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Funding of Investor-State Disputes Attracts Criticism

By Harry Moran and 4 others |

Whilst litigation funders can provide the financial resources for individuals and companies to gain access to justice, the benefits that this service provides do not shield the industry from criticism; especially where lawsuits can be portrayed as putting business interests over social or environmental progress.

An in-depth article in The Guardian covers the growing trend of third-party funding supporting investor-state disputes focused on environmental regulations. In these cases funders are often backing companies who have seen their profits harmed by ‘green laws’, with a large potential upside for the funder due to the sizeable awards in play and the diminished risk of counterclaims being brought by governments.

Analysing the publicly available data from over 1,400 of these cases brought against nation states, The Guardian’s investigation details more than $120 billion in awards through claims in investor-state dispute settlement (ISDS) courts. As the article notes, this figure may be a severe underestimation of the true total, as only 34% of cases where a settlement or award was made had disclosed the financial value of the award.  Similarly, whilst the involvement of third-party funders is not always disclosed, The Guardian found at least 75 ISDS cases where such a party was involved, with more than half of those backed by investors in the UK, US or Canada.

This trend has been the target of some criticism from lawyers and arbitrators involved in these disputes, with Muthucumaraswamy Sornarajah noting that it is often “developing countries” that are the targets of claims backed by investors who see the ISDS system as “big business.” Lisa Sachs, director of the Columbia Center on Sustainable Investment, also argued that the risk mitigation offered by having a funder cover the legal costs is effectively “removing a key deterrent to bringing weak or speculative claims.”

In response to its investigation, Burford Capital was the only funder who agreed to speak with The Guardian. The funder rebuffed the idea of supporting frivolous claims, pointing out that “legal finance provides a vetting function and weeds out meritless cases: we only get paid when our clients win their cases”. Burford’s CEO, Christopher Bogart, questioned whether these kinds of cases were unique, saying that he does not think “ISDS is any more high potential or lucrative than lots of other areas of litigation.”

Nera Capital Reaches $100m Milestone for Investor Returns

By Harry Moran and 4 others |

For any litigation funder, success is measured in favourable outcomes for the cases they support, as well as in their ability to deliver on the returns for investors who provide the foundational capital needed for these businesses.

An article on Insider Media highlights a new landmark for Nera Capital, as the litigation funder announces that it has now exceeded $100 million in repayments to its investors. This latest milestone comes off the back of a strong run of case investments, with the funder spotlighting its backing of a major hernia mesh claim in the United States where Nera supported claimants who suffered complications from defective mesh implants.

In addition to the successful mesh claim, Nera has also built a track record of investing in commercial cartel cases and personal injury claims, with two European anti-trust claims that have settlement values of over $20 billion. Building upon these investments, Nera is anticipating the launch of a new $75 million fund that will support the funder’s ambitious growth plans.

Aisling Byrne, director and co-founder of Nera Capital, said that “surpassing $100 million in repayments is a testament to the firm’s disciplined investment strategy and commitment to delivering on promises.” Speaking to the philosophy behind the company’s investment strategy, Byrne stated: “We are not just funding litigation; we are helping people achieve justice while ensuring our investors benefit from well-structured, high-value opportunities.”

Read more about Nera Capital in LFJ’s Community Spotlight with Aisling Byrne.

PIB Group expands its MGA division acquiring market-leading specialist litigation insurance MGA Litica

By Harry Moran and 4 others |

PIB Group Ltd (‘PIB’ or ‘the Group’), the specialist insurance intermediary group, has acquired market-leading litigation insurance provider Litica. 

Managing General Agent (MGA) Litica specialises in a range of insurance-backed solutions for private and corporate clients involved in litigation or arbitration.

Litica was founded in London in 2019 by co-founding directors Stephen Bolster and Steve Ruffle. It has since expanded its operations to Australia, the United States and Germany. The company has a large panel of insurer backers and is a Lloyd’s coverholder. This access to significant insurance capacity enables them to underwrite a range of complex and high value litigation types. 

