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Case Developments Commercial

CAT Grants CPO Application in Apple Lawsuit, Pending Resolution of Funding Issues

In the aftermath of the Supreme Court’s PACCAR ruling on litigation funding agreements (LFAs), industry observers have been keen to see how lawsuits with pending applications before the Competition Appeal Tribunal (CAT) would be treated. In a new judgement released today, we are seeing signs that the CAT may be taking a pragmatic approach to the issue of funding, whilst still allowing meritorious proceedings to move forward. An article in Reuters provides an update on the case of Mr Justin Gutmann v Apple Inc., Apple Distribution International Limited, and Apple Retail UK Limited, as a CAT tribunal’s ruling granted the application for a collective proceedings order (CPO). The lawsuit, which sees Mr Gutmann acting as the proposed class representative (PCR), seeks to represent approximately 24 million consumers over a claim that Apple concealed battery issues with their iPhone products. The tribunal’s written judgement states that the ‘the requirements of a CPO are met in this case, subject to the resolution of the terms of funding.’ The issue of Mr Gutmann’s third-party funding arrangements were addressed earlier in the judgement’s introduction, with the tribunal noting that the PACCAR ruling raises issues ‘concerning the legality of the PCR’s funding arrangements.’ The tribunal went on to highlight that Mr Gutmann has already ‘indicated that he may need to alter his funding arrangements and he is actively pursuing his options.’ Whilst the judgement noted that neither party had asked the CAT to ‘make a ruling on the current or proposed new funding arrangements’, it also emphasised that the certification for the proceeding was provisional and still ‘subject to further submissions as to funding arrangements.’ In response to the CAT’s ruling, Apple referred back to a previous statement denying the allegations and categorically stating that the company “have never – and would never – do anything to intentionally shorten the life of any Apple product, or degrade the user experience to drive customer upgrades."  Mr Gutmann, who is being represented by law firm Charles Lyndon, described it as “a major step towards consumer justice." In a post on LinkedIn, Eleanor Leedham, of counsel at Charles Lyndon, stated that “the regime may still be in its infancy but rulings like this demonstrate that it is working, and it is a vital system for protecting consumers from abuse by tech behemoths and providing damages where they have suffered loss.”
Announcements Commercial People Moves

Ben Herbert Departs LFG for Miller Barondess

In a post on LinkedIn, Ben Herbert announced that he would be departing Law Finance Group (LFG) to take up a new role as partner and co-lead of the IP practice at Miller Barondess.  Commenting on the move in a press release from Miller Barondess, Herbert stated: “I’m thrilled to join the talented team at Miller Barondess, a firm renowned for excellence inside and outside the courtroom.  I look forward to helping build upon the firm’s strong track record of success, leveraging its capabilities to provide clients with exemplary service and sophisticated representation in the types of patent and trade secret matters I have focused on throughout my career.” Skip Miller, founding partner of Miller Barondess, stated that Herbert would be “instrumental in further expanding the firm’s IP practice.” Sasha Frid, also a founding partner of the firm, described Herbert as “a highly skilled and respected patent and technical trade secret litigator whose expertise will complement the capabilities of our IP team.” Herbert’s departure from LFG comes nearly a year after he joined the litigation funder, having spent the last 10 months leading LFG’s operations in Los Angeles originating new business, and underwriting LFG’s transactions and investments in IP litigation. Prior to joining LFG, Herbert spent over 10 years at Kirkland & Ellis, where he was also a partner in the firm’s intellectual property litigation group.
Commercial Regulatory Issues

Law Professor Argues Some Funders ‘Will Never Be Passive Partners’

Debates over the role of third-party litigation funding have grown increasingly contentious over recent years, with interest groups and policymakers wading into the discussion with assertions that funders operate in the dark and have exerted control over litigation processes and outcomes. A new academic essay dives into this topic with renewed focus, offering an assessment of the current funding landscape and specifically highlighting the role of ‘opaque capital’ as an aggressive and chaotic force in the funding of torts. In an article published in Volume 133 of The Yale Law Forum, Samir D. Parikh, professor of law at the Lewis & Clark Law School, examines the relationship between ‘opaque capital and mass-tort financing,’ and the dangers that third-party funding may pose to mass torts. In the essay, he starts from the position that litigation funders ‘will never be passive partners,’ because ‘all the tools necessary for a financier to create and control a mass-tort case are available and unregulated.’  At the heart of Parikh’s paper is the idea of the ‘Alchemist’s Inversion’, which he describes as ‘the process of employing unethical and potentially illegal tactics to create, enhance, and marshal apparently low-value claims with the hope of turning them into gold.’ Whilst he is quick to emphasise that this kind of behaviour is not currently widespread among funders, he suggests that lessons can be learned from the actions of opaque financiers in other markets and that ‘recent cases demonstrate that the arsenal is available, and deployment is underway.’  In his examination of the funding market, Parikh separates third-party financiers into three types: dedicated, sporadic, and opaque capital.  The ‘dedicated funder’ category encompasses the major litigation funders who have ‘an arguably transparent business model and willingness to engage in public debate about litigation finance.’ Parikh’s ‘sporadic funders’ are categorised as smaller players who operate less systematically, often focusing on smaller lawsuits such as personal-injury claims, and who only ‘receive public scrutiny only when they engage in some sort of malfeasance or unethical conduct.’  Most worrying to Parikh are the ‘opaque capital’ financiers, a group of ‘aggressive hedge funds and private-equity firms’ whose ‘chase for yield requires direct engagement in high-stakes, big-ticket disputes.’ He argues that these opaque funders are notable for their desire to increase their control over the outcome of litigation by ‘exerting leverage at each process point’, with a relationship between the funder and claimant which ‘allows clandestine maneuvering and influence that could undermine cases and litigants in unforeseen ways.’ The rest of the article provides an analysis of how these funders ‘can create chaos in this space’, looking at various case studies and examples to argue that ‘creation and control are the governing dynamics.’ Whilst Parikh describes the article as ‘a primarily descriptive treatment in order to spotlight the challenges posed by opaque capital,’ he concludes by suggesting that it also shows the need for reform and the introduction of measures to ensure greater oversight of funder activities. He puts forward the idea that such proposals could include enhanced disclosure requirements for funding arrangements, introducing ‘a fee to file a claim’, as well as reforms to the ‘regulation of claims marshalling’ and ‘the ways courts and attorneys verify claims. The essay can be read in full here.
Announcements Commercial People Moves

