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Commercial Regulatory Issues

Malaysian Government Minister Meets with EU Officials to Discuss Litigation Funding Regulations

The dispute between the Malaysian government and the Sulu heirs has been one of the most high profile international arbitration cases in recent times, raising issues around state sovereignty and the role of third-party funders in international arbitration. Whilst Malaysia has already managed to achieve some success towards overturning the unfavourable arbitration rulings, the government is now increasing its vocal support for reforms around the international regulation of litigation funding. An article in MalayMail highlights new comments from Datuk Seri Azalina Othman Said, the Malaysian government minister for law and institutional reform, who stated that she had participated in several bilateral meetings with European Union (EU) officials to discuss its own efforts towards regulating third-party litigation funding. These meetings reportedly included representatives from the European Commission, European Parliament and European External Action Service.  Azalina stated that “there is a pressing need for concerted global action to combat the misuse of third-party litigation funding solely for profit-seeking purposes, which subverts the pursuit of justice.” With the arbitrations and disputes in the Sulu case taking place across several EU jurisdictions, she highlighted that the issues which have affected Malaysia are also of concern to “EU member states that are not spared from such detrimental effects.” Azalina also expressed her desire for these discussions to continue with a wider and more international scope, including forums with policymakers from the United States and ASEAN. She stated that it was the Malaysian government’s position that there should be “a robust debate on regulating third-party litigation funding vis-a-vis the need for greater transparency, accountability and ethical professionalism among the funders.”
Case Developments Commercial

Piper Alderman Files Class Action Targeting IC Markets Over CFD Sales to Retail Investors 

As LFJ reported in October of last year, Piper Alderman have been exploring bringing a class action against International Capital Markets (IC Markets) over its marketing and sale of contracts for difference (CFD) products to retail investors. After a short delay, it now appears that this lawsuit has been formally filed in the Australian courts. An article by CDR reveals that Piper Alderman has filed its class action against IC Markets in the Federal Court of Australia, with the lawsuit submitted on 6 February. The class action focuses on allegations that IC Markets failed to adequately assess retail investors’ knowledge of CFD products and the associated risks with trading before selling them. Woodsford is providing the litigation funding for the class action, with the litigation looking to represent any investors who bought CFD products from IC Markets between 6 February 2018 and 6 February 2024. Commenting on the class action, Kate Sambrook, partner at Piper Alderman highlighted that many retail investors “have suffered significant financial losses and distress as a result of being offered highly-leveraged CFDs when they had little or no experience in trading complex financial products.” Woodsford’s chief investment officer, Charlie Morris stated that the funder is “committed to backing this action against IC Markets on behalf of those people who have suffered loss trading these excessively risky and complex products.” As LFJ has previously reported, this is not the only class action that Piper Alderman and Woodsford are involved in targeting trading platforms over the sale of CFD products, as both firms are engaged in separate class actions against IG Markets. In addition, according to CDR’s reporting, IC Markets is also the target of another class action representing retail investors who were sold CFD products, with that lawsuit being led by Echo Law.
Case Developments Commercial

Minnesota Judge Denies Burford and Sysco’s Joint Motions for Substitution of Plaintiff

