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Commercial

Roundtable Discusses Litigation Finance in Offshore Jurisdictions

The use of legal finance is increasing in several important offshore jurisdictions. But how well is that going? Burford Capital’s recent roundtable discusses the effectiveness of legal finance in maximizing recovery in insolvency cases around the globe. Burford’s panel includes Matthew Richardson, director at Grant Thornton (BVI), Ulrich Payne, lawyer at Kobre & Kim, and Ian Lambert, head of litigation, restructuring, and insolvency at HSM. Lambert explains that as always, the purpose of Litigation Finance is to increase access to justice. Legal funding allows for the pursuit of meritorious cases that might otherwise not be possible. This is of particular importance in the wake of COVID-19. Ulrich Payne further notes that liquidators now have a set precedent allowing them to enter into litigation finance agreements—thanks to two recent cases in the Grand Court of the Cayman Islands. What about the overall dearth of case law regarding litigation funding and insolvency? Richardson details that the British Virgin Islands has not heavily relied upon legal funding in insolvency cases. He explains that in his firm, most creditors and shareholders have the funds needed to pursue their case without additional funding. A proposed ‘Private Funding of Legal Services Bill’ is underway, and is expected to clarify specific issues relating to legal funding--such as appropriate rates of return or whether or not funders should have a say in decisions impacting the case. Without additional clarification from BVI courts, British law is the prevailing standard. Ian Lambert details his concern that the bill’s progress is slow, and that overzealous restrictions could make it more difficult for those with legitimate need. Payne sums up the situation, saying that the bill, if passed, would lead to sweeping changes in how litigation funding is addressed and managed in the Cayman Islands. The hope is that the changes will improve access to justice, rather than restrict it.
Announcements Commercial

ANGLO AMERICAN SUED ON BEHALF OF CHILDREN AND WOMEN POISONED BY THE WORLD’S BIGGEST TOXIC LEAD MINE

Lawyers from Mbuyisa Moleele and Leigh Day today announced that a class action lawsuit has been filed against Anglo American South Africa Limited (“AASA”), a subsidiary of London-headquartered multinational mining company Anglo American Plc (LSE: AAL, JSE: AGL), in the Gauteng Division of the High Court of South Africa. The action has been filed on behalf of a class estimated to comprise more than100,000 individuals in the Kabwe District of Zambia who are believed to have been poisoned by lead. The application is brought by 13 representative plaintiffs on behalf of children under 18, and girlsand women who have been or may become pregnant in the future. The claimants – principally young children – are suffering from alarming levels of lead poisoning which, depending on various factors including the blood lead level (“BLL”), causes a range of significant conditions, from psychological, intellectual and behavioural damage to serious and permanent physical damage to their bodily organs, neurological systems and fertility. In extreme cases, serious brain damage and deaths occur. In pregnant women, lead they ingested as children is absorbed into their bones and released during pregnancy. Women are also exposed to lead during pregnancy from the surrounding environment. Lead is known to cross the placenta, resulting in the unborn child being subjected to the same concentration of lead as the mother. Notonly can the baby’s health be damaged, lead causes pregnant women to have a higher risk of pre-eclampsia; gestational hypertension and miscarriage. Generations of children have been poisoned by the operations of the Kabwe mine, originally known as Broken Hill, which caused widespread contamination of the soil, dust, water, and vegetation. The main sources of this poisonous lead were from the smelter, ore processing and tailings dumps. The BLLs of the vast majority of children in Kabwe exceed the BLL limit of 5 micrograms per decilitre set by the U.S. Center forDisease Control. A substantial proportion of the children have BLLs in excess of 45 ug/dl, the limit at which medical treatment is required. There are numerous cases of young children (including among the representative plaintiffs) with BLLs in excess of 100 ug/dl, at which serious brain damage and death may occur. The Kabwe mine was part of AASA group from 1925 until 1974 and was one of the world’s most productive lead mines during this time. It is alleged in the class action that AASA is liable, including for the following, because of AASA’s role in controlling, managing, supervising and advising on the technical, medical and safety aspects of the mine’s operations:
  1. a) Substantial emissions of lead into the local environment were due to deficiencies in the design and systems of operation and control of lead, which AASA failed to ensure were rectified;
  2. b) AASA failed to ensure the clean-up of the communities’ contaminated land; and
  3. c) Accordingtoexperts1, aroundtwothirds of the leadcurrently inthe local environment is likely to have been deposited there between 1925 and 1974 when the mining operation was transferred to ZCCM, a Zambian state-owned company, in 1974.
The class action seeks to pursue remedies in the form of compensation for these children, as well as girls and women with lead poisoning who have or may become pregnant in the future. Also sought is (a) blood lead screening for children and pregnant women in Kabwe, and (b) clean up and remediation of the area to ensure the health of future generations of children and pregnant women is not jeopardised. Richard Meeran, Partner & Head of the International Department at Leigh Day, said: “From the 1950s, Anglo American publicly committed to making a lasting contribution to communities in which it operated. Its current human rights policy is to contribute to remediation when its business has contributed to adverse human rights impacts. This ongoing public health disaster is the result of a flagrant disregard for the health of the local community, which is totally at odds with those grand public pronouncements.” Zanele Mbuyisa, Partner at Mbuyisa Moleele, added: “AASA is considered amining giant that has been instrumental inbuilding theeconomies ofvarious countries, but it also has to be acknowledged that their operations have caused the decimation of communities and long-lasting damage to the health of those communities.” Mbuyisa Moleele is a Johannesburg-based law firm led by Zanele Mbuyisa, and Leigh Day is a leading international law firm specialising in human rights and mass environmental tort claims. Both firms have a proven track record of litigating complex international class actions on behalf of victims from disadvantaged backgrounds. The case is being funded by Augusta Ventures, the UK’s largest litigation fund by volume of claims. More information about this matter can be found at www.childrenofkabwe.com.
Commercial

