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Announcements Commercial

HFW, KPMG AND AUGUSTA VENTURES JOIN FORCES TO SUPPORT BUSINESSES IMPACTED BY COVID-19

HFW, KPMG and Augusta Ventures are pleased to announce a non-exclusive project to assist companies facing problems caused by the Covid-19 pandemic and lockdown. Together, they will provide a global 'one-stop shop' that can quickly support companies needing assistance by facilitating funding for supporting litigation and arbitration from Augusta, and a package of legal assistance, asset tracing and enforcement measures from HFW and KPMG. Augusta’s assistance will enable claims to be swiftly investigated and the merits established, so that clients can decide how they wish to proceed including by way of litigation or mediation. Brian Perrott, Partner, HFW: "The pandemic is the biggest disruption to business since 2008 and will give rise to countless disputes and claims, largely through no fault of either party. But companies wishing to resolve such disputes may find themselves unable to fund the costs of any litigation at this difficult time. Having Augusta on board will therefore be of great comfort to parties when they are dealing with problems caused by the pandemic that are unforeseen and for which there is no time to make any cash provision to fund the matter. "I also look forward to working with KPMG on this project, as I know how many claims do not proceed or fail because of an inability to locate and, where necessary, enforce against assets. This team will also be able to ensure matters are properly investigated, so that the clients can decide if they want to proceed to litigation or resolve their claims by mediation." Robert Hanna, Co-Founder and Managing Director, Augusta Ventures: "Collaborating with KPMG and HFW will allow us to deliver a seamless, low-risk litigation process for claimants seeking to recover funds. Together, we will level the playing field providing funds for access to justice and place our clients on the best path for success." David Standish, Partner, KPMG: "Our expertise in asset tracing and enforcement is of the utmost value to clients who wish to recover losses. Working with this team means we can tackle all aspects of the problem very quickly. The added comfort of funding means no claim need be delayed because of problems around financing the work.”

About HFW

HFW is a leading global law firm in the aerospace, commodities, construction, energy and resources, insurance, and shipping sectors. The firm has more than 600 lawyers, including 185 partners, based in offices across the Americas, Europe, the Middle East and Asia-Pacific. HFW prides itself on its deep industry expertise and its entrepreneurial, creative and collaborative culture.

About Augusta

Established in 2013, Augusta is the largest litigation and dispute funding institution in the UK by case volume. Augusta’s scale enables them to make decisions in market-leading timeframes and fund cases of any size. The business is organised into a series of specialist practice groups: Arbitration, Class Action, Competition, Consumer, Intellectual Property, and Litigation, and sectors including Financial Services and Construction & Energy. Augusta has offices in London, Sydney, Melbourne, and Toronto.

About KPMG

KPMG is a global network of professional services firms providing audit, tax and advisory services to a wide variety of public and private sector organisations. We operate in 147 countries and territories and have over 219,000 people working in member firms around the world. KPMG in the UK is one of the largest member firms of KPMG’s global network providing Audit, Tax and Advisory services. In the UK we have 631 partners and 17,600 professionals working together to deliver value to our clients across our 22 UK offices. Our vision is to be the clear choice in professional services in the UK. For our clients, for our people and for the communities in which we work.
Commercial

Is the Trucking Insurance Industry Becoming Toxic?