Charles Burgess, CEO of Underwriting and Schemes at PIB Group, said: “Having Litica join PIB Group marks an exciting milestone, enabling our MGA division to enter the next phase of growth. Liticia’s operations in Australia and the United States provide our MGA business with a strong foothold in these markets, bringing a wealth of opportunity to the wider Group. We’re excited to have Stephen, Steve and their team join us - their experience will be invaluable.”

Stephen Bolster, co-founding director at Litica, said: “At Litica we have spent the last six years establishing ourselves as the UK's leading provider of specialist litigation insurance, and we are beginning to replicate that success across international markets. Joining an entrepreneurial and ambitious Group provides us with the capabilities we need to continue growing, while still providing our clients with the professional and diligent services we are known for.”

Steve Ruffle, co-founding director at Litica, said: “Being part of an ambitious, bold and fast-paced international Group will ensure we are positioned well to make the most of the opportunities the market continues to present. We are looking forward to leveraging PIB Group’s wide range of products, solutions and expertise in insurance and risk management.”

ILFA and ALF publish summary response to Civil Justice Council review

By Harry Moran and 4 others |

ILFA and the Association of Litigation Funders of England and Wales have submitted a joint response to the Civil Justice Council’s consultation on litigation funding.

Legal experts, representative bodies and law firms have also made their submissions public. While there are - of course - a range of views about the sector and possible reforms, there are two common threads: 

  • Firstly, all contributors are in unanimous agreement that litigation funding is a critical tool in the UK for enabling access to justice, from Sir Alan Bates and the subpostmasters in the Post Office scandal to equal pay for supermarket workers.
  • Secondly, the uncertainty facing the sector because of the 2023 PACCAR judgment is jeapordising that access to justice and must be urgently reversed. In their submission to the CJC, leading Oxford University civil justice academics said “there is a compelling and urgent need to reverse the effects”. The City of London Law Society said “this is an ongoing unsatisfactory state of affairs”. The Class Representatives Network said the current state of uncertainty is “untenable”. The Forum of Complex Injury Solicitors wants to “reinstate the position of prePACCAR”. It goes on. 

ILFA and ALF joint response 

ILFA and ALF’s submission is based on the views of its members who are among the largest and most experienced funders in England and Wales. 

In summary, the views of ILFA and ALF are as follows: 

  1. Litigation funding plays a critical role in enabling access to justice. For many claimants, including consumers and SMEs, it provides the only route to redress. For others, litigation funding allows businesses to use their capital to grow their core business and create jobs instead of tying up budgets for litigation costs.
  2. Litigation funding has worked well in England and Wales. As well as providing access to justice, litigation funding promotes equality of arms between parties. Funding also brings other benefits such as promoting the public interest through exposing corporate wrongdoing, driving good litigation behaviour and supporting the development of English jurisprudence. Commonly stated concerns about litigation funding supporting frivolous or vexatious claims are not supported by evidence; in fact, the evidence is that funders are highly selective in the cases they fund, providing a reality check which benefits parties beyond the funded client and helping direct resources towards meritorious claims.
  3. As well as enabling access to justice, litigation funding has developed into a crucial pillar supporting the UK’s leading global role as a legal and financial centre. To ensure this continues, urgent legislation is needed to address the uncertainty caused by the PACCAR judgment.
  4. In the absence of evidence of harm that needs to be addressed and given the detriment that would be caused by additional regulatory burdens, the current self-regulatory approach strikes the right balance. It will continue to evolve by, for example, potential updates to the ALF Code of Conduct in consultation with the CJC.
  5. Funders’ returns should not be capped. The existing, competitive funding market is best placed to assess and price the many risks involved and the practical effect of an (inflexible) cap would be to make fewer meritorious cases fundable and have a negative effect on access to justice.
  6. Litigation funding helps to control costs (via funder scrutiny and oversight of budgets) but costs are subject to many factors including the defendant’s conduct of the case. Arbitrators have discretion to order that the cost of litigation funding should be recoverable as a cost in proceedings. The courts should have the same discretion.
  7. Recoverability of adverse costs and security for costs applications increase the costs of litigation, costs that are ultimately borne by successful claimants. These costs restrict access to justice and diminish claimants’ net recovery. Permitting flexibility in how adverse cost risk is addressed is beneficial for access to justice.
  8. Funders have less control over proceedings than other third parties that provide economic support for litigation. Concerns relating to control by litigation funders are unfounded.
  9. Beyond representative proceedings in the CAT, there is no need to incur the cost, delay and uncertainty of having the court approve settlements of funded proceedings.
  10. Claimants in funded cases are always represented by lawyers, who owe duties to their client alone, which provides protection for claimants when entering a litigation funding arrangement and throughout their litigation. Measures to address conflicts are adequately reflected in best practices and professional regulation.

