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Commercial Regulatory Issues

Proposed Litigation Funding Disclosure Rule Rejected by Supreme Court Of New Jersey’s Civil Practice Committee

Moves by state legislatures to introduce new laws governing litigation financing have dominated much of the recent conversation around the regulation of third-party funding. However, the roles of state and federal courts in implementing rules around funding disclosure are helping to shape the future of litigation finance in the US. Reporting by The National Law Review provides an overview of the decision by the Supreme Court of New Jersey’s Civil Practice Committee to reject a proposal that would require the disclosure of litigation funding arrangements at the start of any civil lawsuit. The proposal had been brought by the New Jersey Civil Justice Institute, which had argued that such a rule would provide transparency around third-party litigation funding, and would ensure that all parties were aware of funding arrangements that could affect resolution and settlement proceedings. In its rejection of the proposed rule, the Committee argued that it did not have the “sufficient experience to meaningfully develop a rule change at this time,” and suggested that attempts to draft such a rule “may prove difficult.” Whilst the Committee has declined to introduce a disclosure rule at this time, it acknowledged that legal or regulatory developments may require the issue to be revisited “at some point in the future.” The Committee’s decision stands in contrast to the action taken by the District Court for the District of New Jersey in 2021, when it passed Local Civil Rule 7.1.1. This rule requires the disclosure of information surrounding litigation funding, including the identity of the funder and their financial interest in the case, for all cases in New Jersey’s federal courts. The District Court’s decision echoed similar moves to introduce a disclosure rule by many federal District Courts across the country, along with six United States Courts of Appeal.
Announcements Consumer

Counsel Financial Announces $25M Equity Transaction and Launch of New Loan Servicing Business

Counsel Financial, a pioneer in providing financing solutions to the plaintiffs’ bar, is proud to announce the successful close of a $25 million private equity transaction and the launch of its innovative loan servicing business. This strategic development marks a significant milestone in the company’s 25-year history. “Our team possesses unparalleled technology-enabled underwriting and monitoring capabilities, and we look forward to institutional investors leveraging our experience through our enhanced servicing platform,” said Counsel Financial President and CEO Paul Cody. The equity transaction has paved the way for Counsel Financial to renew and extend its nearly $200 million in credit facilities, enhancing its capacity to support law firms with efficient and flexible financing options. Counsel Financial’s equity partners have expanded access to hundreds of millions of investment capital in support of the company’s law firm financing strategies. This influx of capital and confidence from financing partners underscores Counsel Financial’s strong position in the market and its commitment to serving the unique needs of law firms and their clients. The rollout of the loan servicing business represents a natural extension of Counsel Financial’s expertise in underwriting plaintiffs’ law firms and managing contingent fee case collateral. Designed to cater to institutional investors, the new technology-enabled servicing platform offers a comprehensive suite of tools for underwriting, managing, and valuing litigation finance assets, enabling clients to leverage decades of industry experience and a vast repository of historical data to provide unmatched oversight and investment insights. About Counsel Financial Counsel Financial is an industry leader in originating, underwriting and servicing loans and other financing solutions for contingent fee law firms. For over two decades, Counsel Financial has provided more than $2 billion in capital investments across 300+ law firms. These investments have financed the growth of firms in every area of plaintiffs’ litigation, including personal injury, mass torts, class action and labor and employment.
Commercial People Moves