The dispute between Burford Capital and Sysco Corp was one of the biggest litigation finance stories of 2023, providing critics of the industry with fresh talking points around the level of controls that funders can exert over litigation. Despite the core issues of the dispute being resolved last year, it appears that the story will continue throughout 2024, as a Minnesota judge has denied Burford’s request to be named as the plaintiff in the ongoing antitrust lawsuits. Reporting by Reuters covers the decision handed down by U.S. Magistrate Judge John Docherty, which not only denied Burford’s bid to take over the lawsuits, but also raised pointed questions about the reasons behind Burford’s request. Judge Docherty’s order denied the ‘joint motions for substitution of plaintiff’, which had been filed by Sysco Corp and Burford affiliate Carina Ventures LLC, in the ‘Pork Antitrust Litigation’ and ‘Cattle and Beef Antitrust Litigation’ cases. Judge Docherty found that there was no precedent for substituting a plaintiff for ‘a newly formed shell company created mid-suit for the sole purpose of litigating assigned claims on behalf of a litigation funder.’ He went on to emphasise, that in the court’s view, Burford Capital ‘has no stake in the litigation other than maximizing its return on an investment it made in the outcome of the litigation.’  Docherty’s ruling stressed that such a substitution would be in opposition to public policy, as it could discourage parties from reaching settlements. In what appeared to be a rather bold critique of the litigation funder’s involvement in these cases, Judge Docherty stated that ‘the litigation burden caused by Burford’s efforts to maximize return on investment has been enormous.’ He also described the joint motion’s ‘extraordinary nature’ as a contributing factor to the denial, noting that ‘the fact that no other litigation funder has apparently ever before asked to be substituted for its client under Rule 25(c)—leads the Court to be particularly chary of granting the substitution.’ Burford Capital responded to the decision by stating that it would contest the order.
Commercial Special Features

Key Takeaways from LFJs Digital Event: Litigation Finance: What to Expect in 2024

On February 8th, 2024, Litigation Finance Journal hosted a special digital event titled 'Litigation Finance: What to Expect in 2024.'  The event featured Gian Kull, Senior Portfolio Manager at Omni Bridgeway, David Gallagher, Co-Founder of LitFund, Justin Brass, Co-CEO and Managing Director of JBSL, and Michael German, Co-Founder and CIO at Lex Ferenda. The event was moderated by Peter Petyt, founder of 4 Rivers. The discussion covered a range of topics pertinent to the litigation funding space. Below are some key takeaways from the event: Which areas are you particularly interested in investing in over this coming year?  MG: There is a supposition that this industry will continue to grow in 2024. All of the indicators suggest that the industry will continue to grow--nearly all of the funders are funding bankruptcy-related cases, and three quarters are funding patent cases. Those are areas of interest to us, and I think that will continue to make sense, given the types of commercial cases they are - complex cases that require significant amounts of attorney time and defendant time,  and yield significant costs to the litigaiton. JB: We're going to see a continued expansion into the mass arbitration space. That is something that has been coming up with more frequency. Mass torts has been staying quite busy. And where we see a lot of potential is with the evolution of the secondary market. There are a lot of funders coming up with maturing cases, and it makes sense for those funders to redeploy that capital into other opportunities - not necessarily exit that case - but just sell a minority stake or a portion of it. We that in traditional fixed income classes, so we think that is going to continue in the funding market as well. Are you seeing any kind of appetite to invest in jurisdictions you haven't previously invest in? Have some jurisdictions matured to the point where you now will give them a serious look?  GK: That's a hard question to ask Omni Bridgeway as a whole, because we try to be in a lot of places. But from my own experience in Europe, we've gotten quite comfortable in the Netherlands, we have a very large investment in Portugal. Spain is next on the list. Italy is after that. The jurisdiction I've been most disappointed in - aside from the UK with the regulatory issues there - is Germany. For such a large economy, from a commercial collective redress perspective that is a dead end. As we move through Europe, I'll be watching the regulatory regimes and how those are tested over the coming years. Are you seeing many requests for monetization of judgements or awards, or is that not an area that you are particularly interested in?  DG: We're especially interested in that, largely because my partners have spent a lot of their careers making those types of investments. And just speaking from my own experience, that has always been an important part of the market, and continues to be an important part of the market. I think the availability of judgement preservation insurance makes funding more available and appropriate both on the funder's side and the client's side. In my view, it's very interesting to see the number of people in the market moving into the insurance space. In my view quite a surprising number - it's certainly indicative of a trend. LFJ just announced today that Ignite has launched a capital protection insurance resource. So there are a lot of interesting things happening here. Is it still early days for this space, because there are a lot of people moving into it with interest?  MG: I share the sentiment of having a general level of surprise with how many folks from the litigation finance industry insurance has drawn. From the Lex Ferenda perspective, insurance has proven to be a very expensive option, that ultimately my clients and I don't feel is worth the cost. But the vast majority of our investments - from an insurer's perspective - are probably the least good fit, so that's probably why it's reflecting in the price. JB: I think the insurance aspect of litigation finance is here to stay. There will be growing pains along the way. I think even as recently as last week, there were disclosures in the Affordable Care Act fee dispute where the law firm got an insurance policy related to its fee award. What was interesting there, was the law firm was seeking disclosure about the policy, and in essence how it worked. So not only is it new and here to stay, we're seeing it become public. The risk to early-stage cases is the pricing can be expensive, but what will happen over time, is like anything else, the insurers will be tracking the progress on those cases, and as funders come back as repeat customers, they'll be looking at you and factoring that relationship into their pricing, just like how a bank factors that into a credit score. I think the best path forward is figuring out how to work together and create a level of transparency and trust, because it's not going away. For the full recording of the event, click here.
Announcements Commercial People Moves

