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Announcements Commercial

Validity Finance Adds Experienced Dispute Funder Ronit Cohen to Investment Team, Secures Additional $50 Million in Capital Commitments

NEW YORK (September 18, 2019) – Litigation funder Validity Finance continues to build its U.S. investment team while expanding its capital base. The firm announced the arrival of Ronit Cohen, who joins Validity as portfolio counsel. A former trial lawyer who practiced at Simpson Thacher & Bartlett and O’Melveny, Ms. Cohen transitioned to litigation finance in 2012 and spent the past seven years as an investment professional at Bentham IMF. As dispute funding has gained acceptance in the U.S., Ms. Cohen has overseen investments in a wide span of commercial litigation matters, reviewing many hundreds of cases in the process. She’s helped clients secure funding in disputes involving breach of contract, fraud, insurance coverage disputes, patent infringement and large arbitrations. She’s also helped vet and manage investments in portfolios of cases for law firms. In coming to Validity, Ms. Cohen reunites with firm founder and CEO Ralph Sutton, who formerly was chief investment officer at Bentham and originally recruited Ms. Cohen. She is the third former Bentham manager to join Validity this year, following the arrivals of David Kerstein and Julia Gewolb. Mr. Kerstein now serves as Validity’s Chief Risk Officer; Ms. Gewolb is Director of Underwriting. Added to the firm’s other senior staff, Validity has built a team with the most tenured investment professionals focused on disputes in the U.S. “We could not be happier having Ronit join us and round out the team,” Mr. Sutton said. “She was one of our first hires out of Big Law at Bentham and her industry experience is almost unrivaled. Ronit conducted due diligence on hundreds of prospective cases and assisted in bringing dozens to strong conclusions. Her experience will be a great benefit to our current and growing roster of funding clients.” Validity launched in June 2018 with $250 million in committed capital and the backing of leading private equity investor TowerBrook Capital. The firm recently raised another $50 million in commitments from additional investors and has committed more than $50 million in its first year of operations to clients across a range of litigation matters and jurisdictions. The firm recently partnered with American Lawyer Media to survey 330 lawyers at law firms and businesses about their experience with litigation finance. Just under 100% of those surveyed who have used third-party funding said they planned to do so again. And 98% of respondents said that trusted relationships are the most important factor in choosing a funder. “It’s a great pleasure to be working again with Ralph, Dave Kerstein and Julia Gewolb, and to connect with the superb professionals that Validity has assembled in the past year,” Ms. Cohen said. “The firm has created a unique market position with its focus on client-centric service. Fortunately, there is zero learning curve for me in getting started and I’m excited to be part of a team dedicated to innovative dispute funding on a national scale.”

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About Validity: Validity is a commercial litigation finance company that provides businesses, law firms and individuals with non-recourse financing for a wide variety of commercial disputes. Founded in 2018 with $250 million in financing, Validity believes that capital and legal expertise combine to help solve legal problems on behalf of clients. Validity’s’ mission is to make a meaningful difference for clients by focusing on fairness, ethics, innovation, and clarity.  For more, visit www.validity-finance.com.

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The LFJ Podcast
Hosted By Paul Haskel |
In this episode we speak with Paul Haskel of RK&O. Paul discusses establishing a litigation funding practice at his firm, how his background in distressed and high-yield debt investments overlaps with the funding sector, how he structures funding agreements for both claimants and law firms, and what the impact of Burford v. Muddy Waters is likely to be on the industry going forward. [podcast_episode episode="4450" content="title,player,details"]
Commercial

Balance REV to Fund $1B Class Action Against IAG

Insurance Australia Group (IAG) is estimating that a class action being waged against it could be worth as much as $1B. Global funder Balance REV is financing the claim, which alleges that customers were sold 'add-on' insurance products that had little-to-no financial value. As reported in The Sydney Morning Herald, the Hayne Royal Commission recently conducted an investigation into IAG subsidiary Swann. That investigation uncovered 850,000 policies sold to customers for over $1B. Fewer than 10% of the customers who received those policies ever filed a claim. IAG has halted sales of the policy, and initiated a remediation program. Estimates are that hundreds of thousands of customers make up the claimant pool, which is operating under a common fund order agreement. That means that all claimants must pay a percentage of their payout to the litigation funder - in this case, Balance REV - regardless of whether they signed an agreement with the funder. That percentage has been capped at 25%. IAG moved to have Balance REV's fee changed to a 3x multiple of invested capital, given that the 25% figure could yield the funder as much as $250MM. But Justice Gleason found that the funder will be "appropriately and reasonably remunerated," without receiving a windfall. He noted that the upfront costs to this large claim are considerable. The trial is listed for July 2020, with a mediation scheduled for this November.
Announcements Commercial

Augusta raises additional $115m for litigation and dispute funding

London, 12th September 2019. Augusta, the UK’s largest litigation and disputes funder by case volume today announces it has raised a further US $115m from a multi-billion-dollar US-based investment manager.

