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Announcements Commercial

AxiaFunder Returns 94% to Investors Through Second Commercial Litigation Case Win

LONDON, April 24, 2020 /PRNewswire/ -- AxiaFunder, the UK's first for-profit litigation funding platform, today announces its second case win, returning 93.75% to investors in just 15 months.

The breach of contract case, which was funded in February 2019, raised £12,000 to enforce an adjudication award against a property developer. The case was favourably settled following a three-party mediation.

It comes after AxiaFunder's first case win produced a 43.00% return in only eight months with no losses to date.

Cormac Leech, CEO and Founder of AxiaFunder, said: "We are pleased to announce our second case win, which has produced solid returns to our investors through an Innovative Finance ISA eligible bond which was 83% principal protected via insurance. Despite market volatility in the wake of COVID-19, litigation funding offers retail and institutional investors an opportunity to diversify their investment portfolio. Unlike equities, litigation funding is uncorrelated to financial markets and the economy, continuing to generate healthy returns to investors while many other assets classes are underperforming in the current economic climate."

AxiaFunder has a strong pipeline of vetted cases that will be launched over the coming weeks. The first of which is the relaunch of a pre-vetted case backing a 'Francovich' claim – an action seeking damages against a Member State for breaching EU law. The VAT dispute claim is being relaunched to reflect a recent unexpected strike-out application during the funding process. AxiaFunder expects a net 5.5x multiple on investor capital if the case wins at trial, which is expected in around 18 months. Risk Warning: Capital at risk and returns not guaranteed.

Despite COVID-19 and the resulting economic headwinds, AxiaFunder's latest investment opportunity – a portfolio of three commercial litigation cases – was fully funded less than 24 hours after the launch of its marketing campaign.

Leech added: "The litigation funding market is expected to grow as COVID-19 increases insolvency litigation. As the UK's first for-profit litigation funding platform, AxiaFunder is well placed to provide access to capital for many of Britain's SMEs, who would otherwise struggle to afford the cost of litigation.

"AxiaFunder takes a stringent approach to vetting cases and only invests in those that have an estimated probability of a favourable outcome for investors of at least 70%. The vast majority of cases settle before trial with AxiaFunder's investors typically getting paid before the claimant which improves returns."

AxiaFunder itself recently closed an equity round raising over £250,000 of working capital, some of which was raised through Seedrs, the equity crowdfunding platform.

To date AxiaFunder has in total raised £775,000 of litigation funding for 6 commercial cases.

About AxiaFunder

Launched in November 2018, AxiaFunder (an appointed representative Share In Ltd) which is authorised and regulated by the Financial Conduct Authority (FRN 603332) enables both retail and institutional investors to provide funding to claimants who cannot afford to pay for their legal disputes. Investors receive a return on their capital if the case wins, however should note that Capital is at risk and returns are not guaranteed.

