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Commercial

Legalist Founder Explains Unique Funding Model

When we think of Litigation Finance, our impulse might be to envision well-capitalized funders assisting large companies. The founder and CEO of Legalist, Eva Shang, sees the business differently. Her model is one of David v. Goliaths—helping the little guys that other funders may overlook. Above the Law recently interviewed Shang about how she has achieved such incredible success. The Harvard dropout was one of Forbes Magazine’s 30 under 30 back in 2018. Inaugural funding for Legalist was just over $10 million. Two years later, Legalist boasted a fund of $100 million. Interestingly, Legalist began with no lawyers on staff managing funds. When they first started, Shang had never even drafted a Litigation Finance agreement. What’s more—they had no real connections in the legal world. The firm was literally built from the ground up. Shang credits other litigation funders who offered guidance when her company was just beginning. Legalist uses machine learning and AI to find cases and underwrite them. This tech gives Legalist an edge in finding small and medium-sized claims—the sort that larger funders tend to pass on. What many firms find too labor-intensive, Legalist seizes on to brilliant effect. These cases may only see awards of a few million dollars and require a few hundred thousand in investment. This model requires a lot more work, but is filling a much-needed niche in the industry while providing tidy profits. More importantly, Legalist does what Litigation Finance was always designed to do—increase access to justice for those who could not otherwise afford it.
The LFJ Podcast
Hosted By Robert Hanna |
On this episode, we sat down with Robert Hanna, co-founder of Augusta Ventures, the UK's largest litigation funder by case volume and overseas lead generation. Robert discussed developments in the UK market post-COVID. What is the current climate like, and what can we expect down the road? Will the emergence of more funders spell trouble for the industry's reputational risk? And how are industry participants managing issues like collectability risk and time-to-settlement concerns? [podcast_episode episode="5814" content="title,player,details"]
Commercial

Advice from a Litigator Turned Litigation Finance Executive

The most successful Litigation Finance firms are those that act as partners, not merely funders. Funders can join a team at any point in the case and still make a positive impact. John Garda has recently made the move from full-time litigator to assessing funding opportunities for Longford Capital. Above the Law conducted a three-part interview with Garda. Part two discusses how clients can best avail themselves of the opportunities that litigation funding has to offer—particularly in the time of COVID and beyond. Corporate clients may find themselves in need of relief during these financially trying times. Traditional litigation funding can cover attorney fees and existing expenses for a claim. Lump-sum payments may also be available to cover expenses incurred previously. It’s not unusual to find even the most successful businesses in need of working capital on occasion. Third-party funding can provide financial wiggle room so that legal claims can still be pursued effectively, without impacting other areas of the business. Intellectual Property is another area in which litigation funding can pose a benefit. Before approaching funders, an IP lawyer is expected to prepare a whitepaper detailing key facts of the case, and a proposed budget for pursuing the claim. The likelihood is that it will be up to the IP lawyer handling the case to explain it fully to any potential funders. This includes a full analysis of damages caused by the infringement—something many cases fail to outline clearly. Litigation funders will often take a ‘damages first’ approach to evaluating a case for potential funding. Obviously, the merits of the case are important, but if the object is to pursue financial damages, those damages must be verifiable and clearly defined. Ultimately, Garda confirmed that litigation funding is a solid option for corporate clients and IP cases. The increase in requests for litigation funding, however, means attorneys may find themselves competing for attention.
Announcements Commercial

Delta Capital Partners Management Expands its Global Marketing Team

CHICAGO, Illinois, July 1, 2020 -- Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, today announced the hiring of a Chief Marketing Officer and a Marketing Associate.

Kim Fine has been hired as Chief Marketing Officer to closely work with Delta’s Chief Executive Officer and senior management to advance Delta’s strategic marketing and business development objectives and further develop Delta’s brand.

Prior to joining Delta, Ms. Fine was a Managing Director at ALM, formerly American Lawyer Media, where she worked closely with the editors for The American Lawyer, Corporate Counsel magazine, IP Law & Business, and Law Firm Inc. to create events to grow their brands and materially enhance their editorial content. In addition, Ms. Fine has served as a Project Manager at Marsh FINPRO and was a Senior Vice President of Executive Liability for Beecher Carlson. Prior to her role at Marsh, Ms. Fine co-founded Fulcrum Information Services, which produced over 300 conferences annually.

Christopher DeLise, Delta's Founder, CEO and CO-CIO, stated, “We are excited to have someone with Kim’s experience and enthusiasm joining Delta’s team. Her background in marketing within the legal and financial services industries will enhance Delta’s efforts to market to prospective claimants, law firms, professional service providers, and other end-users of litigation and legal finance.”

Additionally, Megan Bradley has been hired as a Marketing Associate to assist Ms. Fine and other members of Delta’s marketing department. Ms. Bradley is a recent graduate of the University of Illinois Urbana-Champaign, where she was a President’s Award Program Honors Scholar and obtained a bachelor’s degree in Global Studies.

Mses. Fine and Bradley join Delta as the firm continues to its global expansion efforts to meet the evolving needs of law firms, businesses, private investment funds, and individual claimants.

