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Commercial

Will New Aussie Funding Regulations Impede Class Actions?

As the federal government in Australia sets up new regulations governing the Litigation Finance industry, some fear that class actions will be much more difficult to pursue. One major change requires that all funders be licensed by ASIC—and meet its expectations of competence, honesty, fairness, and efficiency. That may not seem like a tall order, but it’s not yet certain what hurdles must be cleared to obtain the required licenses. ABC Rural (Australia) reports that smaller funders have the most to fear in this new climate. Take, for example, the Australian Farmers' Fighting Fund, which was developed to fund cases with lasting impacts on growers. Hamish Brett lost his income when an import ban went into effect in 2011. Without funding, he'd have nowhere to turn. With funds from the AFFF, his share of the class action award covered his losses. Brett has stated that more than the money, he’s glad the government will no longer be able to destroy the livelihoods of people with the stroke of a pen. Litigation Finance is also the subject of a forthcoming parliamentary inquiry. Citing concerns that the number of class actions has nearly tripled since the popularization of litigation funding, Treasurer Josh Frydenberg has called for more oversight and increased regulation. He explained that third-party funding should be treated the same way as other financial services—which are generally licensed by the Australian Financial Services Commission. 
Litigation Finance News
Commercial

Correction to Earlier Article Regarding Epistar v. University of California

A previous post asserted that Longford Capital is funding Epistar's IP claim against the University of California. That information is incorrect. Longford is funding a separate IP claim filed by the Regents of the University of California, which is unrelated to Epistar's action against the university. The inaccurate post has been removed, and we regret the error.
Commercial

Class Action Against Oracle and Salesforce Backed by Innsworth

It may be the largest privacy-related class action in history, as The Privacy Collective gears up for a class action against Oracle and Salesforce. The action, which alleges the unlawful large-scale collection and storage of internet users' data in Denmark. Allegedly, the data was shared with multiple commercial and AdTech companies. Diginomics reports that the action is funded by Innsworth Litigation Funding, a London-based funder known for backing large commercial litigation and arbitration claims. Their portfolio of funded cases includes such names as Mastercard and Volkswagen. ILF’s involvement in this action is of particular interest, because Innsworth is owned and partially funded by Elliott Management Corp. Moreover, Elliott bought over $20 million of Oracle stock earlier this year, though they do not appear to have a financial interest in Salesforce. The case is being called one of the largest examples of unlawful data processing since the internet came to be. The case asserts that the rights to protect one’s privacy—including online data—is fundamental. While Oracle and Salesforce are not the only companies accused of mishandling user data, they are among the largest. Regardless of the individual players, this is the sort of case that was bound to happen at some point—given the inherent vagaries of laws surrounding privacy, consent, and data collection and processing. Privacy protection is also being examined in a similar case in the London High Court. Cadwalader partner Melis Acuner has stated that this type of case allows courts to aggregate the harm caused by data privacy violations. No doubt, these cases will set a lasting precedent no matter what the final outcome is. A statement from Salesforce explains that the company disagrees with the allegations and will demonstrate their lack of merit. Oracle also promises to defend against what the company calls “baseless claims,” though with more feisty language—using terms like “bad faith” and ‘shakedown litigation.’
Commercial

