Trending Now

All Articles

3828 Articles
Commercial

The Future of Litigation Funding: Episode 5, Part 2

Episode 5, part 2 of the Turnaround Time podcast features the rest of the panel discussion on what we can expect to see in Litigation Funding trends (our coverage of episode 1 can be found here). David Prager of Duff and Phelps moderates a panel including Tatiana Markel of BakerHostetler, Kenneth Epstein of Omni Bridgeway, and Howard Brownstein of The Brownstein Corporation. Topics include transparency and disclosure in bankruptcy cases that utilize litigation funding. Below are some key takeaways from the discussion:   DP: Howard, can you talk us through a real world example of litigation funding in a bankruptcy context? And how that led to the dynamics we see today? HB: In the Fastship case, we used bankruptcy as a tool to enable litigation. Fastship was a company that had patents advertising they could build a huge cargo vessel that would cross the Atlantic in three days. So they raised money to promote the company. The ships themselves would cost about a billion dollars for a small fleet. The money they raised got used up before they could raise financing to build ships. They came to our firm and said ‘what do we do, we’re running out of money,’ and didn’t see any hope of revenue. We did an orderly wind down of the company, to avoid personal liability for the directors. Then they discovered someone had built three ships, and they were sure they infringed on the patents. But there was no money to pursue a case. I found a law firm that liked the case. They would take it on a contingency basis, they wouldn’t put up money for experts and such—back in 2012 before litigation funding. We ended up getting a DIP loan from the party funding the litigation (debtor-in-possession financing to keep a business in bankruptcy operating)...we were out of bankruptcy in a few months. It was a totally novel use of Chapter 11. As the liquidating trustee, I filed suit in federal court, because these were Navy ships. When you sue the government, they don’t settle. The case took forever. Fast forward to 2017. We won the case. The government appealed and we won there. We’ve been paid the judgement, but are still negotiating fees for costs. Not only had there been misuse of patents, but also an alleged misappropriation of trade secrets. DP: Is there a nexus between litigation funding and bankruptcy? Why haven’t we seen much pure litigation funding in bankruptcy cases? KE: There are a number of reasons why we haven’t seen that en masse yet. The ideal situation for litigation funding on the front end of the case is one in which claims against third parties are outside relative the other assets in the case. There will be increased use of litigation funding either on the front end or the back end when the trust gets set up. It’s a matter of finding the right case, and people haven’t been very aware of (litigation funding) and how it’s used. That’s part of what I do—educating the public on what funding can do, and to consider it when there’s a financial need. DP: It seems unprecedented to take a contingency bankruptcy case. Is that an opening for litigation funding? TM: That’s not really the type of work that we do. We do use litigation funding at the debtor level. That’s something I do in the international asset recovery field. The targets of our asset recovery are often offshore, and are shell companies, and you have to dig through various levels of beneficial ownership before you get to the right people. What we do in that context is, when that issue comes up, we use involuntary bankruptcy, as we, the debtor, could be the largest creditor of one of these offshores—we’d put it into involuntary bankruptcy. That means court supervision and appointment of a liquidator, which has to be funded to prosecute the claims. DP: Everyone in the industry seems to have their own proprietary structure, how do you think about that in the ‘in court’ part of bankruptcy, where disclosure is required? How will that impact pricing and competition? HB: There’s a transparency and disclosure that’s undeniable. If funders want to play in this space, they’re going to have to get comfortable with that dynamic. We’re happy to disclose material to firms, though that will get some scrutiny from shareholders. KE: There’s a necessary transparency that comes with all of this—and I don’t think that’s a bad thing. Many funders will embrace that, but it has to be commensurate to the risk. If a loan has recourse, you really can’t charge non-recourse rates. I’m not suggesting that’s going on—but judges are reacting to risk. Pricing needs to reflect the risk.
Commercial

Burford Capital Limited: Takeaways from the 2020 Annual Report

Burford Capital, the largest litigation finance firm in the world, released its 2020 annual report recently. Incorporated in 2009, Burford trades on the London Stock Exchange's AIM, as well as the NYSE. It counts 60 full-time lawyers among its 133 full-time staff. Burford boasts a total portfolio of $4.5 billion, including balance sheet assets, strategic capital, and private funds. Seeking Alpha shares cautiously optimistic insights on Burford’s numbers. Burford currently has $2.7 billion in private funds under management. This includes funds currently invested, and is split into the Strategic Value Fund ($500 million), Burford Opportunity Fund ($300 million), and Burford Alternative Income Fund ($300 million). Most of the current investments Burford makes are in Litigation Finance in European markets. Exceptions include an evergreen investment in American markets and some post-settlement asset deployment. Moving forward, it’s believed that COVID-related litigation will lead to increased funding activity in the months and years ahead. Burford’s addressable market is too large and varied to pin down. Globally, $860 billion is spent on legal fees—nearly half of that in the United States alone. By cost, Burford has achieved positive outcomes in 84% of its funding deployments. Eight Burford-funded cases which were realized last year produced ROICs of 199% or more. This suggests that Burford relies on big-ticket cases as well as profitable settlements as a core part of its earnings strategy. To date, Burford has deployed $831 million and recovered more than $1.5 billion. This, combined with a conservative debt structure, leave Burford well-positioned for further investments in the coming year. Some even speculate that the Muddy Waters attack has strengthened Burford’s reputation in the community, and its commitment to transparency. With Burford co-founders Chris Bogart and Jonathan Molot recently purchasing millions in shares, it's obvious the company execs believe Burford's success will continue, and that will eventually translate into share price appreciation. 
Announcements Consumer