Law Firms and In-House Counsel Predict Spike in Litigation Funding

A recent study of in-house counsel and private attorneys affirms that the use of litigation funding is up more than 100% since 2017. Burford Capital released the study of roughly 500 legal professionals, which confirms the explosive popularity of the practice. Law.com explains that in-house counsel respondents are reporting tens of millions in unenforced judgments. Using legal finance to turn dormant value into liquid assets makes sense, especially when economic conditions necessitate savvy bookkeeping. Strikingly, over half of lawyers surveyed stated that their companies have abandoned solid claims because of potential litigation costs. This means that a need for third-party funding is widespread and ongoing, especially as pricing options dwindle in the wake of COVID. In the coming months, it’s clear that risk-sharing will be the order of the day.
Commercial

Burford Capital Makes NYSE Debut

Law firms and businesses alike are making even greater use of Litigation Finance in the wake of COVID. That’s good news for Burford Capital, whose listing on the New York Stock Exchange went live this week. Recent reporting on the popularity of the practice, combined with this new NYSE listing and the formation of the ILFA, makes it clear that litigation funding is on the rise. Westlaw explains that the NYSE listing represents an important milestone for Burford, indicating a company that has grown by leaps and bounds in the last decade. The industry is growing and adapting as well. The International Legal Finance Association is a newly formed coalition of funders that now has over a dozen members. David Perla, co-COO at Burford, explains that the term ‘legal finance’ might be more accurate than ‘litigation finance,’ as the practice has become more versatile in recent years. When asked about the Muddy Waters short-selling attack, Perla affirmed that a listing on the NYSE was the best answer to that question.
Commercial

Stolen Wages Lawsuit Filed by Indigenous Workers in Western Australia

As many as 8,000 people are believed to have been directly impacted by Western Australia’s practice of kidnapping and enslaving children in the 1940s and beyond. A class action has been filed to collect wages that were never paid to the workers. So far, at least 1,000 of those affected have registered their intent to seek remuneration. News.com AU explains that the stolen children were forced to work the mines in unbearable conditions, without proper equipment, wages, or proper food. Workers are represented in the case by Shine Lawyers, who received litigation funding from Litigation Lending Services. Litigation Lending funded a similar case in 2019 that settled for $190 million. Jan Sadler, head of class actions at Shine, explains that while the harm done cannot be erased with money, workers deserve compensation for the inhumane treatment they endured. The case is expected to go through mediation. The WA government appears to appreciate and acknowledge the effect that government policies have had on Aboriginal people.
Commercial

Maximizing Liquidity Through Litigation Portfolios

The COVID pandemic has led to the need for creativity, quick thinking, and adaptability for many legal firms. Roughly half of all firms and in-house counsel alike are expecting drops in revenues (and consequently, budgets) within the next year. But this doesn’t have to be dire news. Burford Capital explains that while things may look bleak, many firms and companies have legal assets that they aren’t looking at. Savvy GCs know to identify assets and find ways to maximize their value. Legal finance is one way to heighten liquidity while reducing the risk associated with taking on new cases in uncertain times. A recent legal finance report shows that more than half of in-house counsel affirms that their companies have ignored meritorious claims for financial reasons. Some GCs even support this. But offloading both costs and risks onto a third-party funder can transform a struggling legal department into a profit generator. Monetizing pending claims to generate liquidity is a smart move for businesses and law firms alike. As many as ¾ of in-house counsel cite liquidity as one of the main benefits of using legal funding. Other benefits include: --Non-recourse nature of the funds. This eliminates risk and adds certainty to budgets. --Accelerate incoming cashflow. Rather than waiting years for a case to be resolved, legal funding brings cash in without delay. --Experienced legal funders can help assess risk and pinpoint the most profitable cases and highest potential returns. --Maintaining control of cases can be a worry to those who are new to Litigation Finance. But third-party funders do not supersede the client or attorneys when it comes to making decisions about the case at hand. --Options. Funding allows clients to choose from a wider pool of attorneys without worrying about who is willing to work on contingency—or about cost in general.
Announcements Consumer

