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Commercial Covid-19

COVID Litigation in Europe

Even before the pandemic gained a foothold, European courts felt the impact of COVID. Litigation over insurance, safety precautions, employment, and business interruption was rampant. Such litigation is only expected to grow—even after COVID is under control. Law.com International explains that disputes in France, Netherlands, and Germany all bear close examination. In France, for example, businesses were besieged by lawsuits almost immediately. Amazon, Airbus, and multiple companies that stayed open during lockdown were accused of not properly protecting employees’ safety. In France, employers are under more pressure to treat employees fairly. Parisian employment partner Emmanuelle Rivez-Domont explains that at the end of the day, it’s simply not feasible to keep everyone happy. But employers should still be held to the highest standards. Shockingly, many parties in France decided to remove COVID-related effects from the legal definition of force majeure. This is a heavy blow to those impacted, who were counting on their insurers to make good. In the Netherlands, everyone from insurers to event organizers are taking steps to test the waters. One hospitality industry group sought to vacate or relax social distancing in restaurants and bars. A judge denied the request, affirming that the government is allowed to make even drastic choices in the public’s best interests. Insurance had been a straight-forward matter in the Netherlands until COVID. Now cases are plentiful, leading to four insurers losing a claim over cancellation payouts due to COVID. As in the rest of the world, insurers may need to brace for impact as claimants use legal means to seek what they’re owed. In Germany, a “klagewelle” or ‘litigation wave’ is on the horizon. Germany’s lockdowns included bars and restaurants, hotels, clubs, and theaters—all of which led to industry-wide losses in the tens of billions. It’s only now that these businesses are learning that their insurance doesn’t cover loss of business due to a pandemic.
Commercial

Eni Attacks Third Party Funders in Nigerian Oil Claim

Italian energy giant Eni has requested documents relating to a $1 billion case involving the government of Nigeria and investment firm Drumcliffe—the principles of which are still involved in a corruption trial. Bloomberg News details that this is just the latest facet of an ongoing dispute which puts two prominent energy companies against Africa’s largest producer of crude oil. In this most recent claim, Eni holds that the Nigerian government is influenced by interests that they have not publicly disclosed. To support this claim, Eni is seeking documents from Drumcliffe Partners LLC. Eni now claims that the Nigerian government is in league with third parties who are attempting to reap “illicit” profits. This is a common complaint against third-party litigation funders and is often brought up by parties who have much to lose if the opposition is well-funded. Jim Little of Drumcliffe was unimpressed by the accusations, saying that Drumcliffe looks forward to discrediting the accusations, which he called ‘wild innuendo.’ Nigerian media published the funding agreement with Drumcliffe, which revealed Drumcliffe taking a potential share of 35%. Not uncommon in non-recourse funding agreements. Nigeria has joined the case as a civil party. They are also asserting that both Eni and Shell owe a penalty of $1.1 billion. Still, both companies have denied the charges, affirming that their agreements with the government of Nigeria are legitimate. Also denying wrongdoing are Eni CEOs Claudio Descalzi and Paolo Scaroni. The court is expected to rule later this year.
Commercial

Third-Party Funding Disclosures in Court—What’s at Stake?

As Litigation Finance permeates the mainstream and regulation catches up, the issue of disclosure remains contentious. At the time that a funding deal is created, there’s no real way to know whether or not courts will require disclosure of the agreement. Bloomberg Law explains that typically, this type of disclosure is not required by the courts. Funding, most judges rule, is not materially relevant. That said, determinations regarding disclosure are decided on a case-by-case basis. A recent survey on Litigation Finance shows that while legal professionals are feeling unsure—there’s nothing to suggest that disclosure will not be compelled in most instances. Recently, there have been several cases requiring disclosure of funding terms, but so far they’re few and far between.
Commercial

The Rush to Secure Funding by Year’s End

As 2020 nears its end, firms are straining to reduce the impact of Coronavirus on earnings—which for some means cutting staff even as they ensure that their best players won’t be recruited by other firms. Given that, it makes sense that firms holding strong litigation portfolios would want to consider dispute financing. Omni Bridgeway details that those who want to monetize their portfolio should not wait to get started. Portfolio funding arrangements are often large, detailed, and complex. Doing them well takes time. Waiting until December is risky, and can result in deals not being finalized by year’s end. However, beginning the process a few weeks earlier allows time to conduct due diligence, allowing funders to examine the cases in the portfolio while assessing risks against potential rewards. For many firms, portfolio funding carries less risk than funding individual cases. Overall, it allows firms to take more risks in terms of contingency casework—because the firm shares risk with funders. Non-recourse capital is provided and used to cover costs and fees, and can even be used to cover operational expenses in some circumstances. Awards are shared among plaintiffs, firms, and funders. The non-recourse nature of funding means that even if the entire portfolio is resolved unsuccessfully, the firm is not obligated to repay the funding. Dispute funding has many benefits to firms and partners—such as providing firms the ability to pay partner draws despite COVID-related losses. Funding can offer immediate cash flow when it’s needed most. Funding also gives firms more leeway in client selection and agreements. Contingency cases in particular become more viable with the inclusion of litigation funding. This means a larger pool of potential clients and cases. The advantages brought by funding provide an edge that could be used to expand staff and even recruit a rainmaker or two.
Commercial