Legal Finance Firm Creates Jobs Across Manchester, Dublin and The Netherlands Amid European Expansion

A prominent litigation finance firm has marked a significant growth milestone by establishing a new office in The Netherlands to complement its existing presence in Manchester and Dublin.

Nera Capital’s expansion into Europe is set to create 10 new positions across the company including at its newly minted location in Weert, Netherlands, with US expansion plans also in the pipeline.

The positions will span key areas including legal, finance, audit, origination, technology and marketing, demonstrating the company’s commitment to building a diverse and dynamic platform to support its successfully growing portfolio. 

Since the firm’s inception in 2011, Nera Capital has been a trailblazer in legal finance in multiple jurisdictions assisting over 100,000 claimants to date. Director Aisling Byrne expressed her enthusiasm at the growth, stating: "Our venture into Europe is a strategic move to better serve our clients and partners, providing enhanced access to justice through innovative funding solutions.

"Our new offices mark a geographical expansion that aligns with Nera Capital's vision for growth and accessibility. The decision to establish a presence in Europe reflects a careful consideration of market dynamics and growth potential."

With over 13 years of operation, Nera Capital is a specialized funding provider for law firms, offering support across diverse claim portfolios including Financial Mis-selling, Data Breach, Anti-trust, Personal Injury, and beyond.

In the realm of legal and financial markets, Nera Capital’s seasoned and dynamic team boasts decades of collective expertise and is dedicated to delivering profound insights and cultivating strategic industry partnerships with leading law firms across the globe. 

Byrne added “The positive outcomes from our ventures globally have not only fortified our influence, but bolstered industry relationships, enabling us to adeptly navigate and thrive in these new jurisdictions.”

“Our expansion into Europe is also about creating more access to justice. We are excited about the possibilities this brings and look forward to making a further positive impact on the legal landscape. I take immense pride in witnessing the remarkable growth of Nera Capital as it expands its footprint worldwide. It’s a testament to the hard work of our incredible team and is truly gratifying to see the firm's influence extend beyond borders, creating job opportunities and spearheading justice in Europe."

About Nera Capital

·       Established in 2011, Nera Capital is a specialist funding provider to law firms.

·       Provides Law Firm Lend funding across diverse claim portfolios in both the Consumer and

        Commercial sector.

·       Headquartered in Dublin, the firm also has offices in Manchester and The Netherlands.

·       www.neracapital.com

Past Event

Litigation Finance: What to Expect in 2024

Gain valuable insights into the forces shaping the future of litigation finance.  This webinar recording, captured in early 2024, features expert analysis of key trends, including regulatory changes, economic influences, and the rise of new case categories and technologies. Key topics explored in this webinar:
  • How will the regulatory trends of 2023 play out (PACCAR in UK, disclosure in US, etc.)?
  • How might the prospect of a recession or soft landing impact the litigation finance industry in 2024?
  • Does the rise of duration risk make LPs wary of litigation funding investments?
  • What case categories will drive industry growth? Mass torts, IP, class actions, etc.?
  • How is the evolution of legal technology influencing funder origination & underwriting strategies?
  • What new trends does the panel foresee arising in 2024? 
The LFJ Podcast

