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Commercial

Global Class Actions Meet Corporate Governance

The legal landscape is always changing, and watching for trends is vital for savvy firms and investors. Currently, a convergence of two forces is leading to widespread changes in the industry. First, class actions and other types of collective redress cases are increasing in popularity and validity. Also, corporations are becoming increasingly responsible toward communities, the environment, and stewardship of investor interests. Omni Bridgeway explains that around the world, standard principles are being informally adopted by multiple markets. Now that collective redress and class action suits are more viable than ever, there’s an expectation of a rise in claimants and new cases surrounding environmental and social issues—as well as cases relating to a business’ responsibility to investors. For a long time, the United States was a leader in class action filings. The rest of the world is catching up quickly though, owing in no small part to third-party legal funding. The European Union released a proposal detailing provisions encouraging consumers and investors to address unlawful deeds even in cross-border situations. The Netherlands Collective Damages Act came into law. It allows for surrogates to bring damages on behalf of wronged parties in international class actions. The new law also allows courts to award damages without requiring a settlement to be reached. This means that the looming threat of court-awarded damages can be the impetus to get parties to the bargaining table. Class action cases involving the environment, social issues, or governance can be well-served by litigation funding. International class actions can be costly and take years to conclude. An influx of non-recourse funding may be exactly what’s needed to bring a case to completion without adding financial strain. As the legal industry develops and adapts to changing circumstances, it’s clear that the role of litigation funding will continue to change with it.
Announcements Commercial

Court Issues Carriage Decision in Ukraine Airlines Flight PS752 Class Action

The Ontario Superior Court of Justice has awarded carriage of the proposed class action to the Arsalani Plaintiffs. On January 8, 2020, UIA Flight PS752 took off hours after the IRGC fired and struck US bases in Iraq. Minutes after takeoff, IRGC missiles struck Flight PS752, causing it to crash to the ground. There were no survivors. The proposed class action is on behalf of the passengers and the passengers' families. It alleges the Islamic Republic of Iran, the Islamic Revolutionary Guard Corps (IRGC) (collectively the Iran Defendants) and Ukraine International Airlines PJSC (UIA) are liable in negligence: the Iran Defendants continued to operate and control the airport, aircraft and airspace in exchange for flyover fees after it launched missiles at the US military bases in Iraq and the UIA did not ground the Aircraft. Regarding state immunity of the Iran Defendants, the Court agreed that state immunity is not absolute, it can be lifted in this case through the commercial activity exception. In a lengthy and well reasoned decision, the Court reviewed the numerous carriage factors that favoured the Arsalani Plaintiffs. The Honourable Court awarded carriage to the Arsalani Plaintiffs finding "it is in the best interests of the class, having regard to access to justice, judicial economy, and behaviour modification." "We are grateful for this important court decision as we seek justice and compensation for our loved ones" said Omid Arsalani, whose sister, brother-in-law and niece perished on Flight PS752. "With the help of our team, we will continue to work through the courts to seek justice and compensation" said Tom Arndt, of TWA Law, a leading class action lawyer representing the class members. The Court found that third party litigation funding and indemnity were the most important factor favouring carriage to the Arsalani Action. The court previously approved the Galactic Funding Agreement in a decision released on September 21, 2020. "We are prepared to go the distance with TWA Law as they prosecute the Arsalani Action to completion" said Fred Schulman, Chairman and CEO of Galactic Litigation Partners LLC. Members of the proposed class action are encouraged to consult the case specific website regarding progress of the litigation: www.flightps752.ca
Commercial

‘Chilling’ Precedent Overturned in Augusta Ventures Claim

Alleged underpayment was at the crux of a recently-overturned precedent ruling in Federal Court. UK-based legal funder Augusta Ventures had been ordered to pay more than $3 million in costs before it could proceed with a class action for underpayment at the Mount Arthur coal mine. Financial Review explains that the precedent might have impacted six or more class actions relating to the conduct of industrialists. If upheld, it could have been detrimental to much litigation based around the Fair Work Act. Chief Justice James Allsop determined that the claims in question were merely speculative. The ruling detailed that requiring funders to pay security upfront was contrary to the best interest of workers and to the public good. This clashed with an earlier decision by Justice Michael Lee, who held that securing costs was a necessary step. These rulings are of obvious interest to litigation funders as they impact how class actions can move forward under the terms of the Fair Work Act. Ultimately, a precedent that funders and claimants are not engaged in a ‘joint venture’ was set.
Commercial

