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Commercial People Moves

ALFA Welcomes Aequitas Litigation Funding as Newest Member

In an announcement posted on LinkedIn, The Association of Litigation Funders of Australia (ALFA) welcomed Aequitas Litigation Funding as its newest member.  The Sydney-based litigation funder is backed by Axiis Capital Pty Ltd, with the company being ‘founded on the principle of fairness to all in our legal system and is dedicated to providing access to justice.’ According to Aequitas’ website, the funder is open to providing ‘financing for legal costs, solicitor’s fees, and working capital’, with a focus on class actions.
Commercial Deals

Italian Funder LexCapital Looks to Engage with Swiss Legal Market

For those funders who are newer entrants to the litigation finance market, their focus may initially be limited to domestic proceedings within their native jurisdiction. However, as these funders look to grow, it is often a natural next step to look outside their own borders, and engage with cases in other jurisdictions that have a connection to their home country. An article in Corriere Del Ticino highlights the activities of Italian litigation funder LexCapital, speaking with the company’s COO, Giuseppe Farchione, about the funder’s work in Italy and its recent expansion to engage with legal matters taking place in Switzerland.  Farchione discussed the company’s proprietary algorithm, ‘LexCapital Litigation Assessment’, which allows the funder to analyse the potential outcome and proceeds from a case, utilising a database which includes over 1.2 million civil matters in the Italian courts. The database contains a variety of statistical information that the algorithm can draw upon, including the duration of these cases, the subject and forum of the proceedings, and the division of these cases based on whether they were accepted or rejected. Farchione explained that the company hopes to begin incorporating data from international arbitration proceedings and cases in other jurisdictions. Farchione went on to discuss LexCapital’s nascent activities in the Swiss legal market, having engaged in its first case in Ticino, an Italian-speaking region of southern Switzerland, working with local lawyer Marco Compagnino. Farchione said that LexCapital would be open to working with other law firms in Switzerland, noting that the costs involved in Swiss cases are high but can lead to substantial returns for those proceedings that reach successful conclusions. He went on to say that LexCapital’s primary interest in Swiss litigation funding is in those cases which have a connection to Italy, such as those matters that involve an Italian company operating in Switzerland or a Swiss company that is involved in a dispute with an Italian counterpart.
Announcements Case Developments Commercial

LitFin Funded Case to Recover Khatib Family’s Stolen Art Leads to Raids in Paris and Frankfurt

Many examples of funded litigation involve high profile companies or sovereign states, with alleged scandals and injustices that can quickly dominate headlines. However, an ongoing European legal action may stand out above the rest, with a story so eventful that it sounds as if it could have been lifted from a Hollywood script, as a litigation funder is supporting a family’s efforts to recover stolen paintings worth hundreds of millions of euros. A press release from the Khatib family provided an update on its legal battle to recover valuable paintings that were stolen from their collection, as French bailiffs and police conducted a raid on a storage facility in Paris. The raid was authorised by court orders issued in Paris, which follows the same pattern as raids conducted by German authorities following court orders issued in Frankfurt. The Paris raid reportedly recovered a ‘large number of paintings belonging to a collection of works of Russian Avantgarde stolen from the Khatib family.’ These raids are the result of a legal case that began following the December 2019 theft of around 1,800 paintings, valued in the hundreds of millions of euros, from Wiesbaden in Germany. Since the theft, the Khatib family have been pursuing legal action to recover the stolen artwork, with the litigation funded by Prague-based funder, LitFin, and led by Dentons’ offices in Frankfurt and Paris. The press release included a statement from the spokesperson for the Khatib family, who said: "With the help of Dentons and LitFin, we will follow the perpetrators around the world. We will continue to recover our property and encourage anyone who considers buying works from the Russian Avantgarde to diligently check its provenance and make sure it is not a stolen piece belonging to our family".
Case Developments Commercial

High Court Denies ‘Dieselgate’ Defendants’ Request to Order Disclosure of Claimants’ Funding Agreement