About the International Legal Finance Association

The International Legal Finance Association (ILFA) represents the global commercial legal finance community, and its mission is to engage, educate and influence legislative, regulatory and judicial landscapes as the voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA has local chapter representation around the world. 

For more information, visit www.ilfa.com and find us on LinkedIn and X @ILFA_Official.

“Show Me the Money” – Diverse Teams are a Revenue Driver and Not Just the Right Thing to Do

By Molly Pease and 4 others |

The following article was contributed by Kirstine Rogers, Legal Director at Certum Group, and Molly Pease, Managing Director at Curiam Capital.

Both are also on the steering committee for Women of Litigation Finance (WOLF). WOLF is an organization intended to give women in and around the litigation finance field a space for support, mentorship and connections. WOLF holds quarterly zoom meetings focused on specific relevant topics and hosts various networking events throughout the year.  Please find out more through our LinkedIn page or by contacting any member of the steering committee. WOLF welcomes the support and participation of all industry members. 

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As our country continues to debate the pros and cons of diversity, equity, and inclusion programs in the government and private sectors, the litigation finance industry would be well served by remembering that diverse teams make companies better.  Indeed, several studies have explored the link between diversity initiatives and increased profitability in organizations and found that a more diverse workforce can positively impact business performance, innovation, and profitability.

There are many reasons for this.  First, representation matters.  Whether it is getting a phone call for a potential new investment opportunity from a female general counsel who wants to see diversity in the team she might be working with or being able to hire top talent who want to work with a diverse team, better opportunities present themselves to litigation finance market participants when those firms present a diverse and capable team.  Second, a diverse team allows for more diverse networking opportunities, which encourages investment opportunities from a wide variety of sources.  And finally, and potentially most importantly, diversity of backgrounds, skills, and expertise allows for a risk assessment in underwriting investment opportunities that is less likely to miss potential risks or pitfalls that a more narrow-minded team might not see.  Better underwriting decisions result in better investments, which results in more revenue for the company.

Diversity need not be a mandate for it to be an intentional and profitable choice.

“If you build it, they will come.” 

Does your company reflect the world of your counterparty or their counsel?  

Research has shown that consumers are more likely to buy from or engage with businesses that appear to understand their specific needs, often through shared demographic traits like race, gender, or age.  Businesses that reflect their target consumers' characteristics and values are more likely to foster trust and client loyalty.   The same is true in commercial transactions with counterparties and their counsel.  In entering into a funding agreement, you are forming a potentially long-term partnership.  Communication and trust are essential to the success of that relationship.  You only maximize the likelihood of that success with the diversity of the decision makers on your team.   

Companies with inclusive environments are also more likely to attract top talent and retain employees.  Why wouldn’t a firm cast the widest net possible?

“Nobody puts baby in a corner.” 

Having a diverse workforce also increases opportunities for connection and visibility in the market.  It provides a vehicle for commonality – a shared experience, history, or perspective.  This is because similar backgrounds make it easier to communicate, share common goals, and find mutual interests, which in turn can lead to individual career opportunities and company-wide growth.