Commercial Investor's Corner Slingshot Capital Special Features

2020 Co-Investment Survey Results

The following article is part of an ongoing column titled ‘Investor Insights.’  Brought to you by Ed Truant, founder and content manager of Slingshot Capital, ‘Investor Insights’ will provide thoughtful and engaging perspectives on all aspects of investing in litigation finance.  EXECUTIVE SUMARY
  • Survey suggests the litigation finance industry has demand for co-investment capital
  • Speed to commitment and having a fully funded commitment ranked highest in terms of co-investor characteristics
  • Most funders expect a co-investment commitment within less than 4 weeks
INVESTOR INSIGHTS
  • While investors might be attracted to co-investment opportunities, diversification is a strong component to successful long-term investing in commercial litigation finance
  • Co-investing should only be considered in the context of creating a portfolio, or to add specific exposures to an existing portfolio, but should never be viewed as a single investment
Slingshot Capital and Litigation Finance Journal recently undertook a survey of commercial litigation finance participants to obtain a deeper understanding of the extent to which there is demand for third-party co-investment capital. The survey was distributed globally, with the majority of responses coming from constituents in the USA (50%) and UK (18%) markets, or from funders that invested globally (18%).  Of the responses, 22% were from advisors/intermediaries and 78% were from funders (with the vast majority of funders having dedicated litigation finance funds). Co-Investment in Litigation Finance  Co-investment opportunities are an attractive sub-set of opportunities for many investors in a variety of asset classes, with particular appeal for private equity (buy-out, growth equity, real estate and venture capital) asset classes.  However, in the context of litigation finance, an investor needs to take a different perspective when considering co-investment opportunities. Whereas it may be perfectly acceptable for a family office, endowment or pension plan to co-invest in a specific private equity opportunity as part of their larger portfolio, the quasi-binary nature of litigation finance should make investors think twice about how they approach investing in litigation finance.  The key difference lies in the probability weighted set of outcomes accorded to each asset class. In a private equity buy-out transaction, a high number produce positive results, and the results vary across a spectrum of potential return outcomes (from 1+ X original investment, to a 5+ X original investment). In litigation finance, even though many cases settle before going to court, there tends to be two outcomes – a win or a loss.  The wins are allocated across a tighter spectrum than private equity, and the losses tend to be absolute (with exceptions).  Accordingly, due to the quasi-binary nature of the outcomes of litigation finance, co-investing should only be considered where the investors are committed to assembling a portfolio of such co-investment opportunities, and have the ability to assess the fundamental aspects of litigation finance.  Alternatively, to the extent an investor has existing investments in litigation finance, but is looking to round out his or her portfolio with specific case exposures to achieve a particular portfolio objective, co-investment opportunities may play a role in that investor’s portfolio construction approach. 2020 Co-Investment Survey results are summarized below: Demand Of the 23 respondents, 70% stated they had a need for co-investment capital, whereas 30% did not.  However, 13% indicated that the need for co-investment was occasional, and that sometimes their LPs had pre-emptive rights with respect to investing in those opportunities. Frequency In terms of frequency of co-investment opportunities, almost 50% of respondents indicated they have from 1 to 5 opportunities in a given year, with just over 20% in the 6-10 range, and a few managers indicating they had 20 such opportunities in a given year.  The number of opportunities directly correlated with the size of the funder and the size of the cases they typically finance. Co-Investor Characteristics Regarding the characteristics that are most important in a co-investment partner, speed to commitment and having a funded capital source ranked the highest, with responsiveness and understanding complex litigation also ranking highly.  However, there was not a huge disparity in terms of the importance of the six criteria listed, suggesting that all criteria were factored into their decision-making process. Keep in mind that the compilation of rankings on the chart below is an average of the six criteria, so a high number on the chart should be viewed as being more important (even though that answer drew more 1's and 2's), whereas a low number on the chart should be viewed as less important. For example, 'Speed to Commitment' and 'Having a Funding Capital Source' both received the most 1's and 2's, but their average ranking is the highest and therefore most important.  'Flexible Capital' received the most 6's, but has the lowest average score, and is therefore the least important metric. When we dive further into the ‘speed to commitment’ characteristic, we find the vast majority of respondents expect a commitment within 3-4 weeks.  It remains to be seen if expectations and reality are in alignment, a good question to include in the next survey. Expected Duration With respect to the underwritten expected duration, most fall within the 12-36 month range, which is consistent with duration expectations for the industry as a whole.  However, 30% of respondents did indicate that duration was a function of the type of case being underwritten, with certain case types (patent, international arbitration, etc.) having longer durations and appeal cases having shorter durations. Co-Investment Structuring In terms of insight into how these co-investment transactions are typically structured, the responses varied.  In the ‘other’ category, some respondents indicated they have used a variety of the choices offered, whereas one respondent stated that they received a specified interest in the profits produced by the investment. Current Co-Investors As it relates to where the current co-investment opportunities are being offered, the majority were offered to other funders, suggesting there is a fair amount of cooperation in the litigation finance marketplace.  However, within the ‘other’ category, most respondents suggested it was a combination of all of the choices listed. This brings to a close the results of our first commercial litigation finance co-investment survey.  Slingshot Capital and Litigation Finance Journal would like to thank those that participated in the survey for their time and feedback. Our next survey will cover fundraising initiatives by fund managers in the commercial litigation finance sector. We anticipate making the fundraising survey an annual survey so we can track fundraising activities over time. If you would like to participate in future surveys, please contact Ed Truant here to register your interest. Edward Truant is the founder of Slingshot Capital Inc. and an investor in the consumer and commercial litigation finance industry.
Commercial

Africa: An Untapped Growth Market for Litigation Funding?