CONSUMER LITIGATION FUNDING: THE BASICS, CURRENT REGULATORY, ETHICAL, AND CONFIDENTIALITY ISSUES.

On November 16, 2020 at 1 PM Eastern, the American Bar Association’s Center for Professional Responsibility will present a 60-minute CLE webinar on consumer litigation funding. The presenters are Anthony Sebok, Professor of Law, Benjamin N. Cardozo School of Law; Ronnie Mabra, the Mabra Firm; and Eric Schuller, President, Alliance For Responsible Consumer Legal Funding (ARC). They will discuss the history and structure of the market and the ethical rules at issue with moderator Lucian T. Pera, a partner in Adams and Reese LLP. The conversation will also explore ABA Resolution 111A addressing best practices for third-party litigation funding.  ARC has separately adopted their own best practices some of which mirror the ABA’s Resolution 111A. To find out more and how to register click here
Commercial Covid-19

COVID Litigation in Europe

Even before the pandemic gained a foothold, European courts felt the impact of COVID. Litigation over insurance, safety precautions, employment, and business interruption was rampant. Such litigation is only expected to grow—even after COVID is under control. Law.com International explains that disputes in France, Netherlands, and Germany all bear close examination. In France, for example, businesses were besieged by lawsuits almost immediately. Amazon, Airbus, and multiple companies that stayed open during lockdown were accused of not properly protecting employees’ safety. In France, employers are under more pressure to treat employees fairly. Parisian employment partner Emmanuelle Rivez-Domont explains that at the end of the day, it’s simply not feasible to keep everyone happy. But employers should still be held to the highest standards. Shockingly, many parties in France decided to remove COVID-related effects from the legal definition of force majeure. This is a heavy blow to those impacted, who were counting on their insurers to make good. In the Netherlands, everyone from insurers to event organizers are taking steps to test the waters. One hospitality industry group sought to vacate or relax social distancing in restaurants and bars. A judge denied the request, affirming that the government is allowed to make even drastic choices in the public’s best interests. Insurance had been a straight-forward matter in the Netherlands until COVID. Now cases are plentiful, leading to four insurers losing a claim over cancellation payouts due to COVID. As in the rest of the world, insurers may need to brace for impact as claimants use legal means to seek what they’re owed. In Germany, a “klagewelle” or ‘litigation wave’ is on the horizon. Germany’s lockdowns included bars and restaurants, hotels, clubs, and theaters—all of which led to industry-wide losses in the tens of billions. It’s only now that these businesses are learning that their insurance doesn’t cover loss of business due to a pandemic.
Commercial

Eni Attacks Third Party Funders in Nigerian Oil Claim

Italian energy giant Eni has requested documents relating to a $1 billion case involving the government of Nigeria and investment firm Drumcliffe—the principles of which are still involved in a corruption trial. Bloomberg News details that this is just the latest facet of an ongoing dispute which puts two prominent energy companies against Africa’s largest producer of crude oil. In this most recent claim, Eni holds that the Nigerian government is influenced by interests that they have not publicly disclosed. To support this claim, Eni is seeking documents from Drumcliffe Partners LLC. Eni now claims that the Nigerian government is in league with third parties who are attempting to reap “illicit” profits. This is a common complaint against third-party litigation funders and is often brought up by parties who have much to lose if the opposition is well-funded. Jim Little of Drumcliffe was unimpressed by the accusations, saying that Drumcliffe looks forward to discrediting the accusations, which he called ‘wild innuendo.’ Nigerian media published the funding agreement with Drumcliffe, which revealed Drumcliffe taking a potential share of 35%. Not uncommon in non-recourse funding agreements. Nigeria has joined the case as a civil party. They are also asserting that both Eni and Shell owe a penalty of $1.1 billion. Still, both companies have denied the charges, affirming that their agreements with the government of Nigeria are legitimate. Also denying wrongdoing are Eni CEOs Claudio Descalzi and Paolo Scaroni. The court is expected to rule later this year.