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Williamtown Class Action Members Compensated

An impressive $57 million settlement was distributed among members of the Williamtown Contamination Class Action earlier this week. This comes as part of a settlement from February of last year, in a case involving PFAS contamination of homes, farms, and other businesses. Omni Bridgeway, which funded the action, explains that their involvement in the case allowed class action members to fight for what they deserved—rather than merely asking to be treated fairly. The average award per household was about $100,000, with some affected parties receiving more or less depending on the actual damage suffered. Dentons, one of the largest law firms in the world, distributed the settlement after four years of intense litigation. Reporting from the Newcastle Herald is credited with raising awareness about the case. Justice Lee called the outcome ‘excellent,’ as it seems to fairly compensate those who were harmed by the contamination and its aftermath. Omni Bridgeway points to the case as an example of Litigation Finance working exactly as it should.

Reflections on the State of Litigation Finance

Recently, two portfolio managers at Burford Capital shared their thoughts on 2020’s 4th quarter, the continued impact of COVID, collections, and challenges in cash management. Nicholas Cooper and Patrick Wackerly explain year-end financing and more. According to Burford Capital’s own research, roughly half of in-house counsel expect a shrinking of legal budgets, and more than half have stated that they’ll be looking for discounts from outside counsel. Even in boom times, firms tend to push client collections this time of year. But this year carries unique challenges. There’s a difference between desperation and simply salvaging what there is to salvage. Client discounts, once a go-to measure, are now being eschewed in favor of more lasting solutions. Demand for financing to carry firms through the end of the fiscal year is higher than ever. This is due to several factors: --Legal financing is not a traditional loan --Clients will not be aware when firms utilize third-party legal funding --Funders, like Burford, take on the risk so firms don’t have to --Third-party funding is reliable, time-saving, and economically sound. Savvy firms and businesses alike understand that taking a little help when you need it can spare significant hardship down the road.
Litigation Finance News