Tribeca Capital Group Provides Litigation Loans To Qui Tam Whistleblower Claimants

Tribeca Capital Group, LLC, one of the nation's leading litigation loan companies, has announced a drive to help support the financial needs of whistleblowers who bring actions to expose fraudulent corporate activities and other wrongdoing. Tribeca Capital Group offers help in the form of commercial litigation loans to claimants with whistleblower actions. Tribeca is one of the few litigation loan companies in the United States to offer advances to plaintiffs in what are called qui tam cases, a special type of commercial whistleblower litigation brought under the False Claims Act against a company that has defrauded or otherwise wrongfully made a claim against the federal government. Many states have also enacted their own false claims statutes. In general, qui tam and other whistleblower actions are designed to protect the integrity of government revenue and procurement systems by allowing an individual with specific knowledge of wrongdoing to bring a suit on behalf of the government and claim a reward, usually a percentage of what the government recovers. A case filed under the False Claims Act can result in a whistleblower reward of 15 to 25 percent. Candice Payrovi, Chief Operating Officer of Tribeca Capital Group, LLC described the impetus for some common qui tam cases. "The highest percentage of cases brought by qui tam claimants involve health care and health care-adjacent services, particularly overbilling by unscrupulous Medicare and Medicaid providers. Coronavirus suits are also gaining steam. Companies that procure and supply the government with goods are frequent targets of whistleblower suits, as are defense contractors. Consider the infamous $640 toilet seat and $435 hammer." Payrovi explained why her company is eager to work with whistleblower claimants. "Qui tam and suits under the False Claims Act" are particularly challenging because they are by definition high dollar matters, and much is at stake. The people who bring these cases are protected by law against retaliation in employment, but many are wrongfully forced out of what are often lucrative jobs, and it could be some time before their matters are resolved." Because qui tam and False Claims actions do not follow the traditional litigation model, many brave souls who bring these cases do not realize that they could qualify for a litigation loan from Tribeca. Rewards in a qui tam matter can be substantial, but resolution of complex cases can take months or even years. A litigation loan from Tribeca can help whistleblowers survive the financial stress that often accompanies these cases. Donadio also emphasized that whistleblowers are protected by a guarantee that eliminates their personal liability for repayment if for some reason the case results in no reward. If you have filed a whistleblower action and would like to explore whether you qualify for a litigation loan on your award, contact Candice Payrovi, Tribeca Capital Group at (866) 388-2288.
Commercial

Securities Litigation—Trends and Strategies

Challenging economic times for a business can shed light on prior corporate misconduct. In 2020, there were multiple examples of corporate fraud exposed. As litigation related to insolvencies and fraud grows, institutional investors should be seeking out new strategies to ensure maximum possible recoveries. Burford Capital explains that the Wirecard litigation, which took place in Germany, is an excellent example of how experienced funders can improve case outcomes. Burford worked closely with law firm Quinn Emanuel. Together, the team built the largest shareholder group action against the financial tech firm, and will continue to maximize recovery for their clients. The Economist suggests that as much as a decade’s worth of fraud will soon be exposed.  Securities litigation is about to happen on a scale we haven’t seen since the 2008 financial unrest. This is sure to include jurisdictions that are new to large-scale securities activity. This means institutional investors may find themselves seeking guidance from experienced industry partners that offer insight, as well as funding. The impact of COVID may be changing over time. It remains uncertain when a new normalcy will emerge, and what it will look like when it does. With that in mind, developing a strategic litigation plan should be at the forefront of every GC’s mind over the coming year and beyond. What should that plan entail? Burford Capital recommends portfolio financing to preserve assets and mitigate risk. A portfolio funding arrangement allows fund managers to pursue multiple claims by streamlining processes and lowering costs overall. Monetizing claims is another way legal funding can be employed to free up working capital that may be needed for day-to-day operations. A sizable part of weathering financial uncertainty is to plan and adapt for the future.
Commercial

