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Announcements Commercial Deals

Nakiki SE: New litigation financing agreements: EUR 3 million, option volume EUR 1.5 million

By Harry Moran |

Nakiki SE, in future Legal Finance Holding SE, announces 3 new litigation financing agreements:

Real estate purchase agreement:

The seller of non-EU real estate with a value of EUR 10 million suffered damages of approximately EUR 2.3 million as a result of a cancelled property purchase agreement. Legal Finance entered into a litigation funding agreement with the seller to pursue the claim.

Sports car accident:

A policyholder suffered damage in a serious car accident and the insurance company refused to pay the claim for approximately EUR 700,000. Legal Finance entered into a litigation funding agreement with the policyholder to pursue the claim.

Loan agreements:

A borrower refused to repay business loans totalling approximately EUR 550,000. Legal Finance entered into a litigation funding agreement with the lender to enforce the outstanding payments.

The total amount in dispute of the new litigation financing agreements is approximately EUR 3.5 million (excluding costs and interest). The option volume is approximately EUR 1.5 million.

Additional cases are under review.

Commercial Regulatory Issues

Progress on PACCAR Bill Stalls as UK Election Approaches

By Harry Moran |

An article in CDR looks at the potential impact of the upcoming UK general election, which may result in progress stalling for the government’s Litigation Funding Agreements (Enforceability) Bill. With Prime Minister Rishi Sunak’s announcement on 22 May that the election will be held on 4 July, it is now very unlikely that the bill will reach any further significant milestones towards being signed into law.

The last major development in the bill’s progress was the 15 April second reading in the House of Lords, which saw members continue to debate the proposed legislation and the amendments that had been put forward to alter the language of the bill. As LFJ explained in our recap of the debate, the bill currently sits in the report stage, which provides an opportunity for members of the Lords to further examine the bill and propose any additional amendments to the text. 

However, with an election just over a month away and the current crop of elected representatives already busy campaigning, it would be surprising to see any further progress made under the current government. As CDR notes, it is also unknown whether this bill will be seen as a priority for parliament following the next election, especially if there is a change in the governing political party.

CDR’s article includes a statement from a spokesperson for the International Legal Finance Association (ILFA), which said: “It’s disappointing for us, but more importantly for small businesses and individuals like the sub-postmasters who rely on litigation funding to secure justice. It is critical the next government recognises the urgency of this issue and prioritises a quick fix to ensure access to justice can continue and the UK’s reputation as a world-leading legal centre is protected.”

Announcements Commercial

Burford Capital Expected to Join Russell 3000® and 2000® Indexes

By Harry Moran |

Burford Capital, the leading global finance firm focused on law, is expected to join the broad-market Russell 3000® and small-cap Russell 2000® Indexes at the conclusion of the 2024 Russell US Indexes annual reconstitution, effective after the US market opens on July 1, 2024, according to a preliminary list of additions posted on May 24, 2024. Burford is the first legal finance firm to be listed on the New York Stock Exchange and the first legal finance firm expected to join the Russell 3000® and 2000® Indexes. Legal finance is an emerging asset class generally uncorrelated to market conditions or the performance of the overall economy.

Burford’s inclusion in the Russell 3000® and 2000® Indexes reinforces its continued growth both with its investors and with its clients, which include Fortune 500 companies and many of the world’s largest law firms. Burford, which celebrates its 15th anniversary in October 2024, helps clients shift the cost of their commercial disputes as well as manage the risk and optimize the timing of the often-significant cash flows associated with pending claims, judgments and awards. The company has a multi-billion dollar portfolio, and in 2023, a Burford-funded case against Argentina involving the renationalization of Argentina’s oil company, YPF, resulted in the largest judgment in the history of the US District Court for the Southern District of New York, with the court awarding plaintiffs approximately $16 billion in damages.

Christopher Bogart, CEO of Burford Capital, said: “Since its founding in 2009, Burford has deployed billions of dollars to the business of law, and we’re continuing to see growing demand from CFOs, GCs and other business leaders who recognize that they can use legal finance to turn the legal department from a cost center to a capital source, including a recent $325 million Group-wide commitment with a Fortune 50 company. Joining the Russell 3000® and 2000® Indexes is an exciting moment for Burford, and we are proud to continue on a trajectory of growth and increasing visibility to clients and investors alike.”

Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for active investment strategies. According to the data as of the end of December 2023, about $10.5 trillion in assets are benchmarked against the Russell US indexes.

About Burford Capital

Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its offices in New York, London, Chicago, Washington, DC, Singapore, Dubai, Sydney and Hong Kong.
 
For more information, please visit www.burfordcapital.com.
 
This announcement does not constitute an offer to sell or the solicitation of an offer to buy any ordinary shares or other securities of Burford.

Forward-looking statements

This announcement contains “forward-looking statements” within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, regarding assumptions, expectations, projections, intentions and beliefs about future events. These statements are intended as “forward-looking statements”. In some cases, predictive, future-tense or forward-looking words such as “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “forecast”, “guidance”, “intend”, “may”, “plan”, “potential”, “predict”, “projected”, “should” or “will” or the negative of such terms or other comparable terminology are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. Burford cautions that forward-looking statements are not guarantees of future performance and are based on numerous assumptions, expectations, projections, intentions and beliefs and that Burford’s actual results of operations, including its financial position and liquidity, and the development of the industry in which it operates, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this announcement. Except as required by law, Burford undertakes no obligation to update or revise the forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise.

Announcements Commercial People Moves

Leading Finance Firm Secures Coveted Spot in European Litigation Funders Association (ELFA)

A top-tier litigation finance firm has achieved a significant milestone by becoming a member of the prestigious European Litigation Funders Association (ELFA).

This development marks a strategic move for Nera Capital as it continues to solidify its position as a key player in the global litigation funding market.

With its headquarters in Dublin, along with offices in Manchester and The Netherlands, the company has earned a reputation for delivering innovative financial solutions and cutting-edge technology across a diverse range of claim types.

The company’s portfolio includes high-volume consumer disbursement funding in the UK and substantial commercial claims in both Europe and the USA.

This strategic membership in ELFA underscores Nera Capital’s commitment to fostering ethical and effective litigation funding practices.

The ELFA is a collective of like-minded professionals from the litigation funding industry whose management committee is formed by representatives from the original founding companies, Deminor, Nivalion and Omni Bridgeway.

To become a member, firms need to have demonstrated excellence in the sector and a proven track record of deploying a significant amount of capital into the market.

Aisling Byrne, Director at Nera Capital, expressed her delight at this milestone, stating: “We are very pleased to join the European Litigation Funders Association.

“As a member, we look forward to collaborating with industry peers, sharing our wealth of experience, and contributing to the advancement of ethical and effective litigation funding practices across Europe.

“It positions us to advocate for transparency and promote higher industry standards that benefit all stakeholders involved. We believe our involvement will drive positive change and reinforce the essential role of litigation funding in delivering access to justice.”

Nera Capital’s membership in ELFA comes at a pivotal time when the litigation funding market is experiencing rapid growth.

By aligning with ELFA, Nera Capital is poised to play a crucial role in shaping the future of the industry, and the importance of litigation funding.

Wieger Wielinga, Managing Director of Omni Bridgeway and Chairman of ELFA, welcomed the company’s membership, noting the significance of their inclusion:

“With its roots in Ireland, the only Common Law EU country, Nera Capital operates in several EU jurisdictions as well as the UK.

“ELFA is thrilled to have another experienced funder on board, further enabling us to develop best practices for assisting claimants, insolvency trustees and consumer organisations and law firms across Europe.

“The addition of Nera to ELFA will also enhance our ability to advocate for the funding industry and its invaluable role in delivering access to justice across Europe.”

About Nera Capital:

·        Established in 2011, Nera Capital is a specialist funding provider to law firms.

·        Provides Law Firm Lend funding across diverse claim portfolios in both the Consumer and Commercial sector.

  • Headquartered in Dublin, the firm also has offices in Manchester and The Netherlands.

