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Commercial

Vocus Settlement Raises Questions On Future of Lit Fin in Australia

A recent settlement involving Sydney telecom giant Vocus is raising questions about third-party funding arrangements. The debate between common fund orders (CFOs) versus funding equalization orders (FEOs) reached its apex, when Justice Moshinsky’s ruling resulted in a lower payout to litigation funder Woodsford. Global Legal Post reports that Vocus had been accused of making intentionally misleading statements regarding its potential profits. The claim was settled for $23MM.   The problem? A common fund order was sought in the case, which would have extended the contractual funding agreement to all members of the class action—including those who did not sign on to the funding agreement. CFOs are popular, especially since a 2016 case involving Money Max v QBE. In this instance, however, an FEO was ordered instead. This ultimately means that the funder will receive a lower payout than they would have realized, had a CFO remained in place. Some assert that this ruling will make litigation funders more reticent to fund class action cases in Australia. Because Woodsford had a reasonable belief that the CFO would be granted, they relied on it when calculating its risks. If it remains unclear which type of funding arrangement will ultimately be imposed, this can impact who gets funding, as well as the specifics of future funding arrangements. Moving forward, it’s unclear whether Australian legal professionals will take steps to mitigate FEOs, in order to make CFOs standard practice in litigation funding cases. Surely, there’s a solution that enables funders to make informed decisions about risks and potential payouts, while not forcing potential claimants into agreements which they never signed up for.
Consumer

Litigation Funder Sues PI Lawyer Despite Boyhood Friendship

The story of boyhood friends who became business partners in adulthood should be a sweet one. But the business relationship between personal injury lawyer Sean Callagy and litigation funder Legal Capital Group—run by George Prussin—has definitely gone sour. Legal Newsline reports that LCG is suing Callagy for over $18MM for loans totaling less than $600,000, which were received in 2013. Some of the loans carried a compounded interest rate of nearly 90% per year. Another carried a lower interest rate in exchange for a percentage of payouts in the event of a win. Prussin lent funds to Callagy under multiple business entity names. The funds were intended to help Callagy pursue litigation, including a long and complicated case involving a 2006 plane crash in Russia. Callagy also represented Prussin in multiple cases involving litigation funding, including accusations of fraud. The Law Funder, one name Prussin used while making loans, is listed as the funder for Wilfredo Garcia. He’s perhaps best known for starting a law firm without a law degree. After the crash of Siberia Airlines Flight 778, Garcia amassed 50+ clients for a class action, which he then traded to other lawyers in exchange for a large cut of the contingency arrangement. By the time the case settled, the Prussin-funded suit’s payout was set upon by creditors, Garcia’s ex-wife, and the IRS. Callagy’s firm has offices in Texas, New York, New Jersey, and elsewhere. Promising to ‘change the way people feel about lawyers.’ Meanwhile, LCG was counting on large payouts in several of Callagy’s cases, which did not materialize. The case between Callagy and Prussin is scheduled for a jury trial later this year.
Commercial

Canadian Supreme Court Gives Okay to Litigation Finance

This week, the Supreme Court of Canada publicly released the reasoning behind its January decision in a case involving third-party litigation funding. The ruling provides clarity for an earlier act known as CCAA—the Companies Creditors Arrangement Act. The unanimous ruling found that a gaming software company may use third-party funding to pursue a $200MM lawsuit against Callidus Capital Corporation. CBA National reports that in the case against Callidus Capital, they are accused of factual omissions and multiple “faulty actions” with regard to their financial arrangement with Bluberi. As Bluberi moved to secure funding, a judge ruled that Callidus should be shut out, citing that they had acted improperly. Interestingly, the case demonstrates a coming SCOTUS trend of ruling on cases orally and presenting official reasoning later on. Sylvain Rigaud, co-chair of insolvency and restructuring at Norton Rose Fulbright Canada, explains that the ruling is a vital one. Extending the improper purpose statute to CCAA is a boon to the pursuit of justice. When an insolvent entity’s only assertion is a litigation claim, seeking justice and maximum recovery for clients are one and the same. Paul Rand, Canadian CIO of Omni Bridgeway, agrees, saying that companies now have an opportunity to partner with a funder to pursue meritorious litigation. This is especially vital in insolvency situations where litigation is one’s only recourse. Rand goes on to say that the normalization and expansion of third-party funding increases overall efficiency, and brings attention to lit fin as an option for clients who might not otherwise pursue litigation.
Commercial

