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Announcements Commercial

Brown Rudnick Launches Litigation Funding Working Group

International law firm Brown Rudnick announced today the launch of the Litigation Funding Working Group (LFWG), which brings together leading litigation funders, insurers, institutional claimants, legal advisors and other participants across the litigation funding market in the UK and Europe to develop model documentation to help support the continued growth and development of the litigation funding market. Led by Elena S. Rey, a partner at Brown Rudnick’s Special Situations team, this initiative comes at a time of rising demand for litigation funding products in an evolving regulatory environment. The model documentation will be freely available and will provide the following benefits across the litigation funding market:
  • Promote efficient markets: Improve speed of execution and streamline the negotiation process.
  • Develop secondary market: Provide a platform for the development of secondary market transactions by way of novation, participation, assignment or other risk transfer arrangement.
  • Market integrity: Improve protections for market participants and provide a bench mark for the judiciary by incorporating best market practice, regulatory standards (including data protection) and judicial practice and adopting a balanced approach between stakeholders.
  • Simplicity and Flexibility: Follow the model of other major financial markets by standardising structure and key clauses in a model document while leaving market participants free to incorporate their own commercial and other terms.
  • Reduce Risk: Promote the adoption of high standards across the industry and reduce exposure to reputational risk and disputes from poorly constructed contracts.
The initiative will build on the firm’s experience of working with major litigation funders on preparing their model funding documentation for the US market as well as working with the Loan Market Association (LMA) over the last 10 years in preparing model documentation for the real estate finance market and secondary trading documentation. The model documentation will be produced after extensive consultation with the members of the Working Group and the wider market and will represent an agreed common wording and structure, so that users and providers of litigation funding can rely on standardised boiler plate provisions and focus their negotiations on the commercial elements and other specific considerations. The documentation will be subject to regular review by the LFWG to ensure that it reflects current regulations in relevant jurisdictions and continues to accommodate the requirements of the respective parties. Elena S. Rey, Partner at Brown Rudnick said: “I would like to thank all of the members for their commitment and enthusiasm towards this important initiative, which will support the development of the litigation funding market and the institutionalisation of the industry by introducing best-in-class documentation. I look forward to collaborating with our members and to making these model documents available to all, which will help ensure that the market continues to operate efficiently and with the highest standards in place.” The LFWG consists of major funders and institutional claimants - including Affiniti Finance Limited, Arrowhead Capital, Augusta Ventures, BDO Global, Bench Walk Advisors, Deminor Recovery Services, Galion Capital, Grant Thornton UK LLP, King Street, LionFish Litigation Finance, Litigation Capital Management Limited, North Wall Capital, Omni Bridgeway, Therium Capital Management - insurers and brokers - including AmTrust Financial, Litica Ltd., Marsh Ltd., QLCC, and others as well as leading legal & expert advisers and barrister chambers. About Brown Rudnick LLP Brown Rudnick combines ingenuity with experience to achieve great outcomes for our clients. It delivers partner-driven services and excellence across its practice areas, which include special situations, finance & litigation funding, distressed debt, corporate restructuring, M&A, tech & life science investments, white collar defence, IP & international disputes. It has offices in key financial centers in the US and Europe and serves its clients in the Middle East, North Africa, Eastern Europe, the Caribbean and Latin America. Elena S. Rey  Elena represents funders, private equity funds, major corporations and family offices on complex litigation funding as well as leverage finance matters. As a member of the Special Situations team, Elena provides a range of services from helping clients to raise finance for litigation, corporate or tech projects to introducing investors and connecting sources of capital to off-market investment opportunities. Elena holds a law degree from Harvard University, and is fluent in Russian and French. She is admitted to practice in England & Wales, and is also a member of the New York bar.
Commercial Consumer Covid-19

