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Commercial

Mergers Predicted for Litigation Funders

Litigation Finance is a rapidly growing and evolving industry, and has been since its emergence during the last financial crisis. The practice helps law firms accept more contingency cases, allows businesses to monetize illiquid assets, and can turn existing IP into a profit center.

Asertis explains that third-party litigation funding has demonstrated its worth many times over. A Post Office scandal in the UK was finally brought to light when funders allowed 39 sub-postmasters who had been wrongfully convicted of financial crimes to seek access to justice. The Dieselgate scandal against several German automakers was also aided by third-party legal funding.

It’s expected that even more new entrants to the litigation funding market will present themselves in the near future. While this may increase competition among funders, its great news for law firms and potential claimants who need funding to pursue legal action.

Will litigation funders see an explosion of mergers the way banks have in recent years? Some say so, especially after the merger of IMF Bentham and Omni Bridgeway in 2019. In addition to mergers, many funders—both established and upcoming—are developing specialized and niche areas of focus, offering them an edge over funders with less specific knowledge.

Litigation funding has been mainstreamed and is here to stay. As the practice continues to grow and adapt, all eyes are watching how access to legal capital benefits lawyers, businesses, and clients.

Commercial

Findings From the Hong Kong Law Reform Commission

In Hong Kong, attorneys are not allowed to charge fees based on the potential award for a case. Increasingly, however, some types of flexible fee arrangements are allowed. In Hong Kong’s quest to become a destination for multi-jurisdictional litigation, the Law Reform Commission of Hong Kong has developed a subcommittee that will make recommendations regarding ‘Outcome Related Fee Structures.’ Omni Bridgeway explains that the purpose of the committee is to review current laws regarding ORFSs and make recommendations for reforms as needed. With that in mind, several recommendations were published by the subcommittee in December of last year. These are not final recommendations and were meant to encourage discussion in the legal community. Omni Bridgeway has had a business presence in Hong Kong since 2018. As such, they have provided a response to the subcommittee’s suggestions. The firm agrees that bans on conditional fee arrangements and damages-based agreements should be lifted. This suggestion includes the implementation of laws that, among other things, require lawyers taking on CFA or DBA cases to avoid asserting control over decision-making for issues that should be decided by the client. These lawyers should have to abide by the same standards that third-party funders do. Other client protections include:
  • A tribunal can order disclosure of ORFSs as pertains to conflicts of interest, security for costs, or the impartiality of counsel.
  • Tribunals can order costs against lawyers it believes are facilitating meritless claims.
  • Requirements for adequate capital, and proof therein.
  • Clients must be provided with clear information on ORFSs, as well as advice from those who have no financial stake in the matter.
  • Procedures in place for complaints and reporting non-compliance.
Omni Bridgeway joins a chorus of funders who support ORFS regimes to allow fee-sharing in single cases and portfolio agreements.
Commercial

Is Litigation Funding a ‘Debt’ Under FDCPA Guidelines?

As Litigation Finance grows in popularity, questions arise as to proper use cases. For example, courts are tasked with determining how laws should apply to litigation funding transactions and the agreements that outline them. Holland & Knight detail how the Fair Debt Collection Practices Act (FDCPA) defines a debt, and how that pertains to litigation funding. Until recently, courts focused on litigation funding as pertains to disclosure, champerty, and ensuring that funders do not unduly influence case strategy or decisions best left to clients. Recently, the Third Circuit US Court of Appeals offered some guidance on how or when litigation funding is a debt under FDCPA. An early case on the enforceability of a litigation funding agreement involved Christopher Boling. Litigation went on for years, and ultimately a judge determined that the funding agreement could not be enforced. But the case didn’t end there—the funder’s legal team (Callagy Law) filed a breach of contract action against Michael Breen, the lawyer for Boling. Breen then filed suit against Callagy, accusing it of violating FDCPA law. Ultimately, the Third Circuit stated that although litigation funding obligations may constitute a debt for the client, the same does not hold true for attorneys. The FDCPA defines a debt as an obligation to pay a creditor for monies used for personal or family needs. Because the Boling family used litigation funding to cover personal living expenses, the court stated that this money ‘may’ be defined as a debt under FDCPA guidelines—but the court stopped short of declaring that the funds were a debt in this context. Litigation funding agreements are typically made between funders and clients, or funders and legal teams/firms. In agreements with clients, funds may be used for personal or legal expenses, as needed. The same is not true for funding agreements made with lawyers or law firms.
Announcements Commercial