In 2018, Augusta secured £150m from a global investment fund, to finance business growth and investment in funding cases. In response to increasing demand from lawyers, this additional capital raising will boost Augusta’s existing capacity for dispute and litigation investments in markets including the UK, Europe, Middle-East, Australia, Canada and the US.

Augusta has recently announced £25m firm-wide case funding deals with international law firm Pinsent Masons and leading litigation law firm HFW. This additional investment increases capacity for the funding of individual cases, as well as the working capital requirements of law firms and firm-wide case facilities.

Of particular note is the innovative structure of this new capital. This facility will be used on a ‘co-investment’ basis - allowing both existing and new investors to participate in cases funded, across the full range of size and geography that Augusta supports. This provides both investors with the opportunity to gain exposure to Augusta’s growing case pipeline.

Louis Young, Managing Director at Augusta, said: “With the increase in demand from lawyers for our support, we are delighted to have added additional capacity to our business. Both our existing and new investors are keen to promote access to justice and appreciative of the returns Augusta’s model provides. This development is a strong endorsement of the litigation funding industry and in particular, our market-leading experienced team”.

Augusta has recently announced hirings into its senior team with the arrival of Proskauer Director Polly Bahl as Chief Operating Officer, Gowling WLG Partner James Foster as Head of International Arbitration and FTI Consulting Managing Director Leor Franks as Chief Marketing Officer. These additions reflect Augusta’s ongoing growth and increasing client demand for dispute and litigation funding.

About Augusta:

- Established in 2013, Augusta is the largest litigation and dispute funding institution in the UK by # cases with a team of 70 in London and 85 worldwide. Augusta’s scale enables us to make decisions in market-leading timeframes and fund cases of any size. - Augusta 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. - By the end of H12019, Augusta had funded 213 claims with a market-leading win ratio of over 80%. - Augusta has offices in London, Sydney, Melbourne and Toronto. - #litigation #legalservices #investment #privateequity

Media Contact: Leor Franks, Chief Marketing Officer. leor.franks@augustaventures.com +44 (0)20 3510 2100 Augusta Ventures, The Peak, 5 Wilton Road,  London, SW1V 1AN, United Kingdom. www.augustaventures.com

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Announcements Commercial

ROSEN, A NATIONALLY RANKED LAW FIRM, Reminds Burford Capital Limited Investors of Important Deadline in Securities Class Action First Filed by the Firm; Encourages Investors with Losses over $100K to Contact the Firm – BRFRF, BRFRY

NEW YORK, Sept. 10, 2019 (GLOBE NEWSWIRE) -- Rosen Law Firm, a global investor rights law firm, reminds purchasers of the securities of Burford Capital Limited (OTC: BRFRF, BRFRY) from March 18, 2015 through August 7, 2019, inclusive (the “Class Period”) of the important October 21, 2019 lead plaintiff deadline in the securities class action commenced by the firm. The lawsuit seeks to recover damages for Burford investors under the federal securities laws.

To join the Burford class action, go to http://www.rosenlegal.com/cases-register-1647.html or call Phillip Kim, Esq. toll-free at 866-767-3653 or email pkim@rosenlegal.com or cases@rosenlegal.com for information on the class action.

NO CLASS HAS YET BEEN CERTIFIED IN THE ABOVE ACTION. UNTIL A CLASS IS CERTIFIED, YOU ARE NOT REPRESENTED BY COUNSEL UNLESS YOU RETAIN ONE. YOU MAY RETAIN COUNSEL OF YOUR CHOICE. YOU MAY ALSO REMAIN AN ABSENT CLASS MEMBER AND DO NOTHING AT THIS POINT. AN INVESTOR’S ABILITY TO SHARE IN ANY POTENTIAL FUTURE RECOVERY IS NOT DEPENDENT UPON SERVING AS LEAD PLAINTIFF.

According to the lawsuit, defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (1) Burford has been manipulating its metrics, including ROIC and IRR, to create a misleading picture of investment returns to investors; (2) these manipulations hid the fact that the Company is at high risk for a liquidity crunch and is already arguably insolvent; and (3) as a result of the aforementioned misconduct, Defendants’ statements about Burford’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.