Burford Client Runs Afoul of Champerty Claim in Russian Oligarch Divorce

The contentious divorce of Putin ally Farkhad Akhmedov and his wife, Tatiana, has produced escalating divorce proceedings for nearly two decades. Lawyers for each party have asserted multiple claims of previous divorces that can’t be corroborated, requests for personal emails between father and son, and now—an accusation of champerty regarding Burford Capital’s funding of Tatiana Akhmedova. Technically, the backing of claims by third-party funders in exchange for profit has been illegal in Russia since feudal times. The Guardian reports that Tatiana was awarded a whopping GBP 453MM in 2016, which is roughly 41% of her husband’s assets. Akhmedov disputes the ruling and claims that he and his ex-wife were already divorced 20 years ago. Documents were presented to this effect but were later determined to be forged. The former Mrs. Akhmedova is also pursuing action against her son for his part in Akhmedov’s refusal to pay the award. Attempts to reap the full award are being backed by Burford Capital. Burford's participation is considered questionable, as Russia has yet to enact laws regarding litigation funding. Lawyers for Akhmedov are demanding to see the details of Akhmedova’s agreement with Burford. They further assert that funding of this type is not permissible in family law cases. Assets include a super yacht, a writing desk once used by Napoleon, art by Hirst and Warhol, and other rare antiquities. Lawyers for the Akhmedovs will reference a recent case in Hong Kong that ruled this type of third-party funding illegal.
Commercial Covid-19

Class Actions Post Coronavirus—What Can We Expect?

The global financial crisis of 2008 brought with it a flood of class action litigation against big banks. A similar wave of litigation is expected in the post-COVID world. Indeed, it might be even more widespread. In recent years, the rules and procedures surrounding the formation of class action suits have become more sophisticated. Advances in the understanding and use of Litigation Finance make pursing class actions less complicated. City AM reports that class action suits are already popular in the US, and the UK is expected to follow suit as big banks are held accountable for malfeasance toward their customers. The thinking in legal circles is that increased litigation is a foregone conclusion post-Coronavirus. Christopher Bogart, CEO of Burford Capital, has stated that the reality of the Coronavirus is that it will bring about a huge number of legal disputes. Questions surrounding insurance coverage or contract specifics will be plentiful. Expansive access to litigation funding means many of these cases will go the distance in court. Businesses are already forming groups to take on insurers and others who have already refused to meet their contractual obligations during shutdowns and work stoppages. One such group, Hiscox Action Group, is pursuing claims against Hiscox insurance, with funding from Harbour Litigation Funding.  The use of social media makes finding claimants for class action suits easier than ever. Combined with the wealth of funding provided by third-party funders, it’s easy to understand why class action suits will be a popular means of seeking recompense after the pandemic is behind us.
Commercial Covid-19

‘Pandemic Management’ is Leading to Surge in Interest in Litigation Funding

The pandemic is far from over, but the steps that legal firms are taking to mitigate it have only just begun. Third-party funders are already seeing shifts in the way firms are approaching them. It’s not surprising that law firms will be creative and proactive in heading off financial woes before they occur—but it is startling how quickly things are changing. Eric Blinderman, CEO (U.S.) of Therium Capital Management, writes on Therium's blog that his firm is already seeing a major upswing in funding requests for single cases. This seems to indicate that some firms are already strapped for liquidity, or that savvy managers are trying to get ahead of the coming money crunch by reducing risks and freeing up funds for other activities. Perhaps the most striking aspect of this, is the fast formation of special practice groups specifically for COVID-19-related cases. These are likely to include securities litigation, breach of contract, insurance recovery, and more. Such groups are already overwhelmed with claims relating to business closures, supply chain issues, and a deluge of other losses. One could argue that COVID-19 has given us a new legal specialty—pandemic management. This unique situation we all find ourselves in is leading to a flurry of change in legal circles that’s bound to permanently impact law in general and litigation funding in particular. It’s fortuitous that lit fin has become so accessible in times when low-income litigants would otherwise have no affordable legal recourse.
Commercial