Trucking companies, insurers, and employees have been having a rough couple of years. Tax law changes have cheated drivers out of their per diem, making their taxes skyrocket. Insurance rates climb ever higher as large payouts cripple insurers. Some have placed the blame on Litigation Finance, claiming that enabling plaintiffs has had a negative impact on insurers. But is that fair? Fleet Owner reports that higher insurance prices show no sign of slowing. Mehdi Arradizadeh explains that insurance rates for trucking companies are typically determined by looking at accident prevention, mitigating risk, and an evaluation of safety within the company culture. Other factors, like geography, can come into play with some areas being worse for insurers than others. Now, insurers fear that any claim could quickly become a multi-million-dollar settlement or verdict. Arradizadeh went on to stoke fears that insurers might not even insure trucking companies anymore if they have to keep paying out. He claims that plaintiff-side lawyers are disregarding reasonable liability in favor of seeking a high payout by generating anger and fear from jurists. Some have suggested that Litigation Finance exacerbates this. But what reputable funder is going to bankroll a case without merit? One might be tempted to suggest that insurers worried about payouts should take that up with their underwriters rather than with those who seek to increase access to justice. Underwriter Chris Mikolay explains that proper use of algorithms and research should prevent insurers from overpromising in a policy. He points out that “problems” are really just disguised opportunities, and that insurers simply need to find ways to outsmart the market—perhaps by avoiding claims rather than complaining that the payouts are untenably large. Mikolay suggests that getting one’s house in order is the best way to avoid high settlement amounts.
Commercial

Litigation Funding Comes to the Rescue of Prairie Mining in Case Against Poland

Is the country of Poland in violation of the Energy Charter Treaty or the Australia-Poland Bilateral Investment Treaty? That’s the question being asked in a case brought by Prairie Mining. A notice of dispute was served in February of last year along with a formal request to seek a resolution. Sharecast reports that Prairie Mining and Litigation Capital Management have entered into a funding agreement. LCM, a London-listed firm, explains that the money will be used in pursuit of damages claims, and to cover operational expenses while the case plays out.   It’s rare that even a large company like Prairie Mining could take on an entire government without financial help. A funding arrangement with LCM provides enough money to get through the case—but there’s more. Securing the full legal budget from an experienced entity like LCM lends legitimacy to the claim. LCM is confident that the case will end with them recouping their investment and then some.
Announcements Commercial

District Court in Poznań, Poland rejects Mariusz Świtalski’s request to lift injunction

CHICAGO, Illinois, June 30, 2020 -- Forteam Investments Ltd., an investment company controlled by the American private equity firm Delta Capital Partners Management LLC (“Delta”), which is seeking approximately USD $86 million from Mariusz Świtalski and companies he controls, has secured an injunction against Świtalski and his assets.

A second injunction was also obtained against Świtalski and his four children, Mateusz, Natasza, Marcin and Mikołaj in relation to their ownership in the Świtalski FIZ investment fund.

Świtalski is a Polish entrepreneur that has been named one of the richest persons in Poland by Wprost Weekly.

On June 25, 2020, a Poznań, Poland court rejected a request to lift the first injunction against Świtalski in a decision that is unappealable.

Delta’s CEO Christopher DeLise said, “This decision bodes well for the success of our legal case against Mariusz Świtalski. The court’s choice to deny Świtalski’s appeal underscores the judges’ confidence in the merits of our legal arguments. Moreover, the attempt to conceal expensive cars at the Świtalski family residence by changing their number plates ahead of our bailiff’s visit demonstrates desperate tactics to avoid fulfilling clear legal obligations. We understand that this matter with supporting evidence has been referred to the appropriate criminal prosecutor in Srem. We are also reassured by statements made last week by the Polish President and Prime Minister regarding the security and attractiveness of US investments in Poland. We are aware that this matter is being carefully observed by the American investment community.”

The two injunctions related to Forteam’s civil suits against Świtalski have been widely reported in the press, with outlets such as Gazeta Wyborcza and Puls Biznesu detailing Świtalski’s history of evading contractual obligations.

By way of background, on May 8, 2015, Forteam purchased from Czerwona Torebka, a 100% stake in Małpka, the owner of the Małpka Express chain. Forteam eventually sold its 16.18% stake in Czerwona Torebka. The parties to that transaction were aware of Małpka’s challenging situation and thus acknowledged in the agreement that additional considerable financing would be needed in order for Małpka to remain afloat.