It’s no secret that Litigation Finance is a profitable and growing industry around the world. With Australia, Asia, Europe and North America all enjoying the fruits of lit fin's labor, is it time for Africa to get in on the act? ICIG explains that there are numerous countries in Africa that have very little in the way of affordable legal aid. But since 2010, lit fin has become an attractive option for banks, insurers, equity funds, and others. Many in the Finance world recall that after the 2008 financial crisis, Litigation Finance proved to be a profitable investment. Some assert that lit fin is an excellent option for investors since it isn’t tied to the rest of the market. How should Africa respond to the expansion of Litigation Finance within its legal system? Consistency will be key in assuring that clients, funders, and legal professionals are all treated fairly and with transparency. African courts are known to be inconsistent in their application of the law, something that must be reigned in if Litigation Finance is to be taken seriously as a viable legal option for businesses, class actions, and individuals. Matters of contingency fee arrangements, and even basic contracts will need to be standardized in their coverage and enforcement to ensure that everyone is playing by the same rules. Trust and clarity between parties is an essential component of successful litigation funding. The rise of third-party funding creates opportunity for any number of businesses, investors, and law firms. Africa has an opportunity to allow Litigation Finance to increase access to justice all over the continent.
Commercial

Litigation Funding is Fueling a Contingency Fee Boom

In a typical scenario, contingency cases involve Davids v. Goliaths. That is to say, usually smaller law firms are the ones who take cases on contingency. Established firms are less likely to take cases on a contingency basis, but that may be changing—thanks in part to litigation funding. Legal Executive Institute reports that some larger firms are having success in contingent fee cases. Michigan firm Varnum specialized in defense, but has branched out into plaintiff work successfully. Now, such cases make up a significant percentage of Varnum’s litigation practice. Kirkland & Ellis, meanwhile, has the largest revenue in the legal world. The firm has announced the launch of a plaintiff-side trial group. This move certainly seems to solidify the emergence of contingent fee cases as a viable plan for large firms.  Contingency fee work is less risky for firms when they utilize third-party funding. The popularity of litigation finance is a key reason that contingency fee litigation is becoming more widely used by established firms. Freeing up capital that’s no longer needed for litigation is an attractive prospect for any firm—especially during financially unstable times.  Contingency cases can be difficult to plan for in the long-term, but long-term planning is necessary. If a firm typically focuses on billable hours, switching gears may be a disruptive change. When a firm is adept at planning and choosing contingency fee cases effectively, it can be a huge advantage both fiscally and in terms of differentiating oneself from the competition.
Announcements Commercial

Delta Capital Partners Management Announces New Senior Executive

April 20, 2020, Chicago IL--Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, today announced the hiring of a new senior executive. Martin Lueck has been hired as a Senior Managing Director to work closely with Delta’s CEO and other senior executives on deal origination, due diligence, and strategic development matters. Prior to joining Delta, Mr. Lueck was a litigator for over 35 years, spending the last 20+ years at Robins Kaplan LLP. While at Robins Kaplan representing plaintiffs, he amassed numerous eight- and nine-figure trial victories as lead counsel against Fortune 500 defendants. Mr. Lueck was also a dominant force on the Management Committee while at Robins Kaplan, where he evaluated, modified, approved, or rejected the firm’s contingent, incentive and alternative fee arrangements. Mr. Lueck was Chairman of the Executive Board from 2008 to 2019. His experience lends immeasurable insight into the factors that best predict successful outcomes, as well as pragmatic strategies that lead to consistent returns. As a result of his notable trial success, Mr. Lueck was named one of the Nation’s Top-10 trial lawyers by the National Law Journal in 2004 and is a fellow in the International Academy of Trial Lawyers, which is limited to 500 US trial attorneys, and the American College of Trial Lawyers. Christopher DeLise, Delta’s Founder, CEO and CO-CIO, stated, “We are honored to have someone with Marty’s talent and experience joining Delta’s senior management team as he will enable Delta take the next step in its evolution. His experience as a top-tier litigator and his management of his former firm’s contingency fee engagements are extremely complementary to Delta’s litigation finance business and enhance our ongoing commitment to provide unparalleled service to claimants, law firms, professional service providers, and other end-users of litigation and legal finance around the world.” Mr. Lueck joins Delta as the firm continues to expand to meet the growing liquidity and other financing needs of law firms, businesses, private investment funds, and individual claimants affected by recent macroeconomic developments, including those resulting from the COVID-19 pandemic. Demand for Delta’s proprietary liquidity solutions (DLS), including those involving litigation-collateralized loans (LCLs), term loans and draw-down facilities, has skyrocketed over the past month. About Delta Delta Capital Partners Management LLC is a US-based global private equity firm specializing in litigation and legal finance, judgment enforcement, asset recovery, and related strategies serving claimants, businesses, private investment funds, law firm and other professional service firms across the world. The firm provides capital and expertise that enables such parties to shift risk, significantly enhance the probability of a successful and timely resolution of claims, and/or maximize the effectiveness of their businesses.
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Commercial Covid-19 Special Features

