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Commercial

What You Need to Know about Asset Retrieval

It’s normal for a plaintiff to think that after a long court process and a favorable judgment, the worst is behind them. However, not every losing defendant is going to comply as they should. So when it comes to securing judgments and awards, asset tracing is a crucial component.  Burford Capital explains that asset tracing is a valuable service that experienced litigation funders may provide. Issues with asset recovery can be myriad, including monies being hidden in overseas or hard-to-find accounts, or cases that involve selling off assets without the authority to do so. At Burford, the habit is to invest in asset recoveries where the recoverable amount is in excess of $20 million. In cases with such large amounts, the debtor generally has connections around the world. Those with international connections may offer more opportunities for asset recovery. More monied debtors may also think they’re clever enough to hide their assets to prevent collection. Larger awards, though, can mean a larger investment of time and resources, leading to a more expensive recovery process. Even searching bank accounts can have multiple caveats. Any information obtained must be suitable for introduction in courts anywhere in the world, including unfriendly nations like China or Russia. Collecting large legal debt is not as simple as finding a bank account and putting a lien on it. Often what’s needed is a diverse strategy where investigations and multi-jurisdictional proceedings combine to produce leverage that leads to settlement. To accomplish this, asset recovery specialists have to obtain relevant information and then know how to use it effectively to incentivize remittance. Ultimately, a funder who is prepared to invest in asset recovery is a better choice for those seeking large awards than one without the experience and requisite resources. 
Commercial

Is a Legal Renaissance in the Works?

The pandemic, financial unrest, and now global protests are changing the ways we organize, communicate, and do business. What does this mean for the future of Legal Services? LexBlog explains that no one is really looking to return to the old status quo. Remote working is not ideal in every situation, but its prevalence during social distancing has shown that office space is not necessary for everyone. Business-as-usual in the legal community generally means incremental changes toward some long-term goals. But there’s always been fretting about enacting too much change all at once. That fear, it seems, is behind the legal world forever. Of course, necessity is the mother of invention. Many recent advancements in the way cases are handled came about through sudden bursts of innovation. Others, such as Litigation Finance, have come into prominence after being relegated to the background for a decade or two. Litigation funding is more important now than ever before, given that insurers are circling the wagons to ensure they aren’t bankrupted by pandemic-related payouts.
Announcements Commercial

Litigation Funder Validity Finance Expands to Israel, Taps Noted U.S. Litigation and International Arbitration Lawyer Eli Schulman to Head the First Israel Office of a U.S. Funder

TEL AVIV (June 2, 2020) – Leading U.S. litigation funder Validity Finance has opened its first international office, in Tel Aviv, recruiting prominent international-disputes lawyer Eli Schulman to head its Israel operations. Validity is the first U.S.-based funder to open an office in Israel. As co-founder of boutique litigation firm Schulman & Charish LLP, with affiliates in New York and Israel since 2010, Mr. Schulman has extensive experience representing Israeli clients in complex U.S. business litigation and international arbitration. He has advised companies across Israel’s dynamic high-tech sector, as well as those in established industries and the State of Israel itself. Validity's new Israel office marks the company’s fourth, alongside U.S. offices in New York, Chicago, and Houston. “This is a new day in Israel. We’re pleased to be the first U.S. funder on the ground, helping Israeli businesses secure critical capital to monetize commercial disputes and manage economic risk in a way that doesn’t drain operations and growth,” said Validity CEO Ralph Sutton. “We’re especially pleased to have Eli Schulman on board to lead our efforts in Israel. In addition to being an outstanding international disputes lawyer with a track record of success, he has experience using litigation funding in his own practice. With his reputation and appreciation for the needs of Israeli clients, Eli is uniquely qualified to help Israeli companies and law firms finance disputes on fair and ethical terms,” commented Sutton, who has known Mr. Schulman for years. A frontier for entrepreneurship, Israel leads the globe in per capita R&D spending, with a record number of startups, access to venture capital and more companies listed on the NASDAQ than China. Validity expects to invest in outbound cases on behalf of Israeli companies involving a range of contractual disputes, patent infringement, and other matters resolved in U.S. courts or international arbitration. Dispute Funding During COVID-19 Crisis Validity, like many other companies, has been operating remotely since mid-March. It has seen a significant increase in new case leads since then. These leads arise from law firms looking to stabilize their operations and a large number of clients in newfound need of capital for continued litigation. Validity’s Chief Risk Officer, Dave Kerstein notes, “We are committed to sustaining clients and law firms during the pandemic, and, as the sole US-based firm to operate in Israel, we anticipate many opportunities.” Israel’s handling of the coronavirus crisis has won praise across the globe with a wider return to business expected in the near term, and attending litigation and arbitration in need of capital. Mr. Schulman is recognized among leading dispute-resolution practitioners worldwide by Legal 500 and Chambers, which most recently described him as “dedicated and sophisticated.” He has been active in the international-arbitration community, including as a member of the ICC Commission on Arbitration and ADR. He is a fellow of the Chartered Institute of Arbitrators. Earlier in his career, Mr. Schulman clerked for then-Chief Judge Michael B. Mukasey of the U.S. District Court for the Southern District of New York. Mr. Schulman worked in elite litigation practice at Cahill Gordon in New York and Kellogg Hansen in Washington, D.C. Mr. Schulman also served in the Department of International Affairs at the Israeli Ministry of Justice. A former Fulbright fellow at The Hebrew University of Jerusalem, Mr. Schulman received his A.B. from Columbia University and holds a J.D. from Harvard Law School. “I’m delighted to join Validity’s exceptional team of former trial lawyers and investment professionals to expand dispute funding arising in Israel,” Mr. Schulman said. “While running a New York- and Israel-based disputes firm the past decade, I saw first-hand the need for companies to finance legal challenges. I’m excited to be Validity’s point person for disputes that emanate from Israel.” 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. Validity was founded in 2018 with $250 million in committed, one of the largest first-round capital raises in the U.S. market. The firm announced an additional $50 million in capital in 2019. 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, innovation, and clarity.  For more, visit www.validity-finance.com.
Announcements Consumer