The Effective Use of Monetization

Pending legal claims and potential awards are considered uncertain. They lack liquidity and a surety of success, but they’re also vital corporate assets. With the effective use of monetization capital, these assets can be used to access quick cash. Burford Capital explains that monetization is a growing type of legal finance that allows businesses to liquidate pending judgments, arbitration claims, and pending litigation. The process is simple—a legal financier offers a lump sum of non-recourse capital to cover expenses until the matter is resolved. The benefits of monetization are threefold:
  • Brings an immediate influx of cash when it’s needed most.
  • Allows companies to access capital when it’s needed rather than waiting for cases to be resolved.
  • Mitigating the company’s exposure to risk.
In-house lawyers also find benefits in the monetization of claims. The practice is seen as an innovative and creative solution to financial stress. Better still, monetization allows companies to pursue serious claims without worrying about how the expense will impact the bottom line. This makes pursuing litigation profitable even before a resolution can be reached.
Commercial

Manolete Case Numbers Rise, Fueling Profits

UK Funder Manolete is showing a 49% profit increase in the six months ending September 30th of this year.  Shares magazine details that in the first half of this financial year, 52 cases were completed. This represents nearly three times the number of cases from last year. After-tax profits for Manolete were GBP5.2 million in the first half of this financial year. Profits from completed cases topped GBP4.2 million, an increase of 45%. As of Tuesday morning, Manolete share price was 305p
Commercial

Maximizing Litigation Funding Opportunities in Africa

Around the world, litigation funding is growing at a fast pace. The economic impacts of the pandemic are one of several contributing factors that also include recent legislation that’s increasingly inviting to the practice. Africa is the newest bastion of growth for the industry. As companies face pressure to conserve funds, legal departments scramble for new ways to manage budgets effectively. Lexology details that there are a few main points worth looking at when considering the relevance of litigation funding to Africa. Most notable is the lack of regulation in much of the continent. Third-party funding is welcome nearly everywhere, and legislation impacting the practice is minimal. African communities have been adversely impacted by COVID, pretty much across the board. The businesses that serve these communities recognize their obligation to keep doors open—and reducing costs through the use of litigation funding is a solid way to accomplish that. Also, litigation costs in much of Africa were already on the rise before the pandemic began. Litigation funding allows litigants to avoid contingency plans and find the best counsel available. As a business tool, litigation funding is in high demand. This is an area in which the expertise of funders comes into play, as funding entities utilize legal advisers, analytics, and career-long expertise to advise businesses on how and when to pursue litigation. Funders are more than sources of quick cash. They can serve as advisors who can recommend business solutions that make the most out of third-party legal funding. Africa is joining the ranks of Australia, Europe, the United States, and Singapore as desirable places for investments in litigation funding. The perception of their courts has risen in recent years next to an excellent record for enforcement. There’s every reason to believe this trend will continue.
Commercial

Sizable Damage Awards Have Investors Looking at Patents

Several large awards for damages levied against tech giants like Apple and Cisco are turning industry heads. Centripetal Networks was awarded nearly $2 billion by a Virginia district court, representing just one of several awards of over $100 million for patent infringement. An article in Bloomberg Law explains that investors, including litigation funders, are looking at these sizable awards as an impetus to invest in patents. Some have suggested that big tech companies have become complacent and overconfident in the likelihood of beating a patent-related action. This attitude can limit the ability of parties to meet at the negotiating table—necessitating a long and costly trial. Investing in patents, not unlike litigation funding itself, is recession-proof to a large degree, as it’s not correlated with the rest of the market. A 2019 survey of lit fin companies, in-house counsel, and law firms suggests tremendous interest in acquiring patents. Jack Lu is a chief economist at an intellectual property consultancy. He explains that willful patent infringement can realistically lead to triple damages. Lu sees the large verdicts as a message to patent owners, letting them know that the courts are serious about protecting their rights. That’s good news for tech companies, and for patent owners. The large awards coming down involve high-end tech, or in some cases, pharmaceutical patents. One reason the damages are so sizable is that they factor in the expected sales volume. In the history of the US, only nine cases have ever ended with a verdict of $1 billion or more. They’ve all happened since 2007, which would seem to indicate the intrinsic value of technology in society. Joshua Harris, VP at Burford Capital, expects that the kind of verdicts they’ve been seeing will continue to attract investors. Even if, Harris says, verdicts are lowered on appeal—an award in the multi-millions is still attractive to investors.
Commercial