As the UK litigation finance industry continues to stay in the public spotlight, discussions continue around what any future regulation might entail and whether it would increase requirements around the transparency or disclosure of funding agreements. For now, a recent judgement from the High Court has ruled in favour of the claimants in a high-profile group claim, by denying a request for the disclosure of any funding agreements. An article in The Law Society Gazette highlights a ruling in the High Court of Justice of England and Wales, Kings Bench Division, that dealt with a request for the disclosure of any funding agreements in the ‘Dieselgate’ group claim. The judgement dealt with two sets of applications, with the second being a funding disclosure application from the defendants that sought to compel the claimants and their lawyers, Pogust Goodhead, to provide ‘information as to their funding position’.  The request was sought by the defendants as they stated that they ‘are considering making an application under CPR 25.14(2)(b) for security for costs against the Funders.’ In their judgement, Mrs Justice Cockerill and Mr Justice Constable, declined ‘to order disclosure of Pogust Goodhead’s funding agreement, but instead consider that it will be appropriate to revisit the issue relatively shortly, to the extent it is pursued.’ They wrote that this could be done after legal budgets were fixed and once the claimants have had the opportunity to secure ATE insurance, meaning that ‘the question of security against Gramercy would be rendered redundant.’ The full judgement can be read here.
Commercial

Lawdragon Publishes 100 Global Leaders in Litigation Finance for 2024

Lawdragon has released its 100 Global Leaders in Litigation Finance list for 2024, with the fifth edition of its annual guide ‘dedicated to the leaders of this fascinating – and necessary – avenue of the legal profession.’ The list includes 164 senior executives from all over the glove, representing the entire spectrum of those companies involved in litigation finance, including funders, law firms, insurers, investors, and advisors. Of those companies with leaders included on the list, Burford Capital saw the highest number of executives recognised with 17, with Omni Bridgeway close behind at 12 individuals, and Harbour which had eight of its team listed.  Looking at the breakdown by jurisdiction across the 165 litigation finance leaders recognised, the US was the most represented country with 73 individuals listed. The UK came in a close second with 55 leaders recognised, and Australia came behind it with 17 executives profiled. As part of it’s 2024 litigation finance leaders list, Lawdragon has also identified those individuals who are listed in its Hall of Fame, which recognises ‘members and other outstanding lawyers who have made a remarkable contribution to the profession.’ Within litigation finance, three individuals are included in the Hall of Fame:
  • Louis Young, co-founder & CEO, Augusta Ventures
  • Stuart Grant, co-founder & managing director, Bench Walk Advisors
  • Andy Lundberg, managing director, Burford Capital
The full list of individuals recognised in 100 Global Leaders in Litigation Finance list can be found here.
Commercial Regulatory Issues

Russian Billionaires Evading Sanctions by Funding Cases in UK & US

One of the latest critiques of the litigation finance industry is that it represents a potential threat to US national security, due to the possibility of foreign governments and entities by funding lawsuits that target American companies and strategic national interests. Whilst there has been scant evidence of this being a tangible issue, a new investigation has revealed that Russian billionaires have been avoiding international sanctions by financing lawsuits in the West. The detailed investigation by Bloomberg Law focuses on the activities of the investment company A1, its parent corporation Alfa Group, and A1’s directors. Following Russia’s invasion of Ukraine in February 2022, Alfa Group has been sanctioned by both the United States and United Kingdom, as were A1’s billionaire directors Petr Aven, Mikhail Fridman, German Khan, and Alexey Kuzmichev. The US also individually sanctioned A1 in September 2023. Bloomberg’s investigation reveals that A1 has financed and been directly involved in the proceedings of bankruptcy lawsuits in both New York and London, having spent approximately $20 million across these cases. The investigation highlights that A1’s sanctioned directors attempted to avoid the reach of their individual sanctions by selling the company to another of its directors, Alexander Fain, for the miniscule sum of $900. In a witness statement for one of the bankruptcy cases, Fain explained that his directors had sold the company because “it became obvious that A1 LLC would no longer be able to operate normally and that there was a risk of default on its obligations to fund the litigation.” Commenting on the investigation, J. Scott Maberry, partner at Sheppard Mullin, described A1’s funding activities as “a big development in that sense because it kind of puts the US judicial system on par with the New York Stock Exchange and the US dollar as things that we need to start thinking carefully about how to deny access to.” Matt Webb, senior vice president at the Chamber of Commerce’s Institute for Legal Reform, argued that “A1’s actions are an example of the problems that arise when foreign entities can finance litigation.” The full details of A1’s involvement in these cases, as well as the roles played by sanctioned individuals can be read in Bloomberg Law’s article.
Commercial Deals