Key Takeaways from the LFJ Webinar on COVID-19’s Impact on the Litigation Funding Industry

On Thursday, Litigation Finance Journal held a special digital conference on how litigation funding and the broader legal services sector have been impacted by COVID-19. Ed Truant of Slingshot Capital moderated an expert panel, which included Eric Blinderman, CEO (U.S.) of Therium Capital, Paul Haskel, Partner at Richards, Kibbe & Orbe, LLP, and Ralph Sutton, Founder and CEO of Validity Finance.  The conversation opened on the macro implications of the COVID-19 pandemic, and how the broader legal industry is being impacted. Paul Haskel, the one practicing attorney on the panel, opened the discussion by explaining that firms are experiencing a decline in revenue, and anticipate that continuing. Staff reductions and hiring freezes have become commonplace. And due to financial scarcity, firms that have never before considered third party funding, are now taking a close look at industry utilization. In line with what's happening across industries, law firms both large and small are also focusing on investing in tech tools to reduce costs, and reevaluating the need for real estate, as working from home becomes more palatable for many roles.  Mid-way through the hour-long conference, the topic shifted to COVID-19's impact on litigation funding. Below is a small sampling of the Q&A that took place:   Ed: How do you see the changes in Force Majeure claims in the future, given that many such contracts don’t include clauses specific to pandemics? Paul: Force Majeure has to be specifically cited, and it’s rare to see a clause that refers to a pandemic. Historically these claims have been read narrowly. What will be fascinating to see, is how courts interpret this going forward. What happens if a contract wasn’t specific about pandemics, and was this unforeseeable?  Ed: Are Force Majeure claims a good bet for lit funding? Or are they too subjective in nature? Eric: This turns on the four pillars of underwriting. Likelihood of success on the merits, damages, timing of recovery, judgment of the lawyers. Most FM clauses still trigger payment obligations even if other obligations are negated. The question then becomes whether or not they have the ability to pay.  Ralph: I think firms that only dabble in funding would do better to focus on their own houses.There will likely also be fewer new firms getting into lit fin for the foreseeable future. Those who are funding can be much pickier as there will be so many opportunities to fund. Ed: How will hedge funds impact the markets?  Paul: Over the last five years, hedge funds have created platforms in litigation finance. Overall, everyone is waiting to see what happens with the market. I represent a lot of multi-strategy hedge funds, and they are all hesitant to enter into new investments right now. I agree that there is much more opportunity out there, it just depends on who is putting capital to use.  Ralph: I would expect that hedge funds that dabble in litigation finance and don't have an entire dedicated unit, but maybe just one person or two people looking at the space, that they'd rather focus on their corse business and ensure that they are keeping their powder dry to focus on things they understand much better. I also think there will be fewer new litigation finance companies launched in the near future, because the capital will be more frightened of folks who do not have track records. That said, folks with strong track records can expect to find limited partners willing to fund them. Ed: Where would you expect to see the most activity over the next 6-12 months? Ralph: The majority of claims for us are still commercial. 25% or so is patent, which will probably continue. I think we’ll do a lot more insurance recovery. Eric: There’s an immediate need to look for revenue streams, and insurance policies is an area everyone is turning to. We can expect a wave of class action suits as well. People are hurting and plaintiff-side lawyers are looking for someone to blame. Ed: For new opportunities, have your underwriting procedures changed at all, or is there more emphasis on certain underwriting aspects today than there was a month or two ago.  Ralph: We haven't changed our criteria at all. Most funders turn down over 90% of the opportunities that come to them. I don't think that's going to change dramatically. Eric: I agree exactly with what Ralph said. The fundamentals matter. There's no shortcuts, no secrets. You need to focus on the core basics of what makes you successful, and if you do that, you'll make it through this crisis. Ed: Last question, if there is a significant increase in cases, is there sufficient capital in the marketplace to meet demand? Paul: There will be less capital in the market, and what’s there will be more selective and seeking a higher rate of return than is currently there. So I think there will be an opportunity for funders to be even more picky, going forward.  Eric: I agree with Paul, although I don't generally foresee us changing our capital structure. We're pricing risk. There is a tremendous ability for litigation finance companies to be more selective, as opposed to less. Ed: What about you, Ralph, are you going to run out of money or are you good? Ralph (laughs): I think we’re good.
Commercial

