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Announcements Commercial

Tetragon Financial Group Limited To Pursue Litigation Finance Venture with Brandon Baer

Tetragon and its diversified alternative asset management business, TFG Asset Management, have entered into an agreement with Brandon Baer to invest in his newly-created company, Contingency Capital, a multi-product global asset management business that will sponsor and manage litigation finance related investment funds.  Contingency Capital will have its formal launch on 1 November 2020. Mr. Baer formerly worked at Fortress Investment Group where he was a Partner and Managing Director in the Credit Funds business.  He was also the Co-Founder and Co-Head of its Legal Assets group. TFG Asset Management will receive a significant minority equity interest in Contingency Capital and Tetragon will provide Contingency Capital with, among other things, working capital and a $50 million commitment to Contingency Capital's first commingled investment fund, with Tetragon retaining the option to invest further amounts.  TFG Asset Management, which owns majority and minority private equity stakes in asset management companies, will also provide Contingency Capital with operating infrastructure – encompassing critical business management functions such as risk management, investor relations, financial control, technology and compliance/legal matters. Fortress and Contingency Capital have entered into co-investment arrangements pursuant to which Fortress may invest up to $500 million in Contingency Capital's opportunities.  Contingency Capital has also entered into arrangements with a large fixed income asset manager relating to up to $900 million of additional co-investment opportunities. Reade Griffith, a Founder of Tetragon's investment manager and the Chief Investment Officer of TFG Asset Management, commented: "We think there are significant opportunities in litigation finance related investing, and gaining exposure to this asset class is very appealing.  We are also particularly excited to partner with Brandon, who is a leader in the space with extensive experience."  Stephen Prince, the Head of TFG Asset Management, noted: "We believe Brandon continues our efforts of partnering with exceptional asset managers." "I am excited to partner with Tetragon and its asset management platform," said Mr. Baer.  "The Contingency Capital business seeks to provide access to high-quality litigation finance assets in an increasingly expanding market.  Our focus will be on investments whose primary outcomes are driven by legal, tax or regulatory processes and are intended to be generally uncorrelated to the markets.  I am also pleased to be able to continue collaborating with Fortress, where I spent almost a decade focused on credit and legal assets." "As a significant shareholder in Tetragon and one of the largest investors in legal assets globally, Fortress is very excited to work with Tetragon and Brandon on this new opportunity," said Jack Neumark, Head of Legal Assets at Fortress.  "We have a long history of providing capital in a variety of forms to litigation finance platforms and we believe the co-investment arrangements with Contingency Capital will be another good partnership for us in this asset class."
 About Tetragon: Tetragon is a closed-ended investment company that invests in a broad range of assets, including public and private equities and credit (including distressed securities and structured credit), convertible bonds, real estate, venture capital, infrastructure, bank loans and TFG Asset Management, a diversified alternative asset management business. Where appropriate, through TFG Asset Management, Tetragon seeks to own all, or a portion, of asset management companies with which it invests in order to enhance the returns achieved on its capital. Tetragon's investment objective is to generate distributable income and capital appreciation.  It aims to provide stable returns to investors across various credit, equity, interest rate, inflation and real estate cycles.  The company is traded on Euronext in Amsterdam N.V. and on the Specialist Fund Segment of the main market of the London Stock Exchange.  For more information please visit the company's website at www.tetragoninv.com.
Announcements Commercial

Hausfeld invests in its product liability practice with a lateral partner hire

Today disputes-only law firm, Hausfeld, is pleased to announce that Sarah Moore has joined its London office as partner from Leigh Day. She joins Hausfeld to further strengthen its human rights and environmental disputes practice and lead and grow its product liability practice. Her expertise also complements its group actions and consumer claims work.

During her 15-year career, Sarah has focused on high profile group litigation against corporations both in the UK and overseas and developed extensive experience in product liability and environmental cases. Leading legal directories Legal 500 and Chambers and Partners recognize her expertise and talent on the product liability, claimant-side.

Throughout the pandemic Hausfeld has continued to recruit with 12 lawyers joining since January 2020 from leading UK and US law firms. With 15 partners and 36 qualified lawyers as part of its London disputes resolution team, it is similar in size to other big city firms’ litigation practices.

Commenting on the announcement, London Managing Partner Anthony Maton says: “Sarah’s practice perfectly matches a number of growth areas for Hausfeld in London: one is our undisputed expertise in managing collective redress mechanisms and another relates to our ground-breaking work in climate change litigation. Our growing product liability practice will be further strengthened by the fantastic experience Sarah brings to the table.”

“Sarah’s appointment reflects our broader ambitions. Two years ago, we predicted a rise in group actions which has materialized. We expect this trend to continue, and with the current movement of the public wanting to hold corporates to account, this is unlikely to go away. Our US colleagues are considered market leaders when it comes to product liability claims and we want to bring that expertise into the European market. As early adopters of flexible fee structures and the use of litigation funding, we are in an excellent position to do so.”

