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Consumer Covid-19

COVID and Medical Malpractice—Is Change Coming?

Since the impact of COVID, clinics and hospitals are besieged by new patients they can scarcely accommodate. Beds are full, basic supplies like PPE have run short, and even the best minds in medicine cannot agree on how to stop the spread of the virus. The only thing worse than being sick or injured may be to have that illness or injury exacerbated by an error by a medical professional. The Post offers a warning about potential changes to the way medical malpractice is adjudicated. Medical malpractice claims are increasingly funded by third-party litigation funders. Funders and plaintiffs can enter an agreement for non-recourse funding for legal and other expenses relating to a malpractice claim. If the case is successful, the funder gets an agreed-upon percentage of the award. Outside of the US, some countries are making big changes in how medical malpractice cases are addressed. In Denmark, it is free to file a medical malpractice claim. The medical caregivers are not being personally sued, leading to a speedier and less adversarial system where everyone is more inclined to participate and share information. Perhaps most importantly, The Danes focus on two things: If the treatment itself was lacking, and if a “severe or rare medical event occurred.” The claim is then evaluated by medical reviewers and the information therein is made publicly available. COVID is already spurring calls for fairness when it comes to access to the internet for the impoverished. Could we see similar calls emerge for those in need of malpractice lawsuits? Any emerging trend is worth keeping an eye on, since any mimicking of policies in Demark would likely to reduce opportunities for litigation funders.
Commercial

Insurers’ Balance Sheets Improve as ACA Risk Corridor Payments are Finally Underway

The Judgement Fund is used by the Bureau of Fiscal Services to provide remuneration to plaintiffs who successfully sue the federal government of the US. This arm of the US Treasury Department has been given leave by the Supreme Court to use the fund to pay insurers. Think Advisor explains that the payments are being sent out, as promised by the ACA. The payments had been delayed for years, leading to hardships and even closures for the businesses involved, though their purpose was to help struggling insurers. Why weren’t the payments made when originally scheduled? The government claimed that Congress refused to allot money for the program in the budget—ostensibly as part of a plan to keep the ACA from working properly. This left the fund roughly $12 billion short of where it needed to be. In April, SCOTUS ruled that Congress' failing to provide funds in no way relieves the government from its responsibility to make payments. Risk corridor program payments are estimated to average $800 for each individual with major medical coverage. One estimate puts the number of Americans with individual major medical insurance at roughly 15 million.
Commercial

HESTA Backs 21 Class Actions on Behalf of Shareholders

Litigation Finance is deepening its presence in the shareholder class action scene—challenging businesses when those who invest in them lose money. HESTA, a health-industry-specific fund, is now funding 21 class-action suits representing shareholders. The New Daily reports that HESTA isn’t just seeking big payouts, though they have earned about $32 million from various successful cases. The funding group has stated clearly that in addition to recovering losses, they hope to encourage improved accountability and more oversight into corporate governance. As of December of last year, changes in funding laws necessitate input from big investors in order to see a class action to its conclusion. Doing away with common fund orders means litigation funders need to ensure that enough claimants have signed on to a given case. The skirmish involving common fund orders was brought about by Westpac, ostensibly in the hopes of getting rid of one class action in particular. A recent claim was triggered after Westpac was accused of millions of illegal fund transfers that appear to violate counterterrorism and money-laundering laws. In addition to abolishing common fund orders, regulations for litigation funders also changed—requiring their own licenses due to their new designation as managed investment schemes. Industry professionals are averse to these new changes, according to Allsopp. He explains that the federal government went ahead with a flurry of changes that came against counsel from ASIC and prior to the completion of a Parliamentary inquiry.
Commercial