A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than October 21, 2019. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to join the litigation, go to http://www.rosenlegal.com/cases-register-1647.html or to discuss your rights or interests regarding this class action, please contact Phillip Kim, Esq. of Rosen Law Firm toll free at 866-767-3653 or via e-mail at pkim@rosenlegal.com or cases@rosenlegal.com.

Follow us for updates on LinkedIn: https://www.linkedin.com/company/the-rosen-law-firm or on Twitter: https://twitter.com/rosen_firm or on Facebook: https://www.facebook.com/rosenlawfirm.

Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 3 each year since 2013. Rosen Law Firm has secured hundreds of millions of dollars for investors. Attorney advertising. Prior results do not guarantee a similar outcome.

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Contact Information: Laurence Rosen, Esq. Phillip Kim, Esq. The Rosen Law Firm, P.A. 275 Madison Avenue, 34th Floor New York, NY  10016 Tel: (212) 686-1060 Toll Free: (866) 767-3653 Fax: (212) 202-3827 lrosen@rosenlegal.com pkim@rosenlegal.com cases@rosenlegal.com www.rosenlegal.com

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Commercial

Burford Accused of Lavishing Non-Executive Directors With Trips to Barbados and Capetown

The hits just keep on coming for Burford Capital. First there was the Muddy Waters short, then accusations of a sex tape swap, and now allegations the world's largest litigation funder spent loads of money on its four non-executive directors (whose responsibility is to keep management in check). As reported in The Evening Standard, one of Muddy Waters' principal arguments against Burford was concerns over governance. Burford subsequently demoted CFO Elizabeth O'Connell to CSO. O'Connell is married to Burford CEO Christopher Bogart. The firm also made several other governance adjustments in order to assuage investor anxiety. But the latest revelations speak to that very governance culture. Burford is being criticized for holding board meetings in luxury locations like Barbados, Cape Town and the Four Seasons Mexico City. The funder is said to have invited its four non-executive directors on all-expenses paid jaunts, including expensive food, travel and lodging for them and their wives. Directors stayed upwards of two weeks at certain spots. And while it is standard for a board meeting's travel and lodging expenses to be covered by the company, typically they are held in the city where the company is headquartered or has a strong presence. Burford is a London-based company with offices in major cities around the globe. But those major cities don't include Barbados, Cape Town or Mexico City. A whistleblowing employee claims that the trips were designed to appeal to the non-executives, and reduce the likelihood of their speaking out against the company. Burford is countering that spending extended time with the directors allowed CEO Bogart to maximize the benefits of their expertise. Both Burford and the non-executives insist they remained critical of the firm and asked many substantial questions on the trips. Burford further claimed that as a Guernsey-based company, it cannot hold board meetings in London or New York for tax reasons. Additionally, the firm claims it has been eyeing potential business in Cape Town, Mumbai and Germany, where it held some of its jaunts.
Announcements Commercial

Bentham IMF Completes Third Round of US Hiring Since Launch of $500M Fund Devoted to US Investments, Bringing on Talent to Address Funding Demand for Trade Secrets and International Arbitration Disputes

NEW YORK (September 11, 2019) – Leading commercial litigation funder Bentham IMF has completed its third round of hiring since the November 2018 launch of its second fund devoted to US investments.

Stephanie Southwick, Managing Partner of Greenfield Southwick LLP, a boutique business and intellectual property litigation firm, has joined the company as an Investment Manager and Legal Counsel, adding strength to the team of former Latham & Watkins attorneys in its San Francisco office. Nilufar Hossain, Acting General Counsel at Prakti who previously practiced international arbitration and commercial litigation at King & Spalding LLP and Freshfields Bruckhaus Deringer LLP, has joined Bentham as Legal Counsel in its New York City office.

The hires reinforce the company’s established expertise in evaluating cases in areas of practice where demand for funding is high. Intellectual property claimants have long sought support from Bentham due to the high cost of pursuing such cases and the protracted time they can take to resolve. The rapid rise in trade secrets litigation brought about by the passage of the Defend Trade Secrets Act, combined with a strong job market spurring trade secret theft, has prompted increased demand specific to trade secrets funding. Ms. Southwick meets the needs of parties bringing those disputes in several ways. In her sixteen plus years as a litigator, she has won numerous verdicts and dispositive motions and secured favorable settlement outcomes for her clients. And she has worked with the types of companies most commonly bringing trade secret claims—start-ups, tech companies and manufacturers. She also has represented VCs, real estate developers, family offices, directors and officers and professional partnerships. Her experience also extends to litigating business torts, contract disputes, founder disputes, and employment matters.

