Whilst the UK government has demonstrated support for the litigation finance industry through its legislation, state governments within the US continue to indicate a growing preference for tighter rules and increased oversight around the use of third-party funding.

An article in Bloomberg Law covers the progression of SB355 through the Louisiana legislature, as it received unanimous approval from the state Senate last week and will now be sent to Governor Jeff Landry to be signed into law. SB355 requires any foreign litigation funder involved in a civil action in Louisiana to disclose its details to the state’s attorney general (AG), and to provide the AG with a copy of the funding agreement. The bill would also prohibit funders from controlling the legal action in any way and also prohibits them from being ‘assigned rights in a civil action for which the litigation funder has provided funding’.

State Senator Jeremy Stine, the legislator who introduced SB355, said that the bill will ensure that “Hostile foreign nations and sovereign wealth funds associated with hostile governments will no longer interfere in our justice system.” 

Bloomberg’s reporting notes that whilst Gov. Landry has not publicly stated whether he will sign SB355, a similar bill was vetoed by his predecessor John Bel Edwards when it was sent to the governor’s desk last year.As LFJ reported last month, SB355 is one of two pieces of draft legislation concerning third-party funding in Louisiana, with HB336 introducing additional disclosure requirements for funders involved in civil actions.

As LFJ reported in March, attempts made by Burford Capital, and its subsidiary Carina Ventures, to replace Sysco as the plaintiff in its antitrust lawsuits had achieved some success, with an Illinois court ruling in favour of their Joint Motions for Substitution of Plaintiff. However, the parties have now faced another setback as a Minnesota court has affirmed a prior ruling from a magistrate judge that denied their request.

Reporting from Reuters provides an update on the Burford-Sysco story, as a judge in the US District Court for the District of Minnesota ruled that Sysco should remain as the plaintiff in the antitrust lawsuits that Burford Capital funded. District Judge John R. Tunheim concurred with the February ruling by U.S. Magistrate Judge John Docherty, saying that there was no evidence to show that the “decision to deny the Joint Motions for Substitution of Plaintiff was clearly erroneous, especially considering the unique facts of this case.” 

Judge Tunheim’s ruling follows on from Judge Docherty’s February ruling, which found that Burford could not be named as the plaintiff in the antitrust lawsuits, as it did not have an interest in the case beyond its financial investment in the litigation. In the ruling, Judge Tunheim rejected arguments brought by Burford and Sysco that the Magistrate Judge had erred in his judgement, both on the grounds that it contravened Federal Rule of Civil Procedure 25(c) and that public policies cited by Judge Docherty actually favoured the motion for substitution.

Judge Tunheim went on to say that “Sysco and Burford’s conduct is precisely the kind of conduct of which courts are wary”, and that their motion for substitution of plaintiff “directly resulted from their attempt to resolve the dispute over whether Sysco or Burford should control this litigation.” According to Reuters, Burford is now reviewing Judge Tunheim’s decision, whilst Sysco declined to provide a comment.Judge Tunheim’s full ruling can be read here.

There have been few funded disputes that have reached the worldwide footprint of the Malaysia Sulu case, with arbitration and enforcement proceedings, criminal charges, and a significant geo-political fallout all taking place across Spain, Malaysia, France, Luxembourg, and the Netherlands. In a dispute that has now been ongoing since 2017, we do not appear to be approaching the finish line in the back-and-forth conflict between the core parties.

Reporting by Bloomberg Law covers the latest development in the ongoing saga of the Sulu dispute as Petronas Azerbaijan, an energy company owned by the Malaysian state, is now accusing Therium Capital Management of impropriety in its funding of the Sulu heirs’ case. The company has applied to the United States District Court, Southern District of New York, for an order to “conduct discovery for use in foreign proceedings” and to serve Therium with subpoenas for documents and communications that relate to the funder’s attempts to seize Petronas’ assets in Luxembourg.

Petronas’ Application for Order has its basis in the $14.9 arbitration award issued by Spanish arbitrator Gonzalo Stampa, who was later found guilty of contempt of court for improperly filing enforcement actions and ignoring orders from the Madrid High Court of Justice. Petronas said that they intended to “seek disclosure from various entities acting as custodians of records that could be relevant to its proposed civil and criminal actions against Mr. Stampa, the Funder, the Sulu Claimants, and the Sulu Claimants’ attorneys.”

