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Announcements Consumer

Forbes Ventures : Update on Litigation Funding Securitisation

Forbes Ventures is pleased to announce that, further to the announcement of 2 March 2020, it has established a wholly owned UK subsidiary, Forbes Ventures Cell 1 Limited (the 'UK Cell'). The UK Cell has been established to acquire UK-issued litigation funding loans, through the assignment of the related receivables - i.e. the litigation funding loans themselves and the interest thereon ('the Securitised Assets') - to Forbes Ventures CC 1 (the 'Maltese Cell'). The Maltese Cell is a Securitisation Cell Company in Malta, which is held in a bankruptcy remote structure and as such is not owned by the Company. To finance this securitisation, the Maltese Cell will shortly be issuing a prospectus relating to the proposed offer (the 'Offer') of 2-year bonds (the 'Bonds') and their admission to trading on the Malta Stock Exchange. The Offer has an aggregate value of EUR 35 million. A further announcement will be made at the time of closing of the Offer, which is expected later in September 2020. The net proceeds of the Offer will be paid to the UK Cell as consideration for the assignment of the Securitised Assets to the Maltese Cell, and will provide the funds for the UK Cell to acquire litigation funds in the UK. Forbes Ventures' wholly owned subsidiary, Forbes Ventures Investment Management Limited ('FVIM'), acts as originator and collateral agent for the UK Cell and is responsible for the selection and oversight of the Securitised Assets. FVIM will receive a cash fee for this transaction, upon closing, equivalent to 2% of the funds raised in the Offer. It is the Company's intention that the infrastructure which it has established for this securitisation will also be used to facilitate the securitisation of both further litigation funding and other assets across a range of industries. The Company confirms it is in discussion with multiple prospective counterparties from whom it may purchase assets for this purpose. Further announcements will be made upon the Company entering into any such arrangements. The Directors of Forbes accept responsibility for the contents of this announcement.
Announcements Commercial

Therium Makes Case for Monetization of Corporate Litigation Assets in New Publication

Therium, a leading global provider of litigation, arbitration and specialty legal finance, is pleased to announce the launch of a new publication aimed at educating corporations and their legal departments on the importance of monetizing their litigation assets through structured affirmative recovery programs. A Good Offense: The Therium Guide to Creating an Affirmative Recovery Program, is available as a progressive eBook, beginning today with the release of chapter 1, which introduces the concept of affirmative recovery and delves into its history. New chapters will be released during the last week of each month moving forward.

The legal departments of the world’s corporations were created out of necessity. Legal has always been viewed as a cost center, defending potentially costly claims against the company as efficiently as it can, and ensuring that transactions and other contractual matters are structured properly. Legal departments, however, regularly bypass potentially valuable litigation claims because the financial and other risks required to monetize litigation assets are viewed as too steep. That was already the case in a strong economy, let alone the current downturn. COVID-19 and the subsequent economic downturn are causing corporations to lose value each day, leading to tighter budgets and greater pressure on all departments. At the same time, they must find revenue wherever they can.

“Corporate legal departments have the potential to become drivers of revenue if they can successfully monetize litigation claims,” said Eric Blinderman, CEO of Therium US and one of the publication’s co-authors. “In this economy it is more important than ever that they do just that. We developed this eBook to assist in-house counsel in identifying potential high-value claims and mitigating a broad range of internal and external risks as they formalize a program for initiating plaintiff-side litigation.”

After using the first chapter to lay the groundwork for the story of affirmative claims, future chapters will include:

  • Structuring an affirmative recovery program
  • Identifying claims
  • Selecting claims and managing risk
  • Financing litigation
  • Managing outside counsel
  • Making settlement decisions
  • Achieving buy-in (and maintaining it)

Chapter 1 Abstract 

In 2004, the legal department of E.I. du Point de Nemours and Co. launched an initiative to maximize its recoveries and contribute to the company’s bottom line. “When a certain amount is at stake,” DuPont’s then-assistant general counsel Tom Sager said, “we have an obligation as counsel to the company to pursue claims.”

To those outside the legal profession, this posture may sound unremarkable. But historically, recovering such funds has not been a priority. DuPont’s strategy changed all that. In 2004, its law department recovered $100 million for the company. Within a decade, it had recovered more than $2.6 billion. That figure is enough to establish the obvious benefit of a program like DuPont’s, known as “affirmative recovery programs.” And they have many additional advantages. Among them is the satisfaction of achieving the oft stated but rarely realized goal of making a legal department a profit center rather than a cost center.