Key Takeaways from LFJs Q4 2020 Commercial Litigation Funding Roundup

On Thursday December 17th, Litigation Finance Journal hosted a special 1-hour panel discussion on the major events impacting the commercial litigation funding industry. Panelists included Omni Bridgeway CEO Andrew Saker (AS), Therium Co-Founder and CIO Neil Purslow (NP), and LCM CEO Patrick Moloney (PM). The panel was moderated by Ed Truant (ET), founder of Slingshot Capital. Below are some highlights from the discussion. ET: Why did each of you decide to pursue a global growth strategy as opposed to solely focusing on domestic markets? PM: We looked at things from a very practical perspective at LCM, we looked at where the most economic activity was happening. Where there’s more economic activity there’s more disputes. Therefore, we looked around the globe toward the larger economies than where we started back here in Australia. We were cautious and disciplined about moving into new jurisdictions. So very much driven economically and by opportunity. NP: When we started Therium about 12 years ago, we recognized the potential then that the industry would become a global industry. And from an early stage, we were seeing funding opportunities coming from other jurisdictions as well as the UK. Our global footprint reflects a view of the market that there are benefits to being bigger in funding. From a case point of view, it’s better to have more depth of financial resources. From an investor point of view, greater diversification is better. From an underwriting point of view, being able to draw on expertise across jurisdictions and to have the benefits of a global perspective is also helpful.  ET: What were some of the business challenges you faced when you entered new markets? AS: Most of our expansion was done through organic growth. It was where we perceived first-mover advantage. That required us to address a number of key risks, market awareness of the industry was perhaps first and foremost. There were some jurisdictionally specific issues in Canada where we needed to seek some insurance regulatory approvals. But otherwise, it was all about establishing boots on the ground, finding the right people which is more than half the problem. And ensuring that you’ve got access to the local contacts and networks that you need for establishing a successful business. ET: Other than lack of sleep, what are some of the other negative aspects of going global? AS: Lack of sleep is perhaps the biggest issue, but the benefits far outweigh any of the costs. Having such a global team, a global approach, different cultures that are being fully integrated, compensate for any of those downsides. But it’s an interesting dynamic market that’s continuing to grow. PM: I think that’s right. I think...there’s a necessity to become global. In the respect of at least publicly listed and traded. NP: The thing that’s interesting is, relatively speaking, how easy it is to operate across jurisdictions in this industry, and I think it’s because--to a very large extent--the skillset that you need is so transferrable. So it’s actually been very positive. ET: What’s the implication given COVID? Are you thinking differently about your organizations going forward in terms of travel and face-to-face meetings and that type of thing? AS: I think it’s an evolving thought process. Initially, at the front end of this crisis, we all saw the benefits of staying at home and working remotely and using technology to compensate. There was a great deal of enthusiasm and everyone bought in. As this has dragged on, there’s been different views about the merits of that and the efficacy of it all. To some extent, it does vary depending on your location. We’ve been very fortunate here in Australia to have a slightly different experience from our colleagues in Europe and the US.  ET: The next major topic I want to tackle was this concept of corporate social responsibility and litigation finance in environmental social governance, or ESG. CSR is becoming a pretty powerful trend in global investing, so I wanted to explore the implications for the litigation finance asset class. What are you hearing from your shareholder base about CSR and ESG in terms of their importance, and what pressures are those shareholders putting on public companies these days? PM: From LCM’s perspective, I suppose we have had two experiences. One, the public markets through the securities exchange here in Australia, and then more recently the London stock exchange, are probably two quite different experiences. So I think investors out of the UK and Europe have been far more focused and have an expectation far more than I recollect that we’ve had here in Australia, and that’s not to say that these issues are not present in Australia. It’s probably more of a timing thing, but we’re very conscious of it. What we need to wrestle with is, as a relatively small listed entity, is what capacity we have to wade into this. So we’re very conscious of it and we do have principles associated with that. AS: Definitely, it’s an increasingly important area of relevance to all our shareholders. What we have found as we’ve shifted from the ASX300 to ASX200 is that there are more ESG-specific type funds that are interested in a stock that’s compliant with ESG obligations, and as a consequence of that, we initiated our own process to have a formal ESG policy. It’s a work in progress and something that we’re developing with internal stakeholders and well as external stakeholders. It’s a value that resonates throughout the whole company. NP: ESG and CSR considerations are becoming increasingly important for privately funded investors as well. And we get quite a lot of questions from them about how we’re thinking about this. On the CSR side, the way we’re approaching it—we tend to think of litigation finance as ultimately about investing to facilitate access to justice. And for the most part, obviously, we’re doing that as an investment in the expectation of a return. But there is a wider need in society for access to justice and legal advice where those situations can’t be funded on a commercial basis. And we have felt that it’s important as an investor in the legal world that we play our part in that area too. It’s for that reason that we set up Therium Access 18 months ago. ET: Let’s move on to the third topic, industry growth, and implications for innovation. At a macro level, the industry arguably is growing in three main ways: growth in the number of jurisdictions allowing litigation finance, increasing penetration within existing markets, and then growth through product innovation. So let’s take a closer look at product innovation as a growth factor. Perhaps each of you can comment on what your business has done to innovate in the litigation finance market within the last 2-3 years.   PM: At LCM, we’ve tried to look at business development in a very different way to how the industry might have looked at this previously, so we look at the available market in two ways. One is those who use litigation finance for necessity, and those through choice, so I think the larger part of the market which remains sort of un-penetrated and unaddressed by our industry globally is providing it to large sophisticated well-capitalized corporates. And I think that’s a very interesting part of the market for us, I think it’s an interesting part of the market for the industry as a whole. I think that’s where a lot of our focus has been in the last 2-3 years. ET: Neil, how about you in terms of innovation at Therium? NP: Certainly we’ve seen a lot of innovation in the development of product. Or perhaps to put in another way, in deployment techniques. Our core business is built around an ability to assess and to price litigation risk. But the way in which that investment has been delivered and the way it’s been structured has become a lot more varied in recent years. We put a great deal of resources into developing those techniques, whether it’s portfolio funding of different types, corporate portfolios, law firm funding, or claim monetization. These aren’t new areas, we’ve been at this for a long time. But certainly, our level of sophistication in how we do them has increased dramatically in the last few years. I think also in terms of sophistication, we’re working with an AI firm called Solomonic, to bring a more data-driven approach to our investment process as well. I think that’s another theme. The last point on this: I think the market is in an interesting point now where funders are starting to drive certain parts of the litigation landscape. So instead of being passive recipients of cases from law firms, funders are now playing an important role in shaping litigation trends and what case types do and don’t develop.  AS: From a non-product perspective, I think the evolution of the fund management model is growing, it’s something that has had roots in the last five years, but is now being more warmly embraced by the litigation funders as well as PE investors.  Looking forward, as Neil mentioned, a more active role for litigation funders in the investments is something that I think will grow. We are looking to try to shift our focus from being an agent to being a principal and actually owning claims, judgments, and awards. There are various other strategies we’re looking at, including downside risk management, cracking the holy grail we all talk about of defense-side funding. And then potentially even moving into law firm ownership, to take advantage of this shift that seems to be evolving around the world.