Westfleet Publishes 2023 Litigation Finance Market Report

Westfleet Advisors has published its fifth annual Litigation Finance Market Report, providing a data-driven overview of the commercial funding industry in the United States from 1 July 2022 to 30 June 2023.  Westfleet summarises its findings as ‘indicative of an industry in a state of flux, with some notable players exiting the industry, numerous professionals making lateral moves, and capital commitments to new deals contracting by nearly 14%.’ With regard to the decreasing volume of new capital commitments, Westfleet attributes this trend to the difficult global economic conditions that are affecting all industries, rather than a decline in demand for litigation funding. Despite this contraction on new capital, Westfleet still found that ‘many funders thrived both in terms of new capital raised, capital committed to new deals, growth in their headcount, and profitability.’ Westfleet’s report suggests that the data from 2023 indicates that the market is still favourable for those established funders ‘with strong track records and a proven ability to consistently attract new capital.’ Key highlights from the 2023 report include:
  • $15.2B in assets under management for 2023, representing a small increase from $15.1B in 2022
  • $2.7B in new commitments to deals in 2023, down from £3.2B in 2022
  • The average deal size declined from $8.6M in 2022 to $7.8M in 2023
  • This was driven by a reduction in the average size of portfolio deals from $10.5M in 2022 to $9.9M in 2023
  • In contrast the average size of single-matter transactions increased from $4.3M in 2022 to $4.8M in 2023
  • The share of new capital dedicated to claim monetization reached 21% in 2023, continuing the upward trend from 14% in 2022 and 8% in 2021
To read the full report from Westfleet Advisors, click here.
Commercial Regulatory Issues

Nick Rowles-Davies Shares Thoughts on a Post-PACCAR World

A new piece of analysis by Nick Rowles-Davies, founder and CEO of Lexolent, sheds light on the current state of the litigation funding market post-PACCAR.
As is customary of Rowles-Davies, his analysis pulls no punches. Writing on LinkedIn, he opines that industry stakeholders have varying perspectives on the Litigation Funding Agreements Bill.  Despite the Supreme Court's judgement and the industry's claims of adaptability and compliance, not all funders operate transparently, according to Rowles-Davies. The speed of the proposed new legislation and the lobbying efforts to expedite its implementation have also raised concerns.
The litigation funding industry is diverse, with different funders operating in different ways. There is a growing call for regulation, particularly as 90% of the London Solicitors Litigation Association believe it's time for the industry to be regulated. The PACCAR decision has created uncertainty and led to attempts to reopen concluded deals. As a result, a thorough review by the Civil Justice Council is needed.
The proposed 'Litigation Funding Agreements (Enforceability) Bill' aims to restore the pre-PACCAR regime, allowing individuals and small businesses to fund large claims against corporations. While many eyebrows have certainly been raised, the litigation funding industry isn't going anywhere any time soon, even if future regulation is on the horizon.
Community Spotlights
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Member Spotlight: Michael Perich

Michael Perich is a Senior Vice President and Head of Litigation Insurance in the Transaction Liability Practice at Lockton.  Prior to joining Lockton, Michael spent much of his career working at the world’s largest litigation finance company, Burford Capital, as well as a Chambers-ranked litigation finance broker, Westfleet Advisors. In these roles, he helped a wide range of clients—including multinational corporations and AmLaw100 firms—use innovative litigation finance structure to achieve their financial objectives.

Michael is also a former litigator, having represented clients on contingency fee, alternative fee, and hourly fee arrangements.  He now uses those skillsets to help his clients structure bespoke insurance policies designed to help his clients achieve their financial objectives.

Michael has been recognized by LawDragon as one of the top 100 Global Leaders in litigation finance and is listed in the IAM Strategy 300, a guide listing individuals who innovatively create and action strategies which realize and amplify the worth of IP portfolios.

Company Name and Description:   Lockton is the largest privately held global insurance brokerage that provides outstanding risk mitigation and claims management through the application of modern insurance strategies. With expertise in risk management, property and casualty, employee benefits/people solutions, professional and private risk, we help our clients protect what matters to them most: people, property, and their bottom line.

Company Website: https://global.lockton.com/us/en

Headquarters:  Kansas City

Area of Focus:  Litigation Funding and Contingent Liability Insurance products

Member Quote: Having ventured into the field of litigation finance almost ten years ago, I remain repeatedly astounded and impressed by the growth and increased sophistication the market has exhibited in recent years. The progress has been truly remarkable, and I feel grateful to be involved in this dynamic industry.