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The LFJ Podcast
Hosted By Peter Petyt |
In this episode, we sat down with Peter Petyt of UK-based litigation funding brokerage and advisory service 4 Rivers. Peter explains his role in originating deals and managing relationships between funders, law firms and claimants. He also outlines his company's partnership with data analytics firm Premonition, as well as his thoughts on the impact of Brexit on the UK funding landscape. [podcast_episode episode="3980" content="title,player,details"]
Commercial

Litigation Fund Provides Rosenblatt With Greater Flexibility

UK law firm Rosenblatt went public last year, and in the process announced plans to open a litigation funding arm. The law firm now has five cases under consideration, and CEO Nicola Foulston touts her firm's litigation fund with providing increased flexibility when designing alternative fee arrangements. As reported in This is Money, Foulston is attempting to leverage the relaxed rules around ownership of law firms in the UK. Since 2007, law firms have been allowed to list publicly, and Foulston believes that equity-based PLC structures are the future of the law firm industry. She is also betting heavily on litigation funding, setting up a dedicated funding arm with a portion of the capital raised during the IPO. Rosenblatt can now afford to be selective on the types of cases it accepts. The law firm can work on a no-win, no-fee basis, or fully or partially fund the claims themselves via their dedicated funding arm. Foulston is also looking to expand into other niche areas of the law, including taxation, forensic accounting and financial crime. The law firm still carries a majority of the £13MM it raised during its IPO, and is expected to sharply deploy capital in the near-term to fuel Foulston's growth ambitions.
Announcements Commercial

Commercial Litigation Crowdfunding Platform, AxiaFunder and Solomonic litigation analytics, partner to deliver a new generation of financing decision-making

Commercial Litigation Crowdfunding Platform, Axiafunder and Solomonic litigation analytics have agreed a partnership where Solomonic will provide AxiaFunder with the statistical data to support their case evaluation and due diligence Workflows. Cormac Leech, founder and CEO of AxiaFunder said, “for us moving to a process for determining funding that is based on rigorous data is critical to our business model and Solomonic’s data and analysis in unrivalled in the UK market.” He added, “Our goal is to transform litigation funding by introducing a wider group of sophisticated investors to litigation assets that traditionally haven’t been funded in this way. To do that we have to have more dynamic case evaluation supported by data, rather than relying solely on the traditional approaches still in use in the sector. “ AxiaFunder adopts a comprehensive, six-part review in selecting cases eligible for funding by investors, with the prospects for success fundamental to the decision. AxiaFunder will use Solomonic’s robust and extensive Commercial data set and outcome calculators to help determine relevant base rates for the claim type both to inform the review and as part of their due diligence before any claim is promoted to potential investors. Gideon Cohen, Solomonic co-founder commented: “we are delighted to be partnering with AxiaFunder. Their approach is transformational and because our data is so rigorous and brings so much additional value, will make a meaningful contribution to the proposition they offer to investors in litigation financing.
Commercial

Lawdragon Recognizes Andrew Saker and Allison Chock of IMF Bentham

Lawdragon, a provider of free online guides for US-based legal news, has named IMF Bentham CEO Andrew Saker and Bentham IMF (the US subsidiary of IMF Bentham) CIO Allison Chock as two of its 100 Leading Legal Consultants and Strategists. As reported in Lawdragon, IMF Bentham has been featured in the online guide each of the last four consecutive years. The funder maintains 14 offices across Australia, Asia, Canada, the UK and the US, and manages billions of dollars of AUM. Having helped pioneer litigation funding in Australia in 2001, IMF Bentham expanded into the US a decade later, and now boasts multiple offices across the country and in Canada. The funder is also one of just a handful of industry participants that is publicly-traded. In his interview with Lawdragon, Saker highlighted IMFs capital resources, strategic case insights and assistance with project execution as its core differentiators. He also highlighted the experienced former litigators and in-house counsel who serve as employees of the firm. Over an 18 year lifespan, IMF boasts a 90% success rate in the claims it finances. According to Saker, IMF clients have retained an average rate of 62% of all proceeds.
Commercial