Involuntary Bankruptcy Petition on the Horizon in Tom Girardi Case

Creditors of the firm Girardi Keese, and Tom Girardi himself, plan to file an involuntary bankruptcy petition by the end of the week.   Law.com reports on a recent remote hearing to discuss the appointment of a trustee. Judge Thomas Durkin (Northern District of Ill) has previously frozen the assets of Girardi and his law firm, suspecting that they may have stolen settlement money from clients. Attorneys for one litigation finance firm explained that the involuntary bankruptcy petition would negate the need to appoint a trustee. California Attorney Lending has a judgment against Girardi of more than $6 million, though they remain defendants in an earlier lawsuit brought against Girardi Keese, alleging embezzlement of settlement monies owed to families impacted by the crash of Lion Air Flight 620. Judge Durkin opted not to appoint a trustee, though he did insist that the asset freeze stay. Jay Edelson is the acting co-counsel to several of Girardi’s clients. He recently expressed his concerns about the 8,000-10,000 clients Girardi represented in another class action—possibly involving a 2015 gas leak in Aliso Canyon near Los Angeles. In court, Edelson explained to the judge that his firm is concerned about the clients in question and wants them to be fairly compensated for their losses. Girardi is a prominent attorney whose wife, Erika Jayne, appears on the “Real Housewives of Beverly Hills.” The two ostensibly filed for divorce recently, though some have speculated that this is a ruse to protect or hide the couple’s assets. One lawyer, Boris Treyzon, informed a judge of Girardi’s request that he take over several Girardi Keese cases. Durkin declined this arrangement, saying he would not allow settlement or recovery to move forward without a trustee to supervise. Meanwhile, unnamed litigation funders have offered their assistance to Girardi. A judge has not precluded Girardi from receiving funds to pay for a forensic evaluation of his finances.

Managing the Workflow of Legal Departments

There’s an economic crisis afoot, which means managing costs and workflow is more vital than ever. Instead of telling in-house legal teams to ‘do more with less’, savvy businesses are investing in their legal departments. This allows them to better manage workflow, reduce spending, and optimize the company’s bottom line. Thomson Reuters Legal details that making a case for investment at this time may fall on deaf ears. It suggests that rather than explaining why investing is a good idea—detail instead why not investing can cause significant damage. Poor workflow, for example, is often the result of a lack of prioritization or an uneven distribution of assignments. Enhanced optimization can be a key way to address this. By streamlining, employing consistent practices, using trackable management, and filing regular reports with management, the benefits reveal themselves in short order. Automation via specialty software can connect with existing software to create a new level of efficiency. When a business is reticent to make the necessary investments, third-party legal finance is an option worth considering. Funds can be used to shore up in-house legal departments without adversely impacting balance sheets. Legal funding is a versatile, effective way to keep budgets in line while continuing to make improvements and handle pending matters effectively. Beware the cries of ‘that’s how we’ve always done this,’ when advocating for investment in and updating of in-house legal departments. Innovation is the path to a better future. Corporate legal departments have changed a lot in recent years—moving from a cost-burden to a kind of hub for communication, collaboration, and information centralized for easy access. This can be enhanced by modern tech like live updating of documents for faster contract creation and negotiation, or with software that leads to greater transparency and better communication between staff, clients, and management.

