This past week, Harvard Law School held its first-ever Litigation Finance Symposium. The event drew experienced professionals and curious students and academics alike, and sought to answer some practical questions about litigation finance, such as whether the asset class can truly be considered uncorrelated to the broader market. As reported in Above the Law, one panel, aptly titled “Litigation Finance: Truly an Uncorrelated Asset?” addressed the issue of non-correlation head on. Panelists Lee Drucker of Lake Whillans and Andrew Woltman of Statera Capital both agreed that the asset class will continue to to remain uncorrelated with the broader market, even as more investment enters the space and further capital is deployed by funders. Given the volatility of traditional markets, alternative assets like Infrastructure, Real Estate and even music rights are hot commodities on Wall Street at the moment. Litigation finance falls under the same category, given that the ups and downs of the stock and bond markets have no bearing on the market for legal claims. Where the broader economy comes into play is in the potential for a downturn to impact collectibility. Newly-distressed corporates may suddenly be at a loss to meet settlement or payout demands, and that is something funders have to be wary of should the market turn sideways. As Lee Drucker noted, given how nascent the industry is, his firm (Lake Whillans) and most others in the U.S. have yet to go through a recession. That will be the real test as to whether the asset class is truly uncorrelated or not.

Freeths, the law firm representing the pool of over 500 sub-postmasters who are suing the UK Post Office for wrongful termination and damages due to unfair business practices, has filed a bill for millions of pounds in legal fees from the first of four trials in which the Post Office was found to be contractually liable to the sub-postmasters. As reported in Computer Weekly, Judge Fraser ruled in the first trial that the Post Office implemented a “culture of secrecy” around its Horizon accounting system. Sub-postmasters – or managers of individual branches – blame the system for errors which showed losses when there weren’t any. The sub-postmasters were held responsible for any unexplained revenue shortfalls, and many were fired, driven into bankruptcy, and some even went to prison (one while pregnant). Therium Capital Management is now funding a claimant pool of over 500 sub-postmasters who are seeking recompense for their alleged mistreatment. The first trial was a resounding win for the sub-postmasters, which saw Judge Fraser declare a culture of “oppressive behavior” at the Post Office. Management demanded repayment of funds that were never missing in the first place. Instead, the Horizon accounting system was to blame. The second trial is currently underway. The Post Office has filed a motion for the judge to recuse himself due to a conflict of interest. The hearing for that motion is set to begin on April 3.

It's Women's History Month, so there's no better time to evaluate the state of equal representation for women (or lack thereof) when it comes to international arbitration. Despite much discussion about 'equal opportunity', arbitral tribunals are still dominated by men. Perhaps that's why in 2015, members of the arbitration community formed The Equal Representation in Arbitration Pledge, which seeks to achieve full parity between women and men on arbitral tribunals across the world. As reported in Vannin Capital's special Women in Focus series, the Pledge was created by Jackie van Haersolte-van Hof, Director General at the London Court of International Arbitration, and Sylvia Noury, London Head of International Arbitration at Freshfields Bruckhaus Deringer. van Haersolte-van Hof was in attendance at an ICC event in Miami when she first formulated the notion of a 'pledge' to increase diversity on arbitral tribunals. She claims inspiration came from large corporations in the US who began to demand greater diversity of the law firms they engaged with. She admits that her initial idea was centered around a goal of broader diversity, but that in order to make that bold leap a first step was needed; and that first step was in the direction of gender diversity. It was Noury who eventually took her idea and ran with it. Throughout 2015, she arranged a series of dinners where the Pledge was formalized and eventually finalized. In May of 2016 it was ultimately launched, and included 300 signatories. That number has ballooned to 3,000 now, as the Pledge has evolved from a back-of-the-napkin response to gender uniformity into a full-scale global movement for gender diversity. A longstanding challenge of diversity has been a lack of senior leadership from women in the legal field. This is primarily due to the fact that women have not been full participants for very long, hence they could not 'climb the ladder' in the same way their male counterparts could. However, that trend is slowly shifting. These days there is a greater influx of women into Legal Services, and both van Haersolte-van Hof and Noury are optimistic that the influx will translate into higher rates of women in senior leadership positions over time. When looking at the arbitral institutions who singed the Pledge, the average number of female arbitrators appointed in 2017 was 20%, that's up from 10% just three years prior. Some specific institutions - like the SCC - are up to 40% appointed females. in addition to fostering a culture of inclusivity, gender diversity has the added benefit of positively-impacting qualitative decision-making. Diverse perspectives have been proven to enhance strategic planning and management. As Noury puts it: "They say that three heads are better than one, but if all are thinking in the same way then that benefit is lost. Diversity brings a different perspective, which is important to avoid “group think” and keep everyone honest. This matters as much in arbitration as it does in the real world." With the push for gender inclusivity in international arbitration, the global Legal Services community is making a bold statement. van Haersolte-van Hof and Noury are leading the way with the Pledge, which may yet prove to be only the tip of the iceberg when it comes to the broader goal of diversity across the board.