Which raises an obvious question: why aren’t more companies following their lead?

In recent years, corporate legal departments have taken tentative steps toward adopting a more aggressive mindset. Three-quarters of the Fortune 500 have filed lawsuits as plaintiffs in what could be called “affirmative recovery” matters. But a much smaller portion of the Fortune 500 have created their own programs.

Complacency and tradition are the two most basic forces that have kept legal departments from asserting legal claims. Conventional wisdom has long held that it’s not the general counsel’s job to make money for the company. Instead, lawyers served the singular function of defending the company from legal risk. And the generally defensive orientation of in-house legal departments made a comfortable fit with the risk-averse nature of its lawyers.

Despite the forces keeping legal departments from bringing lawsuits, they have gradually begun to adopt a plaintiff’s mentality. We can trace the origins of the movement as far back as the 1980s, when a financial crisis led Texas Instruments and IBM to turn to their legal departments for patent licensing revenue. These and similar efforts revealed that legal departments could do more than protect companies from risk. They could become strategic actors generating meaningful revenue.

With the Great Recession of 2008, companies came under great pressure to reduce costs, and legal departments were no longer immune. The field of “legal operations,” devoted to imposing discipline on the spending of corporate legal departments, was born. Corporate legal budgets now needed defending, and previously untouchable decisions came under scrutiny. In short, corporate legal departments began to be judged on business terms. Today, the timing is right for another leap in the adoption of affirmative recovery programs. The impediments to bringing affirmative claims have largely eroded, and the riddle of funding affirmative cases has been addressed by the use of litigation funding. And the thirst for revenue from corporate legal departments has not been this palpable since the Great Recession.

About Therium

Therium is a leading global provider of litigation, arbitration and specialty legal finance active in England and Wales and internationally since 2009.  Over that period, Therium has funded claims with a total value exceeding £34 billion including many of the largest and most high profile funded cases.  The firm has investment teams in the UK, USA, Australia, Spain, Germany and Oslo, supplementing its resources in its corporate headquarters in Jersey, Channel Islands.

Therium has established a track record of success in litigation finance in all forms including single case litigation and arbitration funding, funding law firms and funding portfolios of litigation and arbitration claims.  This track record enabled the firm to raise the then single largest investment into litigation finance of £200 million in 2015. Therium has raised over $1 billion since its foundation, which includes the latest £325 million fund raised in February 2019.

Therium has consistently been at the forefront of innovation in litigation finance, pioneering the combined use of insurance tools alongside funding vehicles, and introducing portfolio funding products into the UK.  The firm’s ability to develop innovative funding arrangements and bespoke financial solutions for litigants and law firms complements its unmatched experience and rigorous approach to funding a wide range of commercial disputes throughout the world.

www.therium.com

Commercial

Majority of Insolvency Professionals Consider Using Litigation Finance

Dispute finance is catching on all over the world. That’s not surprising, given the global economic impact of COVID-19. To wit, a whopping 87% of those polled in a recent survey said they’d seriously consider using dispute finance. Omni Bridgeway shares perspectives from a company partner, as well as a managing associate at Simmons and Simmons. According to Ruth Stackpool-Moore, investment manager at Omni Bridgeway, “Litigation funding really aims to do two things. The first is to leverage the contingent value of your claim, and the second is to reduce the cost and risk to you, in pursuing it.” Stackpool-Moore continued, “In terms of the role that the funder plays, there are three different parts to it. In addition to providing the capital, to pursue the claim…funders can bring some valuable expertise to the table, both in terms of experience on the litigation side…but also bring expertise in identifying and quantifying avenues of recovery. At the end of the day, what it all boils down to is what money is there to be recovered at the end of the proceedings. And then the third part is to assist in investigations if there’s further work that needs to be done.” Silvia Yuen, managing associate in Simmons and Simmons' Hong Kong office, commented on the kind of insolvency claims she sees: “I’m usually on the defense side acting opposite liquidators. … Often we see liquidators going after directors of the insolvent company for breach of duty, and also connected parties or counter-parties for unfair preference to avoid transactions that the company entered into in the run-up to liquidation." Yuen continued, "The other type of cases in which liquidators and funders are often involved in are claims against professional advisers… This could involve financial advisors, accountants, valuers, and even lawyers. And if the company had only recently been listed, then it could also involve claims against the sponsors." For a full recording of the webinar, visit here.  
Announcements Consumer

