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Commercial

Got Litigation Claims? Don’t Forget to Monetize!

It cannot be denied that this is a time of stress, uncertainty, and delays. The legal field feels this more acutely than other industries, and it’s already showing in how cases are conducted. We all have a choice: react to what happens, or try to get ahead of it through diligent planning. One key factor in said planning comes in the form of monetization. As ACC Docket reports, monetization involves utilizing legal claims as collateral to gain working capital. This might be calculated as a multiple of the monetized amount, a percentage of the total recovery amount, or some combination of the two.  Monetization funds are provided for the purpose of working capital. That means they can be used to pay legal fees, under specific conditions. Monetized funds can be used in conjunction with traditional funding, which allows lawyers to be compensated as sort of a hybrid-contingency platform. Coronavirus constraints may make this an attractive option for firms and counsel whose budgets are impacted. In addition to slowdowns in most courts, there are other factors impacting the closing of cases—like the inability or unwillingness to take remote depositions impacting discovery. With that in mind, a firm experiencing budget constraints during COVID-19 would do well to consider monetization.
Announcements Commercial

Forbes Ventures Plc – Board Changes and Operational Update

Forbes Ventures announces that Kirk Kashefi and Igor Zjalic have resigned as Non-executive Directors of the Company with immediate effect.  Additionally, Igor Zjalic has resigned as a director of Forbes’ subsidiary, Forbes Ventures Investment Management Limited.  The resignations of Kirk and Igor are by mutual consent and follow Forbes’ announcement of 2 March 2020, which confirmed that the Company’s future strategy would focus on the securitisation of litigation funding assets, via the establishment of a Securitisation Cell Company (SCC) in Malta.

Forbes expects to appoint additional directors to the Board as the Company’s strategy progresses.

Peter Moss, Chairman of Forbes, commented, “We would like to thank both Kirk and Igor for their service to Forbes over the last couple of years and wish them both the very best in their future endeavours.  We at Forbes are extremely excited about our new direction and the establishment of our securitisation capability in Malta.  The set-up of our Securitisation Cell Company is progressing well, and we do not foresee any delays in the process, despite the Covid-19 virus.

While global markets may remain volatile in the short term, we believe that securitised litigation funding assets, with appropriate credit support, will prove to be popular with institutional credit investors when the current market volatility subsides.

The Directors of Forbes accept responsibility for the contents of this announcement.

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Announcements Commercial

Delta Capital Partners Announces Liquidity Solutions for Law Firms, Businesses and Individual Claimants

Chicago, IL, March 30, 2020 -- Delta Capital Partners Management LLC (Delta), a private equity and advisory firm specializing in litigation and legal finance, today announced its ability to provide bespoke liquidity solutions to law firms, businesses, private investment funds, and individual claimants affected by recent macroeconomic developments, including those caused by the COVID-19 pandemic. As the world economy has slowed due to the COVID-19 pandemic, liquidity has become a major concern for all economic actors and many traditional sources of liquidity will be tapped out very shortly. As a result, many law firms, private investment funds, businesses and individual claimants will not have access to capital to fund their needs.  Delta can provide liquidity to such parties based on their litigation or arbitration claims, judgments, awards, alternative fee engagements (i.e., contingency or success based), outstanding accounts receivables or work-in-process, or a combination thereof. Christopher DeLise, Delta’s Founder, CEO and Co-CIO stated, “In the face of horrible healthcare and economic challenges, we are still able to go forward and be helpful, we hope, in a troubled marketplace. As Delta’s core business is the pricing of litigation, enforcement and recovery risks, we are able to timely provide lending and liquidity solutions based on our assessment of such factors.” Delta provides such solutions to meet the needs of law firms, private equity firms, businesses and individual claimants through a variety of arrangements, including litigation-collateralized loans, draw-down facilities, and term loans. Each of these arrangements can be customized to suit the particular needs of borrowers, are competitively priced, and can be backed by a variety of assets and/or enhancements. These flexible solutions ensure that Delta can effectively meet the needs of a broad range of professional service firms, businesses, and individual claimants and thereby improve their financial situations during these unprecedented times. “While Delta has offered such bespoke credit-oriented solutions for many years, these products typically accounted for only a small percentage of its total business. However, we have already started to see that demand for such products is rapidly increasing and we anticipate that this demand will continue to significantly escalate as traditional sources of liquidity will dry up and/or the rates being offered by traditional lenders will materially increase. We are grateful to be able to play a constructive role in helping firms, especially troubled ones, keep their heads above water. Accordingly, we have allocated more resources and capital to meet this growing demand, and will continue to do so as we expect high demand now and for the foreseeable future as the aftereffects of the pandemic are felt around the world,” stated Mr. DeLise. Learn more at www.deltacph.com or contact Delta Capital Partners via email at liquidity@deltacph.com
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The LFJ Podcast
Hosted By Validity Finance |
In this episode, we speak with Dave Kerstein, Chief Risk Officer of Validity Finance, and Will Marra, Portfolio Counsel at Validity. Dave and Will discuss the Working Group on Litigation Funding's response to the controversial NYC Bar opinion, which found that third party funding violates the prohibition on fee sharing. They also discuss the role of litigation funding in today's stressful economic times, and how the COVID-19 crisis is likely to impact the funding industry. [podcast_episode episode="5213" content="title,player,details"]
Commercial Covid-19