Litigation funder Asertis announces: new Commercial Disputes funding division backed by a €1.7bn (approx. £1.46bn) fund; financing of Mercedes group action; and new CIO and lateral hire from Harbour

Litigation funder Asertis today announces the launch of a new commercial litigation and arbitration disputes funding division backed by a well-known fund with available capital of over €1.7bn (approx. £1.46bn), as well as their financing of the Slater & Gordon Mercedes group litigation, and their new CIO and a further lateral hire from Harbour Litigation Funding. Known for their insolvency litigation funding, Asertis’s new service will focus on funding commercial disputes, including those relating to general commercial, competition and corporate, consumer and group action litigations and infrastructure. With €1.7bn (approx. £1.46bn) of funds available through an affiliate of European fund Arrow Credit Opportunities SCSp, Asertis is able to make funding decisions quickly at its own discretion, from its own balance sheet. Led by Chief Investment Officer Harshiv Thakerar, formerly of Global Growth Capital and Augusta Ventures, Asertis is positioned to fund commercial disputes across England and Wales, offshore markets, other common law jurisdictions and the EU. J-P Pitt, formerly a Director of Litigation Funding at Harbour Litigation Funding, also recently joined Asertis as an Investment Manager. J-P brings with him extensive expertise in commercial disputes funding, asset recovery and enforcement, drawing on his previous experience at Harbour and as a qualified solicitor. Asertis also announces today that it is financing the Mercedes Group Action led by Slater and Gordon. The claim centres around allegations that Mercedes, similar to other carmakers embroiled in the dieselgate scandal, installed software in their diesel engines to cheat emissions tests. Slater and Gordon are the joint lead solicitors in the Volkswagen Emissions group action, which is thought to be the largest group action in British legal history. Mercedes owners may be eligible to join if they have purchased or leased, whether new or second hand, a diesel Mercedes made between 2008 and 2018. Harshiv will head the commercial disputes funding division, working with J-P and CEO Ian Madej to build on Asertis’s established insolvency funding division and spearhead the growth of the new commercial disputes service. Commenting on the launch of the commercial disputes funding division and his appointment, Harshiv said: “I am delighted to have joined Asertis, working with the team to develop and grow our new commercial disputes funding service. Although a relatively new entrant into the increasingly crowded commercial litigation funding market, we are in the enviable position of being nimble and able to make funding decisions with certainty, autonomy and speed.” J-P said: “I am thrilled to have joined the Asertis team at such an exciting time in their development. I look forward to using my experience in litigation funding to deliver agile funding decisions, rapidly, under this very significant credit line.” Asertis CEO Ian Madej commented: “Harshiv and J-P both have an extensive understanding of complex disputes, particularly those with a multi-jurisdictional dimension. Asertis has grown rapidly since its launch last year and we have already funded and purchased several significant cases, including the Mercedes group action litigation. Coupled with our new membership of the Association of Litigation Funders, Asertis has fast established itself in the market and we look forward to working with Harshiv and J-P to continue our rapid growth.”
Commercial

DAS UK Forms Partnership With Maxima

Risk solutions specialist Maxima is joining forces with ATE insurance provider DAS UK to take on matters relating to personal injury and clinical negligence. Insurance Business UK details that the partnership comes after legal reforms, and is brokered by Maxima. Vanessa Andrews, head of operations, explains that smaller firms should have access to the same benefits as their larger counterparts. Andrews is confident that firms that have been rejected or have no insurer will welcome this change. John Durbin of DAS UK stated that this was the right time to help smaller firms who specialize in clinical negligence and personal injury—since insurers exiting the market has created a need.
Commercial

Hausfeld to File Antitrust Case Against Amazon

Hausfeld, a law firm that includes connections to the DC Attorney General’s office, has been chosen to file an antitrust lawsuit against retail giant Amazon. The case is said to be so potentially lucrative that the contingency fee agreement states that the firm may not accept more than $55 million in fees. Paul Gallagher will lead the litigation. Gallagher has a long history in antitrust cases, and once worked for the Department of Justice and the DC Attorney General. Legal Newsline reports that AG Karl Racine selected Hausfeld after filing the lawsuit on May 25th. Hausfeld will receive up to 15% of the recovery, though not more than $55MM. This stipulation seems to portend an astronomically high award. Hausfeld has multiple claims against Amazon in several Federal courts. Allegations include anti-competitive requirements and fees by Amazon that impact customers and sellers. Amazon allegedly utilizes a complex scheme of fees and extra charges that can comprise nearly half of a listed product’s price, while also preventing third-party sellers from selling items elsewhere at a lower price. The high fees and charges Amazon imposes on third-party sellers are often passed down to consumers. Using private legal firms to sue businesses is unusual for an AG, but not unheard of. In 2020, AG Racine also used private law firms to file climate change actions against Shell Oil, BP, Chevron, and Exxon. A motion to dismiss, filed by Amazon lawyers, stated that Amazon’s approach is common and not unreasonable.
Commercial