NYU Law School Hosts Digital Conference on Funding

NYU Law School's Center on Civil Justice, creators of the first-of-its-kind Dispute Financing Library, will host an online, virtual conference discussing how the industry is shifting because of COVID-19. The conference will take place on Zoom on June 4, 2020, 2pm-5pm Eastern.  It will feature two panels -- the first discussing the impact of COVID-19 on the dispute financing industry and the second discussing other recent developments, from changes in law to important cases. The event is free, and registration is available here: https://tinyurl.com/TPLFconference. We are in the process of applying for 3 hours of CLE credit.  For more information, you can view the event website here.
Commercial Covid-19

Canada Prepares for Increased Litigation and Third-Party Funding

Like much of the world, Canada is seeing an influx of insurance disputes connected to COVID-19. As more and more insurers insist that their business closure contracts don’t provide protections during a pandemic—businesses and private citizen alike are seeking access to justice. Canadian Underwriter reports that Litigation Funding is prepped and ready to help wronged Canadian policyholders get their due. CEO of Slingshot Capital, Ed Truant, tells the publication that in the context of scrappy individuals versus callous giants—Slingshot Capital is poised to help the Davids, not the Goliaths (a clear nod to the biblical tale from which this funding firm gets its name).  Canada is a relatively new player in the Litigation Finance landscape. As recently as four years ago, Canada had no lit funding firms. Truant points to Australia as the origin of the funding model. Because litigation funding works to the advantage of both clients and firms, its growing popularity is not surprising.   Personal injury cases also make use of litigation funding. Commonly though, these arrangements offer financial support to plaintiffs to hold them over until the insurance company payment is remitted. In commercial lawsuits, however, funding is usually offered when plaintiff claims exceed $10MM, or thereabouts. 
Commercial

The Challenges of Enforcing Awards in Asia

A growing economy can also lead to growth in litigation disputes. That means an increasing need for great lawyers, and a means to enforce awards. After all, a good judgment doesn’t do much if it cannot be enforced. This can be a particular issue in Asian markets, where legal disputes have risen sharply in recent years. Omni Bridgeway reveals that they’ve been involved in enforcement in Japan since the 90s. In 2015, Omni Bridgeway broke ground on a Singapore office. Now the funder is well-placed to help clients with cross-border arbitration and recovery. Head of Enforcement in Asia, Marjolein van den Bosch-Broeren, is a long-time litigator with extensive experience in enforcement. She and Chee Chong Lau head up the Singapore office, making strategic assessments on enforcement matters. They focus mainly on South, East, and Southeast Asia as part of a global team of litigators and recovery specialists. Diversity is a crucial component in cross-border litigation and recovery. The team at Omni Bridgeway speaks over 25 languages and is multi-ethnic and multi-disciplinary. This is particularly important in Asia, as some courts are known to be protective of those in their own jurisdiction. A multi-ethnic team is preferable, if only because learning another culture as fully as a native is arguably impossible. Recovery can involve cultural sensitivity and subtlety that may not be possible for an outsider to achieve. In many cases, winning a judgment is the first step in a long process toward a client actually receiving their award. Enforcing an order or recovering an award can be costly and time-consuming. This can be true anywhere in Asia, or even against an Asian company or defendant. Utilizing an enforcement agency that is diverse, prepared and experienced, can go a long way toward ensuring that justice is done.
Commercial