Burford Capital Hires Judgement Enforcement and Foreign Asset Recovery Expert

When talking about the benefits of third-party funding, litigation funders are often keen to talk about the expertise they can bring in the areas of judgement enforcement and collection. One funder is demonstrating its own commitment to this field, as it has hired a leading judgement enforcement expert to bolster its own team. An article in The American Lawyer highlights Burford Capital’s recruitment of Carrie Tendler, a former partner at Kobre & Kim, to strengthen its judgement enforcement team through her expertise in foreign asset recovery. Tendler brings 16 years of experience at Kobre & Kim to her new role at the litigation funder, having led a practice focused on international judgment enforcement and cross-border asset forfeiture and recovery.  Discussing her new role at Burford, Tendler explained she would focus on helping Burford “in those types of situations where they are the stakeholder in international judgment claims to better manage, strategize and fulfill the role of an in-house litigator.” Tendler also used the interview to offer praise for the value that third-party funding has brought to the legal system, stating: “Lawyers are able to take cases that we wouldn’t have been able to take without the benefit of financing, and claims get adjudicated that should be adjudicated, and that’s all enabled by litigation finance.” It is no coincidence that this recent hire aligns with Burford’s efforts to enforce the $16 billion judgement in the Argentina YPF case, as the funder is in the middle of pursuing a variety of routes to collect the award. Referencing the YPF example, Tendler explained that Burford has many such cases “where Burford is a stakeholder where they need to enforce judgments and having someone full time working on the enforcement of those judgments is my new role.” Burford’s CEO, Christopher Bogart highlighted Tendler as “a leader in global enforcement and cross-border asset recovery”, and stated that the firm is excited to bring “her skillset to our already exceptional asset recovery team, with a particular focus on the YPF matter.”
Announcements Commercial People Moves

Keller Postman UK merges with Lanier, Longstaff, Hedar & Roberts to form specialist collective redress law firm KP Law Limited

Today Keller Postman UK Limited and Lanier, Longstaff, Hedar & Roberts LLP announce their merger to form a new specialist collective redress law firm called KP Law Limited. The merged firm will specialize in bringing large scale consumer claims in the areas of product liability, workers’ rights, data breach and privacy, investment fraud and financial products mis- selling, and competition law. The merged firm will also pursue in the UK and Europe cases being brought by The Lanier Law Firm in the US, which well-known US trial lawyer Mark Lanier heads up. Andrew Nugent Smith, formerly Managing Partner of Keller Postman UK, will be Managing Partner of the new firm, with Tom Longstaff and Duncan Hedar becoming Partners and taking on the roles of Head of Product Liability and Head of Competition, respectively. Keller Postman UK has previously resolved diesel emissions claims against Volkswagen, workers’ rights claims against Uber, and data breach claims against British Airways, Ticketmaster, and Equifax. Ongoing cases for the firm include further diesel emissions claims against Mercedes and Vauxhall, equal pay cases against the major UK supermarkets, and a number of other large group actions. The new KP Law will also continue to pursue claims against talcum powder manufacturers previously brought by Lanier, Longstaff, Hedar & Roberts, with many other large group actions in the pipeline. Mark Lanier commented: “This merger represents an extremely important and significant collaboration for the Lanier Law Firm as we continue to be strategic in developing relationships with firms internationally. I’m thrilled and excited at what a positive development this is for our clients. It’s equally important to me that we are continuing our partnership with Tom Longstaff and Duncan Hedar who are, without a doubt, two of the finest lawyers in the UK.” Andrew Nugent Smith commented: “This merger adds new product liability and competition law expertise to our existing workers’ rights, data breach and privacy, financial products and investment fraud and mis-selling practices. In Tom Longstaff and Duncan Hedar, we gain two stellar collective redress lawyers with the ability to develop and progress collective redress cases, and we are incredibly excited by the opportunity to collaborate with The Lanier Law Firm in the US.” Tom Longstaff commented: “We are delighted to join forces with Keller Postman UK which will allow us to benefit from their established position in the collective redress ecosystem and to increase the pace and scale at which we can bring a large number of opportunities we have developed in the short time that Lanier, Longstaff, Hedar & Roberts has been operating.”
Case Developments Commercial

South American Countries File Briefs in Support of Argentina’s Appeal of $16 Billion Judgment 