Claimants Sought for Possible Tyro Payments Class Action

An investigation of claims is underway as Bannister Law Class Actions determines whether a class action against Tyro Payments Limited is warranted. Tyro is a powerhouse provider of payment acceptance logistics, currently serving more than 32,000 businesses in Australia. Bannister Law details that in January of this year, many businesses have been unable to utilize Tyro’s services due to connectivity issues on Tyro’s end. This left businesses unable to accept credit or debit card payments—drastically reducing revenue and depleting consumer confidence. Those whose businesses have been impacted by Tyro are being asked to sign up as potential claimants in the class action. There is no cost to potential claimants as Court House Capital is funding the action. Compensation may include damages for:
  • loss of sales revenue
  • losses and damages suffered when seeking replacement services
  • loss of service fees for services not provided
  • loss of goodwill and customer satisfaction
Eligible parties include those who had business contracts with Tyro before January 5th, 2021. Those who had connectivity issues from January of this year onward, and those who endured business losses due to Tyro issues. The claims in the potential case are as follows:
  • Tyro breached statutory warranties, which imply that services will be provided with appropriate skill and care.
  • The services provided are unacceptable and do not achieve their intended purpose.
  • Any reasonable consumer would be dissatisfied with the services provided by Tyro, and that the company is in breach of contract.
  • Tyro stated that its services have less than .1 percent of downtime, which was not accurate for many impacted customers.
Court House Capital is an Australian litigation funder located in Sydney. They focus on insolvency claims, commercial litigation, and class actions in Australia and New Zealand. Court House Capital is currently investigating multiple potential class actions.
Announcements Commercial

Pathfinder Minerals books annual loss as it pursues Mozambique claim

Mining company Pathfinder Minerals booked a full-year, as it continues to pursue a legal claim over ownership rights in Mozambique. Pre-tax losses for the year through December amounted to £0.67 million, compared to a year-on-year loss of £0.87 million. 'With a new chief executive appointed during 2020 and fundraises during the first half of 2021, Pathfinder is in the strongest position it has been in for several years to recover value through a substantial claim against the government of Mozambique under the Mozambique-United Kingdom Bilateral Investment Treaty,' chairman Dennis Edmonds said. 'With estimated losses in connection with the diversion of its licence, including lost profits, exceeding $621 million, a legal opinion from counsel in the company's favour, and the means to progress a claim to the point of securing third-party litigation funding, the opportunity for Pathfinder is clear.' 'Pathfinder has also broadened its horizon to actively consider exploring additional opportunities in advance of, in parallel with, or subsequent to, a resolution of the expropriation.'
Announcements Commercial

Flight PS752 Class Action Certification Order

The Honourable Justice Glustein signed the Flight PS752 Class Action certification order for the class action arising from the downing of UIA Flight PS752. On January 8, 2020, UIA Flight PS752 was shot down moments after takeoff from Iran on its way to Canada via Ukraine. There were no survivors.
The 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 legally responsible for the downing of Flight PS752. Previously, the Court found the class action is "the preferable procedure for the resolution of the common issues in an action and provides a fair, efficient, and manageable method for advancing the class members' claims." "We are grateful the court made another order in our favour" said representative plaintiff Vahid Hezarkhani, whose sister-in-law and brother-in-law were on Flight PS752. "This is another major litigation milestone as we prosecute the class action for the passengers and their families. We will continue to work with the various stakeholders as we seek justice and compensation" said Tom Arndt, of TWA Law, class counsel representing the class members. The class action was commenced January 20, 2020. In September 2020 the court approved the third-party litigation funding agreement with Galactic Litigation Funders. In November 2020, the court determined that the Class Action and TWA Law were the best class action and best law firm positioned to advance the interests of the victims and their families, permitting this class action to go forward, staying similar actions commenced by other counsel. Formal notice of certification will be published shortly. Class Members and interested individuals are encouraged to consult the case specific website regarding progress of the litigation: www.flightps752.ca