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Commercial Special Features

How Litigation Funders Are Leveraging Legal Tech

Both plaintiff and defense have a clear vested interest in the outcome of their litigation. For litigation funders, however, the interest is in prospective claims - thousands of them - which are reviewed using a due diligence that combines legal expertise with financial analysis. Given the ROI component that litigation funders are faced with, there is a growing tendency to rely on legal technology to properly aggregate and analyze all of that raw data. But to what extent are litigation funders - and the broader legal community - relying on AI and Legal Tech to inform their decision making? As reported in the latest edition of Vannin Capital's bi-annual Funding in Focus series, Legal Tech is evolving into a core component of the broader Legal Services industry. According to a recent Law Firm Leaders survey, 95% of UK-based managing and senior partners expect to increase their investment in Legal Tech over the next decade, the majority of whom said the investment would be 'substantial.' Of course not all Legal Tech is created equal. In such a nascent field, there are plenty of competitors out there, and the winners and losers of the space have yet to be clearly defined. That said, there are some clear trend lines that are noticeably emerging. One such trend is the utilization of eDiscovery platforms. eDiscovery has been at the foundational level of the Legal industry for many decades - it's simply much easier to catalog cases, motions and rulings on a computer than in a giant file cabinet. That said, advancements in the space are making production, collation, storage and review all the more efficient. Cloud-based storage and processing, visual analytics which group related documents, and AI/machine learning tools that assist in data analysis have catapulted eDiscovery from a decades-old timesaver into a powerful instrument for any legal expert. eDiscovery platforms can now identify and map key phrases within related (or seemingly unrelated) documents, visualize data so researchers can better understand key trends and highlights, automatically redact sensitive information, and even track user accuracy so companies can monitor their reviewers' progress. As a result, the global eDiscovery market is worth an estimated $20B. Advancements in cloud computing have not only made eDiscovery a more streamlined and efficient process, but a cheaper one as well. Average storage costs have decreased from $40/GB/month to around $20/GB/month; sometimes much less if volumes are large enough. And with big names like Amazon Web Services and Google Cloud offering improved text-searching and data extraction services, the quality and efficiency of eDiscovery is bound to continue to improve. Perhaps even more germane to the funding industry is the ability of Legal Tech to help predict case outcomes. Big Data analysis can help funders predict judicial rulings, the size of jury awards based on case type and jurisdiction, time-to-settlement, and whether arbitrators tend to favor plaintiffs or the defense. Some Legal Tech platforms even leverage 'unstructured data,' which is a term used to encapsulate all data that cannot be easily quantifiable. For example, a platform may scrape all of a judge's or arbitrator's public comments, rulings, and social media posts to infer via language and syntax what proclivities and/or biases he or she possesses. Such is the granular new reality we all find ourselves in when every aspect of life is reduced to an algorithm. That said, granularity is a wonderful thing when you're tasked with analyzing the potential return on a multi-million dollar investment. Of course, these Legal Tech tools can only provide the data - they can't tell you how to interpret or act on it. That decision is up to the humans who control the purse strings. Additionally, as we all know, past performance is not always an indicator of future performance, so there remains some question as to just how 'predictive' this technology truly is. Prominent legal technologist, Professor Richard Susskind recently affirmed: “I have no doubt that the work of courts around the world will increasingly be conducted online. Here indeed will lie the key to providing greater access to justice."  Indeed, from case initiations to online courts and tribunals, to virtual mediation rooms to the eventual (albeit somewhat far off) advancement of end-to-end AI dispute resolution, the entire legal landscape is bound to be disrupted by the transformative power of technology. While it remains to be seen exactly which Legal Tech firms rise to prominence as 'the cream of the crop,' their collective impact is already being experienced in all facets of the industry.
Announcements Commercial

Litigation Capital Management (AIM:LIT): Interim Results

Litigation Capital Management (LCM) Limited (AIM:LIT), a leading international provider of litigation financing solutions, announces its reviewed interim results for the six months ended 31 December 2018.