International Arbitration Opportunities Through Litigation Finance

Multinational companies are choosing international arbitration to settle disputes in greater numbers than ever. For those who make this choice, Litigation Finance can take the financial stress out of the ordeal. Third-party legal funding can be used commercially and internationally. Omni Bridgeway details that in 2019, there were 869 new arbitration cases, according to stats from the International Chamber of Commerce. Over 1/3 of new cases were valued at more than $10 million. Moreover, of the 10 most-commonly chosen venues for international arbitration—half were located outside Europe or North America. Firms and companies involved in international arbitration can certainly benefit from litigation funding. When arbitration is the chosen path for an international dispute in cases like treaties, or a business bringing a claim against a government—funding can lighten the financial load significantly. Funding may also mitigate the longer case lengths and lower settlements that can occur. Now more than ever, international entities are looking for funding for a broad portfolio of cases. This presents opportunities for businesses to better manage finances while reducing the overall risk for funders. If one plans to make use of Litigation Finance, it’s important to understand the criteria by which funders select cases. Criteria include the probability of success as the main factor, followed by the potential expenditure versus the amount of a potential award. Experienced funders will have their own metrics or algorithms to determine this. Also considered are the success rate of the legal team involved, the jurisdiction, the potential time-frame of the case, and the probability of collecting an award or settlement. If there’s a tribunal, its efficacy will factor in as well. Enforceability is an ongoing concern for international cases—so funders with global enforcement experience are particularly desirable. All of these factors can impact the funder’s bottom line—which is particularly important given the non-recourse nature of litigation funding.
Commercial

Innovation and Litigation Finance—A Winning Combination

Current economic conditions are making it more challenging to run a business regardless of industry. In the legal world, budgets are shrinking and GCs, already stretched to the brink, are taking on even more costs. An ability to adapt to circumstances while finding ways to save money is of the essence. Burford Capital explains that when money is tight, the last thing firms want to do is take risks. At the same time, the need for innovation is greater than ever. The solution? Legal Finance. Innovation in the legal world is nothing new. But now, increased efficiency and time-saving techniques aren’t just desirable—they’re mandatory. Clients and customers require digital signatures, electronic billing and payments, secure virtual meeting spaces, and protected file transfers that maintain the privacy of clients and firms. A 2019 Legal Finance Report shows that more than 70% of in-house counsel chose not to pursue meritorious cases because they didn’t want to take the financial risk. Not only that, over 60% of in-house lawyers are failing to collect judgments or awards to the tune of tens of millions. In these instances, Litigation Finance can make all the difference.
Announcements Consumer

Law Finance Group Offers Answer to Challenging Question Law Firms Now Face: “When Will We Get Paid?”

August 27, 2020—It’s a question many are now confronting, and it has nothing to do with the law: “When will we get paid?”

As the pandemic and other macro factors continue to impact the economy, law firms’ efforts to collect from their clients present a real challenge. On one hand, firms need steady revenue to meet their operating expenses and other obligations; on the other, they need to put client interests first. With clients facing their own financial stresses, lawyers must show extreme sensitivity to their clients’ challenges, arguably before their own. Law Finance Group, a leading litigation financier and provider of capital to law firms for more than 25 years, has recognized this dilemma and stepped in with a solution—AR Now: Accounts Receivable Financing.

A first-of-its-kind product, AR Now will:

  • Immediately advance 50% of a client’s outstanding bill.
  • Allow law firms to maintain the billing relationship with the client, while Law Finance Group stays in the background.
  • Offer facilities up to $20 million or more, giving law firms peace of mind to focus on their work.
  • Avoid personal guarantees that law firm lenders typically require.

When clients pay their invoices within six months, law firms keep 93% of the amount billed. When invoices are paid within a year, law firms keep 88%. The full program terms allow law firms to give clients up to 18 months to pay outstanding bills.

“You don’t need to read about furloughs and cost-cutting to know that firms and their clients are under great stress right now,” said Dan Bush, Law Finance Group’s chief investment officer. “We’re happy to offer a product that relieves a lot of that stress on law firms, while also benefitting their clients.”

AR Now also holds the promise of relieving any tension that may exist between law firm partners and management and provides a strategy to navigating this reality together. Often, compensation plans incentivize partners to offer overly generous discounts that get funds in the door, but work against the broader firm goal of maximizing revenue. AR Now aligns the interests of partners and management, while offering attractive advantages to both groups.

Partner benefits: Partners can offer clients extended payment terms, further establishing themselves as valuable problem solvers in a time of crisis. For them, AR Now also allows the firm to book revenue that could contribute to partner distributions.