State Courts Feel the Impact of COVID-19

State courts face an array of challenges, only some of which are related to COVID. Budget cuts, ever-growing backlogs, logistical concerns, even constitutional challenges are impacting the legal world in myriad ways. Meanwhile, lawyers, judges, defendants—everyone is looking for ways to get back to some semblance of normalcy. An article in Law.com explains that in Texas, state services are facing untenable budget cuts. As appellate courts plead for funding, they describe the significant and devastating consequences of court delays on families, the unjustly accused, and those in the midst of disputes that require fast adjudication. Certainly, budget cuts are not a new phenomenon. But slashing budgets when state courts are already scrambling seems like adding insult to injury. Texas courts are already under budget due to a ransomware attack on state court computer systems earlier this year. And New York state courts are facing budget cuts and may now actually be forced to lay off senior judges. This shocking move is expected to cause even greater delays in the pursuit of justice. The president of the New York State Bar Association explains that state and federal governments are obligated to find a way to restore the budget to appropriate levels. In Connecticut, state court backlogs are causing confusion, frustration, and even desperation. Simple cases are dragging on for months, and ostensibly simple decisions are left undecided. A Philadelphia judge was removed from her post, reportedly stemming from frustration at the civil dockets not moving forward. Some jurisdictions are taking bold steps to mitigate the impact of COVID, such as trying cases in closed movie theaters and other now-essentially-defunct locales. A recovery in the number of cases filed is happening nationwide. Civil cases are being filed at a rate almost comparable to pre-pandemic levels, while family law case numbers are still low.
Commercial

How to Structure an Affirmative Recovery Plan

There are a multitude of ways to structure an affirmative recovery program, but the central guiding principles remain the same. It’s vital to make any new initiatives company-wide so everyone is involved and participating in the same goals. It’s equally important to know that focusing on the legal department doesn’t have to mean enlarging your staff. Therium Capital’s Guide: A Good Offense, explains the importance of setting both short and long-term goals, then regularly measuring one’s progress. In developing an initial strategy, it may make sense to look for easily attainable goals. Assembling a team and locating reliable partnerships may take time—but it’s time well-spent. This might include outside counsel, internal staffers, and litigation funding partners. The team should involve people whose ongoing task is asserting claims. This doesn’t necessarily mean filing new actions, only that simply reminding debtors what they owe can go a long way toward getting remuneration. Bringing a delinquent debtor to the table might be as simple as sending a Notice of Breach. Also vital to any affirmative recovery plan is setting clear standards on how cases will be greenlit. Obviously, it’s disadvantageous to bring claims that will cost more to complete than any realistic potential reward. The same applies if a case will require an extensive time commitment from key figures in the firm. Firms would do well to devise an outline or checklist detailing the specific criteria used for case selection. While the specifics may differ, the goal of any affirmative recovery program is to improve the bottom line. But it’s just as important to consider optics. Ethical, responsible behavior is important. But branding experts know that for the full benefit—investors and the public should understand which firms are responsible and ethical. That means good communication is critical in a successful affirmative recovery program.
Announcements Consumer

Tribeca Lawsuit Loans Now Accepting Applications From Zantac Claimants

Tribeca Capital Group, LLC, a leading pre-settlement litigation funding company, announced today that it is accepting applications for litigation advances from patients who have filed claims or lawsuits against any of the manufacturers of the heartburn medication ranitidine (eg. Zantac, a brand name of the pharmaceutical company Sanofi). As of April 1, 2020, Zantac and other ranitidine products are the subject of an FDA recall. They have been found to contain N-Nitrosodimethylamine (NDMA), a probable human carcinogen, and are suspected of causing cancers of the digestive tract and blood. The recall applies to both over-the-counter and prescription forms of the drug, which was marketed under the brand names Zantac, Deprizine, and the generic Ranitidine. "Already numerous lawsuits have been filed against the companies that manufactured Zantac, many of which have been brought together as a class action in federal court," explains Rory Donadio, founder of Tribeca. "Because Zantac was such a popular and widely distributed drug, many people in the know believe that claims against these companies could number in the tens of thousands and be worth billions," says Donadio. In addition to Sanofi, ranitidine was manufactured and marketed by several dozen companies, including Apotex Corp. (labeled by Walgreens, Walmart, and Rite-Aid), Reddy's Laboratories (labeled by Walgreens, Walmart, CVS, Target, and Kroger), GlaxoSmithKline (GSK), Novitium Pharma, Perrigo Company and Sandoz. For ten years Tribeca has provided litigation funding to plaintiffs in personal injury suits, including those for dangerous drugs and defective medical equipment. Litigation funding, or lawsuit loans, allow someone who suffered injury to obtain an advance on the proceeds they expect to receive on a claim or lawsuit. Says Tribeca's Donadio, "Litigation funding can help a plaintiff cover everyday expenses or pay for medical treatment they would otherwise not get until the case settled or went to trial. Then, if for some reason the claim is denied or the client loses the lawsuit, they're not required to pay back the advance. It's a win all around." To be eligible for an advance on a Zantac claim, it is not necessary to have filed a lawsuit. But it is necessary to file a claim in the Zantac litigation and be able to provide copies of medical records, including a pathology report. To learn more or to file an application, contact Tribeca Lawsuit Loans toll-free at (866) 388-2288 or visit TribecaLawsuitLoans.com.
Commercial