Whilst most of the conversation about the $16 billion judgement in the YPF Argentina case has focused on attempts by Burford Capital to collect on the award, this does not mean that the Argentine government has simply given up on continuing its fight against the judgment. In what is perhaps the most significant geopolitical development in the case yet, Argentina’s regional neighbours have joined its legal fight to appeal the US court’s decision. An article in The Financial Times highlights the growing level of global attention focused on the $16 billion judgment faced by Argentina, as its neighbouring countries have lent their support by filing briefs in support of Argentina’s appeal to the US Court of Appeals. In a bold sign of regional solidarity, Brazil, Chile, Uruguay and Ecuador have all signed on to briefs in support of Argentina’s appeal, arguing that upholding the judgment would amount to a violation of national sovereignty. The brief filed by lawyers for Brazil and Uruguay stated that they were concerned the court’s judgement had “misapplied crucial doctrines that are designed to ensure respect for the prerogatives of foreign sovereigns and their courts, protect foreign litigants from the burdens of litigating in the United States, and safeguard against the misapplication of foreign law.” Furthermore, the brief argued that the multibillion-dollar award had created an undue burden on Argentina, saying that “the people of the region should not be forced to endure the economic consequences of a judgment that flagrantly misapplies the governing law, entered by a court that never should have exercised jurisdiction in the first place”. The second brief, signed by Chile and Ecuador, focused on the effect this judgment might have on South American businesses, arguing that it could make these regional companies hesitant about engaging in US markets. The brief argued that “the threat of increased and wide-roaming judgments by US courts, based on only the most tenuous connections to the US” may have wider ramifications for commerce between South American and US corporations.
Commercial Legal Innovation

LitFin Hosts Inaugural LitFin Leap Conference

In a post on LinkedIn, Prague-based litigation funder LitFin highlighted the success of its inaugural LitFin Leap Conference, which was held at the company’s headquarters last week. The event saw over 50 participants representing 11 European Union countries in attendance, as lawyers from across the continent gathered to discuss the most pressing issues. The morning of the conference featured discussions around a range of topics, with one panel examining the intricacies of competition law private enforcement, and another that looked at the relationship between law firms and litigation funders. The afternoon saw LitFin host the conference attendees on a sightseeing tour of Prague, followed by an evening set aside for informal networking and drinks. Ondřej Tyleček, partner at LitFin, thanked those who participated in the event, saying: “It warms my to know that we have so many great legal professionals from all corners of EU around us at LitFin, many of whom we can call friends.”
Commercial Special Features

An LFJ Conversation with Harish Daiya

Harish Daiya is the Co-Founder and Chief Executive Officer of Lumenci. He is based out of Austin, Texas and oversees the company’s operation across all global offices. With over 15 years of industry experience in technical consulting in IP litigation and licensing, Harish has been a part of $2B+ in IP value creation.

Harish is also a member of the Forbes Business Council, where he regularly writes Thought Leadership pieces and shares ideas on global impact. Harish has also been a serial entrepreneur and angel investor for several successful startups. As the CEO, Harish is elemental in driving Lumenci’s vision, goals, sales, and revenue. He oversees organizational growth, business strategy, people culture, client relationships, business development, strategic partnerships, and launching new businesses.
 
Below is our LFJ Conversation with Harish Daiya:
 
Lumenci is a full-service technology consulting firm that uses domain expertise and automation to create value from technical innovations. Can you unpack that for us?
 

At Lumenci, we provide turnkey solutions to generate value from patent assets. What started as a technical consulting team has, over time, evolved into a team of like-minded experts, engineers, and deal makers who find innovative ways to commercialize the value of the patents. 

We frequently engage with deep-tech companies (and their investors) with sizeable patent portfolios that want to understand and estimate the value of their patents, which requires thoroughly examining their patent portfolio, deep diving into the invention/inventor story, and identifying assets that can generate maximum returns. This could also mean assisting the client in developing patents and selecting the best out of the lot for monetization. Our analysis and strategies to customers drive tangible value out of intangible assets, with more tech companies becoming more aware of the value of intellectual property. Our global clientele is now expanding with more requirements on the ‘how’ than the ‘what.’  