·        Nera Capital is dedicated to facilitating the setup of class actions and group actions to promote equitable access to justice for individuals and interest groups. With a proven track record, Nera Capital has spearheaded numerous impactful claims, empowering clients to achieve legal redress in cases such as Housing Disrepair Claims, where vulnerable claimants lack the means to address their grievances effectively. Additionally, Nera Capital has played a pivotal role in supporting claims like the Trucking Cartel case in Europe, assisting in exposing evidence of anti-competitive behaviour by manufacturers. Through its strategic interventions and advanced AI capabilities, Nera Capital continues to champion fairness and accountability in the legal landscape. 

·       www.nerecapital.com

About The European Litigation Funders Association (ELFA):

·        ELFA was founded by three leading litigation funders with a European footprint and today includes the vast majority of EU based litigation funders. ELFA was established to serve as the voice of the commercial litigation funding industry operating from within the EU member states. With the objective of representing the industry’s interests before governmental bodies, international organisations and professional associations, ELFA aims to act as a clearinghouse and reference for relevant information, research and data regarding the uses and applications of commercial legal finance within the European continent. ELFA aims to be inclusive for all professional litigation funders of larger or smaller size and to allow specific contributing market participants and academics as associate members.

·        www.elfassociation.eu

Community Spotlights

Member Spotlight: Tamar Katamadze

By John Freund |

Tamar is an underwriter in the Political Risk division at Mosaic Insurance and, among other things, responsible for developing Mosaic’s Arbitration Award Default Insurance (AADI) worldwide after previously supporting transactional liability division. In prior positions, she worked as a senior lawyer at JSC Georgian State Electrosystem in Georgia, representing the company in the European Union, and later, as an associate at Fridman Law Firm PLLC in New York. She started her career at Georgia’s Ministry of Economy & Sustainable Development, where she represented the government in courts, with a particular focus on complex commercial litigation.

Mosaic Insurance is a global specialty insurer with exceptional expertise, a focus on complex products, and an award-winning, digitized operating model. Mosaic Insurance underwrites for trade clients alongside we own Lloyd’s Syndicate 1609—offering capacity and custom service across seven lines of business in seven countries.

Company Website: https://www.mosaicinsurance.com/

Year Founded:  2021

Headquarters:  Bermuda

Area of Focus:  Arbitration Award Default Insurance Product

Member Quote: We believe that our new product revolutionizes the landscape for litigation funders investing in international arbitration, providing funds with certainty and effectively managing the value of their investments.

Commercial Regulatory Issues

LSB Report on Litigation Funding Welcomed by ILFA and ALF Leadership

By Harry Moran |

A report by Queen Mary University of London and commissioned by the Legal Services Board, has provided new research into litigation funding in England and Wales. The research report was led by Prof. Rachael Mulheron KC (Hon), professor of tort law and civil justice at Queen May University includes an empirical and legal literature study of the topic, and included input from funders, insurers, law firms, brokers and advisors.

The report found that litigation funding ‘serves the public interest by funding litigation that would (and could) not otherwise be funded’, and ‘offers consumers a hitherto unobtainable route to access to justice where there are more widespread but lower levels of detriment.’ Following the publication of the report, the chairs of both the International Legal Finance Association (ILFA) and the Association of Litigation Funders (ALF) provided comments on the research. 

Neil Purslow, Chair of ILFA said: “We welcome the LSB’s findings that the litigation funding industry serves a public interest, and that although the industry is still nascent, it has become a key feature of legal services provision that supports the development and enforcement of the rule of law.  The report also clearly sets out how claimants would benefit if funding costs were recoverable from an unsuccessful defendant and we look forward to this becoming a key consideration in the upcoming CJC review.”

Susan Dunn, Chair of ALF said: “The Association of Litigation Funders has a strong and growing membership and our board will reflect on the findings contained in this important and thoughtful research, which recognises the utility of the ALF as a self-regulating body and the benefits of the code of conduct to claimants, law firms and funders.”The full report can be read here.

Commercial Deals

AFR: Gramercy Expects $135M Profit Per Year from Pogust Goodhead Funding Deal

By Harry Moran |

Although the wider public rarely if ever are aware of the details of legal funding deals, new reporting sheds some light on the largest litigation funding deal in the industry’s history, and demonstrates the impressive scale of financial returns’ that may be on offer to outside investors in law firms.