“Adding a well-respected expert in trade secrets such as Stephanie Southwick sets Bentham apart,” said Allison Chock, Bentham’s US Chief Investment Officer. “We enhanced our IP funding strengths earlier this year when we hired Kirkland & Ellis LLP partner Sarah Tsou to oversee our US patent funding. Ms. Southwick’s arrival broadens our capabilities such that we can now serve as a one-stop shop for all types of IP funding.” 

Arbitration disputes give rise to similar issues that prompt the need for funding. With 14 offices around the world and leading international arbitration practitioners including Dana MacGrath (former Sidley Austin LLP partner and current ArbitralWomen President) on its team, Bentham has the capacity—and the capital strength—to provide solutions for international arbitrations arising across the globe. Nilufar’s experience representing US and foreign clients in cross-border litigations, investigations and arbitrations concerning energy, oil & gas, mining and natural resources, pharmaceuticals, technology, and construction disputes adds to the expertise Bentham brings to bear in vetting such disputes.

The hires also help Bentham mirror the legal department and executive teams of the companies it funds. “Gender and ethnic diversity haven’t driven our hiring strategy, but they are factors we consider as we strive to be the trusted resource that companies around the world can look to for strategic financing solutions,” said Allison Chock. The company’s eleven-person senior investment management team in the US, which is comprised solely of lawyers in business-generating roles comparable to equity partner roles at law firms, now has more women than men—a rarity in the fields of law and finance.

The team’s newest hires are highly qualified in their respective fields and have demonstrated a commitment to service throughout their careers. Stephanie served as Arts Commissioner for the City of San Jose and a member of the Board of Trustees for the Silicon Valley Ballet (Ballet San Jose), where she has previously served as pro bono legal counsel. She earned her JD, with honors, from The George Washington University Law School where she was a member of the George Washington International Law Review. She studied International Human Rights Law at The University of Oxford and The George Washington University, and she earned her BA in International Political Economy from the University of Washington.

Nilufar previously served on the board of directors for The Synergos Institute, a non-profit engaged in international public-private partnership projects. She received her JD from New York University School of Law, her MA from Middlebury College and her BA from Harvard University, where she graduated magna cum laude.

ABOUT BENTHAM IMF

Bentham IMF is the US arm of publicly listed IMF Bentham Limited (ASX: IMF), one of the most successful litigation funding companies in the world, and one of only two Chambers and Partners “Band One” litigation funding companies in the US, with a portfolio that has a total claim’s estimated recoverable amount of $5.6 billion AUD. Together, our companies have 14 offices throughout the US, UK, Australia, Canada and Asia and provide funding to clients in jurisdictions including the US, UK, Europe, Australia, Canada, New Zealand, Hong Kong and Singapore. We have reviewed thousands of commercial cases in the past 18 years, funding to completion 192 cases and generating $2.4 billion AUD in recoveries. We have achieved an 89% success rate, with clients utilizing our funding retaining an average of 63% of all case proceeds.

For further information regarding Bentham IMF and its activities, please visit www.benthamimf.com.

DISCLAIMER

Nothing herein should be construed as an offer to buy or sell, nor a solicitation of an offer to buy or sell, any security or other financial instrument, or to invest assets in any account managed or advised by Bentham IMF or its affiliates.

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Commercial

Burford Investor Caro-Kann Issues Point-by-Point Rebuttal of Muddy Waters Allegations