Experience is the Path to Trust in Litigation Finance

Despite the widespread acceptance of third-party litigation funding, some remain skeptical. Accusations of promoting frivolous legal actions and unfair recoupments are common. Bloomberg Law details that while most of the legal world understands the value of Litigation Finance in increasing access to justice, not everyone is convinced. A new survey shows that opinions on the efficacy and trustworthiness of the practice are directly impacted by one’s own experience. In short—those who have used litigation funding were more likely to say that it’s helpful, while those who haven’t were more prone to view it with suspicion.
Announcements Commercial

Litigation funder Validity Finance adds former Kirkland Ellis lawyer in Houston; former federal judge joins firm’s investment committee

Leading litigation funder Validity Finance has expanded its Texas bench with the addition of former Kirkland & Ellis Houston trial partner Sarah Williams. She joins as portfolio counsel in Houston, where she’ll advise on potential investments with particular focus on Texas and the Southwest. At Kirkland, Ms. Williams handled a wide span of litigation matters, including high-profile energy and bankruptcy cases, as well as disputes involving contract, fraud, professional liability, and employment claims. Along with her trial experience, she brings strong analytic skills for helping Validity assess funding opportunities with law firms and businesses across Texas and the region. The Texas legal market is the nation’s third largest and boasts one of the most active state court systems, and the fourth most active federal system. The latest annual report by the Texas Judiciary reported that the number of civil lawsuits filed in state district courts grew by 11% between 2018-19, and nearly 30% over a five-year period. As the state’s docket has grown, so has the backlog, creating more financial pressure on claimants trying to advance their cases. “We’ve seen a pronounced uptick this year in demand for funding support – including among companies and law firms constrained by Covid. Nationally, demand has grown around 50%,” said Validity’s Houston office head Laina Hammond. “In our two-and-a-half-year presence here, we’ve met with virtually all of the top trial practices in the state, including boutiques. This is a market that grasps the value proposition in partnering with strong funding providers to grow and sustain litigation pipelines.” Regarding Ms. Williams, Ms. Hammond added, “We had no doubt that Sarah was a strong fit with our team here. She brings outstanding trial experience and excellent relationships across the region, and her ability to size up the merits and worthiness of a case will make her invaluable for building our Texas portfolio. We are thrilled to have her with us and look forward to helping clients find innovative financing solutions to meet the unprecedented legal challenges they face.” Ms. Williams was partner at Kirkland from 2018-20, having previously been a litigation associate. She was formerly an associate at the Houston firm Diamond McCarthy as well as at Weil Gotshal. She served as judicial clerk for the Honorable Marcia Crone in the Eastern District of Texas from 2010-12. Before becoming a lawyer, Ms. Williams was an award-winning journalist, writing for various publications including The Houston Chronicle and Examiner Newspaper Group. “I am excited to join the Validity team and to help expand the company's portfolio in Texas and beyond,” Ms. Williams said. “As a trial lawyer, I'm keenly aware of the important role litigation finance can play in ensuring worthy cases reach the courtroom and look forward to partnering with our clients to develop innovative solutions to their funding needs.” Retired Magistrate Judge Henry Jones Joins Investment Committee Validity also announced a new member to its investment committee, former U.S. Magistrate Judge Henry Jones. He joins former federal Judge John Gleeson, retired Kirkland & Ellis partner Jim Schink, and Towerbrook General Counsel Glenn Miller on Validity’s investment committee. Judge Jones most recently served as a mediator, arbitrator and Special Master for The McCammon Group after retiring from more than 30 years as Magistrate Judge of the U.S. District Court of the Eastern District of Arkansas. A graduate of Yale University and the University of Michigan Law School, he enjoyed a broad civil litigation practice as a partner at Walker Hollingsworth & Jones in Little Rock, Ark., prior to his judicial career. Validity CEO Ralph Sutton stated, “Judge Jones and I have known each other for over 30 years. We both clerked for the Honorable G Thomas Eisele about 20 years apart. Judge Jones’ reputation for incisive, crisp and thoughtful decisions from the bench was always matched by his impartiality and respect for the dignity of every litigant who appeared before him. We know he will contribute meaningfully to the quality of our IC’s investment decisions.” 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.validity-finance.com.