Diversity-based industry groups like the Women of Litigation Finance (WOLF) facilitate interaction between market peers, provide leadership and speaking opportunities, and lead to collaboration between companies seeking to work together.  Bar associations also frequently have smaller diversity-based committees that provide a smaller community from which to network and form connections.  Bigger fish. Smaller pond.  Stronger bond.  And these genuine connections formed on shared experiences can lead to exponential networking growth.  A familiar face at one industry event only leads to more familiar faces at the next one.  

This is true for thought leadership too.  If every member of a panel of speakers looks the same and does not reflect the different faces in the audience, there are people in that audience your panel is not reaching.  If every article is written from the same perspective, there are readers who are not listening.  

“You’re gonna need a bigger boat.” 

At its core, the litigation finance industry assesses risk.  The better a firm can do that – whether it is a funder, a broker, or an insurer – the more profitable it will be.  Risk assessment involves seeing things that others might miss and making sure no stone gets left unturned.  

There are many components of a due diligence risk assessment, including reviewing the strength of the legal merits of the claims, assessing the credibility and testifying potential of key witnesses, and predicting what arguments or defenses will be presented by opposing counsel.  A diligence team with diverse backgrounds, experiences, and perspectives will be better at identifying risks and assessing the value of potential claims.  For example, a funder will often speak extensively with key witnesses to assess how they would present testimony at trial and whether a jury would find that testimony credible and persuasive.  If a trial team were conducting a mock jury to test these points, it would assemble a diverse panel of men and women from different ages and backgrounds to get various views on the testimony.  Similarly, a funder trying to make its own internal assessment will be better served by a diverse team with a variety of perspectives.  If everyone in the room has the same basic background, characteristics, and experiences, they are likely to see things similarly and thus miss key factors that could be important in determining the impact of the testimony.  And this is only one aspect of a risk assessment.  Each step of the diligence and risk assessment process would benefit from analysis by a diverse team.  The biggest concern in the litigation finance industry is that a funder, broker, or insurer misses a significant risk in their assessment of a legal asset and finds themselves funding an investment that has a low chance of success in hindsight.  A diverse team will protect against this outcome and therefore drive revenue for industry participants.

"You talkin' to me?" 

At the end of the day, the value of meaningfully implemented diversity initiatives is clear.  Having the benefit of differing experiences and perspectives makes companies better.  And, as to litigation finance in particular, diversity without question strengthens the return on investments. 

But just having a diverse workforce does not necessarily result in a better company or improved profitability.  The company needs to foster an inclusive environment where diverse perspectives are valued and integrated into decision-making processes and where those selected as thought leaders demonstrate how diversity is implemented, prioritized, and integrated into company culture.

In honor of International Women’s Day, make this a call to action – what can you do at your company to ensure you have the broadest perspectives represented?  Ask yourself, does the panel you are sponsoring completely reflect your target client base?  Does your leadership team include those with different perspectives?  Does your company provide women with networking and mentoring opportunities? 

After all, diversity presents an opportunity for someone at your company to collaborate with other market participants to write an article just like this.  

About the authors:

Molly Pease is Managing Director and Chief Compliance Officer at Curiam Capital, and Kirstine Rogers is Legal Director at Certum Group. They both serve on the Steering Committee for WOLF, the Women of Litigation Finance.  They can be reached at molly.pease@curiam.com and krogers@certumgroup.com

Community Spotlights

Community Spotlight: Caroline Taylor, Founding Partner, Ignitis

By John Freund and 4 others |

Caroline Taylor is a Founding Partner of Ignitis, an early-stage litigation funder focused on developing cases to assess viability and prepare them for full litigation. With over a decade of litigation experience, Caroline brings a unique blend of funding expertise and strategic legal insight, leveraging an extensive professional network to support cases from inception to resolution. Ignitis partners with claimants, foundations, corporate clients, lawyers, experts, funders, and other legal professionals to ensure that each case has what it needs to maximize its chance of success.