Case Study: Liquidation Using Portfolio Funding

How is portfolio funding valuable during liquidation? One case study may help explain. LCM details that the case in question involves the liquidation of a trading entity that was part of a group of construction and development businesses. The complexities of the liquidation combined with accusations of misconduct led to the liquidator spending a disproportionate amount of time assisting with the ASIC investigation, and being largely unfunded. By entering a portfolio funding arrangement with a legal funder, non-recourse funds are provided. The claims themselves are cross-collateralized, lowering the funder’s risk. This type of funding supports the pursuit of all meritorious claims—not just the most lucrative few. Ultimately, portfolio funding can increase the size of recoveries in a liquidation case while ensuring that funding is priced fairly and all claims are followed to completion.
Commercial

East to West—Patent Cases Find a New Favorite Jurisdiction

Why are patent cases suddenly more plentiful in the Western District of Texas, when for years, the Eastern District of Texas was the reigning king? It could be the recent $2.18 billion verdict in a case against Intel Corp. The jury’s willingness to hand down such a high award is likely to attract interest in trying patent cases in the jurisdiction. Omni Bridgeway explains that the West District of Texas may be positioning itself to become a destination for patent cases. This would be good news for companies hoping to pursue infringement litigation. Over the last two years, patent cases filed in the Western District surged from 2.5% of cases to nearly 20%. Most of these cases eventually land in the lap of Judge Alan Albright. Albright is reluctant to transfer cases outside the district and has expressed enthusiasm for patent cases in general. Patent infringement claims often are not pursued for financial reasons—leaving money on the table. But litigation funders can take the risk out of patent litigation in many situations. Which means funders should have their eyes on the Western District of Texas, and the IP claims that are adjudicated there. 
Announcements Commercial

Burford Capital announces closing of private offering of senior notes

Burford Capital Limited (“Burford” or “Burford Capital”), the leading global finance and asset management firm focused on law, today announces the closing on April 5, 2021 of the private offering of $400 million aggregate principal amount of 6.25% senior notes due 2028 (the “Notes”) by its indirect, wholly owned subsidiary, Burford Capital Global Finance LLC. The Notes are guaranteed on a senior unsecured basis by Burford Capital as well as Burford Capital Finance LLC and Burford Capital PLC, both indirect, wholly owned subsidiaries of Burford Capital (such guarantees, together with the Notes, the “Securities”).
Burford Capital intends to use the net proceeds from the offering for general corporate purposes, including the potential repayment or retirement of existing indebtedness. The Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the laws of any other jurisdiction, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from registration under the Securities Act or any applicable state securities laws. The Securities will be offered only to persons reasonably believed to be “Qualified Institutional Buyers” within the meaning of Rule 144A under the Securities Act or non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act, in each case, who are “Qualified Purchasers” as defined in Section (2)(a)(51)(A) under the U.S. Investment Company Act of 1940.
For further information, please contact:
Burford Capital Limited 
Jim Kilman, Chief Financial Officer+1 917 985 9840
Robert Bailhache, Head of Investor Relations, EMEA and Asia+44 (0)20 3530 2023
Jim Ballan, Head of Investor Relations, Americas+1 (646) 793 9176
  
Numis Securities Limited - NOMAD and Joint Broker+44 (0)20 7260 1000
Kevin Cruickshank (NOMAD) 
Charlie Farquhar / Jonathan Abbott (Joint Broker) 
  