Australian Government Rallies to Protect Insolvent Businesses

Australia is being extremely proactive when it comes to mitigating the impact of the Coronavirus outbreak. In addition to swift self-quarantine protocols and shutdowns, Australia has enacted the COVID-19 Response Act, which passed both houses of parliament.  Lexblog reports that the goal of these laws is to protect existing businesses from insolvency.  The primary purpose is to provide businesses more time to meet their financial obligations to creditors—six months in most cases. It also shields some directors from being held personally liable for financial shortfalls in their companies. The main focus of the COVID-19 Response Act is to mitigate the impact that the pandemic is having on businesses across the spectrum. Australian government foresaw that directors will need to seek additional credit and inventory, raise equity, and take on new debt to keep businesses afloat. As many businesses are forced to employ remote workers, the need for tech and training must be addressed as well.  Not all the new regulations of the C19RA have been released to the public. But they appear to focus on reporting obligations, treatment of existing debt, and extensions of how much time must pass before non-payment on insolvency claims can be made. Directors should be aware that unless a provision is specifically stated in the act, their usual responsibilities remain the same. The responsibilities to employees and shareholders do not change, even during a pandemic.  Given how prevalent litigation funding has become in Australia, both funders and class action law firms should take note of the recent changes.
Commercial

Even Well-Heeled Clients Are Turning to Litigation Finance

We already know that litigation finance can provide opportunities to pursue bigger and more time consuming cases. We also know that funders help companies and clients who couldn't otherwise afford strong legal representation. But what about those who aren't strapped for capital? Why are they turning to litigation finance, when they don't appear to need to? Above the Law, in their series on litigation finance, explains that there are plenty of other reasons for lawyers or firms to team up with litigation funders. The most obvious being the mitigation of risk. Any company can be sued, meritoriously or not, and eventually, many large businesses find themselves in the position of having to sue. While this may not cause a financial crisis for the company, neither is it a cause to celebrate. A litigation funder can assume some risk by providing funding in exchange for a share of the recovery amount. This loosens up capital restrictions while allowing the company to pursue legal matters effectively.  Litigation funders may also provide a sound measure of the merits of a case. When a big funder like Omni Bridgeway, for example, decides to fund a case—it's a strong indicator that a case has value and is worthy of being pursued. Further, many funders have vast experience and connections with researchers and others who can support the case.   Litigation funding allows for the raising of capital, or the freeing of funds to be used for other purposes. Overall, this can reduce financial pressure and relax time constraints that might impact the pursuit of a claim. For plaintiff companies, funding enables them to exempt legal costs from their balance sheets, which provides increased solvency.  During these uncertain economic times, it should come as no surprise that even prosperous clients are turning to litigation funding.
Commercial