Understanding Pricing in Litigation Funding

The idea that clients may be able to pursue a claim without a large initial investment may seem too good to be true. The reality is that litigation funding exists for just that reason—so ordinary people have the means to seek justice when they are wronged. Above the Law details that while lit fin can be incredibly helpful, it is vital that clients understand the finer points. Informed decision making is central to third-party-funding working in the best interests of clients. Understanding “fixed multiple” loan structure versus “percentage of proceeds” is important for all involved. In a fixed multiple agreement, the funder gets all of its investment back in the event of a win—plus a multiple of its investment amount. Alternatively, a percentage of proceeds arrangement means the funder will recoup its investment after a win, plus a percentage of the award. Often in this model, there may be a cap on how much the funder can take or the percentage may go down as the size of the award gets larger. Making the choice to go with one model or the other is often based on an assessment of risk, how long the case is expected to take, and what the anticipated award may be. Within the model of the fixed multiple, there’s also a distinction between the amount disbursed versus the “reserved facility.” The reserved facility is the total amount a funder expects to apply to the case. Disbursed funds represent the money actually given—as such monies are generally not paid all at once. Obviously, it makes no sense to pay a percentage of funds that were never delivered. The last thing to consider is the “waterfall,” which is the legal term for the order in which parties will get their funds. There will be a specific pecking order, and clients will want to understand it before committing.
Commercial

Litigation Finance is a Bridge Between Client and Law Firm

The legal field experienced record-setting business in 2019. Alas, this year much has changed. Despite many firms seeing a large influx of cases and inquiries, financial tensions loom. COVID-19 has led to worry, late payments, furloughs, court delays, and even outright insolvency for some.   Burford Capital explains that Litigation Finance is poised to serve a vital role in the coming months. By helping fund meritorious cases and large class actions, law firms are able to take on more and bigger cases with less financial risk. Clients also benefit, receiving access to better counsel than they could normally afford. Currently, clients are asking for rate reductions due to an inability to pay standard rates. Understandable, but this can be crushing for firms who may have already had to lay off workers. Budgets at law firms are shrinking, and partner payouts have shrunk or been put on hiatus for now. Everyone seems to be feeling the pressure—except funders—who have been preparing for this moment. Legal financing on a non-recourse basis gives lawyers and clients much-needed financial space while they await adjudication. Portfolio-based funding is even more helpful for firms since it reduces risk across the board on current and even future cases. The economy may not improve any time soon, but access to justice will not wane thanks to the growing body of litigation funders.
Commercial

Will Relaxed Disclosure Rules Impact Investor Confidence?  

Unrest in the world of investment is nothing new. But current pandemic conditions have led to a wave of class-action lawsuits, many of which come from investors who feel that they were misled on relevant issues. In response, the Australian federal government has announced a rolling back of disclosure rules to protect large companies from class-action suits. Brisbane Times explains that this rollback, though temporary, could harm investor confidence irreparably. If companies aren’t required to keep investors informed, how can anyone invest with confidence? Moreover, if one invests based on current disclosure rules—changing the rules later doesn’t negate the reasonable belief that proper disclosure would be made. Australia’s business market currently enjoys a reputation for widespread transparency and rules that encourage informed investing. That reputation can also be damaged by the month-long hiatus from proper disclosure of risks. Will the overall cost of capital be impacted? Dean Paatsch of Ownership Matters believes so. He asserts that lax disclosure rules can lead to a so-called ‘honest idiot defense,’ meaning that company reps are relieved from the responsibility of being informed on investment matters. If they can plausibly pretend their information was correct, without disclosure, it’s difficult to argue that any misinformation given was intentional. Paatsch feels strongly that the government is favoring business directors over shareholders and their interests. It is feared that this move will set back investor confidence for years to come.