Well, not everyone is buying Muddy Waters' claims that Burford Capital mis-represented its accounting. Investor Caro-Kann Capital is long Burford shares, and has released a lengthy and detailed report outlining the firm's point-by-point rebuttal of Muddy Waters' allegations. In Caro-Kann's report, the investor likens Muddy Waters' attack on Burford to trying to find 'a black cat in a dark room.' Essentially, they're searching for something that is extremely difficult to find, especially if it's not there at all. While the 50+ page report lays out a host of arguments, we'll focus on the major ones here. In the Napo Pharmaceuticals claim, Muddy Waters alleges that Burford accounted income that didn't materialize, then concocted a scheme with its largest investor - Invesco - to raise funds through a subsidiary to capitalize Napo so it could pay back Burford. Caro-Kann say this accusation was meant to be "a Mike Tyson uppercut," but in fact amounts to "a phantom punch." Caro-Kann concludes that Burford's accounting of the Napo claim was actually conservative. They note that Burford accounted the claim at $15.75MM in 2013, when the entitlement became unconditional. Legally, Burford could have accounted the claim at $30MM. Additionally, by the end of 2015, Burford had not yet accounted for any accrued interest on the claim (interest was accruing at 18%). And at the end of 2016, Burford accounted for Napo at $21.3MM, when legally it could have done so for $51.1MM. So according to Caro-Kann, Burford management was actually being conservative in its valuation of the claim. Clearly management was not certain about collectability, so they were extra cautious here. This shows "thoughtfulness and conservatism, as opposed to aggressiveness to impress investors with returns as implied by Muddy Waters." Caro-Kann also notes how Muddy Waters pointed out that Burford affiliate Nantucket, which was the proxy for owning shares in the Napo subsidiary Jaguar Health, listed its headquarters at the same address as Burford shareholder Invesco. The implication here is that the “cozy address sharing” led to Burford and Invesco colluding to capitalize Napo, so Burford could recover. According to Caro-Kann, the shared address was actually a result of clerical error, as evidenced by prior and subsequent filings. So this turns out to be much ado about nothing (also let's not forget, we do have this thing called the internet... so the idea that Burford and Invesco have to share an office to collude is kind of outdated. Clearly Muddy Waters was just trying to-- ahem-- muddy the waters with this part of the accusation).  Caro-Kann also targets Muddy Waters' allegation that Burford misreports its IRR. Citing the Desert Ridge case, Caro-Kann notes that while Burford did sacrifice 4% of IRR on the deal, it did so in order to increase eventual profit on the deal by 77% (from $17.6MM to $31.1MM). ROIC subsequently increased from 254% to 448%. Muddy Waters omitted these stats from its IRR analysis, which Caro-Kann finds misleading. "We bet that every hedge fund manager out there would take such an IRR reduction in order to gain a higher ROIC," the report says. There are other -- many, many other -- points made by Caro-Kann in their report. One example is how Muddy Waters claims that Burford delayed recognizing a trial loss for several years (the Progas case). Yet Caro-Kann found that Burford did the same with Teinver - which was a huge win for the funder. So in reality, the funder was applying a consistent reporting method to its wins and losses. Caro-Kann finishes their report by declaring their "tremendous respect" for short-sellers who expose corporate malfeasance. While they consider Carson Block and Muddy Waters to be among the best short-sellers, they profoundly disagree with Block's findings as relates to Burford Capital. "Muddy Waters’ prior track record does not mean that they are always right," read the report. "Burford is one such example. We believe Muddy Waters is mistaken in their conclusions about Burford Capital’s reporting and accounting practices, as well as its financial position." Caro-Kann labels itself "arguably the most publicly recognizable long investor in Burford," having published a long thesis in December 2018. Now this rebuttal will add to their public profile. It will be interesting to see how Block - who has been anything but shy when it comes to debating his Burford claims - will respond to this lengthy and detailed report. We will continue to follow this story as it develops. Click here to read the full report.
Commercial

Litigation Funding Makes its Way to Canada’s Supreme Court

The case of 9354-9186 Québec inc., et al. v. Callidus Capital Corporation 2018 QCCA 632 is making its way to the Canadian Supreme Court, and with it will come an examination of litigation funding in the insolvency context. As reported in The Lawyer's Daily, the court will decide if debtors under the Companies’ Creditors Arrangement Act will need creditor approval in order to obtain litigation financing. The trial court ruled that approval was unnecessary, but an appeals court overturned that decision. In the underlying claim, gaming manufacturer Bluberi Gaming Technologies Inc. obtained CCAA protection in 2015. Bluberi is alleging their secured lender, Callidus Capital Corp., unlawfully triggered a liquidity crisis at the firm. Callidus' secured claim in Bluberi was for $136MM, and the creditor purchased Bluberi's assets when they came up for auction. Now Bluberi is suing its former creditor for $200MM in a damages claim. Bluberi had asked the court to approve its litigation funding agreement with Bentham Canada, which is funding the case to the tune of $2MM, and will split the first $20MM of any payout with Bluberi's attorneys. Callidus challenged that funding agreement as needing approval under the CCAA, however the trial judge found in favor of the plaintiffs, saying the agreement did not need to be submitted for approval. Yet the Quebec Court of Appeal overturned that decision, and now here we are. Now the Supreme Court of Canada will decide if Bluberi's funding agreement with Bentham must be subject to CCAA approval.