Episode 84: Sina Toussi

Hosted By Sina Toussi |
Our guest today is Sina Toussi, Founder and Chief Investment Officer of Two Seas Capital, an investment fund that focuses on litigation-driven investments arising from restructurings, bankruptcies, commercial disputes, corporate malfeasance, and regulatory events. Sina provides some specific examples of how a litigation-focused hedge fund such as Two Seas can maximize return by investing in the underlying companies that are pursuing litigation. [podcast_episode episode="12549" content="title,player,details"]
Commercial Deals

Shoosmiths Report: 31% of UK GC’s Would Consider Third-Party Litigation Funding

As legal industry analysts continue to predict increasing degrees of litigation risk for corporations, in-house counsel are being forced to develop strategies to manage their resources that are already under threat from budget cuts. New research suggests that litigation funders may find a receptive audience among these legal professionals, with GCs at large UK companies showing interest in exploring alternative funding for litigation. Shoosmiths’ Litigation Risk 2024 report provides insight into the attitudes of in-house legal professionals in the UK, surveying over 360 senior general counsels and senior lawyers. The survey covered a wide variety of topics including emerging areas of litigation risk, allocating resources for disputes, anticipating and mitigating exposures, and responding to these increasing litigation risks. In the introduction to the report, Alex Bishop, partner and head of dispute resolution & litigation, says that ‘the fallout from geopolitical turmoil and other external shocks, GCs can rightly anticipate increasing caseloads alongside escalating litigation costs.’ As a result, report sheds some light on the views of these in-house lawyers towards the use of third-party funding to manage these escalating costs. In the section of the report on ‘allocating resources for disputes’, Shoosmiths highlight its finding that ‘increasing costs associated with litigation encourage organisations to explore new methods of funding.’ 31% of respondents said that they would consider using third-party litigation funding in response to rising litigation costs. When looking at those surveyed broken down into their respective industries, Shoosmiths found that when it comes to third-party funding, ‘twice as many GCs in the technology sector likely to consider it as a tool to combat rising costs compared with those working in financial services’. As for the reason behind this divide across industries, Shoosmiths’ report suggests that ‘financial services businesses may be less inclined to adopt third-party funding because they are less likely to be in the position of claimant.’
Commercial

Speakers and Agenda Announced for Brown Rudnick’s Litigation Funding Conference 2024

The speakers and agenda for Brown Rudnick’s upcoming Litigation Funding Conference have been announced, with an impressive range of speakers from across the litigation finance industry set to engage in a day of insightful discussions. The conference will be kicking off with a keynote speech from Camille M. Vasquez, partner and co-chair of Brown Rudnick’s Brand & Reputation Management group. Vasquez is best known for her co-leadership of Johnny Depp’s legal team in the Depp v. Heard defamation trial. The morning of the event will include three panel discussions, beginning with an opening session looking at the ‘State of the Market’, featuring Susan Dunn from Harbour Litigation Funding and Matthew Lo from Exton Advisors. This will be followed by a panel focusing on UK class actions in a post-PACCAR world, and another looking at litigation funding from the in-house perspective. Following the lunch break, the conference’s focus will expand to include discussions on law firm funding and the secondary market opportunities for litigation finance, with speakers including thought leaders from Gramercy, Leigh Day, Omni Bridgeway, and Augusta. The penultimate session of the day aims to look outside the UK, with a panel discussion focusing on collective redress in Europe. A variety of perspectives from different European jurisdictions will be included, with speakers sharing insights from the Netherlands, France, Italy and Spain. The final item on the agenda for the day will be a discussion on the latest trends and challenges in the CAT regime, featuring insights from Adam Erusalimsky at Litigation Capital Management, Genevieve Quierin at Stephenson Harwood, and Anneli Howard KC from Monckton Chambers. The full agenda and details for the conference can be found here, and LFJ looks forward to reporting live from the event on Thursday, 14 March.