An article in the Australian Financial Review provides new insight into the financial success of Gramercy following its landmark $550 million funding deal with Pogust Goodhead, stating that the hedge fund expects to see around $135 million in profit a year from the deal. AFR’s reporting highlights that the loan has allowed the UK-based law firm to expand its global footprint to include operations in Australia, with the firm announcing its intention to pursue litigation against Australian corporations for violations of environmental law.

AFR’s reporting is based on a Gramercy investor presentation from May 2023, which covered the “Special Situations Opportunity” for funding the deal with Pogust Goodhead and offered insight into the financial returns that Gramercy was expecting. The presentation separated the deal into two loans, each accounting for $250 million in capital, with the first loan projected to return approximately $95 million over 2-3 years and the second to return around $220 million over a 3-.3.5 year period. 

Whilst both firms declined to comment on the details of the funding arrangement, Pogust Goodhead’s managing partner Tom Goodhead spoke about the firm’s broader financial strategy, explaining that debt capital markets have allowed it “to level the playing field with the corporations that have access to sophisticated corporate finance.” Mr Goodhead went on to say that this approach enables the firm “to take up the fight for justice on victims’ behalf despite the often elaborate attempts by large mega-wealthy corporations to deflect and obstruct.”

Commercial

Burford CEO says Capping Funders’ Fees is “a Preposterously Dumb Idea”

By Harry Moran |

As the UK government moves forward with its legislation to reverse the effects of PACCAR, the parallel progress of its review into the litigation funding industry is attracting even more attention than the bill itself, with funders weighing in on the direction this review should take.

An article in The Law Society Gazette covers a media briefing from Christopher Bogart, chief executive of Burford Capital, who spoke about the upcoming Civil Justice Council (CJC) review into third-party litigation funding in the UK. Commenting on the choice to have the CJC lead the review, Bogart said that “the CJC has a long history of being sensible [in its] thinking about this industry” and that he saw no reason “why that would change.”

However, when it came to discussing the potential reforms to the litigation finance industry that this review might recommend, Bogart was particularly scathing when it came to the idea of a cap on funder’s returns, saying it “would be a preposterously dumb idea.” He argued that there was little logic behind the argument for imposing such a restriction on this kind of financial transaction, acknowledging that whilst there was “some superficial appeal” to outside observers of the industry, “it doesn’t stand up to any sort of rational financial scrutiny.”

Similarly, Bogart cautioned against the introduction of capital adequacy requirements for litigation funders that are used for the banking industry, arguing that the suggestion that funders may run out of capital during a case also lacks evidence as the funding industry “has been operating for over 20 years, and you don’t have a history of that happening.” In reality, Bogart explained, the litigation finance industry has repeatedly demonstrated “a history of larger players being willing to step in and buy out claims if somebody doesn’t have the capital.”

Case Developments Commercial

Class Action Filed Against Rio Tinto over Closure of Panguna Copper Mine

By Harry Moran |

Reporting by Bloomberg and shared on Yahoo Finance provides details on a new class action that has been launched on behalf of the people of Bougainville, an autonomous region of Papa New Guinea, against Rio Tinto Plc over its alleged mismanagement of the Panguna copper mine. The Panguna Mine Action (PMA) lawsuit alleges that it was the closure of the mine in 1989 by Rio Tinto’s former unit Bougainville Copper Ltd. that led to protests over the ‘disbursement of revenue’ from the shuttered mine, which then escalated into a civil war that resulted in the deaths of up to 20,000 people.

The Bouganvillean plaintiffs are being represented by lawyers from Sydney-based firm Morris Mennilli and Port Moresby-based Goodwin Bidar Nutley, with Matthew Mennilli stating that the plaintiffs are seeking compensation that could amount to billions of dollars. According to PMA’s website, the class action is being supported through third-party funding, although the name of the litigation funder has not been released.

In an emailed response, Rio Tinto stated: “We are reviewing the details of the claim. As this is an ongoing legal matter, we are unable to comment further at this time.”

The class action has been filed in the National Court of Justice of Papua New Guinea.