How does Lumenci help patent owners, law firms, and litigation funders during IP litigation?

Lumenci has supported AMLaw100 law firms in over 175 patent litigation matters, on both plaintiff and defense, across the US, EU, China, India, and Brazil, and has helped generate over $3B in verdicts, settlements, licensing revenues, and cost savings. Our team has successfully represented as technology consultants in high-stakes patent litigation lifecycle in creating high-quality litigation grade claim charts, drafting complaints, investigating confidential source code under the protective order, documentation review, expert reports prep, and supporting our law firm customers during deposition and trial.

Lumenci’s vast experience of supporting multiple high-stakes cases through the trial is beneficial to patent owners in not only validating the merits of a patent portfolio from a technology and valuation standpoint but also getting a turnkey solution to craft the right story, raise capital via litigation funding or insurance, engage with law firms, and get insights throughout the commercialization lifecycle. 

Our experts advise litigation funders with in-depth technology and valuation due diligence and help them identify the risks of a potential investment. Our experience with litigation funders has yielded them to mitigate high investment risks by identifying the underlying potential of patent assets, the risk of a commercialization campaign, and strategies on how to mitigate them. 

What is the role of due diligence and technical analysis in the patent litigation lifecycle?

Foundational, to sum it up in a word. 

Lumenci conducts due diligence on the company’s patent assets, highlighting relevance w.r.t technology evolution, assessing validity w.r.t section patentable subject matter, novelty and obviousness, scoping enforceability across the industry, and outlining the damages potential. This process becomes integral to the initial stages of a patent commercialization process. In addition, venue consideration is an important aspect of the diligence.  This due diligence forms the basis of building infallible evidence, which is critical in supporting a high-stakes commercialization campaign. 

How does the technical analysis process work? Are you able to analyze any technical domain?

We support high-stakes patent commercializing and litigation campaigns from day 1 through trial and specialize in technology domains like Software, Telecom/Networking, Semiconductors, and Medical Devices.  We support our law firm customers in maintaining and constantly upgrading the state of infringement or non-infringement evidence, and validity or invalidity evidence as a case progresses by analyzing source code, reverse engineering hardware, testing prior art systems, and conducting complex testing of telecom/networking devices. Lumenci is well known in the industry for "illuminating innovation”, i.e. finding key pieces of evidence which can be material in affecting the outcome of a case, on both the plaintiff and defense side.

What trends are you seeing in the patent space that is relevant to litigation funders specifically, and how does Lumenci's service fit into those trends?

As litigation costs, especially in the US, continue to increase, the level of pre-intake diligence by the litigation funders also continues to increase. For the funders, this means having access to or relationships with technical and damages diligence teams that can provide priority and prompt support to their diligence needs is essential. The litigation funders that have these relationships ironed can out-compete their peers in terms of speed and depth of decision-making. Lumenci with its trained teams in various parts of the patent monetization and litigation cycle in over 10 countries, offers this depth and speed that is virtually unmatched at scale.

Despite the rising interest rates and dire macroeconomic conditions, the growing number of litigation cases and the emerging secondary market for litigation finance claims highlight the pertinence of litigation funding. Litigation funders are particularly interested in understanding the underlying potential of patent assets and mitigation potential before investing in a case. Additionally, operating technology companies continue to find creative ways to generate revenue and many patent assets are coming to the market which have little to no diligence done on them. Lumenci’s in-depth expertise in technical due diligence, validity assessment, damages assessment, and experience in handling high-stakes patent litigation matters are highly valued by litigation funders and insurance underwriters in making informed decisions on their investments in patent asset commercialization campaigns.