About Delta

Delta Capital Partners Management LLC is a US-based, global private equity firm specializing in litigation and legal finance, judgment or award enforcement, and/or asset or collateral recovery.  Delta works with law firms and other professional service firms, private investment funds, businesses and individual claimants involved in litigation, arbitration or recoveries across the globe.

Announcements Commercial

HFW, KPMG AND AUGUSTA VENTURES JOIN FORCES TO SUPPORT BUSINESSES IMPACTED BY COVID-19

HFW, KPMG and Augusta Ventures are pleased to announce a non-exclusive project to assist companies facing problems caused by the Covid-19 pandemic and lockdown. Together, they will provide a global 'one-stop shop' that can quickly support companies needing assistance by facilitating funding for supporting litigation and arbitration from Augusta, and a package of legal assistance, asset tracing and enforcement measures from HFW and KPMG. Augusta’s assistance will enable claims to be swiftly investigated and the merits established, so that clients can decide how they wish to proceed including by way of litigation or mediation. Brian Perrott, Partner, HFW: "The pandemic is the biggest disruption to business since 2008 and will give rise to countless disputes and claims, largely through no fault of either party. But companies wishing to resolve such disputes may find themselves unable to fund the costs of any litigation at this difficult time. Having Augusta on board will therefore be of great comfort to parties when they are dealing with problems caused by the pandemic that are unforeseen and for which there is no time to make any cash provision to fund the matter. "I also look forward to working with KPMG on this project, as I know how many claims do not proceed or fail because of an inability to locate and, where necessary, enforce against assets. This team will also be able to ensure matters are properly investigated, so that the clients can decide if they want to proceed to litigation or resolve their claims by mediation." Robert Hanna, Co-Founder and Managing Director, Augusta Ventures: "Collaborating with KPMG and HFW will allow us to deliver a seamless, low-risk litigation process for claimants seeking to recover funds. Together, we will level the playing field providing funds for access to justice and place our clients on the best path for success." David Standish, Partner, KPMG: "Our expertise in asset tracing and enforcement is of the utmost value to clients who wish to recover losses. Working with this team means we can tackle all aspects of the problem very quickly. The added comfort of funding means no claim need be delayed because of problems around financing the work.”

About HFW

HFW is a leading global law firm in the aerospace, commodities, construction, energy and resources, insurance, and shipping sectors. The firm has more than 600 lawyers, including 185 partners, based in offices across the Americas, Europe, the Middle East and Asia-Pacific. HFW prides itself on its deep industry expertise and its entrepreneurial, creative and collaborative culture.

About Augusta

Established in 2013, Augusta is the largest litigation and dispute funding institution in the UK by case volume. Augusta’s scale enables them to make decisions in market-leading timeframes and fund cases of any size. The business is organised into a series of specialist practice groups: Arbitration, Class Action, Competition, Consumer, Intellectual Property, and Litigation, and sectors including Financial Services and Construction & Energy. Augusta has offices in London, Sydney, Melbourne, and Toronto.

About KPMG

KPMG is a global network of professional services firms providing audit, tax and advisory services to a wide variety of public and private sector organisations. We operate in 147 countries and territories and have over 219,000 people working in member firms around the world. KPMG in the UK is one of the largest member firms of KPMG’s global network providing Audit, Tax and Advisory services. In the UK we have 631 partners and 17,600 professionals working together to deliver value to our clients across our 22 UK offices. Our vision is to be the clear choice in professional services in the UK. For our clients, for our people and for the communities in which we work.
Commercial

Is the Trucking Insurance Industry Becoming Toxic?

Trucking companies, insurers, and employees have been having a rough couple of years. Tax law changes have cheated drivers out of their per diem, making their taxes skyrocket. Insurance rates climb ever higher as large payouts cripple insurers. Some have placed the blame on Litigation Finance, claiming that enabling plaintiffs has had a negative impact on insurers. But is that fair? Fleet Owner reports that higher insurance prices show no sign of slowing. Mehdi Arradizadeh explains that insurance rates for trucking companies are typically determined by looking at accident prevention, mitigating risk, and an evaluation of safety within the company culture. Other factors, like geography, can come into play with some areas being worse for insurers than others. Now, insurers fear that any claim could quickly become a multi-million-dollar settlement or verdict. Arradizadeh went on to stoke fears that insurers might not even insure trucking companies anymore if they have to keep paying out. He claims that plaintiff-side lawyers are disregarding reasonable liability in favor of seeking a high payout by generating anger and fear from jurists. Some have suggested that Litigation Finance exacerbates this. But what reputable funder is going to bankroll a case without merit? One might be tempted to suggest that insurers worried about payouts should take that up with their underwriters rather than with those who seek to increase access to justice. Underwriter Chris Mikolay explains that proper use of algorithms and research should prevent insurers from overpromising in a policy. He points out that “problems” are really just disguised opportunities, and that insurers simply need to find ways to outsmart the market—perhaps by avoiding claims rather than complaining that the payouts are untenably large. Mikolay suggests that getting one’s house in order is the best way to avoid high settlement amounts.
Commercial