Management benefits: AR Now gives chief financial officers, chief operating officers, pricing professionals, and client services managers immediate capital without having to offer clients substantial new discounts or tapping their lines of credit.

“Our AR Now product has other applications for law firms and their clients—for instance, facilitating new alternative fee arrangements,” Bush said. “Ultimately, we’re here to help both firms and their clients get through this challenging moment, and, as always, are willing to get creative to get that done.”

For detailed terms and more information about AR Now, click here.

About Law Finance Group

For more than 25 years, Law Finance Group has been a leader in the litigation and law firm finance industry. We have provided over half a billion dollars in financing for individual lawsuits and litigation portfolios to parties and their law firms. Our innovative financing solutions are based on our deep understanding of the civil justice system and the realities of the modern law firm business model. Law Finance Group maintains offices in San Francisco, New York, and Austin.

Commercial

Qui Tam Relators Compelled to Disclose Litigation Funding

The FCA or ‘False Claims Act’ has secured more than $3 billion in settlements or judgments in civil cases in the 2019 fiscal year alone. Much of that relates to healthcare claims, and nearly two-thirds involve relators—which is another term for whistleblowers. This is not surprising, given the widespread application of Qui Tam provisions that offer a portion of an award to whistleblowers who assist the prosecution with cases under the FCA. JD Supra explains that rampant fraud in government programs combined with the money to be made under a writ of qui tam means this type of litigation is increasingly popular. Litigation Finance is now entering the fray of FCA cases, though there are no definitive numbers on how much litigation funders have invested in FCA suits. While increased regulation has not yet been called for, the DOJ does appear to have concerns over third-party funding in qui tam cases. With that in mind, the DOJ now requires all qui tam relators to reveal any agreements they may have with third-party funders. Many think this move toward transparency might signal the end of funding in qui tam FCA cases—and that in turn, this will decrease the number of whistleblowers coming forward. The DOJ initially expressed concern regarding FCA cases when the relator is involved in litigating on behalf of their government. At a January 2020 speech, former Deputy Associate AG Stephen Cox explained that the DOJ was looking into whether or not disclosure in such cases was appropriate. Now, a series of questions will be asked of all FCA relators: --Is there an agreement with a third-party funder? --Who is the funder? --What information has been shared with the funder? --What is the nature of the written agreement with the funder? --Does the agreement give the funder control over decision making (this is generally prohibited in all cases)?
Commercial

Does Litigation Funding Turn David into Goliath?

At what point might a David become a Goliath? Some would say that Litigation Finance is the catalyst for such a transformation. Take the case of Akiane Kramarik and the famed portrait of Jesus she painted at age nine. Over the years, she’s been the subject of television appearances, media events, and even a big-budget film. But as she grew up, missing royalty payments and other shady dealings began to emerge. Bloomberg Law explains that the artist recently acquired funding from Legalist, a third-party funder, in order to sue former business partner Carol Corneliuson and her business, Art & SoulWorks. For most people of modest means, Litigation Finance provides a way for those who can’t afford legal representation to have their day in court. Kramarik and her family claim that they need help from funders to finance their case. But Corneliuson claims that the Kramarik’s can now use the funds to make outrageous demands—though there’s no evidence that they have done so. In January 2019, the Kramarik family terminated their relationship with Corneliuson. After a short disagreement about selling existing merchandise, Kramarik’s father decided to look deeper. That’s when he learned that Art & SoulWorks had not paid full royalty payments, and allegedly sold low-quality reprints to counterfeit markets. Referencing items she had already purchased for sale that were now ostensibly worthless—Corneliuson filed a countersuit. Eva Shang of Legalist has stated that Ms. Kramarik is exactly the kind of client who can benefit from litigation funding. The case itself does not appear to be near a settlement. Indeed, Corneliuson’s attorney has said that her client would be unable to afford the proposed settlement of $2 million. A partner at the firm representing the Kramarik’s has said that the firm isn’t pursuing the case any differently than he would have, had no funding been secured.
Announcements Commercial