Another Billionaire Secretly Finances Litigation – This Time Over a Jeff Koons Scuplture

First there was Peter Thiel, who backed Hulk Hogan's successful lawsuit against Gawker, and now there's Ronald Perelman. Perelman, who runs the conglomerate MacAndrews & Forbes Group (MAFG), has been secretly funding Hollywood Produer Joel Silver's lawsuit against art gallery owner Larry Gagosian. The funding deal was uncovered by Gagosian's lawyers, who wrote a letter to the judge seeking to compel disclosure of alleged non-privileged communication between the two. As reported in Artnet, Silver - who produced The Matrix and Lethal Weapon series - purchased an $8MM Jeff Koons balloon sculpture from Gagosian's gallery. Silver began paying for the sculpture in installments, but ceased payment and sued the gallery when Gagosian allegedly failed to deliver the sculpture on time. Perelman has previously sued Gagosian for failure to deliver on time as well, after Perelman purchased a dozen works of art for $45MM, including a Koons sculpture. Perelman's suit was ultimately dismissed. However, it seems Perelman never forgot his experience with Gagosian's gallery and has decided to finance a third party lawsuit a' la Peter Thiel. Upon discovery of Perelman's financing, Gagosian's attorneys requested that Judge Peter Sherwood compel Silver to disclose Perelman's exact involvement in the case. Their letter also expressed concern that Silver may have violated the case's confidentiality order by disclosing certain information to MAFG. Silver allegedly confirmed outside funding of his claim. His attorney has since announced that he and Gagosian have settled their respective suits (Gagosian had been countersuing), and that Silver will move ahead with his acquisition of the Koons sculpture.
Commercial

NYC Bar to Keep Comments on Ethics of Litigation Funding Private

The comment period for the NYC Bar's recent opinion on third party funding has ended. The NYC Bar found that when funders collect a percentage of fees, the practice constitutes fee sharing between lawyers and non-lawyers, and should therefore be prohibited. The Bar accepted opinions from the public on its recent ethics opinion, and spokesman Eric Friedman has said those opinions will be kept private. As reported in Legal News Line, although the NYC Bar is going to keep the opinions it has received private, many in the funding industry have already voiced their dissent quite publicly. Validity Finance CEO Ralph Sutton recently penned an op-ed where he declared third party funding as an important access-to-justice point for many businesses and individuals. Sutton went even further, in suggesting that it may be unethical for lawyers not to tell their clients about the existence of third party funding. Many have shot back at the idea that funding agreements should be disclosed, claiming that such measures would lead to a 'discovery sideshow,' whereby defendants would move to disclose all matters under the sun, in a bid to stretch out the litigation and pile on excess costs. The New York City Bar’s Working Group on third party funding will release its final report by the end of the year.
Announcements Consumer

Oasis Financial Selects New CEO

Oasis Financial announces the appointment of Greg Zeeman as its new Chief Executive Officer. Zeeman takes over responsibilities from interim CEO, Jack Lavin. Oasis Financial is the nation’s leading provider of consumer litigation finance solutions to plaintiffs, attorneys, and medical providers through its Oasis and Key Health brands. Both Mr. Zeeman and Mr. Lavin will continue to serve on the company’s Board of Managers.

“I’m honored to join the Oasis team,” said Zeeman. “As an industry leader in the provision of both pre-settlement and medical funding solutions, I believe we are extremely well positioned for the next chapter of dramatic growth. We have a proven platform that will enable strong organic growth and an industry landscape that provides for exciting partnership and acquisition opportunities.”

Zeeman is a veteran in the financial services industry. Prior to joining Oasis Financial, he served as Chief Operating Officer for Enova International, a global credit and lending company, and as Chief Executive Officer for Main Street Renewal, a leading home renovation and leasing company across the U.S. He also previously served as Chief Operating Officer for HSBC USA.

“Greg was a natural fit for this opportunity given his leadership experience in financial services, his passion for creating winning teams, and his talent for driving scalable growth,” said Zach Sadek, Partner at Parthenon Capital. Oasis’ financial sponsors include Parthenon Capital and Waterfall Asset Management.