Note: All financial results based on cash accounting methods, as opposed to fair value methods. Any gains or losses are only recognised in LCM’s accounts when a successful judgement or settlement has been determined.

Highlights

  • Adjusted profit before tax of A$2.72 million – increase of 268% (H1 2018: adjusted loss $1.62 million)
  • Adjusted revenue of A$11.71 million – increase of 11,498% (H1 2018: A$0.10 million)
  • Continued strong litigation project performance, with three projects completing in the period, and consistent with existing track record:
    • Portfolio IRR of 78% (on a cumulative basis since FY 2012, including losses)
    • ROIC of 117% (on a cumulative basis since FY 2012, including losses)
  • Strong pipeline of potential future litigation projects, diversified by litigation type and geography - 64 pre-qualified projects with estimated investment of A$409 million
    • Diversification in pipeline across geography (Australia, EMEA and Asia Pacific) as well as across single case, portfolio and corporate transactions
    • Future litigation projects include class action, commercial claims, insolvency, international arbitration, and corporate transactions
  • Funded first corporate portfolio transaction in October 2018 in the building and construction sector. Corporate transactions represent a growth opportunity for LCM, as the Company is currently considering eight significant corporate portfolio transactions as part of its pipeline of investment opportunities
  • LCM is now a truly global litigation finance provider following the launch of offices in London (covering EMEA) and Singapore (covering Singapore and Hong Kong), with both regions representing a significant growth opportunity for LCM going forward
  • Completion of listing on AIM in December 2018 and delisting from ASX
  • Significant strengthening to management team and board through the appointments of Nick Rowles-Davies as Executive Vice Chairman, Stephen Conrad as Chief Financial Officer and Jonathan Moulds as Non-Executive Director

Patrick Moloney, CEO of LCM, said:

“We are delighted to present our first set of financial results as an AIM-listed company. The strength of our performance is reflective of the consistent approach and focus we have ensuring that we continue to deliver strong returns across our existing portfolio. We have significantly expanded our operations to create a truly global platform for LCM.

“Our listing on the London Stock Exchange was a key milestone for the company and raised necessary capital to help fund future litigation projects and investments. Since LCM has become a London listed company, we have already seen a notable increase in the litigation funding products that we offer across the mix – including single case, portfolio and corporate transactions.

“Our geographical expansion, with new offices in both London and Singapore, has naturally seen the team grow and industry leading experienced individuals have been added to the Board and senior management team. This has created a strong foundation for LCM to continue to pursue exciting growth opportunities and maintain its position as a leader in the growing litigation finance market.”

About LCM

  • LCM is a leading international provider of litigation financing solutions
  • This includes single-case and portfolio; across class actions, commercial claims, claims arising out of insolvency and international arbitration
  • LCM has an unparalleled track record, driven by effective project selection, active project management and robust risk management
  • Headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT
Commercial

Canadian Court Approves Third Party Funding in Class Action Claim Against Tim Hortons

A Canadian court has approved the usage of third party financing in a class action claim being brought by Tim Hortons franchisees against the parent company. As reported in Canadian Lawyer, the case of JB & M Walker Ltd v. TDL Group could become a watershed. In Canada, the court must approve third party funding in all class actions, and the court in this case found that the funder did not seek to exert control, was well-capitalized, and was not being overcompensated. Therefore funding was approved for the class action. Litigation funding is relatively new in Canada (compared to say, the UK and Australia), so laws and legal precedents aren't as easy to come by. The court in this case found that litigation funder Galactic TH Litigation Funders LC, met the aforementioned criteria. The funder has assets of $33MM and net equity of $29MM, and is collecting between 22-26% of any proceeds. So Galactic are well-capitalized and not to be overcompensated. They also agreed to pay any security for costs issued against the plaintiff. The Tim Hortons franchisees had been originally funded by the Great White North Franchisee Association, but last summer that financing dried up, and the franchisees could not afford to continue the case on their own.
Commercial