Sarah adds: “Hausfeld has a remarkable reputation in the market as specialist litigators. I am delighted to be joining this excellent team and am looking forward to drawing on my experience in further growing the environment and product liability practices and supporting the firm’s reputation as a leading litigation boutique.” Notes to Editors For further information or to arrange interviews in the US, please contact:

Deborah Schwartz Media Relations (240) 355-8838 deborah@mediarelationsinc.com

About Sarah Moore

Sarah commenced her career at Freshfields Bruckhaus Deringer where she trained in both their London and Paris offices. Most recently, she practiced as an associate solicitor at Leigh Day in London, where she was involved in high profile litigation against British corporations concerning a range of product liability and environmental issues. Her cases have involved defective medical devices, pharmaceuticals and mass torts – often committed overseas by UK multinationals. The legal directory Chambers UK highlights: “Sarah Moore is a developing force in the market who has been involved in significant litigation involving medical device defects.”

For more information about Sarah, please visit her bio.

About Hausfeld

Hausfeld is a leading global law firm with offices in Amsterdam, Berlin, Boston, Brussels, Düsseldorf, London, New York, Paris, Philadelphia, San Francisco, Stockholm, and Washington, DC. The firm has a broad range of complex litigation expertise, particularly in antitrust/competition, financial services, sports and entertainment, environmental, mass torts, consumer protection, and human rights matters, often with an international dimension. Hausfeld aims to achieve the best possible results for clients through its practical and commercial approach, avoiding litigation where feasible, yet litigating robustly when necessary. Hausfeld’s extensive experience with alternative and innovative fee models offers clients a diverse menu of engagement options and maximum flexibility in terms of managing their cost exposure.

Hausfeld is the only claimants’ firm to be ranked by the Legal 500 and Chambers & Partners as a top tier firm in private enforcement of antitrust/competition law in both the United States and Europe. For more information about the firm, including recent trial victories and landmark settlements, please visit www.hausfeld.com.

Commercial

Burford Capital Capitalizes on Claims Monetization

Litigation Finance has been slowly growing since it first gained acceptance during the last financial crisis. In addition to a funding model that pairs funders with a single case, litigation funding can also come in the form of claims monetization. Bloomberg Law details that Burford Capital has made a pretty penny in claims monetization. One main draw in this type of funding is lawyers not being required to risk contingency returns. Within this model, investors buy a stake in a claim or judgment directly from clients.   Burford Capital made great use of this model, which brought in spectacular results. During the first half of 2020, portfolio investments of $145 million paid out nearly $425 million. Last week, Burford shares rose over 7%. Dai Wai Chin Feman, director of commercial litigation at Parabellum Capital, explains that claim monetization allows for more capital to be used for claims that have more value. Better still, this type of funding agreement is simple because legal fees and expenses do not have to be calculated or estimated beforehand. Currently, Burford’s value is more than 4x its nearest publicly traded-competitor. That gives it more financial wiggle room, allowing it to better weather the risks associated with larger claims. At the same time, single case litigation is still expected to be part of Burford’s core areas of focus. According to Christopher Bogart, Burford chief executive, what Burford is developing is a multi-product line approach to finance. By diversifying the types of funding provided, they increase their potential client base by offering services that fulfill a variety of needs. While the number of new cases has fallen, cash outlay is also lower due to COVID-related slowdowns in the courts.
Commercial

Canadian Insurers Sound Alarm over Litigation Finance

Litigation funding is growing in popularity all over the world. The practice of third parties funding cases in exchange for a share of the rewards is a lucrative business model. Better still, it increases access to justice for those who couldn’t otherwise afford it. So why are insurers in Canada speaking out against the practice? Canadian Underwriter explains that litigation funding is still in its infancy in Canada. The fear, according to insurer Bernard McNulty, is that social inflation might become a problem. But would it? Some might say that insurers dislike the practice because it empowers class actions with sizable payouts. It is true that some funded cases have come away with high rewards. As McNulty detailed, one traffic accident led to an $18 million verdict, while another auto-related case brought in $17 million. According to McNulty, verdicts of this size are a good reason to limit the use of litigation funding—even though these plaintiffs may have never had their day in court without it. The problem for insurers is that these large payouts have led to them raising their rates to offset costs. High rates mean clients may take their insurance needs elsewhere. One might think that rather than passing expenses down to consumers—that insurers might improve their underwriting and employ the kind of ethical business practices that don’t lead to lawsuits in the first place. Or they could just blame litigation funding...
Commercial