New Funding Applications Soar at Omni Bridgeway

Third-party litigation funding is becoming a natural response to the economic turmoil caused by COVID-19. Firms beset by financial anxiety are looking to keep balance sheets balanced, and funding is an excellent route. According to Law Times, Omni Bridgeway is well on its way to doubling the number of funding applications when compared to this time last year.  One sector in particular is seeing increased difficulty: Cannabis. The cannabis sector is beset by uncertainty, which is being amplified by the current economic downturn. Bankruptcy and contract law continue to be busy litigation areas as well, with such claims expecting to spike as economic pressures increase. Funders are seeking individual claims, as well as fully or partially funding full portfolios of smaller claims, some of which may already be in progress.  In Canada, courthouses are largely closed or restricted. But legal teams and funders are working hard to keep the wheels of law spinning. Ontario courts are particularly adept at keeping delays short and obstacles to a minimum. Much work takes place at odd hours, from home, and over the phone or via virtual meetings. 
Announcements Commercial

BioCardia Announces Litigation Financing in the Case Captioned Boston Scientific Corp., et al., v. BioCardia Inc.

SAN CARLOS, Calif., April 14, 2020 (GLOBE NEWSWIRE) -- BioCardia, Inc. (Nasdaq: BCDA), a leader in the development of comprehensive solutions for cardiovascular regenerative therapies, today reported it has entered into an agreement for litigation financing which has been filed today with the Securities and Exchange Commission on Form 8-K.

BioCardia, Inc. entered into a Litigation Funding Agreement with BSLF, L.L.C., an entity owned and controlled by Andrew Blank, a member of BioCardia’s board of directors, for the purpose of funding the Company’s currently pending legal proceedings and any and all claims, actions and/or proceedings relating to, or arising from, the case captioned Boston Scientific Corp., et al., v. BioCardia Inc., Case No. 3:19-05645-VC, U.S.D.C., N. D. Cal (the “Litigation”). The Litigation relates to matters the Company raised in a letter to Ms. Surbhi Sarna, nVision Medical and Boston Scientific based on BioCardia’s discovery in January 2019 that Ms. Sarna had assigned to a company she founded, nVision Medical, a patent and patent applications she had filed while a BioCardia employee. nVision subsequently was acquired by Boston Scientific.