Key Takeaways from the IP Dealmakers Forum

Week two of the IP Dealmaker’s Forum included a variety of panels and events revolving around three main points of discussion. These included diligence, licensing, and venue. The forum also expounded on the importance of litigation funding in an array of IP matters. Above the Law details that litigation funding is a modernization of the traditional contingency model. In many types of patent litigation, diligence is key. Litigation funders can help with this, as their experience in varied IP-related matters will provide valuable insight. Litigation funders are well-versed in IP litigation and routinely invest in their diligence capabilities. In addition, the Litigation Finance industry is well-monied and standing by to help. It’s vital that litigants be proactive in the diligence process. This includes giving funders all the relevant information, allowing them to fully vet the risks of a specific investment. Also advised is a willingness to discuss these risks fully with their funders. These aspects of diligence benefit all involved. Firms get a no-cost opinion from experienced funders while funders are able to protect their (and their investor’s) capital from risk. Patent owners can obtain an informed and experienced analysis of their case to decide how best to proceed. Venue is also a vital consideration and another aspect that may be best discussed with litigation funders early on in the process. Some might suggest that, theoretically, it shouldn’t matter where a case is filed. But that’s simply not the reality. Licensing was the third major consideration discussed at the forum. Much IP licensing is based on potential damages from infringement. Large verdicts have become increasingly common in the IP landscape, even outside the business world with university researchers and non-practicing entities gaining huge settlements or awards. Part of the frustration with licensing stems from tech companies failing to look seriously at their licensing until a lawsuit is on the horizon.

Did the Recent Mastercard Case Open the Floodgates?

The case of Mastercard Inc et al v Merricks has captured considerable attention. Lawyers, funders, claimants in cases that have been stayed pending this decision—and at least 46 million claimants all awaited the Supreme Court’s ruling. Omni Bridgeway explains that collective proceedings in England became opt-out in 2015 as part of a bid to find more equitable solutions. This led to worry that, as some say has happened, commercial firms might fund cases strictly for profit. That was of particular concern in this case, given the high number of claimants as well as the size of the potential award. In the Mastercard v Merricks case, claimants are made up of those who made purchases with Mastercard over the 16-year-period covered by the action. Also involved are the 800,000 or so businesses that accepted the payments. All told, the class action seeks GBP 14 billion. Merricks, the representative plaintiff, has a meritorious cause of action. Specifically, the case here follows a finding of liability as the European Commission already declared that Mastercard breached its duty when they set their fees. But how can Merricks establish everyone’s individual losses on every mundane transaction over 16 years? In truth, he doesn’t have to. Seeking an aggregate award would only require data and methodology that affirms an appropriate amount of damage. At the same time, it may seem impossible to find a methodology that is fair to everyone. The Supreme Court ultimately held that defendants should not be let off the hook because proving exact damages is a herculean task. They also affirmed that collective actions are permissible even if they’re made up of claimants who could have filed their cases individually. Some have claimed that this ruling opens the floodgates to a bevy of new collective actions. It is true that class actions may have an easier path, but that only increases access to justice for ordinary people.

New Law Brings Litigation Finance to Cayman Islands

This past Monday, Cayman Islands Parliament passed the Private Funding of Legal Services Bill 2020. The bill provides a legal framework for conditional legal fees akin to what happens in the United Kingdom, as well as US-style contingency fees and litigation funding. Cayman Compass reports that unlike UK and US litigation finance agreements, under the new law, fees will be capped. Unless there’s a Grand Court application from the client and lawyer, success fees may not be higher than 100% more than the normal fee. Further, contingency fees cannot exceed 40% of the total recovery or award. The law is a welcome one. The attorney general stated that the new provisions are expected to level the legal playing field. Without funding options, the party with the most money is generally the winner. Ultimately, the result will be greater access to justice. That’s why the Opposition Members of Parliament supported the bill. The new law does not apply to criminal cases.

Avalanche Blockchain Offers ILO: Initial Litigation Offering

An ILO (Initial Litigation Offering) was recently launched on the Avalanche blockchain. This is, in essence, a token that provides investors with a percentage of payouts from various funded lawsuits. The December 14th announcement detailed the perks of litigation funding as an investment. Coinspeaker reports that the ILO is a first, and is estimated to generate more than $10 billion in the cryptocurrency landscape. Kevin Sekniqi of Ava Labs, explains that this ILO is a boon to investors as well as those who seek legal redress but lack the resources. Litigation finance is uncorrelated with the larger market and therefore an attractive investment in unpredictable times. While the Avalanche ILO is the first of its kind, it’s expected to be far from the last. The first noteworthy case involves a California hemp farm that was wrongfully destroyed by the Kern County Sheriff’s Office. The farm was worth roughly $1 billion. ILO investors will now be able to invest and share in any future recovery.