managing third-party funds, following its building of a permanent source of balance sheet capital through the equity markets. Contact:\ Angela Bilbow Global Head of Communications abilbow@lcmfinace.com +44 (0)20 3955 5271 About LCM Litigation Capital Management (LCM) is a leading international provider of litigation financing solutions. This includes single-case and portfolios across; class actions, commercial claims, claims arising out of insolvency and international arbitration. 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.
Read More
The LFJ Podcast
Hosted By Christopher DeLise |
In this episode, we spoke with Christopher DeLise, Founder & CEO of Delta Capital Partners. Delta was founded in 2011, and Chris explains both his company and the industry have evolved over that time. He also goes into detail about 'the Delta difference,' and highlights some unique product launches that are expected to rollout soon. [podcast_episode episode="5574" content="title,player,details"]
Commercial

Community Justice Fund Established by Therium Access & Partners

Therium is a household name in the world of Litigation Finance, and with good reason. As a prominent funder, they’ve expanded access to justice for countless ordinary citizens. Now, Therium has teamed up with five foundations to establish the Community Justice Fund. Its purpose is to provide grants in support of social welfare during and after the Coronavirus pandemic. As Therium explains on their website, these grants will offer access to specialized legal advice and long term support where needed. The idea is for the grants to be flexible and expedient so that the money goes to the people and causes most in need.  A total of six foundations are providing financial grants, along with additional support for social welfare agencies to help those impacted by the pandemic. Participating groups include: Therium Access, Access to Justice Foundation, Paul Hamlyn Foundation, Indigo Trust, Legal Education Foundation and AB Charitable Trust. Other groups will also be making contributions, including Law Society, Linklaters, London Legal Support Trust, and Allen & Overy. This type of giving is more vital now than ever, as ongoing cuts to social safety nets have decimated the social justice sector. Extra pressure from business closures, insurance or landlord disputes, furloughed employees, and other results of Coronavirus could stress these protections to the breaking point. There has already been a massive uptick in requests for legal advice or representation. Hopefully, some of these grants will find their way to organizations whose tech is still ill-equipped to mitigate Coronavirus precautions. Lacking internet access or updated computers can prevent teleconferencing or meetings via Zoom. Because these grants are flexible, money can be used to upgrade equipment, cover adaptive services, or cover costs of working remotely.
Commercial Covid-19

Litigation Finance to Maintain Momentum During and Post-COVID-19

Everything we know about the business world is changing, in no small part due to the Coronavirus. Retail outlets, restaurants, bars, theaters, and even insurance companies are feeling the crunch caused by stay-at-home orders, supply shortages, and staffing woes. Yet through it all, Litigation Finance is enjoying a surge of opportunity. Bloomberg Law reports that while the impact on the legal community will be long-lasting, there are steps firms can take to mitigate how much COVID-19 impinges on them. Right now, we’re seeing industries across the board become more risk-averse. IPOs are on hold, mergers and acquisitions are practically non-existent. At the same time, third-party litigation funding is more necessary than ever. When clients or even firms are in financial peril, a contract with an experienced funder is an excellent way to mitigate risk and keep balance sheets tight. The concept that litigation funding increases access to the pursuit of justice is more evident than ever.  It’s expected that specific areas of law will be extra active post-COVID. Insurance coverage conflicts, breach of contract, and insolvency will all likely increase. Portfolio funding will probably grow as well, along with claims monetization. As per usual, those with more capital on hand will likely do better in a post-COVID world. But given that litigation funding returns are not correlated with the rest of the market, smaller funding entities may see increased opportunities to expand as capital flows into this attractive asset class. 
Commercial Covid-19

COVID Case-Funding Displays Importance of Uncorrelated Investments

Tail Risk is a term used to describe a situation that’s unlikely to happen, but would have a profound impact should it take place. The current COVID-19 pandemic certainly qualifies. The disruption caused by the Coronavirus outbreak is affecting markets around the globe, yet despite the upheaval - or perhaps because of it - Litigation Finance is thriving. The Star details that the world of Litigation Finance is still a solid investment—especially since it’s not correlated to other market factors. Third-party funding is not a new strategy, though it has resurged in recent years. The US market is especially active since laws regarding funding obligations are welcoming towards responsible funders. In 2013, roughly 7% of firms used third-party funding. Four years later that percentage jumped to 36%. Still, the market is wide open for funders who want to invest in single cases or portfolios.   Litigation Finance, however, requires experience and expertise to determine the viability of a given case—experience that hedge fund managers and VC firms sorely lack. That's why many are partnering with savvy funders who are adept at weighing potential risks and returns, including the length of cases and the probability of a reward.  In the world of Litigation Finance, effective risk management—the kind that comes with years of experience--is vital. 
The LFJ Podcast
Hosted By Counsel Financial |
Our guests today are Paul Cody and Todd Kushman from law firm funder Counsel Financial. Paul and Todd discuss what sets Counsel Financial's business model apart from that of traditional funders, how they partner with funders in various capacities, the types of financial products the company offers, and how both their company and the industry at large has evolved in the 20 years since Counsel Financial was first founded. [podcast_episode episode="5536" content="title,player,details"]
Commercial

When Should Clients Seek Litigation Funding?

Litigation Finance is a complex and growing industry for good reason. It’s a boon to potential plaintiffs of limited means, as it increases their access to the pursuit of justice. It’s helpful for legal firms keeping the balance sheets tight while still pursuing a heavy caseload. Litigation funding is also good for the court systems at large, as funders only want to fund meritorious cases—cutting down on frivolous litigation clogging courts. Above the Law details that a client doesn't need to set up a funding agreement at the early stages of the case. There is any number of ways that bringing in a third-party financing partner can help a case at any stage of the process—before an award is collected. Teaming with a funder at the outset of your case can be advantageous, especially financially—even when it’s not strictly necessary in order for the case to move forward. The best time to get advice from an experienced funder is before you’ve invested too much time and money. That’s a good time for cases to be tested, and their merits weighed. If a case seems to be going well, it can be good to bring in a funder at the midway point. Once it’s determined that an early settlement won’t be reached, morale might be down while expenses pile up. Bringing in funding to mitigate risk and expenses can be a big plus at this stage of the case. Even after a judgment has been provided in your case, a funder can help. Additional funding might be needed to mitigate an appeals process or ensure that an award can be collected. In class action cases, it may take months or longer to determine individual payouts and get them distributed. While earlier is probably better when considering Litigation Finance, there’s really no stage in the game where it’s too late to bring in an experienced funder. The right funder can offer sage guidance, help ease financial strain, and limit risk for all involved.