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Analyzing the Potential Impact of Florida’s Litigation Funding Bill

Florida is one of the latest US states to see the introduction of draft legislation focused on the regulation of litigation finance. Whilst the bill is currently stalled within the Florida legislature, it is important to consider what impact such a piece of legislation would have, if it is eventually signed into law in its current form. An insights piece from John J. Hanley, partner at Rimon Law, examines the current draft legislation making its way through the Florida legislature, which aims to place new guidelines and restrictions on the use of third-party litigation funding in the state. Hanley begins his analysis by noting that this bill has been the subject of intense lobbying, with 67 lobbyists from interest groups and industry associations contributing to the debate over the legislation. Looking at the core features of the Litigation Investment Safeguards and Transparency Act (LISTA), Hanley points out that the idea the bill is designed to protect consumers is misguided, as the focus of the legislation is directed towards commercial litigation finance arrangements.  Hanley also explains that whilst the bill prohibits various ways funders could control the litigation process, these are largely superfluous measures, given that every funding agreement that Rimon has reviewed already contains these provisions. Similarly, the legislation’s prohibition on funders paying commissions or referral fees is not expected to have a significant impact on the industry, because these commissions ‘are paid by the party receiving funding and not the funder.’ On the bill’s requirement that funders should not receive a larger portion of any damages or award than the plaintiffs themselves, Hanley states that ‘this is a good idea’ and highlights that many ‘reputable funders are already striving to achieve this.’ In contrast, Hanley says that the legislation’s ban on the assignment or securitization of funding agreements ‘is probably the worst feature of LISTA.’ He argues that if such a prohibition were enacted, it would ‘kill liquidity and make it difficult for funders to allocate capital which in turn will drive up pricing and further hurt small business in Florida seeking to fight deep pocketed defendants.’

Burford Capital Reports Record 2023 Results

Burford Capital Limited ("Burford"), the leading global finance and asset management firm focused on law, today announces its fourth quarter and full year 2023 results. In addition, Burford has made available an accompanying fourth quarter and full year 2023 results presentation, a shareholder letter and capital provision-direct and capital provision-indirect asset data tables on its website at http://investors.burfordcapital.com. Christopher Bogart, Chief Executive Officer of Burford Capital, commented: "Burford had an extraordinary year. Our earnings per share rose 19x to $2.74, driven by a tripling of consolidated total revenues to $1.1 billion in 2023 due to significant growth in capital provision income, with and without our YPF-related assets. We achieved a Burford-only net income margin of 63%. With the courts fully back in business, we had an active year and we anticipate further substantial levels of activity in 2024 and 2025. Increased portfolio velocity was reflected in record core legal finance realizations, cash receipts and realized gains, as well as sizeable unrealized gains arising from the portfolio moving forward. Our ROTE soared to 32% in 2023 from 2% in 2022, and we increased tangible book value by 34% to $9.85."

CAT Continues to Send Revised Funding Agreements to the Court of Appeal

As the UK government accelerates its efforts to implement new legislation to address the impact of the Supreme Court’s PACCAR ruling on litigation funding, the courts continue to deal with ongoing attempts to revise litigation funding agreements to comply with PACCAR. An article in Legal Futures provides an overview of activity in the CAT in 2024, which has granted permission for a number of revised litigation funding agreements (LFAs) to go before the Court of Appeal in the wake of the Supreme Court’s PACCAR ruling. The CAT’s latest decision is the third time this year that the CAT has sent funding agreements to the Court of Appeal, after the terms of the funder’s remuneration in each agreement had been reworked to comply with the PACCAR judgement. The first of these decisions from the CAT was in January and related to the collective proceedings brought against Sony over allegations that it overcharged customers through its distribution of videogames in the Playstation Store. In that case, the CAT ruled that the revised funding agreement which allowed for the funder to receive a percentage of the damages only if this was “enforceable and permitted by applicable law” did not violate the PACCAR ruling. Permission was granted to send the funding agreement to the Court of Appeal, with the CAT saying that a “conclusive” decision was required. The second permission granted for an LFA was in the case of Kent v Apple, where the funding agreement’s terms had been revised to specify that the funder’s returns would be calculated based on a multiple of costs rather than a percentage of damages.  The latest example cited by Legal Futures is the CAT’s decision on the funding agreements on the dual opt-in and opt-out collective proceedings which have been brought against Mastercard and Visa. In these proceedings, the returns for funders in the LFAs were revised from a percentage-based recovery to one based on the funder and ATE insurer’s costs, and a multiple of the funder’s spend. Once again, the CAT ruled in favour of sending the revised agreements to be reviewed, stating that the continuing uncertainty about these issues of funding enforceability arising in a series of cases before the tribunal is unlikely to be resolved without determination of the issues by the Court of Appeal”.