More About Oasis Financial & Key Health  Oasis Financial was founded in 1996 by attorneys who saw a need among clients burdened with increasing medical and living expenses, but their cases weren’t settling fast enough to keep up with their bills. The attorneys launched Oasis to provide a way for plaintiffs to receive an advance on their settlement and make life livable until their case closed. Today, Oasis has helped over 300,000 consumers make ends meet while waiting for their case to settle. In 2017, Oasis merged with Key Health, the nation’s leader in medical lien funding. Key Health works with medical providers spanning the U.S. who offer services to injured victims on a lien or letter of protection basis as part of a personal injury claim. Together, Oasis and Key Health help personal injury victims recover both physically and financially from an accident. Working with more than 14,000 attorneys and maintaining relationships with more than 10,000 physicians, Oasis and Key Health help ensure consumers who are injured in an accident have access to great healthcare, as well as funds to cover life’s other expenses while waiting for a personal injury case to settle.

More information can be found at http://www.oasisfinancial.com/about-oasis.

Announcements Commercial

Pravati Capital Announces Launch of Law Firm Consulting Business

SCOTTSDALE, Ariz., June 6, 2019 /PRNewswire/ -- Pravati Capital (Company), a leading litigation finance and law firm consulting company, announced today that the Company has formally launched its law firm consulting business, Pravati Management Group.

Pravati Management Group was formed to function as a management consultant. The group's experienced team helps law firms take a strategic approach to access, deploy, and manage growth capital for partner and practice acquisition and build a scalable financial and operational infrastructure to drive growth. Pravati Management Group offers counsel on strategy, business decisions, and best practices. Counsel could include input on practice area expansion, talent, potential mergers and acquisitions, financial and operational infrastructure, succession planning, and marketing.

Pravati Capital's primary business is commercial litigation finance, which focuses on providing capital to support both law firms and corporations pursuing high merit cases.

"Managing the business side of a law firm has become more complex," commented Alexander Chucri, Chief Executive Officer of Pravati Capital. "Over the past 16 years, Pravati has gained invaluable insights into the challenges faced by midsize law firms. Our objective at Pravati Management Group is to use our wealth of experience to help a law firm's leadership team make the right decisions on growth strategies and operating models to better use our capital to expand."

Robert S. Schulman, who joined Pravati Capital in 2017 as Commercial Litigation Finance Advisor, will help to grow Pravati Management Group. Mr. Schulman has significant experience in complex commercial litigation and deep expertise in the business management of law firms.

"We are experiencing high demand from law firms looking for capital and business counsel to responsibly scale their firms," added Alexander Chucri. "Bob Schulman is a trusted resource, and his knowledge and insight will help our clients grow and mitigate risk across their firms."

Robert S. Schulman

Robert S. Schulman has practiced law for over 50 years, focusing on commercial litigation involving major corporations in the financial and manufacturing sectors. Prior to joining Pravati Capital in 2017, Mr. Schulman was a senior litigation partner in the Los Angeles offices of Fulbright & Jaworski, where he served as the firm's Chairman of its Accounting Profession Practice Committee and a member of the Los Angeles offices' Leadership Council. Among his numerous honors is his selection by the Chambers Guide as one of the top 13 commercial litigators in the state of California.

Mr. Schulman has also served several terms as an Adjunct Professor of Law at The Sandra Day O'Connor College of Law at Arizona State University in Tempe, Arizona. Mr. Schulman received his Juris Doctor from Rutgers University School of Law.

About Pravati Capital

As a leader in the litigation financing field, Pravati Capital has changed how law firms envision their future. For more than a decade, we have been at the forefront of litigation financing solutions, creating innovative sources for bridge capital. It is our mission to provide innovative, efficient capital solutions for law firms, compassionate assistance to plaintiffs, and a secure alternative investment option for accredited investors. For more information, please visit our website at Pravati Capital or call 1.844.772.8284. You can also follow us on LinkedIn and Twitter.