Burford Capital Profits Down—but Not Out

A new report from Burford Capital reveals that profits were down 15% during the first half of this year, as it reported to the London Stock Exchange. Much of this is due to fallout from Coronavirus, which led to group-wide commitments ending down a startling 74% to roughly GBP 152 million. Law Gazette reports that Burford remains confident that the funding landscape has stabilized. Chief executive Christopher Bogart stated the expectation that a spike in litigation claims spurred by the pandemic is coming. Sir Peter Middleton, Burford chair, explains that the current numbers showcase the earning power of the litigation portfolio. Next up for Burford, an impending listing on the NYSE.
The LFJ Podcast
Hosted By Erik Bomans |
Our guest today is Erik Bomans, CEO of Deminor Recovery Services. Deminor is an EU and Asia-focused litigation funder. The company has a presence in six countries and has supported claims in 13 jurisdictions, with an 81% positive outcome rate. Erik discusses issues relating to market awareness, regulatory environment and country-to-country differences across Europe with respect to the funding industry. He also dives into the collective action landscape, and whether Europe is headed down a similar road as Australia in terms of a regulatory backlash to the funding of large consumer claims. This podcast is a must-listen for any litigation funder with an eye towards the EU market! [podcast_episode episode="6490" content="title,player,details"]
Consumer Special Features

California Bar Issues Formal Opinion on Third-Party Litigation Funding

This article was contributed by Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC). On October 1, 2020 the California Bar Association published Formal Opinion NO. 2020-204 on Third-Party Litigation Funding. The bar’s opinion states that attorney and consumer must be fully informed as to the terms and conditions of the contract. Additionally, the lawyer must ensure competence in advising on any litigation funding agreement, and is obligated to obtain a client’s permission before discussing any confidential information with the funding company. During the comment period of this opinion, the Alliance For Responsible Consumer Legal Funding (ARC) weighed in on the issue by submitting a letter to the review committee. In the letter ARC stated: “The Proposed Formal Opinion properly establishes that a lawyer is under an ethical obligation to decline to represent a client in legal funding negotiations if the lawyer does not have sufficient knowledge and expertise to help the client avoid being exploited in the legal funding relationship.” In addition, it was stated that this opinion will give consumers additional confidence in the industry: ”By requiring adequate representation in the legal funding negotiation, bad actors will be less likely to survive. As those bad actors are driven out, consumer confidence in legal funding services will rise and the resulting increase in demand for legal funding services will draw even more reputable funders into the market. This, in turn, will create stronger incentives for funders to cater to the price and quality preferences of individual plaintiffs.” The California Bar Association and the American Bar Association have each released a recent opinion on Litigation Funding. In both opinions, the bars acknowledge a need for the product, and propose best practices for how consumers and attorneys should work with companies that offer financial assistance to consumers in their time of need. ARC and its member companies continue to ensure that both consumers and their attorneys are fully-informed on the terms and conditions of the contract, and that the only parties that have a say in the prosecution of the case are consumers and their attorneys. These are enforced in the most recent set of Best Practices that ARC and its companies have released. ARC is very pleased the California Bar Association, the largest State Bar Association in the United States with over 242,000 members, has taken this position on the issue and put forward these important guidelines.
Commercial

Stonewood Case Stay of Proceedings Lifted

Questions about litigation funding led to a stay of proceedings during the liquidation of Stonewood Homes. That stay has been lifted by Associate Judge Owen Paulsen on September 25th. In August, a ruling stated that the liquidators, Rhys Cain and Rees Logan, could submit a request to lift the stay once concerns regarding the funding arrangement could be addressed. Otago Daily Times reports that Queenstown Mayor, Jim Boult, was the director of Stonewood Homes prior to February 2016. At that time, Stonewood was put into receivership as it owed money to unsecured creditors. According to the liquidators, Boult and another defendant allowed for trading while insolvent. Allegedly, this went on for nearly two years, during which time Stonewood lost even more money—to the tune of millions. Boult ostensibly took issue with the funding for the case, which was provided by developer Chris Meehan. Through his company, PLF Services, Meehan agreed to cover court costs, legal fees, investigator fees, and witnesses. Boult asserted that Meehan's funding was part of a vendetta intended to interfere with the coming mayoral election. Ultimately, Judge Paulsen determined that there was no satisfactory evidence of a vendetta. Part of this ruling was based on the fact that Meehan was approached about funding, as opposed to having sought it out.  A hearing for the case has not been announced but is expected soon.
Commercial

Insolvencies Lead to More Disputes—Says Litigation Capital Management

While COVID takes a toll on businesses around the globe, Litigation Finance is experiencing boom times. As the number of insolvencies increases, funders are readying for an influx of new requests. In preparation, Litigation Capital Management has created an asset management division. This is Money explains that LCM is on track to grow its global presence through the use of increased capital. As chief executive Patrick Moloney has stated, LCM has experienced major growth so far in 2020, and that’s expected to continue. Like many litigation funders, LCM is counter-cyclical. When businesses are in turmoil and markets are in flux, opportunities to fund cases abound. As Moloney explains, LCM anticipates ‘a huge volume of opportunity’ in the global marketplace. LCM relies on two basic funding models. Some disputes are funded directly from its balance sheet. Others go through a third-party fund managed by LCM. These funds are used to invest in individual cases, a portfolio of multiple cases, or to purchase claims in cases that have already been adjudicated. The current LCM share price suggests that investors are still cautious about the growth potential of the company. Moloney remains optimistic. He explains that LCM is not just focusing on current markets—but looking ahead to global opportunities for growth. Once the market grasps the full potential of LCMs portfolio funding model, the true value of the company will become readily apparent.