New Singapore Insolvency Laws Open Door to Third-Party Funders

What happens when a liquidator lacks the resources to pursue a debt? Often times, the debtor walks away from their responsibilities. That may be changing under Singapore’s new Insolvency Restructuring and Dissolution Act (IRDA)—which took effect just two weeks ago. The Act is part of a larger overhaul of Singapore’s insolvency legislation. Business Insider details that one key facet of the new law allows liquidators to utilize third-party funding to hold directors of firms to account. This change is expected to allow judicial managers to be appointed even after a business has collapsed.   The changes in the IRDA have been in the works for seven years—long before the COVID pandemic impacted businesses around the world. But the legislation takes on new significance, now that corporate insolvency and personal bankruptcy have skyrocketed. In the second quarter of this year alone, Singapore’s economy shrank over 13%. Meanwhile, applications for compulsory liquidation went up a shocking 70%. Governmental relief measures combined with encouraging non-legal mechanisms to settle conflict have led to an easing of new bankruptcies and insolvencies. The Act offers protection and increased options for debtors in temporary crisis—but also provides safeguards against abuse from opportunistic use of the Act’s provisions. It is believed that the IRDA is the final part of a planned revamping of insolvency laws designed to carve out a place for Singapore in the field of cross-border restructuring of debt. Insolvency laws must be fair to debtors and creditors in order to be effective. The ideal framework for insolvency should leave both parties feeling as though justice has been served. Allowance for third-party funding is a key element of the IRDA, but it is one tool in a larger toolbox. It’s expected that the non-recourse nature of the funds, along with the transparency the system provides, will help bolster Singapore’s status within the global marketplace.
Commercial

Anexo Group Secures Funding for Volkswagen Claim

For Liverpool-based Anexo Group, 2020 got off to a slow start. From Jan-June of this year, the legal services provider showed sales of GBP 36.625 million, down from 36.717 million this time last year. Share dividends are .5p a share, down from 1p per share last year. Still, the group is poised for a big finish to 2020. The Business Desk reports that Anexo Group has taken steps to expand the business while bringing in extra funds. In May, a share placing brought in GBP 7.5 Million. This was used to bring in new staff, and amp up the company's marketing presence. Meanwhile, their legal team, Bond Turner, is pursuing a class action regarding emissions against Volkswagen. A further GBP 2.1 million was raised from a litigation funder. This influx allowed the firm to seek out and sign on class action members in the case against Volkswagen. Litigation funding allows Bond Turner to devote resources to the case—which has the potential for significant returns—without impeding the firm’s overall budget. Like most businesses, Anexo Group has had to get creative in how they balance budgets, meet expenses, and adapt to the needs brought about by the COVID pandemic. Because litigation funding was available to them, they were able to continue pursuing meritorious cases, acquire new clients, and transition staff to remote work whenever possible. While COVID has brought about a reduction in receipts and increased costs—the firm expects more and larger settlements and collections in the second half of the year. Executive chairman Alan Sellers anticipates great things ahead, saying that Anexo has already hit its target of generating a profit this quarter. The firm has increased its overall number of cases, while maximizing the value of their existing backlog of cases. Sellers went on to assure shareholders that they are looking ahead with confidence.
Commercial

Twists and Turns in Tesla Case Against Former Employee

Martin Tripp, formerly with Tesla, is embroiled in a case with his former employer. The case, which began in 2018, accuses Tripp of stealing and disseminating multiple gigabytes of confidential trade secrets. In turn, Tripp denies all wrongdoing and describes himself as a whistleblower exposing evidence of vital safety concerns and company fraud. He is countersuing Tesla for defamation. Teslatati reports that recently, Tripp fired his legal team and intends to represent himself for the rest of the case. This announcement came on the heels of the revelation that Tripp’s litigation funder, The Funicular Fund LP (doing business as Cable Car Capital LLC) was short-selling Tesla stock. When news broke, Tripp took to Twitter to explain himself. His Tweets assert that he believed the funding for his case to be from a legitimate litigation funder. He also stated that it was his legal team who advised him not to divulge information about the funding. Recent documents published in Google Drive and released by Tripp detail that Cable Car Capital invested $150,000, and that a further $125,000 was requested. In response to the confidential information drop, Tesla filed an emergency motion to force Tripp stop publishing, and to stop “harassing” counsel for Tesla. This is in reference to his publishing an email from Jeanine Zalduendo, counsel for Tesla.
Consumer