Before founding Ignitis, Caroline was a partner at a leading international collective redress firm. She played a key role in expanding the firm’s European operations, including opening offices across several countries, assembling and leading teams, and driving case development and management. Her work in securing litigation funding helped support the development of over 30 cases across Europe and the UK. Caroline’s ability to seamlessly integrate operations between U.S. and European offices proved instrumental in advancing initiatives on both sides of the Atlantic. Her deep understanding of collective redress procedures in multiple European jurisdictions, combined with her experience taking cases from concept to resolution, makes her well-suited for her role at Ignitis.

During her time in private practice, Caroline specialized in class actions, complex litigation, and personal injury cases, gaining firsthand experience of the impact corporate misconduct can have on individuals. This exposure sharpened her litigation skills and solidified her commitment to justice. Caroline also served in several leadership roles, including as a Board Member of the American Association for Justice, Chair of its Railroad Section, and as a Board and Executive Committee Member of the Tennessee Trial Lawyers Association. She has received numerous accolades, including recognition by The National Trial Lawyers, Best Lawyers in America, and Super Lawyers. Caroline is a frequent speaker at international legal conferences.

She is admitted to practice in Tennessee, Florida, and Kentucky state courts, as well as in numerous federal and appellate courts in the United States and England and Wales.

Company Name and Description: Ignitis AG is an early-stage funding company. Ignitis was founded to solve a critical challenge: parties often need initial capital to develop the case into something viable to attract larger litigation funders. Essentially, to secure funding, one must first invest capital. Drawing on decades of experience in litigation and institutional investment, we are uniquely positioned to provide the capital and expertise needed to kickstart cases and drive them toward resolution. We focus solely on early-stage funding, ensuring that quality cases get the financing they need to be successful while increasing access to justice.

Company Websitewww.ignitisag.com

Year Founded: 2024

Headquarters: Zug, Switzerland

Area of Focus: We focus specifically on initial case development and early-stage funding. We put our money in at initial, risky stages, to develop the case and prepare it for full funding and filing. We not only inject capital, but we also provide expertise and advice along the way to ensure that the case has the greatest opportunity for success.

Member Quote: "Too many meritorious cases never make it to court, not because they lack merit, but because the injured parties lack the financial resources or the know-how to move forward. At Ignitis, we are committed to improving access to justice by investing in cases that other funders might overlook and offering the expertise needed for thorough case development—ensuring more individuals have their day in court."

Administrators for VFS Legal Repay Millions to Creditors

By Harry Moran and 4 others |

For those litigation funders who achieve great success with their investments in meritorious claims, the financial returns can create the foundation for a long-term strategic growth. However, with the inherent risk at play in any legal funding enterprise, there will always be funders who do not survive in the market.

Reporting by The Law Society Gazette provides an update on the status of the collapsed litigation funder, VFS Legal, with administrators having reportedly been able to pay back millions of pounds to the company’s creditors by recovering loans taken out by law firms. 

In the last six months, administrators have reportedly been able to return £3.9m to VFS’ one secured creditor, resulting in a total of £22.2m in payments made to investor OBS. In addition to these sums paid to the creditor, administrators have also fully repaid £74,000 to preferential creditors. Finally, unsecured creditors who were owed a total of £9m have been given a final dividend of 5.34p on the pound.

Alvarez & Marsal Europe LLP, as the firm appointed to handle the administration of VFS, have reportedly accumulated £284,000 in time costs, with their final fees expected to exceed the starting estimate of £1.5 million.

As LFJ covered in August 2023 when VFS Legal had confirmed the appointment of administrators, the funder had reportedly provided £150 million in funding to support over 25,000 cases across the last eight years, with law firms including Slater and Gordon having previously received funding. However, by 30 June 2022, VFS reportedly owed £38.7 million in repayments within the following year, primarily comprised of a bank loan for £35.6 million.