Even Strong Cases Benefit from Litigation Funding

When you have a strong case you feel great about, you're probably not thinking about litigation funding. But perhaps you should be. Aside from the inherent risks associated with all litigation, there are a host of reasons why funding should be considered—even when you're feeling confident.  IMF Bentham points out that while retaining a big judgement is desirable, retaining all the risk may not be. Arbiters and judges can make unexpected rulings, and even the most meritorious cases can go south. Litigation finance can reduce risk while ensuring that legal teams have the means to pursue cases effectively.   When an opponent has a huge financial war chest, they have more options at their disposal.  By securing comparable funds, lawyers, firms, and clients have a stronger fighting chance. Even when a company is flush with cash, a protracted legal battle can siphon resources from other areas of business. Balance sheets can be less balanced when cases drag on or blow past the planned budget. The costs associated with a case are sometimes mitigated by hiring attorneys or firms that work on contingency. The benefits vary, depending whom you ask. Many top firms will not accept cases on full contingency, but with a strong litigation funder like Omni Bridgeway, clients can hire the best representation without budgetary concerns. 
Commercial

Are Court Delays Better or Worse for Litigation Funders?

There's a debate currently underway in the legal world: Will work stoppages brought about by the COVID-19 pandemic be better for litigation funders, or worse? Will it enhance earnings by increasing demand, or lead to lower settlements and fewer payouts? Can an influx of new cases bolster the legal field, or will it merely increase competition to land lit fin deals? As Bloomberg reports, we don't yet know for sure. Generally speaking, funders bring in excess revenue when cases take longer to resolve, as a spokesperson for Omni Bridgeway (formerly Bentham IMF) explained. Burford Capital also stated that delays tend to benefit them economically, provided the courts remain largely up and running.   A recent case involving an investment by Omni Bridgeway of $1MM illustrates how time plays a part in funder earnings. The contract stated that if the case was resolved within 6 months, Bentham would recoup more than 1 ½ times their investment. If the case took a year, that amount would double. If the case really dragged on, Bentham could have made as much as $4MM. Based on those terms, it's hard to imagine funders weeping at the prospect of long court delays. That said, court delays caused by pandemics are generally not part of existing lit fin contracts. However, Force Majeure may apply in some cases. Contracts are becoming more precise and competitive, as firms spar for funding. Lawyers and clients are now in the process of negotiating what needs to happen during the various shutdowns and delays caused by COVID-19.  But why should lawyers or firms accept a lower percentage when they weren't responsible for delays?  Negotiating these situations is new territory for the parties involved. Should we expect litigation funders to accept lower returns as competition for cases ramps up? Given how long this crisis is expected to last, we're sure to find out eventually. 
Commercial

Litigation Finance Can Perk Up a Down Economy

When the economy takes a downturn, a spike in litigation can follow. Desperate financial times can turn even the most non-confrontational towards dispute—as assets dwindle and every penny counts.  But in an economy beset by losses, slow growth, layoffs, and shutdowns, how are people supposed to fund cases? Enter: Litigation Finance.  As Bloomberg reports, lit funding allows financially strapped clients an opportunity for top-notch legal representation, the best research, and all of the resources needed to reach a satisfactory resolution. This makes lit fin a net gain for firms, clients, lawyers, and anyone who is a fan of access to justice. The practice has also been called a 'force multiplier,' which enhances litigation hedge. Litigation finance can be a vital part of "countercyclical" planning. That is to say, that lit fin provides a way for existing cases to continue, and new cases to be taken on, in spite of bad economic times. This is true of several legal specialties—bankruptcy law, for example.  Macro-economic pressure can spur clients into being more adamant about recouping damages, and make them less interested in compromise or settlements. Litigation funding levels the playing field between the AmLaw firms and those of lesser means. Funding also lowers overall risk to firms, and may therefore allow them to take on riskier cases. By providing non-recourse capital, third party funders remove strain from individual investors, as well as clients and the litigators who serve them. While providing opportunities for low-risk profit, lit fin investors are increasing access to justice and aiding those with meritorious claims.