Significant Legal Win for “David” Canadian Corp in London Court

Global Energy Horizons Corp (GEHC) an alternative energy corporation headquartered in Victoria, British Columbia, Canada has won a significant Judgment against The Winros Partnership (formerly Rosenblatt Solicitors) a City of London based law firm. GEHC’s claims are related to the legality and enforceability of three Conditional Fee Agreements (CFAs) alongside several misconduct allegations against Rosenblatt. A CFA  is a contingency agreement between a law firm and its client whereby the law firm assumes the costs of pursuing a litigation for a reward that could amount to 100% of its customary fee. The case considered GEHC’s claim that all three CFAs entered into with Rosenblatt were unenforceable, and in any event wrongly terminated, and as such Rosenblatt wrongly claimed costs, despite the existence of an unenforceable ‘no-win, no-fee’ CFA. The case also considered numerous allegations of impropriety, including Rosenblatt misrepresenting to its client that monies were owed. The Judgment, handed down on Thursday August 20, 2020, found for GEHC in all its claims. Master James, the presiding justice, noted that Rosenblatt “left GEHC’s best interests in their rear-view mirror” and “favoured its own interests over its client’s.” The Judgment found that Rosenblatt had misrepresented the following to GEHC and/or the court:
    • that one of the CFAs had come to an end, before wrongly and unclearly invoicing the claimant for monies allegedly owed
    • a win had been achieved under a later CFA resulting in additional fee requirements of £7 million
    • GEHC had agreed to gift Rosenblatt in excess of £2 million, including £460,000 in irrecoverable success fees which Rosenblatt maintained they had explained to GEHC that there was no contractual entitlement
    • further, Rosenblatt failed to keep records of the alleged advice or the alleged agreement
The conduct of the matter was punctuated by poor or non-existent written communications, on which Master James remarked: “This is one of a number of occasions upon which a very important event, involving a large sum of money, has allegedly happened but in respect of which there is no paper trail to verify it, in spite of the fact that Rosenblatt is a commercial law firm and well-versed in the importance of reducing important agreements to writing.” GEHC was represented by a London-based team of the firm Eversheds Sutherland and Ben Williams QC of 4 New Square, London. The Eversheds Sutherland team was led by Partners David Flack and Mark Cooper, and Head of Costs Glenn Newberry. The Winros Partnership were represented by Rosenblatt Solicitors and Andrew Post QC of Hailsham Chambers, and Adam Zellick QC of Fountain Court, all of London, UK. Glenn Newberry, Head of Costs and Litigation Funding at Eversheds Sutherland commented: “We’re delighted the Judgment found for GEHC on all counts. This is a significant case, being one of the first to find a post 2005 CFA to be unenforceable following the abolition of the 2000 CFA Regulations in 2005, as well as tackling what became an ever-growing number of incidences of misconduct. The team faced numerous challenges during proceedings, including a lack of documentary evidence, nor correspondence nor file notes of conversations of the advice which Rosenblatt purported to have provided to GEHC in respect of the unusual and complex fee agreements.” Brian de Clare, President of GEHC commented: “GEHC engaged Eversheds in 2016 to investigate our rights following the unauthorized removal of funds from our Client account at Rosenblatt. That was a shocking situation for us to have been put in, especially where we had placed great trust in Rosenblatt from the very beginning. For Eversheds to have uncovered even further grave irregularities in our fundamental contractual relationship with Rosenblatt (the CFAs) made us realise the trust we placed in Rosenblatt actually exposed us to being taken advantage of by them. We are extremely grateful to the Eversheds Sutherland team and Ben Williams QC for their expertise, hard work and perseverance on this difficult to comprehend matter which unearthed a catalogue of misconduct incidents stretching back a number of years.” The case was heard in the Senior Courts Cost Office in London. The hearing lasted 10 days in 2018, including eight days of live evidence. The defendant has sought permission to appeal. Rosenblatt Solicitors were hired in 2009 to litigate GEHC’s case against Robert Gresham Gray in London for breach of fiduciary duty in 2006 by removing GEHC’s opportunity to participate in an innovative and patented technology/process, tested and utilized in the U.S. and around the world, for increasing oil & gas recovery, and the associated benefits derived therefrom. Eversheds Sutherland also represent Global Energy Horizons in the ongoing litigation against Gray, who was found guilty by Lord Justice Vos in 2012 for breach of fiduciary responsibility.