The Full Federal Court of Australia and the New South Wales Court of Appeal have found in separate judgments that common fund orders can be approved by courts in class action cases. This is good news for litigation funders and the large pools of claimants they represent. However, the focus of courts will now be on ensuring a fair and reasonable payout to funders, which means the fees they command are under increased scrutiny. As reported in Mondaq, courts in Australia and new South Wales agreed to a joint hearing on the common fund order issue, in what has come to be known as a "super" appeal. The courts jointly heard a trio of cases, and concluded in separate decisions that trial courts do indeed have the authority to issue a common fund order in a class action case. Common fund orders mandate that all claimants contribute to the litigation funder's fee, regardless of whether they signed the funding agreement. In essence, if the funder finances the claim, all group members are responsible for the funder's fee. With the applicability of common fund order confirmed (pending an appeal), the focus now shifts to 'fair and reasonable' payouts. Australian courts, wary of the impact litigation funding is having on the class action environment, want to be certain that funders aren't gouging their clients. As a result, many are predicting that courts will apply extra scrutiny to the fees incurred by litigation funders, in an effort to ensure fairness.

When it comes to the issue of disclosure of third party funders and their funding agreements, courts across the United States have consistently held that such information is protected under work product (some legislators have yet to catch on). That said, when it comes to the issue of sharing privileged information with a litigation funder, courts aren't as uniform in their findings. Some hold that the common interest doctrine protects privileged information that is passed on to a funder, and others have ruled the exact opposite. According to National Law Review, courts have been decidedly split on the issue of sharing privileged information with a third party funder - whether that be a prospective funder, or even one that is already contracted. In California, the district court in  Odyssey Wireless, Inc. v. Samsung Elecs. Co., 2016 U.S. Dist. LEXIS 188611 (S.D. Cal. Sept. 19, 2016) found that privileged documents disclosed to a funder do not wave work product, given the common interest that exists between third party funders and the plaintiffs (or in some cases defendants) they finance. However, in Berger v. Seyfarth Shaw LLP, 2008 U.S. Dist. LEXIS 88811 at *7-*8 (N.D. Cal. 2008), a separate district court found that the common interest doctrine does not apply to litigation funders, given that it was originally created to protect multiple litigants represented by a single counsel. Even though the doctrine is applied more broadly today, the court found that funders should not be covered under the umbrella of 'common interest.' Delaware has a similar discrepancy. In Carlyle Investment Mgmt. L.L.C. v. Moonmouth Co. S.A., No. 7841-VCP, 2015 Del. Ch. LEXIS 42 at *28-*30 (Del. Ch. Feb. 24, 2015), the state court found that common interest applies. However, in Leader Techs. Inc. v. Facebook, Inc., 729 F.Supp. 2d 373 (D. Del. 2010), the federal court disagreed, despite the fact that a written common interest agreement was in place between litigator and funder. All of this is quite head-scratching. But such is the nature of a common law jurisdiction when a relatively new enterprise emerges across the legal landscape. Unfortunately for funders, lawyers and claimants, the only thing we can be certain of going forward is that nothing is for certain. Case law remains unsettled, and the inconsistency on this issue arising from courtrooms across America will likely continue.