Delaware District Judge Rules in Favour of Woodsford Subsidiary in Dispute with Hosie Rice

In what appears to be the final word on the long-running dispute between Woodsford and Hosie Rice, a Delaware judge has ruled in favour of the litigation funder in its efforts to recoup $1.8 million from the law firm. An article in Legal Newsline covers the decision by U.S. District Judge Colm Connolly to rule in favour of Woodsford’s subsidiary Frome Wye, upholding the prior court order from a magistrate judge requiring Hosie Rice to pay $1.8 million to the funder. In his ruling, Judge Connolly said that Hosie Rice’s objections were “without merit” and found that they were not protected by Delaware’s usury law with regards to the law firm’s obligations to remunerate the funder. The origins of this dispute date back to Woodsford providing around $800,000 in funding for Space Data’s case against Google, with Space Data refusing to pay Hosie Rice after it reached a settlement with Google in 2020. After an arbitrator ruled that Space Data owed the law firm up to $4 million in costs but no contingency fee, Hosie argued that it was not required to award Woodsford any additional fee beyond the original loan repayments.  The $1.8 million award was handed down by an arbitration panel as a result of Woodsford’s subsequent lawsuit against Hosie Rice, in which the funder argued that it was owed additional remuneration as the $4 million client payment constituted a ‘revenue event’ for the law firm. 

High Court Judge Rules that Anonymous Funder’s Identity is Relevant in Webster v HMRC

The issue of disclosure in regards to litigation funding has been most associated, in recent years, with patent infringement litigation in the United States, as defendants and judges have probed the nature of the financiers backing lawsuits. However, an ongoing case in the High Court has brought this issue to light in a very different manner, after a claimant said that even they did not know the identity of their litigation funder. Reporting by International Tax Review highlights the case of Webster v HMRC in the High Court, where Justice Rowena Collins Rice ruled against the claimant’s application to strike out an abuse of process defense, over HMRC’s attempts to identify Webster’s litigation funder. Jennifer Webster, the claimant in the case, has stated that she does not know who is funding her case, as the funder has only backed the claim on the condition that its identity remains anonymous and would withdraw from the litigation if its identity was made public. According to the judge’s ruling, Mishcon de Reya, the law firm representing Webster, are aware of the litigation funder’s identity. The ruling came about after HMRC successfully sought a court order to force the claimant to disclose their funder’s identity, which led Webster’s legal team to attempt to have this defence struck out. In her ruling, Justice Collins Rice explained that the funder’s identity was relevant as it addresses concerns over this mystery financier’s motivations for the case. The judge stated:  “Funder identity goes, on HMRC’s case, to the core issue of whether this is a genuine private law claim, albeit a test case, generously funded by a disinterested and publicity-shy benefactor with a commitment to human rights, or whether the court’s processes are being abused by an unregulated attack, on a government department exercising statutory public functions in the public interest, made in the service of agencies whose own commitment to the UK public interest, and the interests of justice, is unapparent.” Commenting on the judgement, Dan Neidle, director of Tax Policy Associates, argued that despite the judge’s ruling being “very strange”, it was unlikely that the claimant would be successful if they appealed the decision. As for the mystery funder’s reasons for seeking anonymity, Neidle suggested that it could be a benign motivation or “possibly something more sinister: a person with something to hide, using this litigation to block the rules that prevent its secrets from being uncovered”.