Nanoco Shows Major Losses, Extends Cash Runway

A recent announcement from Nanoco reveals a sharp tumble in revenue. The Manchester-based tech business reported that revenue fell from GBP 7.132 million to GBP 3.856 million in the period ending July of this year. The Business Desk reports that despite these setbacks, Nanoco has managed to extend its cash runway to December of 2022. It’s hoped that this extension will allow the company to rebuild value. In July of this year, GBP 3.4 million was raised in a patent lawsuit against tech giant Samsung—thanks to support from a third-party litigation funder. A company-wide restructure is underway, which ultimately reduced monthly outlays by roughly 50%. Nanoco’s chairman, Dr. Christopher Richards, affirms that this year has been one of substantial change.
Commercial

Litigation Finance Pro Gian Kull Hired by SYZ Capital

Gian Kull has been appointed head of special situations at SYZ Capital. His investment experience spans more than a decade, making him an excellent choice to manage portfolios and handle private marketing investments. Wealth Adviser details that Kull’s past experience includes structured litigation investments at Multiplicity Partners AG, director of sourcing at Valtegra LLP, as well as opening a European office in Zurich for Brigade Capital Management. He began his career at Merrill Lynch as a research analyst. CEO of SYZ Capital, Marc Syz, explains that Kull’s contribution to the team will center on his expertise in private market investments, sourcing niche investments, and in portfolio construction. His experience with structuring litigation investments will be a boon to the team. As an investment, litigation funding is uncorrelated to the rest of the market. Kull’s expertise will be used to identify opportunities to find ways to generate capital within structural imbalances, specific niche access, or utilizing obscure information effectively.
Commercial Covid-19

Litigation Finance Evolves Through COVID and Beyond

It could be argued that Burford Capital is handling the pandemic better than most. The company transitioned to a remote working platform early on, and have adapted to what’s being called “the new normal” with aplomb. In the months that followed, courts, businesses, and even schools shifted to remote operations—meaning court cases could finally continue. Burford Capital explains that the importance of legal finance has only grown in the era of COVID. Litigation funding can make it possible for class actions, or any meritorious action, to proceed with help from investors. As the legal world forges ahead, there are three specific developments in the industry that all lawyers should be aware of. Solutions in legal finance. The idea of solutions, as opposed to mere transactions, is essential to understanding Litigation Finance. The process offers choices—far more than a simple loan/repayment structure. Litigation funding offers opportunity, peace of mind, and expertise to all parties involved. What’s more, experienced funders will provide an array of options that address specific client needs and concerns. The best funders offer more than funds, they offer years of industry knowledge and tech-fueled insights. The International Legal Finance Association. This organization recently launched as a way to protect the industry from overzealous regulation. It also informs the public about the benefits of litigation funding and does so with transparency and clarity. Welcoming the ILFA as a valuable resource is the right move for businesses, financial institutions, and legal professionals. Corporate partnerships. These are a vital part of what Burford does, especially now that interest in Litigation Finance has exploded. Because Burford is a publicly-traded company (currently on AIM, soon NYSE) functioning with obvious transparency, they’re a strong choice for in-house legal teams or finance departments that demand predictable capital and unparalleled compliance. Now that settlement activity is on the rise, and courts are slowly getting back up to speed—a relationship with an experienced funder is more vital than ever.
Commercial Covid-19

Litigation Funders Find Fewer Sure Bets Due to COVID

One of the most attractive aspects of Litigation Finance as an investment is that it’s uncorrelated with the rest of the market. Even as the Coronavirus pandemic became increasingly impactful, funders assured investors that returns would remain high. Bloomberg Law explains that while investment opportunities in Litigation Finance are plentiful, it hasn’t become the big money generator that legal professionals anticipated. Insurance disputes make up a large percentage of new litigation since the pandemic began. While these cases are plentiful, they don’t offer investors the kind of certainty they’re looking for. Rather than seeing nuclear verdicts in favor of plaintiffs, a number of significant rulings have come down in favor of insurers. This has led to even more caution among investors. Burford Capital, one of the largest funders, endured a sharp decline in business in the first part of this year. At the same time, Burford had a smaller cash outlay this year due to fewer new cases and ongoing court delays. Burford’s Christopher Bogart has stated that it’s impossible to know with certainty what’s coming. Speculation changes every week. In contrast, Ralph Sutton of Validity Finance, is encouraged by the 40% increase in investment opportunity his firm has shown this year.
Commercial

Claim Dismissed Against Russian Oligarch Over Superyacht

A claim of over $115 million in damages, filed by Russian oligarch Farkhad Akhmedov (along with owner Straight Establishment) has been dismissed by the high court of Dubai. The claim revolved around a 115-meter superyacht, the MV Luna, which had been held as part of a divorce settlement. The National details that Mr. Akhmedov sought to recover lost earnings he would have made had he been able to charter the superyacht. However, this contradicted Akhmedov’s earlier assertion that the boat was not a commercial vessel and was not being used as a means to profit. The dismissal is considered a final decision by the courts and is not subject to appeal. The former Mrs. Akhmedova’s case was funded by Burford Capital. Akhmedov’s claim for damages was brought specifically to prevent Akhmedova and Burford representatives from taking possession of the MV Luna. However, the court prevented Akhmedova from taking the yacht—which means that this recent dismissal is a hollow victory. The ongoing injunctions mean that the superyacht is still in Port Rashid while proceedings continue to determine its rightful owner. To date, it has been in dry dock for two years—since London’s high court ruled that Akhmedov must pay 40% of his fortune to his ex-wife.