Alliance for Responsible Consumer Legal Funding (ARC) Updates its Best Practices

On August 3, 2020 the American Bar Association House of Delegates passed resolution 111A by a vote of 366-10, regarding the “Best Practices for Third-Party Litigation Funding”. The Best Practices addressed Consumer Legal Funding, Commercial Litigation Finance and Attorney Funding. In reviewing the Best Practices for Consumer Legal Funding, ARC and its members made the decision to update the set of Best Practices our companies will follow. By following the guidance of the ABA, ARC and its members are setting a new high standard that others in the industry should follow. The updated Best Practices can be found on the ARC Website
  • Each member agrees the funding agreement will be in writing.
  • Each member agrees the written funding agreement will make clear the non-recourse nature of the investment the funder is making in the claim.
  • Each member agrees the funding agreement will state who is responsible for paying the funder, from what source (e., the recovery after trial or settlement), and when (g., after receipt by the attorney of judgment or settlement funds).
  • Each member agrees the funding agreement will be structured so that the consumer, not the funder, retains the right to control the conduct and litigation of their claim.
  • Each member agrees the funding agreement will state: the amount of funding to be provided to the consumer, the future amounts owed or method of calculating the amounts owed to the funder, and provide an independent dispute resolution process.
  • Each member agrees the funding agreement will include a recommendation that a consumer obtains legal advice before entering into the funding agreement.
  • Each member agrees that they will not intentionally provide the consumer funding in excess of the consumer’s needs at the time of such funding.
  • Each member agrees that they will not intentionally over-fund a case in relation to their perceived value of the case at the time of such funding.
  • Each member agrees that they will not advertise false or intentionally misleading information.
  • Each member agrees that they will not offer or pay commissions or referral fees to any attorney or employee of a law firm for referring a consumer to the member.
  • Each member will strive to achieve a rating of B or better with the Better Business Bureau.
On November 16th 2020, ARC will participate in a CLE Webinar with the ABA titled “Consumer Litigation Funding: The Basics, Current Regulatory, Ethical and Confidentiality Issues,” in which these Best Practices and other issues that affect the industry will be discussed. When consumers and their attorneys are dealing with Consumer Legal Funding companies, they should look for the ARC Logo and ensure they follow the Best Practices of the organization. Any questions on this or other issues regarding Consumer Legal Funding can be addressed to info@arclegalfunding.org
Announcements Commercial

UK leading litigation funder, Affiniti Finance, Has Agreed to a £10 Million Funding Line to Top 100 UK Law Firm Hugh James

The initiative will support Hugh James across all services with the initial launch focusing on their niche Military Personal Injury claims, including military deafness and cold related injuries.

Affiniti Finance, who recently announced a £250 million capital raise for litigation and dispute claims, will provide funding for a variety of claims. This deal will support access to justice for thousands of Hugh James clients, as the funding under this facility will be used to finance expenses incurred in pursuing their claims. 

The litigation funding market experienced an unprecedented rise in Firms seeking sustainable and innovative solutions that give claimants access to capital to pursue meritorious claims and allow law firms to fully support their clients.

Ian Cunningham, CEO commented ‘Affiniti Finance are delighted to have partnered with prestigious law firm Hugh James. I am extremely proud of my team and the team at Hugh James for successfully completing this deal during these challenging times. We look forward to strengthening this partnership further into the future and providing additional clients greater access to justice.’

Commercial

Got Tax Disputes? Litigation Funding to the Rescue

Tax disputes are common, yet notoriously difficult to complete. They’re also expensive, complex, can take years to fully resolve and even longer to complete structured payments. When large businesses and corporations are involved, existing rules make the situation even more complicated. Litigation Finance is commonly sought in class actions and other large litigation. But now some suggest that there’s a place for litigation funding in the world of tax disputes. The Northern Miner explains that as COVID impacts large industries like mining, the need for liquidity is of the essence. When a business with over $10 million in capital disputes its owed taxes, they’re required to pay half of the disputed amount upfront. In some instances, businesses will prepay the entire tax bill to avoid late fees and penalties should they lose the dispute. That, of course, can leave businesses cash poor. For funders, tax disputes are a pretty safe investment. There’s typically a monetary payout, and the defendant is always able to pay. Tax disputes are also less likely to endure setbacks like summary judgments and preliminary motions to dismiss. In Canada, successful litigants can be eligible for cost awards that cover most, or all, litigation costs. In the coming months, COVID-related economic response plans will come into effect in Canada. This will likely lead to more audits of businesses, and therefore an increase in tax disputes. With that in mind, Litigation Finance is expected to grow even more in the Canadian markets. That’s good news for anyone expecting a tax dispute, as third-party funding is well-poised to help manage the risks and potential cost of seeing tax disputes to completion.
Commercial