Commercial

Litigation Funding & ATE Insurance: A Match Made in Legal Heaven

At yesterday's 2nd annual IMN Conference on Litigation Finance, a crowd of industry participants, experts, and interested parties gathered at The Union League Club in Midtown Manhattan to discuss key topics facing the industry. One of the more interesting back-and-froths took place during the first panel, where some light was shed on litigation funding's overlap with ATE insurance, and how even countries like the US are getting in on the ATE act as a form of overall risk reduction. The first panel of the day covered a broad array of topics, including growth in the US market (spoiler, there's plenty), growth in the international market (ahem, IA in Asia takes the cake here; although the Nordic countries in Europe were also mentioned as areas of growth), and ethical hurdles facing the industry (it rhymes with 'Schmandatory disclosure'). But perhaps the most interesting segment of the panel focused on the relationship between litigation finance and ATE insurance. ATE - or 'after the event' insurance - is a product typically offered in cost-shifting jurisdictions like the UK, to protect plaintiffs from having to fully cover an adverse costs award. Jo Burgess, Strategy and Operations Director at UK-based Affiniti Finance (and soon to be an LFJ Podcast guest), explained that ATE insurance has actually been around for much longer than people realize - going on 20 years now. Often times, ATE insurers don't understand the nuances of the law, and how to properly assess risk in the Legal Services environment. As a result, litigation funders like Affiniti end up working very closely with ATE insurers to help them assess their risk pools and underwrite claims. In some cases, Affiniti will even finance the insurance premiums themselves - so they insure the insurance. Of course there are risks here, as ATE insurers have gone bankrupt, which of course renders their agreements null and void. Fortunately, Affiniti hasn't encountered any such circumstance, though the potential looms. Burgess then pointed out that even countries without cost-shifting, such as the United States, are beginning to use ATE insurance as a means of hedging their risk. ATE insurance affords law firms and funders the opportunity to spread their risk across a wider range of cases, and therefore accept more claims which expands their overall risk appetite - something the industry has long been craving. At this point, Jay Greenberg of US-based funder LexShares, took the opportunity to muse on the fact that there aren't more fully-insured litigation products in the US. Greenberg offered the following hypothetical: Say a funder is pricing its deals to yield a 100% annualized return, and say the funder has an 80% win rate. So the book is yielding an 80% IRR. Even if the funder absorbed an extremely expensive insurance product - one that eats up half of earnings - that still leaves the funder with a 40% IRR. Any institutional investor would gobble up that return, especially as it is de-risked from an insurance perspective. A de-risked 40% return might even be more attractive to an underwriter than a risk-heavy 80% return. Stuart Grant of Bench Walk Advisors pointed out that we actually are seeing that scenario play out... just not with insurance companies! It's actually investors who are insuring litigation products, and they are doing so with notes from banks. Investors might ask a funder to take on the first 25% of the risk, but they will pony-up the remaining 75%. This 'wrap program' essentially means the funder is utilizing leverage. 75% of the invested capital is risk-free, and the premium they are receiving on their capital can be considered a form of leverage. Many non-insurance companies are coming in and leveraging these types of wrap programs, presumably because Big Insurance tends to be a slow adopter of new technology (lit fin can be thought of as such), and therefore its up to investors, banks and other non-insurance entities to innovate here (this last thought wasn't mentioned on the panel. I am merely hypothesizing...). James Batson, head of Bentham IMFs New York office, chimed in that his firm has engaged in a handful of investments where litigation finance was provided on appeal, and they secured insurance to cover a large chunk of their investment. These appellate insurance policies derive from the UK, which is perhaps to be expected, however the expectation is that US firms will soon catch on. Appellate court is a natural first step, given that the appeals process is often more predictable than going to trial, with outcomes that are closer to binary. Burgess believes that as costs come down, Big Insurance will jump on board; it's only a matter of time. And the panelists all concurred. As Stuart Grant succinctly put it: "The big takeaway here is, expect more wrap programs and insurance over the next couple of years." The emergence of insurers into the litigation funding market en-masse could greatly reduce the risk profile of the industry as a whole, and perhaps lead to more funded cases across the board (not to mention more funders emerging, with even more capital at their disposal). Of course, we're in wait-and-see mode as to whether all of this actually pans out, but it was a fascinating topic nonetheless.