Accordingly, Mariusz Świtalski and Sowiniec Group contractually agreed to guarantee that Forteam would make a profit from its investment when it eventually exited the business. In connection with the issuance of the guarantee in favor of Forteam, Mariusz Świtalski submitted a written declaration that his personal assets were sufficient to enable him to honor his obligations under the guarantee agreement.

Despite having engaged a well-respected independent investment bank in 2018 to run a robust sales process for it, Forteam was only able to sell Małpka Express for an amount well-below the minimum set forth in the definitive transaction documents and related guarantee agreement.

On December 28, 2018, Forteam notified Świtalski of its obligation to remit the monies owed to Forteam pursuant to the guarantee agreement. Notwithstanding, Świtalski and his companies have failed to pay any amounts due and owing to Forteam, which necessitated the filing of the injunctions and civil lawsuits.

Commercial

PFAS Pollution Case Settles, with Some Claimants Upset

An Australian case involving contamination from firefighting foam has settled with what the judge called a “fair and reasonable” amount. The class action over PFAS contamination in three Australian towns has been underway for years, involved multiple law firms and over 500 claimants. World Socialist Website explains that while the judge was pleased with the decision, many members of the class were not. Individual settlement amounts call into question whether the amount taken from the award for costs is excessive. The final settlement amount was $212 million. From that figure, litigation funder Omni Bridgeway will take $53.1 million in profits plus nearly a million more for costs. Lawyers will get just over $30 million, and a further $2 million will be taken for administration. Does taking nearly one-quarter of the settlement in exchange for providing funding seem fair? Legal minds may disagree, but the truth is, that without litigation funding, the case would probably not have moved forward at all. Most ordinary citizens or even small business owners lack the resources needed to sue the federal government. Still, it’s easy to see why there were objections to the settlement—75 of them all told. One farmer who reported a $2 million loss will receive a mere $152,000. Another lost $200,000 and will receive less than $33,000. Those who objected to the settlement determined that the money offered wouldn’t come close to covering their actual losses. The offer presumed a figure of 21.5% property devaluation. Many residents though, were shown to have suffered much larger losses than that. The judge accepted the settlement, saying that a trial might still end with a loss and would take years to resolve. Meanwhile, PFAS chemicals are still found in sites all over Australia.
Commercial

Scottish Courts Feeling the Dearth of Litigation Funders

Scotland, like much of the world, is bracing for a spike in litigation related to the Coronavirus. Business closures, insurance disputes, non-payment of rent, and other common types of litigation are expected to rise at least three-fold. Once courts are up and running again, the backlog of cases and filings is expected to take 1-3 years to completely clear. The Scotsman reports that Scottish courts were already struggling to keep up with cases before COVID-19 reared its ugly head. Between 2017-18, Scotland saw a staggering 81,000 cases. With the impending increase in cases, it’s expected that there will be a shortage of courtrooms, judges, available attorneys, and litigation funders. Unfortunately, opportunities to acquire litigation funding in Scotland are limited. Unlike places like the US, UK, and much of Asia—Scotland has been slow to get onboard with litigation funding. That may change as investors get wise to diversification opportunities and lack of correlation that litigation finance provides as an investment. By providing funds to plaintiffs for legal fees, expert witnesses, and other essentials during a case, litigation funders provide increased access to justice. By carefully vetting the cases they take on, funders also ensure that courts are not overburdened by frivolous litigation. It’s a win for plaintiffs and for the community at large.  
Commercial