Upholding the Duty of Client Confidentiality During the Funding Process

By Jeff Manley |
The following article was contributed by Jeff Manley, Chief Operating Officer of Armadillo Litigation Funding In the competitive landscape of litigation, the strategic use of litigation financing has become a vital tool for law firms to manage cash flow, mitigate risk, and level the playing field. However, the infusion of external capital into the legal process brings forth intricate ethical considerations, particularly concerning client confidentiality. The Imperative of Confidentiality At the heart of the attorney-client relationship lies the paramount duty of confidentiality, a cornerstone enshrined in the American Bar Association (ABA) Model Rules of Professional Conduct Rule 1.6. The Rule obligates attorneys to not reveal information related to the representation of a client without the client's informed consent or unless the disclosure is otherwise permitted by the Rules. This duty persists beyond the attorney-client relationship and extends to all members of a law firm. Ethical Complexities in Litigation Financing Litigation financing requires attorneys to navigate a delicate balance: providing sufficient information to secure funding while safeguarding the sanctity of client confidences. The process typically involves disclosing case merits, potential outcomes, and strategies—details that, if not handled correctly, could jeopardize client confidentiality. Crafting the Safeguards Non-Disclosure Agreements (NDAs): Prior to any discussion, law firms must insist on stringent NDAs with financing entities. These NDAs must be tailored to explicitly protect any information that may relate to a client's case. De-identification of Data: Information shared during the funding process should be stripped of any identifiers that can link it to a specific client. This step ensures that financiers can evaluate the investment on its merits without risking a breach of confidentiality. Use of Aggregated Data: Where possible, firms should rely on aggregated statistics and data analytics that provide an overview of the firm’s track record and the types of cases they handle, rather than details of individual cases. Informed Consent: In scenarios where the disclosure of identifiable information is unavoidable, the law firm must obtain explicit, informed consent from the client. This consent should be thorough, documenting the specific information to be disclosed, the purpose of the disclosure, and the parties to whom it will be disclosed. The ethical obligations surrounding confidentiality are not mere guidelines but are anchored in legal and regulatory frameworks that govern the practice of law. Violations can lead to disciplinary actions by state bar associations, potential disqualification from cases, and even civil liability. Continuous Ethical Vigilance  The journey towards ethical compliance in litigation financing is not one that a law firm undertakes alone. It is a collaborative endeavor that greatly benefits from the engagement of a respected and knowledgeable funding partner. Such a partner brings to the table a deep understanding of the legal landscape and the specific nuances of confidentiality laws that govern attorney conduct. Selecting the Right Partner: A reputable litigation finance partner will have stringent ethical standards in place and will be well-versed in the ABA Model Rules, state bar directives, and relevant case law. This expertise is invaluable in helping to structure financing agreements that are not only beneficial but also fully compliant with legal ethics. Joint Compliance Efforts: A trusted funding partner contributes to the law firm's efforts by engaging in joint compliance checks and due diligence. They will proactively work with the firm to ensure that all shared information adheres to the principles of confidentiality and that any potential ethical pitfalls are identified and mitigated early on. The landscape of legal ethics is not static; it evolves with new rulings and regulations. A knowledgeable funding partner remains abreast of these changes and works alongside the law firm to adapt practices and agreements accordingly. This dynamic approach ensures that the firm's operations remain compliant over time. In the intricate process of litigation finance, a law firm's dedication to maintaining confidentiality must be matched by the acumen of its financial allies. The right funding partner does not merely provide capital; they contribute to the ethical fortitude of the funding process. Through continuous vigilance and a partnership grounded in mutual respect for the law, firms can navigate the complexities of litigation financing while upholding the sacred duty of client confidentiality.