Litigation Funding Comes to the Rescue of Prairie Mining in Case Against Poland

Is the country of Poland in violation of the Energy Charter Treaty or the Australia-Poland Bilateral Investment Treaty? That’s the question being asked in a case brought by Prairie Mining. A notice of dispute was served in February of last year along with a formal request to seek a resolution. Sharecast reports that Prairie Mining and Litigation Capital Management have entered into a funding agreement. LCM, a London-listed firm, explains that the money will be used in pursuit of damages claims, and to cover operational expenses while the case plays out.   It’s rare that even a large company like Prairie Mining could take on an entire government without financial help. A funding arrangement with LCM provides enough money to get through the case—but there’s more. Securing the full legal budget from an experienced entity like LCM lends legitimacy to the claim. LCM is confident that the case will end with them recouping their investment and then some.
Announcements Commercial

District Court in Poznań, Poland rejects Mariusz Świtalski’s request to lift injunction

CHICAGO, Illinois, June 30, 2020 -- Forteam Investments Ltd., an investment company controlled by the American private equity firm Delta Capital Partners Management LLC (“Delta”), which is seeking approximately USD $86 million from Mariusz Świtalski and companies he controls, has secured an injunction against Świtalski and his assets.

A second injunction was also obtained against Świtalski and his four children, Mateusz, Natasza, Marcin and Mikołaj in relation to their ownership in the Świtalski FIZ investment fund.

Świtalski is a Polish entrepreneur that has been named one of the richest persons in Poland by Wprost Weekly.

On June 25, 2020, a Poznań, Poland court rejected a request to lift the first injunction against Świtalski in a decision that is unappealable.

Delta’s CEO Christopher DeLise said, “This decision bodes well for the success of our legal case against Mariusz Świtalski. The court’s choice to deny Świtalski’s appeal underscores the judges’ confidence in the merits of our legal arguments. Moreover, the attempt to conceal expensive cars at the Świtalski family residence by changing their number plates ahead of our bailiff’s visit demonstrates desperate tactics to avoid fulfilling clear legal obligations. We understand that this matter with supporting evidence has been referred to the appropriate criminal prosecutor in Srem. We are also reassured by statements made last week by the Polish President and Prime Minister regarding the security and attractiveness of US investments in Poland. We are aware that this matter is being carefully observed by the American investment community.”

The two injunctions related to Forteam’s civil suits against Świtalski have been widely reported in the press, with outlets such as Gazeta Wyborcza and Puls Biznesu detailing Świtalski’s history of evading contractual obligations.

By way of background, on May 8, 2015, Forteam purchased from Czerwona Torebka, a 100% stake in Małpka, the owner of the Małpka Express chain. Forteam eventually sold its 16.18% stake in Czerwona Torebka. The parties to that transaction were aware of Małpka’s challenging situation and thus acknowledged in the agreement that additional considerable financing would be needed in order for Małpka to remain afloat.

Accordingly, Mariusz Świtalski and Sowiniec Group contractually agreed to guarantee that Forteam would make a profit from its investment when it eventually exited the business. In connection with the issuance of the guarantee in favor of Forteam, Mariusz Świtalski submitted a written declaration that his personal assets were sufficient to enable him to honor his obligations under the guarantee agreement.

Despite having engaged a well-respected independent investment bank in 2018 to run a robust sales process for it, Forteam was only able to sell Małpka Express for an amount well-below the minimum set forth in the definitive transaction documents and related guarantee agreement.

On December 28, 2018, Forteam notified Świtalski of its obligation to remit the monies owed to Forteam pursuant to the guarantee agreement. Notwithstanding, Świtalski and his companies have failed to pay any amounts due and owing to Forteam, which necessitated the filing of the injunctions and civil lawsuits.

Commercial

PFAS Pollution Case Settles, with Some Claimants Upset

An Australian case involving contamination from firefighting foam has settled with what the judge called a “fair and reasonable” amount. The class action over PFAS contamination in three Australian towns has been underway for years, involved multiple law firms and over 500 claimants. World Socialist Website explains that while the judge was pleased with the decision, many members of the class were not. Individual settlement amounts call into question whether the amount taken from the award for costs is excessive. The final settlement amount was $212 million. From that figure, litigation funder Omni Bridgeway will take $53.1 million in profits plus nearly a million more for costs. Lawyers will get just over $30 million, and a further $2 million will be taken for administration. Does taking nearly one-quarter of the settlement in exchange for providing funding seem fair? Legal minds may disagree, but the truth is, that without litigation funding, the case would probably not have moved forward at all. Most ordinary citizens or even small business owners lack the resources needed to sue the federal government. Still, it’s easy to see why there were objections to the settlement—75 of them all told. One farmer who reported a $2 million loss will receive a mere $152,000. Another lost $200,000 and will receive less than $33,000. Those who objected to the settlement determined that the money offered wouldn’t come close to covering their actual losses. The offer presumed a figure of 21.5% property devaluation. Many residents though, were shown to have suffered much larger losses than that. The judge accepted the settlement, saying that a trial might still end with a loss and would take years to resolve. Meanwhile, PFAS chemicals are still found in sites all over Australia.