New Zealand Wary Over Increase in Litigation Funding After Mainzeal Judgment

In a recent decision by a New Zealand High Court, the directors of failed construction company Mainzeal - including former Prime Minister Jenny Shipley - were ordered to pay $36MM to creditors. The claim was funded by litigation funder LPF, and many in New Zealand are concerned that the big win will herald a litigation funding revolution - much like what is currently taking place in neighboring Australia. As reported in Newsroom, the New Zealand court found that the directors allowed the company to continue operations for several years, despite being "balance sheet insolvent." Shipley and the other directors argued they had an asset in the form of millions of dollars of debt owed to Chinese parent company Richina Pacific, yet no money from the China parent company ever trickled down to New Zealand. When the company couldn't afford to pay its bills, contractors lost out on $45.5MM, and creditors on $110MM. Justice Cooke found that the Mainzeal directors had not put in place any proper risk assessment measures, and failed in their corporate governance duties. Of the four directors involved, Shipley and one other owe $6MM each, while the remainder is to be paid by Richina. The quartet have Directors & Officers (D&O) insurance totaling $20MM, though it isn't clear how that money is to be allocated. D&O insurance has exploded in cost in neighboring Australia, where litigation funding is helping fuel a number of prominent class action claims. With the big win coming in the Mainzeal case, which was funded by LPF, many New Zealand legal experts are considered about a similar rise in claims, and the resulting impact on insurance costs.
Announcements Commercial

Legal claim launched against rail companies after millions double-pay for fares in London

A claim has been launched in the UK’s specialist competition court by Justin Gutmann, formerly of Citizens Advice, on behalf of millions of passengers who have paid twice for part of their journeys on Southeastern and South Western routes.  

  • Passengers who have held a Travelcard in the period since October 2015 and bought another ticket for a rail journey that is partially covered by their Travelcard have effectively paid twice for part of their rail journey
  • The claim is estimated to be worth around £93 million in damages
  • Millions of passengers who have travelled in and around London may be eligible for compensation

London, February 27th, 2019

A claim on behalf of millions of rail passengers has been filed in the Competition Appeal Tribunal against the operators of the South Western and Southeastern rail franchises.

First MTR South Western Trains, Stagecoach South Western Trains and London & South Eastern Railway are alleged to have not made “boundary” fares readily available for Travelcard holders to purchase, nor making passengers aware of their existence. The rail companies’ failures have left customers with little option but to buy a higher fare than they would have needed because their Travelcard already entitled them to travel for part of their journey.

Boundary fares allow passengers who own a Travelcard to travel beyond the zones covered by their Travelcard without doubling up on payment. Independent research has shown that boundary fares are not readily available through online platforms or over the telephone from South Western or Southeastern and are rarely offered at ticket counters unless expressly requested by passengers. This imposition of an unfair price for fares is an abuse of the companies’ dominant position and in breach of UK and EU competition laws.

The opt-out collective action is being led by Justin Gutmann, an experienced campaigner on both consumer issues and the transport sector.

Gutmann said:

“Passengers in London already pay a lot of money for trains that are often delayed or not even running. Now following extensive research, we have found that some passengers are paying twice for parts of their rail journeys.

We are launching this legal action to ensure that the money that South Western and Southeastern have made from this is returned to those train users.

Millions of rail passengers could be eligible for compensation. Let’s put this right and stop train companies taking passengers for a ride.”

Who is eligible?

Passengers who owned a Travelcard at any time from 1 October 2015 and also purchased a rail fare from a station within the zones of their Travelcard to a destination outside of those zones may be eligible for compensation. Millions of passengers are thought to be affected.

Dorothea Antzoulatos, Director of Charles Lyndon, said “Charles Lyndon has worked extensively with Mr Gutmann to develop this case which seeks to recover compensation for millions of rail passengers who have overpaid as a result of what we believe is the behaviour of the defendants. We are delighted to be working together with Hausfeld & Co to represent Mr Gutmann in what will be the first stand-alone collective action in this country.  A case such as this would not have been practicable before the introduction of the Consumer Rights Act 2015 and we hope that as a result of this action millions of rail passengers will be able to recover the compensation that is due to them.”