Jefferies International Limited - Joint Broker+44 (0)20 7029 8000
Graham Davidson 
Tony White 
About Burford Capital Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its principal offices in New York, London, Chicago, Washington, Singapore and Sydney. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities of Burford. This release does not constitute an offer of any Burford fund. Burford Capital Investment Management LLC ("BCIM"), which acts as the fund manager of all Burford funds, is registered as an investment adviser with the U.S. Securities and Exchange Commission. The information provided herein is for informational purposes only. Past performance is not indicative of future results. The information contained herein is not, and should not be construed as, an offer to sell or the solicitation of an offer to buy any securities (including, without limitation, interests or shares in the funds). Any such offer or solicitation may be made only by means of a final confidential Private Placement Memorandum and other offering documents. PRIIPs Regulation / Prohibition of sales to EEA retail investors. The securities described in this announcement are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area ("EEA"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or (ii) a customer within the meaning of Directive 2016/97/ EU (the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II. Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended, the "PRIIPs Regulation") for offering or selling the securities described in this announcement or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the securities described in this announcement or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation. Prohibition of sales to UK retail investors. The securities described in this announcement are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom ("UK"). For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 ("EUWA"); or (ii) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA (the "UK PRIIPs Regulation") for offering or selling the securities described in this announcement or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the securities described in this announcement or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation. IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA, THIS ANNOUNCEMENT IS DIRECTED ONLY AT PERSONS WHO ARE "QUALIFIED INVESTORS" WITHIN THE MEANING OF PROSPECTUS REGULATION (EU) 2017/1129 IN SUCH MEMBER STATE, AND SUCH OTHER PERSONS AS THIS DOCUMENT MAY BE ADDRESSED ON LEGAL GROUNDS, AND NO PERSON THAT IS NOT A RELEVANT PERSON OR QUALIFIED INVESTOR MAY ACT OR RELY ON THIS DOCUMENT OR ANY OF ITS CONTENTS. IN THE UK, THIS ANNOUNCEMENT IS DIRECTED ONLY AT PERSONS WHO ARE "QUALIFIED INVESTORS" WITHIN THE MEANING OF PROSPECTUS REGULATION (EU) 2017/1129 AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUWA IN THE UK, AND SUCH OTHER PERSONS AS THIS DOCUMENT MAY BE ADDRESSED ON LEGAL GROUNDS, AND NO PERSON THAT IS NOT A RELEVANT PERSON OR QUALIFIED INVESTOR MAY ACT OR RELY ON THIS DOCUMENT OR ANY OF ITS CONTENTS. Forward-looking statements This announcement contains “forward-looking statements” within the meaning of Section 21E of the US Securities Exchange Act of 1934 regarding assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as “forward-looking statements”. In some cases, predictive, future-tense or forward-looking words such as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “forecast”, “guidance”, “intend”, “may”, “plan”, “potential”, “predict”, “projected”, “should” or “will” or the negative of such terms or other comparable terminology are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. In addition, we and our representatives may from time to time make other oral or written statements which are forward-looking statements, including in our periodic reports that we file with the US Securities and Exchange Commission, other information sent to our security holders, and other written materials. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and are based on  numerous assumptions and that our actual results of operations, including our financial condition and liquidity and the development of the industry in which we operate, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this announcement. Significant factors that may cause actual results to differ from those we expect include those discussed under “Risk Factors” in our Annual Report on Form 20-F filed with the US Securities and Exchange Commission on March 24, 2021. In addition, even if our results of operations, including our financial condition and liquidity and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Except as required by law, we undertake no obligation to update or revise the forward-looking statements contained in this announcement, whether as a result of new information, future events, a change in our views or expectations or otherwise.
Announcements Consumer

LFJ Hosts a Special Digital Conference on “Investor Insights into Consumer Legal Funding” 

Litigation Finance Journal has announced an upcoming roundtable discussion on third-party legal funding. A panel of institutional investors will discuss their thoughts on Consumer Legal Funding as an asset class. This special event will be held April 13 from 11:30 am-12:30 pm EST. Tickets can be found here.  This digital conference will be moderated by Dan Avnir, Managing Director of Bryant Park Capital. Featured panelists include Ben Kaplan, Co-founder of C9 Partners, Don Plotsky, Co-Founder of Uinta Investment Partners, and Michael Morris, Managing Director of Northleaf Capital Partners.  Topics to be covered will include:
  • The unique challenges of investing in litigation
  • How do institutional investors vet fund managers?
  • Expected returns, risk/reward profiles, and manager best practices
  • Predictions for the future of the industry
There will also be a Q&A with attendees after the panel discussion. Tickets are available now.  Please note: The event will be recorded, and all who purchase a ticket will receive a link to the recording. 
Commercial

COVID as a Factor in Securities for Costs

An order for securities for costs is meant to ensure that defendants can receive remuneration from an unsuccessful plaintiff. Monies are verified or set aside until the case is completed. If a securities for costs order is not met, a case may be dismissed. For the courts, deciding whether this is necessary can be a balancing act that weighs the hardship of a defendant who cannot recover costs, versus the financial burden to the plaintiff. LCM details one case that illustrates the precarious nature of this balancing exercise. The case is Grocon Group Holdings Pty Limited v Infrastructure NSW (2020) NSWSC 1194, which involves accusations of deceptive and misleading conduct during the bidding for the Central Barangaroo Development. INSW requested that Grocon be ordered to put up security for costs. The law says that to ask for securities for costs, the defendant is responsible for demonstrating that the plaintiffs may not be able to pay the costs if necessary. INSW used Grocon’s own financial reports that demonstrated more liabilities than assets. Grocon declined to provide evidence to the contrary. Interestingly, the judge did say that the impact of COVID might have influenced his order for securities for costs if Grocon had submitted evidence to that effect. Another recent case referenced by the judge held that if a business is significantly disrupted due to COVID, a securities for costs order could hurt the business even further—and is therefore not in the interests of justice. Security for costs orders are largely left to the judge’s discretion. A judge does have the discretion to decline to order securities for costs if there is a legitimate financial reason. But in this instance, the judge wanted evidence that Grocon was in financial peril—and not merely unwilling to put up securities for costs. Ultimately, the judge ordered Grocon to pay security for costs.