Dane Lund Joins Juris Capital as Managing Director

Juris Capital, an investment manager specializing in innovative financial solutions for commercial litigants and law firms, is delighted to announce that Dane Lund has joined as a Managing Director. As Juris begins to expand its offerings of tailored financial solutions for commercial claimants, top-tier law firms and litigation boutiques, Lund will play a leading role in developing and executing new strategies for the firm. With the addition of Lund, Juris will offer more bespoke solutions for a wide range of cost needs, whether in the hundreds of thousands or millions. With over a decade of legal and financial experience, Dane brings valuable insight to Juris Capital. Dane has worked across a breadth of industries, including legal services, banking, litigation finance, and blockchain services, providing unique perspectives that can propel Juris’ business forward. "I am honored to join Juris Capital, an industry pioneer and one of the most successful firms in legal finance," said Lund. "I look forward to furthering Juris Capital's mission of providing innovative, client-focused solutions. I envision Juris growing to become not only a commercial litigation funder of choice, but also a balance sheet partner to the most innovative law firms in the country." About Juris Capital: Juris Capital is a capital partner to commercial litigants and law firms that has led financings ranging from $250k-$29mm. Since 2009, Juris has set a standard for ethical and collaborative legal financing. Juris helps commercial claimants and law firms manage litigation risk, pursue meritorious claims despite high litigation costs, and reallocate capital to core business purposes. Juris also works directly with law firms to help optimize their balance sheets, enable thoughtful growth and expand firm offerings. Dane Lund: dlund@juriscapitalcorp.com Juris Capital: www.juriscapitalcorp.com

Quantum Data Analysis Meets Litigation Finance and Investment

While engaging quantum computing across the legal spectrum is still in its infancy, litigation funders are increasingly looking to manage financial risk exposure with in-house data analytics systems. A new article pressure tests the most evident matters concerning quantum data and litigation finance.  Mondaq reports on how litigation financiers are integrating algorithmic data tools into their decision making. With the potential of billions of dollars in proceeds, it is important to understand the impact of data architecture through self inventory, extraction and analysis. Spotting holes in data systems is essential, and should be encouraged to promote a nimble innovation strategy within an organization.  Current popular uses of data analysis in litigation finance include quantifiable forecasts of economic harm caused by defendant actions, and contemplation of settlement proposals. Devising solutions to mitigate data disasters is also a prime concern for third party funding. For example, some litigation funders are compiling “data literacy” manuals to increase and enhance engagement between colleagues.   The future of quantum data analysis in litigation finance will belong to those who conceptualize systems that maximize ROI and improve operational efficiencies.  

LegalPay Awarded the Best LegalTech Startup of the Year by Entrepreneur India at Tech and Innovation Summit 2024

LegalPay, India's leading litigation finance company, has been named the BEST LEGALTECH STARTUP OF THE YEAR by Entrepreneur India at the prestigious Tech and Innovation Summit 2024. This recognition underscores LegalPay's unwavering commitment to revolutionizing the legal finance landscape and empowering businesses with innovative solutions.

LegalPay tackles the chronic issue of delayed payments faced by businesses. Their groundbreaking financing solution, QuickSettle, offers a lifeline to thousands of businesses struggling with cash flow. QuickSettle provides immediate funding to creditors, allowing them to receive their dues upfront. Simultaneously, debtors benefit from flexible repayment plans, easing financial strain and facilitating a win-win outcome for all parties involved.

"In today's dynamic economic climate, access to flexible financing solutions is vital for businesses to thrive," says Mr. Kundan Shahi, Founder & CEO of LegalPay. "We are incredibly honored to be recognized by Entrepreneur India. This award is a testament to our steadfast dedication to pushing the boundaries of innovation in the legal finance industry. We remain committed to empowering businesses and fostering a culture of faster dispute resolution in India."

LegalPay’s innovation transcends traditional boundaries. By bridging the gap between creditors and debtors, QuickSettle fosters collaboration and trust, reducing the need for costly litigation. In today’s dynamic business landscape, access to working capital is paramount. QuickSettle liberates working capital, allowing businesses to focus on growth and expansion.

The recognition from Entrepreneur India serves as a testament to LegalPay's dedication to pushing the boundaries of innovation in the legal and financial technology sector. As businesses continue to seek efficient and sustainable solutions to recover their dues, LegalPay remains steadfast in its mission to empower businesses and drive positive change in the industry.

About LegalPay:

Founded in 2019 by Kundan Shahi, LegalPay has emerged as India's largest litigation funding company, currently managing over USD 400 Million worth of claims. Through innovative solutions like QuickSettle, LegalPay empowers businesses to navigate financial hurdles seamlessly and unlock their true potential.