BioCardia made various claims, including that the patent and patent application rightfully belonged to BioCardia pursuant to Ms. Sarna’s invention assignment agreement, that the proceeds from the sale of nVision to Boston Scientific rightfully belonged to BioCardia because they were the direct result of Ms. Sarna’s breach of her obligation to assign to BioCardia the patent and patent applications and the use of misappropriated BioCardia trade secrets.  On September 6, 2019, Boston Scientific Corporation, Boston Scientific Scimed Inc., and Fortis Advisors LLC (the “Boston Scientific Parties”) filed a complaint against BioCardia in the United States District Court Northern District of California, Case no. 3:19-05645-VC, seeking declarations that the claims made in BioCardia’s correspondence were without basis. On October 31, 2019, BioCardia filed a counterclaim against the Boston Scientific Parties and Ms. Sarna for breach of contract, misappropriation of trade secrets and correction of inventorship on the patents naming Ms. Sarna as an inventor. BioCardia seeks imposition of constructive trusts both on the patents naming Ms. Sarna as an inventor and the proceeds received from the sale of nVision to Boston Scientific, as well as damages, including unjust enrichment damages measured by the proceeds received from the sale of nVision to Boston Scientific.

Under the terms of the Funding Agreement, the Funder agreed to fund the legal fees and costs incurred by the Company in connection with the Litigation on and after March 1, 2020 on a non-recourse basis in return for a share of the litigation proceeds.  Details of the Funding Agreement are available in the Form 8-K filed today.

BioCardia CEO Peter Altman, PhD, said, “This litigation financing gives BioCardia the wherewithal to pursue its claims in court. This preserves our investment focus on advancing our important cell therapy product pipeline to treat cardiovascular diseases, and the commercialization of our FDA-approved enabling device products.”

About BioCardia® BioCardia, Inc., headquartered in San Carlos, California, is developing regenerative biologic therapies to treat cardiovascular disease. CardiAMP™ and CardiALLO™ cell therapies are the Company’s biotherapeutic product candidates in clinical development. The Company's current products include the Helix™ transendocardial delivery system, the Morph® steerable guide and sheath catheter portfolio and the AVANCE™ steerable introducer family. BioCardia also partners with other biotherapeutic companies to provide its Helix systems and clinical support to their programs studying therapies for the treatment of heart failure, chronic myocardial ischemia and acute myocardial infarction. Forward Looking Statements  This press release contains forward-looking statements that are subject to many risks and uncertainties. In particular, the outcome and timing of litigation are uncertain.  These forward-looking statements are made as of the date of this press release, and BioCardia assumes no obligation to update the forward-looking statements.
Announcements Commercial

Financial Poise™ Announces “Commercial Litigation Funding-101” a New Webinar Series Premiering May 12th at 1:00 PM CST through West LegalEdcenter™

The first episode in this series is titled "An Introduction to a New Yet Old Funding Alternative" and is co-produced by West LegalEdCenter™. It will feature Jeremy Waitzman (Sugar Felsenthal Grais & Helsinger LLP); Dave Kerstein (Validity Finance LLC); Christopher Freeman (Burford Capital); and Joel Cohen (Stout). About the Series: Once a fledgling industry predominantly used in the Commonwealth nations, litigation funding has over the past ten years becomes a well-accepted and prevalent practice in the United States. As the industry has evolved, so too have the menu of available products, strategic decisions made by funders and practitioners, and types of investors. This three-part series is geared towards educating attorneys and clients on legal/ethical, strategic, and business decisions when considering litigation funding, and investors seeking to learn about an increasingly mainstream asset class. Panelists include preeminent experts in the field of litigation funding, including academics who have written on the topic, investment managers at preeminent litigation funders, litigators who have used funding products, and independent litigation funding advisors. About the Episode: Litigation funding is an increasingly-popular tool for attorneys and clients to share the risk and reward of litigation with third-party investors, and for investors to capitalize on the uncorrelated returns generated by legal-driven revenue. This webinar is intended to provide an overview of the topic generally, touching on the "who," "what," "where," "when," "why" and "how's" behind litigation funding. To learn more and register, click here. The webinar will be available on-demand after its premiere. As with every Financial Poise Webinar, it will be an engaging and plain English conversation designed to entertain as it teaches. About Financial Poise – Financial Poise has one mission: to provide reliable plain English business, financial and legal education to investors, private business owners and executives, and their respective trusted advisors. Financial Poise content is created by seasoned, respected experts who are invited to join our Faculty only after being recommended by current Faculty Members. Our editorial staff then works to make sure all content is easily digestible. Financial Poise is a meritocracy; nobody can "buy" their way into the Financial Poise Faculty. Start learning today at https://www.financialpoise.com/