ME Group Announces Second Senior Hire in Two Weeks

Fintech credit professional Rob Cottingham has been appointed to Chief Credit Officer at ME Group, a Cheadle-based firm. Cottingham takes on this new role that will report to executive chairman Bruce Walker—who is also new to the business. These appointments herald a new phase in a long-term growth strategy for the company, as it moves toward becoming a leader in consumer litigation funding. Business Desk details that Cottingham is expected to evaluate credit risk. His role will be crucial as he heads up the credit committee that determines how litigation funding is allocated to cases and firms. Rob Cooper, ME Group chief executive, states that Cottingham’s CV is impressive, and that his experience is expected to add considerable clout to the senior team. Cooper went on to explain that ME Group found itself in competition with other firms to hire Cottingham. Existing tech at ME Group is integrated with that of claimant law firms. They also boast in-house claim expertise. Together, this provides excellent oversight and an ability to effectively manage credit risk throughout the litigation process. Prior to his new appointment, Cottingham was with Specialist Lending, assessing credit and risk for a financial technology startup. Funded by private equity, SL provided consumer litigation funding to law firms. He has also worked for Elavon Merchant Services, Provident Financial Group, and Ferratum Group—all in risk-management. His new appointment at ME Group takes effect in September.
Commercial

Litigation Finance in the Startup Landscape

Startups are often strapped for cash and rushing to meet deadlines, so what happens when your startup suddenly has to fund an unexpected legal battle? That’s what happened when video startups Eko and Quibi found themselves in a legal skirmish. Both companies are relatively new, and each has a huge corporate entity at its back (Disney/eBay and Walmart, respectively). Bloomberg Law reports that the companies are in dispute over ‘turnstile’ technology, after Eko pitched it to Jeffrey Katzenberg. Both parties have filed suit to keep the other from using the tech in question. Eko is funding their suit by selling equity in the company to hedge fund and litigation funder Elliott Management. This idea, selling capital to finance litigation, was unheard of 10 years ago. Now, it’s becoming commonplace—largely because businesses are finally able to defend and protect their rights while pursuing business goals. Litigation Finance is beneficial to startups, offering three distinct advantages. First, the use of funding keeps new businesses from giving up equity to fund their suit. A valid claim is already an asset that can be used to secure funding. Next, the non-recourse nature of litigation funding means a company only owes a funder if the case is successful and an award is received. This kind of de-risking can be vital to companies in their early stages. Finally, funders can choose to provide working capital to companies that have a meritorious claim. That money can be used to help the plaintiff’s business run smoothly, even though litigation is pending. Ultimately it’s Litigation Finance that helps a new company like Eko pursue a case against a giant like Quibi. Regardless of who wins, we can be confident in knowing that justice will be meted out appropriately, because both sides were given a fighting chance—thanks to Litigation Finance.
Commercial

Q&A With Litigation Funder Susanna Taylor

Susanna Taylor is a Senior Investment Manager with LCM, and has been a commercial litigator for over 20 years. She answered a few questions from Tom Balmer, Director of Business Development at TLS. JD Supra details the finer points of their discussion, beginning with a general comment on how her firm, Litigation Capital Management, has done so well. Taylor credits her company’s successful growth to three specific things:
  • Formulating an assertive strategy for short and long-term growth.
  • A welcoming and professional corporate culture where people feel valued.
  • Compiling a staff of experts at the top of their game.
Taylor states that it’s vital to develop a strategy that fits your personality and strengths, and then utilize that to get the results you want. Also, taking time to build and grow a network from existing contacts is essential. Networks aren’t just made of potential clients. They can encompass anyone who might call on you for your expertise, and anyone you might call on as well. When asked for advice for young, green lawyers, Taylors’s response was simple. Follow your interests and find yourself a mentor. Then do all you can to surround yourself with those succeeding in your desired area. Listen more than you talk, and learn all you can while you can. Taylor’s own experience included work in the Crown Solicitor’s Office, which is where she developed an interest in litigation. From there, she worked at Hammonds in London and then onto Norton Rose Fulbright, where she focused on commercial claims and class action. In 2014, she took her advanced skillset to LCM, and has been successful there ever since.