What You Should Know Before Investing in Litigation Finance

Litigation is more popular than it’s ever been. With a predicted spike in litigation just around the corner, plenty of investors are wondering whether or not they should get involved. This rapidly growing industry has gone from just six dedicated lit fin firms in 2008, to over 40 commercial litigation funding entities as of last year. Together, they manage assets of nearly $10 billion. CNBC explains that the potential to invest in the Litigation Finance industry also comes with important caveats. First of all, litigation funding is an opportunity generally extended to accredited investors. Accredited investors must have a net worth of at least $1 million, and an annual income of at least four times the national average—so the current threshold is $200,000 per year. Litigation finance firms employ a team of attorneys to vet cases and determine which are strong investments. This includes the merits of the case, the size of the potential award, and the likelihood of recovery. In commercial cases, litigation funding often helps pay for expert witnesses, and the research involved in complex patent or IP law. In other instances, funding helps plaintiffs hire more and better attorneys than they could otherwise afford.   Litigation funding is an attractive investment because it’s not impacted by the rest of the market. The drawback is that funders get paid only when a case is successful, and the award collected. This is why investors might prefer to diversify into a portfolio of litigation rather than investing on an individual case basis. Portfolio investments can carry steep minimums, but this is a net gain, as investors can invest in a fund that is diversified among multiple other investors, thus lowering risk overall. Once the risks are fully comprehended, Litigation Finance remains an attractive option for investors.
Commercial

John Garda Makes the Switch from Litigator to Litigation Funder

Last year, former law firm managing partner John Garda was recruited by Longford Capital to head up their new Dallas office. This includes underwriting in addition to investment sourcing and monitoring. With more than 25 years of litigation experience, his expertise includes complex commercial and securities litigation, investment banking disputes, real estate, and construction disputes, healthcare contracts, and more. Above the Law writer Gaston Kroub talks to Garda about his passion for Litigation Finance. When asked why he made the decision to move from litigation to lit funding, Garda had much to say. Garda’s introduction to Litigation Finance came when Longford Capital involved his then-firm, K&L Gates, to help vet potential investments. Garda was impressed by Longford's two-stage diligence policy. This means Garda has been involved with Longford Capital since they started funding cases way back in 2013. Longford, of course, has been growing by leaps and bounds since. Due diligence in vetting cases can be a difficult issue for any funder. Firms approach these efforts in myriad ways, with varying degrees of success. Longford uses both internal and external resources when determining the merits of a case and its suitability for funding. This ensures investors that their investment is safe, and assures parties involved in cases that they’re receiving careful attention. Due diligence can give funders a huge competitive advantage in acquiring funding and new clients. When Longford Capital announced that they’d be opening a Dallas office, it made sense to hire someone who was experienced in the finer points of litigation funding. And Garda’s belief in the ability of third-party funding to increase access to justice had already been illustrated through his work with the firm. Garda explains that the opportunity to combine his passions was simply too good to pass up. Fortunately, he also believes Longford to have the best management team in the lit fin industry.
Commercial

Is Litigation Finance a Viable Option in Bankruptcy Cases?

Bankruptcy cases are expected to increase in the coming months, as companies struggle to recover from pandemic-related losses. It’s been reported that firms across the world are looking desperately to hire more bankruptcy lawyers to help handle the expected flood in new cases. Above the Law explains that bankruptcy law is another field that could benefit from increased use of litigation funding. For creditors and debtors alike, third-party funding can increase the value of claims, improve chances of recovery, and help keep expenses off the balance sheet. Small or medium-sized businesses in financial distress can use litigation to cover the costs of bringing a claim. Litigation and recovery take time, which is often in short supply when companies are already struggling. DIP financing cases are also well-placed to make use of litigation funding. Sometimes an estate’s pending litigation claims are its most valuable asset. Lit funding can keep a troubled company on its feet until it can be sold—thereby creating more profit than a simple liquidation. In some cases, utilizing a litigation funder makes more sense than investments from the involved parties—if only because experienced funders can better evaluate risks and may even offer funds at lower rates. Litigation assets can also be sold in the event of a bankruptcy, just like any other asset being liquidated. The value of a litigation claim may be more difficult to determine than traditional assets. Selling off litigation claims can reduce financial pressure on the rest of the estate. The same applies to liquidation trusts—which can take years to complete. Litigation funding can make more sense than traditional contingency arrangements with a law firm. We’re about to see a massive increase in bankruptcy filings. Businesses will scramble to restructure while creditors look to recover losses. Regardless of how the chips fall—litigation funding may be able to help.