Litigation Finance Continues to Show Strong Returns

 In today’s uncertain financial climate, investors are seeking non-correlated investments and higher returns. As the need for an independent class of assets grows, so do the investments in the Litigation Finance war chest. Litigation funding is insulated from larger financial tides—regardless of what happens in the stock market, with interest rates, etc., litigation assets are not impacted by outside factors. An article in P&I Online details that industry-wide AUM has more than doubled since 2017. A growing pandemic, the central bank stimulus, and the formation of the International Litigation Finance Association all lend urgency and credibility to the practice. Investing in legal funding, however, is not for everyone. Returns can be delayed, invested cash is largely illiquid, and the non-recourse nature of funding means that a total loss is always a possibility.
Consumer

Federal Appeals Court Revives Fraud Action Against RD Legal Funding

A fraud case against legal finance firm RD Legal Funding has been revived by the Second Circuit US Court of Appeals. Allegations include defrauding the families of victims of the 9/11 terrorist attacks in 2001. An article in Bloomberg Law explains that a lower court ruling from 2018 held that the CFPB’s leadership was unconstitutional and beyond fixing—and therefore they dismissed the case. SCOTUS agreed with that assessment, but maintained that the CFPB could continue to exist so long as the president’s ability to fire the director of the agency was preserved. The NY AG’s case against RD Legal continues, and neither party could be reached for comment.
Commercial

Co-Founder’s Arrest Spells Bankruptcy for Las Vegas Tech Company

Invictus Global Management LLC is providing $10 million in funding to cover the legal proceedings of NS8, a Las Vegas-based fraud prevention and cybersecurity company. This week, the company filed for Chapter 11 in a Delaware court. Review Journal explains that NS8 CEO and co-founder Adam Rogas deliberately misstated its revenue, margins, and profitability to investors, the management team, board of directors, and corporate partners. The bankruptcy declaration asserts that about $72 million of the $123 million in investor funds were used to repurchase shares and finance a tender offer. Rogas allegedly helped himself to over $17 million in investor funds under the guise of a share purchase. Rogas was arrested last month on federal charges of using false bank statements to deceive investors. The FBI’s William F Sweeney Jr. noted the irony of a co-founder of a fraud prevention company engaging in fraud himself. The bankruptcy filing is expected to provide time for NS8 to resolve its existing debt.
Commercial

Insolvency Class Action Against Wirecard AG

German payment processor Wirecard has filed for insolvency as of June 2020. This comes after a startling admission that over $2 billion in cash listed on its balance sheets did not actually exist. Unsurprisingly, this led to a share price drop of over 90% over the course of a week—disastrous for those whose pension funds were invested in it by default. ICLG details that a consolidated class action is underway in the US, with more to come in Germany and elsewhere. Allegations include wrongful auditing, market manipulation, and failure to comply with statutory duties. German class actions are ‘opt-in’ and the multiple, parallel cases will utilize third-party funding. The actions are expected to be costly and time-consuming, as they’ll require detailed reviews of trading patterns and perceived losses. Because cases will run concurrently, it may take even longer for creditors to be paid. At the same time, investors will be expected to take an open and active role in the litigation process—largely due to the collective proceedings mechanisms that will be in effect. Unlike class actions in the US, German claimants are treated individually, with separate funding and contractual requirements. Funders for the cases have not been formally announced, so the actual agreement language and costs are not yet known.
Commercial

Funder Milberg Hit with GBP 21K Fine

International litigation funder Milberg Ltd has been fined GBP 21,000 for allegedly mishandling GBP 3MM intended for a class action the firm was not involved in. Initially, the money was meant for a Milberg subsidiary, Ferguson Funding Limited, for a class-action suit against a car manufacturer in a scandal involving emissions. Law Gazette explains that the mishandled monies were received in four separate payments from three different investment companies. The money was returned to the various investment companies in July of last year. The firm admitted that by receiving and making payments from the funds, that they were breaking SRA account rules. The SRA explained that the high fine will likely deter this firm, and others, from committing similar errors in judgment.