Anthony Maton, Managing Partner at Hausfeld & Co LLP said: “This claim is about rail passengers being able to recover what is rightfully due to them. This is only the fifth collective action in the Competition Appeal Tribunal and the first brought without the benefit of an underlying regulatory decision. We’re very pleased to be co-counsel for Mr Gutmann on this ground-breaking case.”

Will there be any cost be for class members?

There is no cost for class members. This action is being funded by Woodsford Litigation Funding, a specialist litigation funder. By absorbing both the costs and risks associated with a claim of this size, Woodsford is enabling the claim to be brought and ensuring that as many rail passengers as possible benefit from this legal action.

Woodsford’s Chief Investment Officer, Charlie Morris, stated: “Third party funding facilitates access to justice and is an integral part of bringing collective actions such as this boundary fares claim. Woodsford is looking forward to helping millions of rail passengers achieve the compensation they are entitled to."

What next?

The Tribunal will now determine whether or not Mr Gutmann’s claim is allowed to proceed.  If the claim is permitted to go forward then those affected will not have to pay any legal fees, nor contact lawyers.

Affected passengers who live in the UK will be automatically included in the claim although they can choose to opt-out in due course. Affected passengers who do not live in the UK will also be eligible to join the claim but must proactively opt-in. As the case progresses, we will provide more detail as to what rail users will be required to do to either opt-in, or opt-out.

Anyone who would like to receive further information about the claim, can visit the claim website, BoundaryFares.com, to sign up for updates.

Further information

The claim’s website and social media channels are available from the day of launch, at BoundaryFares.com where affected passengers can sign up to receive further information on the legal proceedings.

Justin Gutmann represents the passengers bringing this legal case against South Western and Southeastern. He is aiming to ensure that the train companies have to pay back the money which they earned from passengers paying twice for part of their journeys. This is estimated to be in the region of £93 million.

Mr Gutmann has a wealth of experience working in the consumer rights sphere and he has strong expertise in the transport sector. He has spent a large part of his professional life dedicated to consumer welfare, public policy and market research.

Mr Gutmann’s final job prior to retirement was as Head of Research and Insight at Citizens Advice.

Mr Gutmann also spent eight years working for London Underground as a Market Planning Manager.

Justin Gutmann is represented by Charles Lyndon and Hausfeld & Co LLP.

The LFJ Podcast
Hosted By Michael German |
In this episode, we speak with Michael German of Vannin Capital about the issue of disclosure. With the recent GOP Senators' push to re-introduce legislation that would mandate disclosure of all third party-funded agreements in class action cases and MDLs, disclosure is on the forefront of all industry participants' minds. Michael recently penned an article suggesting a compromise on the issue: that being mandated limited disclosure in all third party-funded cases, with excess disclosure expressly prohibited. Michael explains his reasoning on the podcast. [podcast_episode episode="3544" content="title,player,details"]
Announcements Commercial

Vannin Capital Names UK Regional Managing Director

Vannin Capital, the global expert in legal finance, has today announced that Rosie Ioannou has been appointed as UK Regional Managing Director.

 Rosie joined Vannin in 2014 as a Managing Director and has since been a driving force behind its growth and development, as well as the evolution of the litigation funding industry in the UK and around the globe. In her new role, she will have overall responsibility for Vannin’s UK business, leading the team of UK Managing Directors. Her appointment underscores Vannin’s ambitious growth objectives for the years ahead, and the role that the UK litigation market will play in realising those ambitions.

Highly regarded for her experience in funding claims in areas such as insolvency, competition and UK group actions, Rosie has been recognised as a Leading Individual in the UK for her work by Chambers & Partners. Prior to joining the Vannin team, she worked for magic circle law firm Allen & Overy.

Commenting on the announcement, Vannin Capital CEO Richard Hextall said: “Rosie has been fundamental to Vannin’s growth since joining the team in 2014, and her breadth of experience and reputation in the market is second to none. She is a natural choice to lead the UK team to the next stage of its growth, as we look to capitalise on the developing market in the UK and internationally.”

