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Commercial

Akhmedov Divorce Rancor Continues with Funding from Burford Capital

The largest divorce settlement in history is still unsettled. While the ex-wife of Russian billionaire Farkhad Akhmedov was awarded over $600 million in the divorce, she has received next to nothing from her ex-husband. To combat this, she enlisted help from Burford Capital, a publicly-traded legal funder. Baltimore Sun reports that Akhmedova is currently suing her son in a London court for almost $100 million. This includes a significant amount of cash, as well as assets such as art and property. Because Farkhad refused to pay the settlement, Akhmedova’s legal team opted to pursue monies via the couple’s oldest son. Temur Akhmedov is a resident in the UK, which means his assets may be seized to uphold a London court ruling. The Akhmedova lawyers have asserted that Temur was instrumental in helping to hide his father’s assets from his mother—a charge that he strenuously denies. London has long been perceived as a haven for wealthy Russians, many of whom have homes there and even stash their assets in London banks. A “superyacht” owned by the elder Akhmedov was ordered to be handed over to Akhmedova, but the order was refused. This led to the yacht being seized and held in Dubai. Ultimately, Shariah law prevented the enforcement of Akhmedova’s claim to the yacht. Temur has insisted that he was not involved in attempts to hide money from his mother or her legal team. However, the courts appeared to find this suspicious. An assertion that he moved $100 million in paintings to a boat for sheer aesthetic pleasure was scoffed at. Farkhad maintains his refusal to pay the court-ordered judgment against him. Among other things, he specifically mentioned that one-third of all monies given to Akhmedova would go to litigation funder Burford Capital as part of their funding agreement.
Announcements Consumer

New Securitization Fuels Growth for Golden Pear Funding OpCo, LLC

Golden Pear Funding OpCo, LLC announced Kroll Bond Rating Agency (KBRA) assigns a rating to one class of notes from PEAR 2020-1, LLC - an $80 million litigation finance asset backed security (ABS) transaction. The PEAR 2020-1, LLC transaction represents Golden Pear’s first rated security collateralized by litigation finance receivables. “Golden Pear continues to experience tremendous growth and has emerged as a leader in the consumer litigation finance industry. We are excited for this milestone and look forward to continuing to serve our clients and partners,” says Gary Amos, CEO at Golden Pear Funding OpCo, LLC. “Access to the securitization market increases our liquidity and supports our financial performance in this next stage of growth,” says Daniel Amsellem, CFO at Golden Pear Funding OpCo, LLC. The offering was oversubscribed, which represents a recognition of Golden Pear’s strong fundamentals as well as a desire by institutional investors to invest in the growing litigation finance industry. Golden Pear has funded over $675 million in aggregate advances since its inception in 2008. The company’s growth and differentiation in the consumer litigation marketplace have been achieved by industry-leading innovation and a focus on service for both attorneys and their clients. About Golden Pear Funding OpCo, LLC: Golden Pear is one of the largest specialty finance companies in the United States funding legal matters and purchasing medical receivables from physicians and medical centers. The company empowers its clients navigate the legal system and provides them with financial solutions that work. Golden Pear is backed by a partnership of several private equity firms that allow for the stability and continued institutional growth of the firm.
Commercial

Legislative Changes Lead to Increase in Class Actions

It cannot be denied that as acceptance of Litigation Finance increases, class actions increase in number. This is viewed by most as a positive, as it demonstrates that the practice is affording access to the legal system. Increasingly, class actions involving pension fund-related investment losses are cropping up across the US and Europe. IPE Magazine explains that as institutional investors become more active, they’ve also become more litigious when big losses occur. As European investors are seeing more sizable losses for a number of reasons, they are seen as the driving force behind this new wave of litigation. Jeroen can Kwawegen, a partner in New York firm BLBG, explains that European pension funds are markedly different from those in the US. In Europe, pension funds focus on sustainability, environmental concerns, and investing in social programs. In a sense, these class actions are a kind of corporate governance tool to enforce responsible behavior and to recover losses. Some say that litigation is an effective way to engage with a company when informal options are exhausted. But this ‘punishment litigation’ is not always appropriate or effective. After all, investors may not want to break off their relationships with a company—yet it is essential that the misconduct not become repetitive. The recent REST settlement illustrates that litigation can have a positive impact beyond the claimants involved. When the Retail Employees Superannuation Trust settled, they agreed to a net-zero carbon footprint by 2050, along with increased transparency and a more careful assessment of climate change risks as they pertain to investment. Neil Purslow, CIO at Australia’s Therium Capital, states that the REST settlement is unlikely to unleash a flurry of similar cases in other countries. While the Litigation Finance community is well-funded and poised to invest in meritorious cases, it’s unlikely that Australia will see the same type of investor cases.
Commercial