Explaining the need for the disclosure of these materials, Petronas’ application stated that they “reasonably believe that the Therium Group used one or more of them to facilitate payments to Mr. Stampa”. The application goes on to say that the funder, arbitrator, the claimants and their attorneys, “collectively and/or individually knowingly and intentionally supported Mr. Stampa’s unlawful actions.” Petronas’ explained that this discovery “is for use in contemplated proceedings before a foreign tribunal”, with Spain and Luxembourg mentioned as two jurisdictions where Petronas is considering bringing claims against the aforementioned parties.The full Application for Order can be read here.

As LFJ recently reported, the surprise announcement of the UK general election being held on 4 July has had unforeseen consequences for the litigation finance industry, with the government’s efforts to reverse the effects of the Supreme Court’s PACCAR decision appearing to have stalled.

An article in City A.M. covers the reaction of law firms and litigation funders to the news that the Prime Minister’s election announcement would mean that the Litigation Funding Agreements (Enforceability) Bill will not move forward at present. 

The collective feeling among industry professionals appears to show widespread dissatisfaction following the encouraging progress that the bill had already made, with Martyn Day, co-president of the Collective Redress Lawyers Association describing the development as “disappointing news”. In particular, Day highlighted that the election had undermined the work that had gone into the bill and the momentum it had gained, saying that the certainty the bill provided to funders “is now lost for at least some months while the political future of the country is decided”.

Mohsin Patel, co-founder and director at Factor Risk Management, offered substantive commentary on the issue and called this roadblock in the bill’s progress “frustrating for many, particularly given the relatively swift manner in which the government had sought to rectify its position on litigation funding.” However, Patel remained optimistic that legislation to solve this issue would still be passed even if there is a change in government following the election, highlighting the “non-partisan nature of the bill, and the groundswell in public opinion in support of the funding industry following the Post Office scandal”.

Litigation Capital Management’s CEO, Patrick Moloney appeared to share this viewpoint and suggested that “if there is a change of government one might have thought a Labour led government would be equally focused on access to justice thus allowing the passing of the Bill.”

Julian Chamberlayne, partner at Stewarts, explained that on a procedural level this is the end of the road for the current version of the draft legislation, due to the fact that “A Bill cannot be carried over from one Parliament to the next.” Chamberlayne went on to say that “whether it can be introduced in the same form, and whether it will be in the Lords or House of Commons, will depend on who forms the next Government.”

The use of third-party funding in patent infringement lawsuits has not dominated the headlines in 2024 when compared to previous years, with debates over the disclosure of funding agreements waning amid various instances of state legislatures introducing new rules. However, a high profile patent infringement claim brought against Samsung has come to an end, after the court found that the claimant had improperly obtained and shared confidential information with their lawyers and funder.

An article in ICLG covers a significant development in Staton Techiya and Synergy IP v Samsung Electronics where District Judge Rodney Gilstrap has dismissed the case against Samsung and described the claimant’s behaviour as “dishonest, unfair, and repugnant to the rule of law”. Judge Gilstrap’s ruling found that the claimant, Ahn Seung-ho, had obtained confidential information from Samsung and then shared it with other parties for their own gain in the lawsuit.

The court’s judgement explained that Ahn and Cho Sungil, a patent attorney formerly employed by Samsung, had shared internal status reports with Techiya’s patent lawyers and with the claimant’s funder, PurpleVine IP. In his ruling, Judge Gilstrap stated that the misappropriation and dissemination of these materials was particularly egregious, as they “were critical documents that could determine the outcome of the litigation because they contained Samsung’s strategy regarding the Techiya litigation”. 

Furthermore, the court highlighted that there had been evidence of more wrongdoing by Ahn and his associates, including evidence of perjury, attempts to destroy evidence, and violations of discovery rules. Judge Gilstrap concluded that the “evidence presented by the parties at the bench trial demonstrates subversion of our adversarial system of litigation and an invasion of the attorney-client privilege”. As a result, the court ordered that the conduct exhibited by Ahn, and other individuals working with him, be reported to ethics committees in both California and New York.

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.”