Class Action Against Facebook, Google, & Twitter Passes $1B in Claims

An Australian class-action suit against prominent online entities has taken major strides forward in recent weeks. Targeting Facebook, Google, and Twitter over their refusal to accept cryptocurrency advertising, the case has amassed over one billion Australian dollars. This staggering number makes it one of the largest class action cases in the country. Peakd reports that a detailed analysis of the damages brought about by the ad ban on various types of cryptocurrency services include $110 billion in crystalized loses, and a further $250 billion in un-crystalized losses. The lower volumes and prices caused by the lack of ads ultimately led to a stark devaluation of various cryptocurrencies, multiple failed IPOs, as well as a sharp decline in profits from currency mining equipment. Companies such as Steem experienced a steep lag in growth and engagement on their platforms. In Australia, lawyers are not permitted a share of recovery from cases. In this case, that translates to lawyers working for free. Over the last three quarters, a team of legal experts has worked off-the-clock to collect evidence and conduct research, believing the case to be meritorious. More is needed, though, to take this class action to completion. The case requires a “bookbuild,” which refers to a large number of signups, which are already secured. Also, a Senior Counsel advocate must state that the case has merit and should move forward. Given the numbers here, it seems an attractive option for large litigation funders. It’s estimated that $3-5 million will be needed to take the class action all the way through the system.
Announcements Consumer

Balanced Bridge Funding Provides Financing to Plaintiffs with Awards from Settled Sex Abuse Cases

ARDMORE, Pa., May 7, 2020 /PRNewswire/ -- Balanced Bridge Funding, LLC ("Balanced Bridge") now offers a special financing program for plaintiffs involved in settled sex abuse cases, who have awards and are interested in receiving a portion of their award upfront. In cases like USC George Tyndall and Larry Nassar, plaintiffs are placed in categories in accordance to their level of abuse. Once they receive notification of their award, they may want to access a portion prior to the anticipated distribution. Balanced Bridge can give them the option to do that. "Our past experience dealing with plaintiffs in these kinds of cases has given us the confidence to move forward with this specially designed program," says Joseph Genovesi, CEO of Balanced Bridge. As a direct funder, Balanced Bridge is able to communicate and coordinate funding to plaintiffs with awards in a matter of days. Rogue gynecologists like Larry Nassar, George Tyndall, and Nikita Levy are well known because of the abuse they rendered to their patients. Each of them was accused of sexual abuse, and because of that, the institutions they worked for were also sued. USC, Michigan State, U.S. Olympics, and John Hopkins University eventually settled with the plaintiffs, costing these institutions millions of dollars. However, with such settlements, the monetary awards the plaintiffs are slated to receive can take a long time to payout. Plaintiffs who have received notification of their award for their settled case and are interested in receiving a portion upfront can complete an application on Balanced Bridge's website. They can also contact the company via email at info@balancedbridge.com or call 267-457-4540.
Commercial

Ross Asset Management Case Goes to Trial as ANZ Loses Motion

In her 65-page decision, Justice Jillian Mallon ruled that the case against Ross Asset Management will go to trial. This came after ANZ Bank filed to have the case thrown out before trial. Ross Asset Management has been called the biggest Ponzi scheme in New Zealand since its went under in 2012. According to the NZ Herald, investors entrusted at least $450 million to Ross Asset Management, much of which was allegedly grossly mismanaged with help from their bank, ANZ. Charges in the class action include breach of trust, misused overdrafts which led to fraudulent fees and interest charges, and negligence. Estimated losses are listed around $100 million, though only $10 million has been recovered thus far. At least 500 investors have signed on to take part in the class action, which is being funded by LPF Group. Their arrangement indicates that LPF Group will get 25% of the award should the case settle by the end of June. If the case goes into July and beyond, LPF will receive 30%. Without funders like LPF, investors may not have been able to organize for a class action of this size and length. The alleged breaches all occurred prior to 2012, which means the case could take more than a decade to reach a conclusion. This is exactly the kind of high-value case where litigation funders can be of the most help to clients who have been wronged by large entities.