Rosie Ioannou said: “This is a really exciting time for Vannin as the London market for litigation funding continues to grow. The business is very well positioned to continue to diversify its portfolio and capitalise on the myriad opportunities that exist. I look forward to tackling this new challenge and helping to lead our talented UK team into the future.”

About Vannin Capital

Established in 2010, Vannin Capital is a global expert in the provision of funding to support individuals, corporate clients and law firms in the successful resolution of high-value litigation and arbitration claims.

From single case funding to portfolio finance, we offer creative capital solutions that are tailored to our clients’ needs. Our global team of legal and financial experts cover the key commercial litigation and arbitration centres from our offices in London, Jersey, Paris, Bonn, New York, Washington, Sydney and Melbourne. More than just capital, we combine global experience with local knowledge to deliver a high standard of service and expertise to our clients around the world.

A major player in the legal finance market, we are a member of the Association of Litigation Funders of England and Wales (ALF), conducting our business to a high standard in line with its code of conduct.

Announcements Commercial Consumer

DealFlow Announces The Litigation Funding Forum 2019 Agenda

New York, NY, Feb. 22, 2019 (GLOBE NEWSWIRE) -- via NEWMEDIAWIRE -- DealFlow Events is pleased to announce the agenda for The Litigation Funding Forum 2019 coming up April 4 in New York City. The complete agenda and panel speakers: https://litigationfundingforum.com/agenda/ Here is just some of the information our slate of experts will cover during this must-attend event:
  • Latest trends in the litigation funding marketplace
  • Challenges facing legal counsel with litigation funding
  • Benefits to investors in litigation funding
  • Growth prospects in the marketplace: Leveling the legal playing field
  • What counsel should look for in identifying the right litigation financing firm for clients
  • How litigation funders determine cost to ROI
  • Contracts and risk management
  • Litigation funding in patent and intellectual property cases
The conference keynote speaker is New York State Sen. Rob Ortt, who introduced the Litigation Funding Act. Whether you are a funder, an attorney or a litigation finance consultant, The Litigation Funding Forum 2019 is a can’t-miss event. Panels of experts are ready to answer your questions regarding litigation finance, while exploring the latest legal trends, best practices and insights to maximize the benefits of litigation finance while avoiding challenges that have tripped up others. Corporate sponsors of The Litigation Funding Forum 2019 include Validity Finance, RRBB Accountants + Advisors, and Armadillo Financial Partners. Learn more about the forum at https://litigationfundingforum.com/. This event will likely sell out. Get your tickets today at https://litigationfundingforum.com/tickets/. Questions? Contact DealFlow at (516) 876-8006 or email Charlie Napolitano at charlie@dealflow.com. About DealFlow When it comes to the business of finance, the tag line “A DealFlow Event” is widely recognized as a symbol of quality. We’ve produced over 200 conferences, seminars, and webcasts on a variety of financial topics over the last 16 years. These events are the signature programs in their respective markets, offering high-quality content and unequaled professional networking opportunities. For more information about our events business, visit www.dealflowevents.com. For more information about some of our other projects, visit www.dealflow.com.
Announcements Commercial

Collaboration between law firm, litigation funder and insurance brokerage creates access to justice enhancing product for owners of intellectual property