India Clarifies Law on Readily Realizable Assets in Liquidation

Generally speaking, a corporate liquidation shouldn’t take longer than a year. Yet it often does. There are myriad reasons for this, but one of the most common is the existence of NRRAs, or Not Readily Realizable Assets. India Business Law Journal explains that the Insolvency and Bankruptcy Board of India is taking steps to address this. NRRAs can include disputed or contingent receivables, disputed assets, or anything deemed potentially undervalued, fraudulent, or extortionate as defined by law. What is a liquidator to do with a limited amount of time and multiple parties waiting for their share? The challenges faced by liquidators are being considered by IBBI, which has led to multiple proposals. One of which includes the use of third-party litigation funding to realize the full value of NRRAs. The current proposal is for liquidators to assign these assets to third-parties for a fee. These third-parties would then fund the court proceedings needed to gain their full value. The thinking is that third-parties could focus on one specific asset, cutting down the time it takes to bring legal action to completion. The goal then would be for assignees to recover a larger sum than they paid to gain the assignment of assets. This scheme would shorten liquidation processes while still allowing the full value of assets to be realized. Liquidators would be required to seek out maximum value for assets, and there would also be a provision for an early exit for those creditors in immediate need of liquidity. While stakeholders might benefit from this arrangement in the beginning, it’s possible that they’d lose out on larger payouts later on.
Commercial

Burford CEO Q&A: The Future of Litigation Funding

A trade group comprised of Litigation Finance entities was a long time coming. Over the last decade, the industry has evolved from a niche service used in very specific circumstances to a multi-billion-dollar industry spanning the globe. The formation of the International Legal Finance Association (ILFA) is a welcome addition to the litigation funding landscape.  Westlaw Today offers commentary from Christopher Bogart, CEO of Burford Capital—one of the founding members of the ILFA. He comments on where he sees the industry headed over the next few months, and what we can expect moving forward, through COVID and beyond. Bogart explains that the main focus of the ILFA is to advocate for industry-friendly legislation, and to educate lawmakers and the public about Litigation Finance. He points out that clients don’t always like to discuss litigation, making it less well-understood than other aspects of law or finance. Bogart details that getting into Litigation Finance requires extensive knowledge and a well-developed infrastructure that is best accomplished by experienced legal or financial professionals. In the future, Bogart predicts that funders will present themselves as financial service pros rather than members of an upstart industry. Further, the trend of corporate clients monetizing litigation and using it as capital, rather than simply to resolve disputes, will only accelerate. Bogart also points to how laws are changing around the world. In the US, some states are now allowing non-lawyers to own legal firms—a trend already growing in Europe. This opens the door to big changes and potential collaborations, not to mention expansion. As of this writing, Burford has an equity interest in multiple law firms throughout the UK.
Commercial

Singapore Legislation Welcoming Litigation Funders Goes into Effect

As the Litigation Finance industry has grown, some parts of the world have met the practice with suspicion. Some countries have suggested or enacted legislation designed to encumber and restrict the process of third-party funding in litigation. In the wake of COVID-19, however, the need for the practice has been affirmed. Omni Bridgeway explains that Singapore is one country whose newest legislation is welcoming to the practice of litigation funding, and cognizant of the good it can do. The Insolvency, Restructuring, and Dissolution Act was passed in 2018, and went into effect in July of this year. Provisions of the IRDA include consolidation of personal and corporate insolvency, as well as debt restructuring laws. It also expands the powers of judicial managers and liquidators as they relate to dispute funding. Judicial managers are a softer option than liquidators, in that the appointment of an external judicial manager will protect the company from legal proceedings during the process—at least temporarily. This gives the company a better chance to get its finances in order for a potential recovery. When action is taken against an insolvent business, a third-party funder may be used in several specific situations, such as fraudulent trading, unfair or undervalued trades, and damages against individual delinquent officers. That said, the new IRDA provisions are not intended to impact existing funding arrangements or laws regarding them. Class actions and other types of third-party funding against companies are still permissible. Singapore also enacted a Temporary Measures Act, which came into law in April of this year. It offers temporary financial relief for individuals and businesses—and will remain the law until October 2020. Some speculate that extensions may be granted, depending on the COVID situation at that time. The act increases the thresholds for bankruptcies, and extends the deadline for businesses and individuals to respond to demands from creditors.