Brexit Propels Ireland to Become Litigation Destination

As anticipated, Brexit has led to uncertainty—even chaos in some industries. In the legal landscape, Ireland is in a perfect position to capitalize on its status as an EU member state. Ireland’s legal system and laws are largely similar to those of Britain, which allows it to offer similar legal remedies with the same basic enforcement. Business Post details that Brexit has brought welcome changes as well, like the formation of the Ireland for Law Initiative. Considered a focal point of Brexit strategy, it endeavors to make Ireland the jurisdiction of choice for business-related litigation. Many speculate that this will include creating conditions under which third-party litigation funding may be used. Ireland, however, will be competing with common law courts in places like Netherlands and France. With this in mind, government investment in the court system will be a vital part of Ireland’s legal future. A Review of Civil Justice Group has released a report detailing a variety of proposals that are currently being vetted and prioritized for possible implementation. Among these are provisions for Litigation Finance. Currently, Ireland prohibits the practice of third-party legal funding, but that’s a remnant of medieval law. As litigation funding has taken off in most of the developed world, Ireland seems poised to adopt the example set by London in allowing the practice. There is a multitude of reasons Ireland would benefit from allowing Litigation Finance, including increasing access to justice. Legal funding can also be used for risk management in a business context, or to provide resources for class actions. Many feel that beginning with legal finance for liquidators and administrators makes sense, as the practice was first implemented in the insolvency sector. The EU Bar Association and the Irish Society for European Law made a joint recommendation to provide provisions for the use of litigation funding. If Ireland intends to compete on the global legal stage, embracing litigation funding will be essential.
Consumer Special Features

Consumer Legal Funding Going into 2021

The following article was contributed by Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC).  As we put 2020 in our rear-view mirror, let us look at what took place in the space of Consumer Legal Funding. The American Bar Association (ABA) adopted the Best Practices for Third-Party Litigation Funding. In it, the ABA lays out a set of guidelines that attorneys should follow when working with Consumer Legal Funding companies. This will ensure that consumers, attorneys, and funding companies will be protected, and the product will be offered properly. The New Jersey State Bar Association (NJSBA) board voted to support the ABA resolution on litigation financing. To ensure consistency across the country, ARC updated our set of Best Practices to be in line with the ABA set of Best Practices on the industry. This will ensure that a consumer in Maine will have the same set of Best Practices as a consumer in Oregon. As a follow-up to the new set of Best Practices, the ABA held a virtual CLE to explain how they would be implemented. ARC participated and explained how our Best Practices are beneficial for consumers and the industry as a whole. In addition to the ABA, the New York City Bar Association published its report on use of Litigation Funding for Consumers. In the report, they publish a set of guidelines that should be followed in a contract with the consumer, including stating that the agreement is a non-recourse transaction, ensuring acknowledgement by the consumer’s attorney, and affirming non-compensation to the consumer’s attorney. The California Bar Association also published its opinion on the industry, which was consistent with what was stated by the ABA and the New York City Bar Association. Additionally, the state of Utah introduced and passed legislation to regulate Consumer Legal Funding. The legislation—which was passed nearly unanimously—insists on clear notice and disclosure to the consumer as to the terms and conditions of the contract. The consumer’s attorney will be made aware of the transaction and that there are no rate restrictions on the product, thereby allowing the free market to dictate rates. Each company will have to report on an annual basis the rates they do charge to the state. As we roll into 2021, we are hoping that other State Associations will follow the lead of the ABA, NJSBA, the New York City Bar Association and the California Bar Association in setting up practical guidelines for the use of Consumer Legal Funding. We also hope that other State Legislatures follow what Utah, Nebraska, Ohio, Maine, and Oklahoma have done in passing sensible legislation that provides consumer protections while allowing the industry to operate in a free market environment. Eric Schuller President ARC
Commercial

Is India Ready to Embrace Litigation Finance?

Litigation Finance has exploded in popularity over the last decade. This was caused by a number of factors, and cemented by the impact of COVID. Litigation Finance is now a powerful industry with major financial strength behind it. But it hasn’t yet reached every corner of the globe. Could India be the next frontier? India Legal Live explains that Indian law expressly prohibits advocates from funding litigation or arbitration. While funders do lack decision making powers in the cases they fund elsewhere, India’s existing laws may frown on funders looking for contingency fees when deciding which cases to bankroll. Some refer to India’s current financial climate as a ‘liberalization’ of policy, as foreign investors are welcomed and India moves toward becoming a destination for international arbitration. Still, the use of third-party litigation funding is scarce. Current contract law in India contains provisions to prevent lopsided bargains. It may be assumed that claimants have greater financial need than defendants, and may therefore be more likely to be exploited by funders. Contract law might then have to be updated or clarified before litigation funding can gain more mainstream acceptance. A recent court case determined that litigation funding agreements must be carefully scrutinized to ensure fairness. This came after an affirmation that litigation funding does increase access to justice for those who cannot otherwise afford it. There are already countries in which litigation funding arrangements must be approved by courts. India may adopt similar legislation. Confidentiality is another contentious issue. Every nation holds confidentiality to be a necessary part of lawyer/client relations. It’s vital to ensure that confidentiality is maintained even as courts maintain a close eye on funding arrangements. Omni Bridgeway’s Tom Glasgow is optimistic about the future of Litigation Finance in India, saying that opportunities to aid in de-risking litigation are plentiful. As part of the ILFA Working Group, Omni Bridgeway hopes to be instrumental in bringing international best practices to India.
Commercial