Debenhams Ottaway LLP in association with Sparkle Capital Ltd, Sybaris Legal & IP and Acasta Europe Limited have today launched a product to fund claims brought in the Intellectual Property and Enterprise Court (“IPEC”). The product follows collaboration between the innovative law firm, who last year set up a litigation funding panel and Sparkle Capital, a litigation funder. Sybaris Legal & IP, an insurance broker operating in the intellectual property arena will operate one of the distribution channels for the product and Acasta will provide the After The Event insurance. The product can cater for claims valued from £50,000 to £500,000. The fixed recoverable costs in IPEC limit the recoverable costs in stages up to £50,000 (save in some circumstances in which a party beats a Part 36 offer). The IPEC regime is therefore attractive to litigation funders and ATE insurers because it limits exposure for adverse costs particularly where the Arkin cap[1] is under threat from developing jurisprudence. The product is aimed both at the SME market and IP portfolio holders such as brand owners, musicians and the pharmaceutical industry. It covers a variety of different types of Intellectual property claims ranging from trade mark infringement and passing-off to copyright, design right and patent infringement claims.  It combines a discounted conditional fee agreement with Debenhams Ottaway within a funding package from Sparkle Capital to meet the discounted element of the fees and disbursements. The cost of the funding is low by market standards because it is based on a fixed interest rate rather than the market standard “share of the award”. And it is non-recourse as it is covered by the relevant After the Event and Financial Guarantee Insurance provided by Acasta. Commenting on the launch of the product, Debenhams Ottaway lead litigation and dispute resolution Partner, Luke Harrison, who also serves as Chairman of the Commercial Litigation Association said: “The IPEC funding product is essentially an access to justice tool. It enables those who have suffered a legal wrong to obtain redress whilst avoiding the risks associated with litigation. Intellectual property is an intangible asset which is easy for third parties to exploit and profit from. Whilst there are a number of ways IP may be protected, enforcing those rights in practice through the Courts is often the only tool available to protect that value.” Senior Associate and lead Intellectual Property disputes Lawyer at Debenhams Ottaway, Rosie Patterson said: “The IPEC funding product should go some way to addressing the imbalance in resources that we often see between parties in IP disputes, an imbalance that frequently acts as a barrier to Claimants bringing actions to protect their rights.” Tets Ishikawa, Director at Acasta and Senior Adviser at Sparkle Capital, commented: "Acasta and Sparkle are delighted to partner with our forward-looking partners, Debenhams Ottaway and Sybaris Legal & IP, in launching this IPEC Funding Product. The delivery of real access to justice can only progress with a solutions-led approach that lead to products meeting the actual needs of legal claims. This is the result of that approach and is part of our overall strategy to deliver innovative, relevant insurance and funding products to the litigation market."  Commenting on the launch of this new product, Ian Wishart, a director of Sybaris Legal & IP and himself an experienced patent attorney and an inventor, said: “This new funding product will benefit potential litigants before IPEC who have been unable to pursue good claims, sometimes against much larger firms, because of a lack of resources.  It levels the playing field, and enables IPR owners to retain value and leverage those rights.” Notes
  1. Debenhams Ottaway LLP is a leading law firm with offices in Hertfordshire and a London space. The firm acts for high net worth individuals, entrepreneurs and established businesses including, in specialist fields, a number of household brand names. The firm’s litigation and dispute resolution team is known for its entrepreneurial and collaborative approach and fastidious approach to delivering value to clients. The firm also boasts the leading contentious intellectual property team in the northern home countries lead by former city lawyer Rosie Patterson.
  2. Sparkle Capital Ltd was founded in 2014 as a third-party commercial litigation funding business. We are a privately-owned company belonging to the family of Fred Done, who is best known for founding BetFred and various other business interests, including real estate and insurance. We are administered by Acasta Europe Limited, an ATE insurance provider.”
  3. Acasta Europe Ltd provides administrative services to Acasta European Insurance Company Ltd, an insurer founded in 2006 and active in 12 European countries across 9 classes of insurance. We are an active provider of legal expenses insurance in the UK being one of the most trusted and innovative ATE insurance providers in both delegated authority Personal Injury and bespoke commercial, clinical negligence and insolvency cases. We have a core base of loyal partners that we work closely with to provide innovative solutions that enhance their businesses.
  4. Sybaris Legal & IP is a trading identity of Sartorex Group Ltd, which is an accredited Lloyds broker. Sybaris Legal & IP has been broking specialist legal and IP risks for over six years, and has a team of highly experienced brokers and IP specialists, who have been assisting micro-businesses to £100+M turnover companies with IP insurance, After the Event insurance and litigation funding
[1] Whereby funders are ordered to pay adverse costs, but only up to the level that they invested in the case.