Commercial Legal Innovation

The Opportunities and Limitations of AI for Litigation Finance

In December of last year, LFJ hosted a digital event on the topic of LegalTech and Litigation Finance, examining the variety of technology solutions that litigation funders are already using, and those technologies that may transform the future of the industry. New reporting provides additional insight into the adoption of emergent technology by funders, with many firms hoping to take advantage of AI tools to gain a competitive edge. An article in Bloomberg Law provides an in-depth look at the use of AI by litigation funders, highlighting how newer entrants to the market have adopted it to accelerate their growth, whilst also examining where the limits of this technology still exist. One of the most common applications for AI in the field of litigation finance is the discovery and identification of potential cases to fund, with Legalist and Qanlex recognised as two companies leading the way in this area. Legalist has created its own “truffle sniffer” algorithm to search for cases defined by a set of parameters, whilst Qanlex has built its own proprietary “Case Miner” software to both identify cases and contact those parties whose cases are most suitable. However, senior executives from both companies acknowledge that there are limits to what AI can do for their businesses. Legalist’s CEO, Eva Shang, emphasises that “there’s still a very important human component”, and that AI tools are not yet in a position to “do things that an underwriter would normally do.” Qanlex’s co-founder, Yago Zavalia Gahan said that whilst their Case Miner software allows the company to maximise the efficiency of its lead sourcing, litigation funding remains “a relationship-based business.” Apex Litigation Finance is another funder that utilises in-house AI tools, but according to its CEO, Maurice Power, it is only used in conjunction with human assessment of potential funding opportunities. Power says that AI’s limitations around creating accurate predictions of case outcomes largely stem from its data foundations, explaining that “for any AI predictive analytics model to be really effective, it’s only as good as the data that it has available to it.” For funders like Burford Capital and Parabellum Capital, AI can provide useful benefits in limited applications, but both funders are firm in their assertion that the human element cannot be so easily removed. David Perla, co-chief operating officer at Burford, firmly argues that AI is not a magic bullet and, at present, “no one’s got a tool where you could push a button and say, wow, this is an order of magnitude better—you still have to read the case.” Likewise, Parabellum’s managing director, Angela Ni identifies case management as an area where AI has been most useful to help track and analyse the vast amounts of information involved in a portfolio of cases.
Commercial Regulatory Issues

Ministry of Justice Announces New Law to Protect Litigation Funding

Ever since the Supreme Court’s ruling in PACCAR, litigation funders and legal professionals have been vocal in their desire to see the UK government act to protect access to third-party funding. After months of optimistic statements from ministers and MPs, the Ministry of Justice has revealed that it will soon be taking direct legislative action to reverse the Supreme Court’s judgement.  In an announcement released today, the Ministry of Justice (MOJ) said that the Lord Chancellor, Alex Chalk, will be introducing new legislation to ‘make it easier for members of the public to secure the financial backing of third parties when launching complex claims against moneyed corporations.’ The MoJ’s announcement states that the new law ‘will restore the position that existed before the Supreme Court’s ruling last year,’ effectively nullifying the impact of the PACCAR judgement. The announcement clarified that this new legislation will be introduced to Parliament shortly but will only apply to cases taking place in England and Wales. In addition to the planned legislation, the MOJ stated it was ‘considering options for a wider review of the sector and how third-party litigation funding is carried out.’ The review would examine ‘whether there is a need for increased regulation or safeguards for people bringing claims to court,’ with the government acknowledging the growing prevalence of third-party funding. Whilst there was no indication of when or how this review might be conducted, the MOJ said that ‘the next steps and any Terms of Reference of the review will be set out in due course.’ In a separate opinion piece for The Financial Times, Chalk explained the necessity of introducing this new legislation, citing the important role that litigation funding played in the Post Office case and arguing that it was crucial to ensure ‘that justice is available to all, and not merely the preserve of those with deep pockets.’ Referencing the potential review of litigation finance, Chalk highlighted the fact that the funders of the Post Office litigation ‘received £46MM of the £58MM awarded’, whilst the actual claimants were left with ‘a fraction of the total award.’ He emphasised that the government is aiming ‘to strike the right balance between access to justice and fairness for claimants.’