Sarah Tsou Speaks About Patent Litigation Funding

Sarah Tsou is an investment manager with funding leader Omni Bridgeway, where she specializes in patent litigation. In IP Watchdog’s recent podcast, Tsou explains the modus operandi most commonly used to defend against patent suits. Well-monied defendants can drag out even a meritorious patent suit for years—depleting the resources of patent owners. The proliferation of litigation funding now means that patient owners with strong cases can enter into funding agreements—increasing the chances of seeing justice done. Tsou also expounds on:
  • Finding and vetting cases
  • Tips for building a patent portfolio
  • Patent litigation funding for in-house legal teams
  • Risk sharing
Below are some highlights from the podcast. Tsou: My experience taught me that having a really good understanding of remedies, so not just damages, but also injunctive relief and the kinds of pressure those remedies can put on litigants is really important. Tsou: Across the company, our rejection rate might be something like 99% on the patent cases that we get. I think our philosophy is that we have to find the good cases. It takes time, it takes in-house experience, it takes trusted relationships from good law firms that we know, who are showing us good cases and good companies that we know have valuable assets—and it’s just putting in the work upfront. Because one common saying in funding is that in patent cases, ‘there are a million ways to die.’ Tsou: One of the important requirements for our funding is that the law firm needs to be able to take some risk. And that usually means some kind of contingency arrangement or hybrid arrangement where they only get a portion of their fees, say 50%, along the way. In exchange for that risk, they get a substantial percentage of the reward. That way we know we’re working with a law firm that’s just as aligned and sharing in the risk as we are. Tsou: Be prepared for litigation and the things that can come up beyond cost. Have realistic expectations. The more that a company can start thinking about patent litigation as something that’s not going to be a billion dollar claim, because there are very few claims that result in a billion dollars, or having a realistic expectation for the time it’s going to take, and how much money could actually be received at the end of the day...the better off they’ll be.
Commercial

Four Hot Litigation Finance Trends for the Coming Year

This year has been unique in terms of obstacles, uncertainty, and hardship. Record layoffs and business closures have caused disruption around the globe, and the legal world is beset by delays juxtaposed with a tidal wave of new litigation. Thankfully, it has also brought about a rise in the use of litigation funding. Law.com details four vital trends in Litigation Finance to keep an eye on in 2021. The first of these concerns transparency. Right now, there’s a disconnect between the right to confidentiality and the need to keep third-party funding transparent and above board. We can expect new legislation and recommendations that outline clear guidelines and legal expectations that apply to funders, lawyers, plaintiffs, and courtrooms. At present, laws regarding the use of third-party legal funding lack cohesiveness. Different countries, and indeed, different US states will have their own laws governing funding, how it may be used, who can be involved, and what disclosures must be made. Standardization is desired, and 2021 will likely show progress toward that aim—even though such moves are currently in legislative limbo. As more funding entities emerge, consolidation becomes likely. The recent merger of IMF Bentham with Omni Bridgeway turned industry heads. New, specialized firms may find themselves acquired by bigger, monied entities. This may be an overall advantage to an industry that is still a mystery to much of the public. Court delays are still ongoing, and the increase in court matters will only make the backlogs worse. As such, it’s expected that settlements, mediation, and out-of-court arbitration will become more commonplace. Remote working is likely to continue even after the pandemic as employers see that productivity goals can be met from home. Litigation Finance proves to be a game-changer in the legal world. It’s also got the financial backing it needs to meet the increasing demand.
Commercial

Is Covid-19 an Impetus for Litigation Finance in India?

India is currently one of the world’s top five economies. That’s good news. But like most top economies, Covid is causing disruption and discord. The pandemic may also lead to a flurry of new litigation as it has in much of the developed world. Will India be joining the likes of Germany, Australia, UK, Singapore, and others in their acceptance of litigation funding? Bar and Bench explains that with trying financial times comes a need for creative solutions. Litigation Finance is not as well established in India as it is elsewhere, but the practice is poised to catch on. The recent success of the Indian economy has made it a desirable destination for international investors. In 2016, the Indian Government was involved in over $9 billion in arbitration disputes relating to infrastructure. As businesses find themselves with dwindling resources and limited access to credit, the idea of third party funding becomes increasingly attractive. Indian courts seem to be moving ever-closer to widespread acceptance of litigation funding. In one case, the Privy Council approved the practice of one party funding a case for another in exchange for a share of the reward. This is predicated on the arrangement being fair and the case being meritorious. A later case established that champerty rules did not apply in India, and that there was no public policy prohibition against the practice. Still, the acceptance and use of the practice in India promises to be complex. Public policy, for example, is not a written law, but a generally understood set of principles. The ‘right to sue’ is more complicated in India, and issues of conflict of interest and even confidentiality are more convoluted. This may impede or slow the widespread use of litigation funding as legal precedents are set to refine the practice. Finally, there’s the question of qualifications for third-party funders. Australia and elsewhere have stringent rules about who can provide funding and how they must conduct themselves. India seems headed toward a similar regulatory path.