The Challenges Facing the Funding Market for Investment Treaty Disputes

By Harry Moran and 4 others |

Although commercial disputes and class action claims tend to dominate the headlines around legal funding, the world of international arbitration remains a market that currently presents an equal balance of challenges and opportunities for those funders willing to take on the risk of these complex disputes.

In an interview shared by Erso Capital, investment manager Sarah Breckenridge speaks with Baiju Vasani, barrister and arbitrator at Twenty Essex Counsel, to discuss the current state of the funding market for investment treaty disputes. In the interview, Breckenridge raises the question of whether it has become more difficult to secure litigation funding for these investment treaty cases. 

Vasani explains that whilst in the past this was a stable market, this trend of a “hardened” funding market has emerged in recent years. He goes on to note that there has been a “tightening” on funding availability since the outbreak of Russia’s war with Ukraine, and that “geopolitical volatility has created uncertainty in the market.”  As a result of these factors, Vasani illustrates a situation where “funders are somewhat reticent to invest in cases in a certain region”, with the imposition of sanctions playing a role in this reticence.

Vasani also highlights an issue that is “systemic to the ICSID” as a reason for these difficulties in obtaining funding, that being the simple facts that “cases are taking too long, costing too much” and identifies “some fatigue in the funding market with that situation.” However, Vasani provides an optimistic outlook that we may be at the peak of this cycle of prolonged case durations and exorbitant costs, and expressed hope that the “tightening of the market” is temporary.

As a final note of hope for the funding market, Vasani argues that “there is never a tightening of the market for a fantastic case, so if you’ve got a great case there is money available for it.”

Chambers Releases Litigation Funding 2025 Practice Guide

By Harry Moran and 4 others |

As the legal funding market continues to expand its influence across the globe, with the practice seeing growth across a diverse array of markets, understanding the nuances at play in these different jurisdictions has never been more important.

Chambers and Partners has released its 2025 practice guide for litigation funding, providing a fresh look at the latest information on the legal and regulatory framework around legal funding. The guide’s global overview highlights the most prominent developments and challenges in the last year, noting that the rising demand for legal capital is being driven by emerging markets, whilst growing calls for regulation across the UK, USA and Europe have presented fresh obstacles for the industry to tackle.

The practice also delves into 11 key individual jurisdictions around the globe, offering more detailed information and analysis on the current rules and regulations in those countries. In addition to this outline of the rules in these jurisdictions, Chambers has included an update on the latest trends and developments in the following six jurisdictions: Germany, Italy, Spain, Turkey, UK and USA. In order to compile these useful insights on regional rules and trends, Chambers worked with the following legal professionals in each region:

  • Australia: Susanna Taylor, Lina Kolomoitseva, Helen Roins, Justin Ward (Litigation Capital Management)
  • Cayman Islands: Harriet Ter-Berg, Ellie Taylor (Appleby)
  • Germany: Ulrich Lohmann, Christian T. Stempfle, Stefan Heinrichshofen (Peters, Schönberger & Partner mbB)
  • India: Hiroo Advani, Justin M Bharucha, Sneha Jaisingh (Bharucha & Partners)
  • Italy: Giorgio Afferni, Lavinia Florimo (Delex Law Firm)
  • Japan: Kosuke Tsunashima, Shunsuke Domon, Shigeo Sato (Anderson Mori & Tomotsune)
  • Spain: Jesús Rodrigo Lavilla, Alipio Conde Herrero, Silvia Ochoa Pérez (PLA Litigation Funding)
  • Türkiye: Jonathan W Blythe, Gül Şengüler, Yasemin Akdeniz, Alp Göktuğ Kalmaz (Şengüler & Partners)
  • UAE: Ais Lidzhanova, Michael Neumann, Oliver Ciric (TA Advisory)
  • UK: Elena Rey, Tom McDonnell, Tracy Fisher (Brown Rudnick LLP)
  • USA: Charles Agee, Wendie Childress, Gretchen Lowe (Westfleet Advisors)

Chambers’ Litigation Funding 2025 practice guide can be read in full here