Omni Bridgeway More Than Doubles the Size of its London Investment Team

Omni Bridgeway is pleased to announce a substantial expansion of its operations in the UK with the addition of six individuals in London, bringing the total team to 11. All the new hires have significant experience in legal finance. Gian Kull joins as Regional Portfolio Manager for the UK and Senior Investment Manager and will oversee the origination and management of investments in the UK. Gian joins Omni Bridgeway from a UK-based global litigation funder where he was Chief Investment Officer. Prior to this, Gian was with Syz Capital in Zürich, where he led the build-out of a legal assets investment platform focused on litigation funding and law firm lending. Gian is joined by Investment Managers Simon Latham, Sean McGuiness, Andrew Roberts and Michael Taggart. With experience across commercial litigation funding and international arbitration, the group brings particular bench strength in competition disputes, collective redress, large-scale insolvencies, shareholder claims, offshore litigation and recovery, and sector-focused experience in infrastructure, energy and construction, among others.  "Omni Bridgeway is the world's leading funder and these appointments solidify our position," notes Raymond van Hulst, Managing Director and CEO. "These experienced new hires bring further track record to the high-calibre team we already have in London. At a time when funding options in the UK market have been reducing significantly, Omni Bridgeway is increasing its commitment and presence," he continues. "With over three decades of experience – and our footprint and operations in 26 international markets – Omni Bridgeway remains the only funder to have global originating and funding capability." The team augments Omni Bridgeway's slate of industry veterans: seasoned investment team members Alistair Croft, Camilla Godman, and Mark Wells, former founding partner of Calunius Capital who recently joined the company as Global Head of Portfolio Management. The team is rounded out by senior business development and marketing professionals Sarah Glover (formerly Burford Capital) and Steven Savage, who joined from Woodsford last month. "Collectively, the London team bring decades of funding industry experience," remarks Managing Director and Chief Investment Officer EMEA, Hannah van Roessel. "Omni Bridgeway is now even better positioned in the UK to provide on-the-ground resources and expertise for merits and enforcement funding across all types of disputes." Gian Kull concluded, "It's exciting to be leading the efforts for one of the world's top funders in such a key market for disputes funding. We are joining a highly respected team – it is strength building on strength. The quality of our combined team and the resources we can deploy will enable us to quickly deliver legal finance solutions to companies, law firms and their clients." ABOUT OMNI BRIDGEWAY Omni Bridgeway is the global leader in legal finance and risk management, including dispute and litigation finance from case inception to post-judgment enforcement and recovery. Listed on the ASX, Omni Bridgeway operates from 26 international locations.
Consumer

Funder Loses Appeal Over NFL Concussion Settlement Distribution

One of the biggest stories in sports law over recent years has been the claim that current and former players in contact sports, such as American Football, are owed compensation for concussion injuries. However, even in one of the most high profile victories for this type of claim, it seems that the involvement of funders has led to ongoing disputes about the way in which settlements have been distributed. Reporting by Reuters details last Friday’s decision by the 3rd U.S. Circuit Court of Appeals in Philadelphia, which dismissed Thrivest Specialty Funding’s appeal to intervene in a previous District Court ruling over the way settlements were paid out to individuals in the NFL concussion litigation. Thrivest, which now operates as Balanced Bridge Funding, argued that ‘the District Court is improperly administering the settlement in a manner adverse to its interests,’ because the ‘Funder Rules’ allowed for the NFL players to receive settlement payments directly rather than through their lawyers. Thrivest had previously moved to have the District Court change these rules in 2022, with the funder having cited at least two examples of players who had ‘received a direct settlement payout, and dissipated the proceeds without repaying Thrivest.’ In a 2-1 decision, the Court of Appeals panel rejected Thrivest’s argument that the District Court’s Funder Rules ‘amount to a substantive ruling that all third-party cash agreements are invalid’, describing the claim as ‘patently incorrect.’ It went on to state that ‘the Rules simply distribute funds in a particular way: directly to class members instead of through counsel,’ and that ‘Thrivest remains free to pursue a collection action.’  In what reads as a particularly damning final statement on Thrivest’s second argument that the Rules allow class members to avoid paying the funder, the panel said: ‘Put differently, it does not like the “particular way” the claims administrator is distributing funds to class members and would prefer a different method.’ As LFJ reported in November 2021, this is not the first time that Thrivest’s involvement in the NFL concussion litigation has led to subsequent disputes.
Case Developments Commercial

Camp Lejeune Litigation Attracting Growing Numbers of Fraudulent Claims

As LFJ reported in July 2023, the interest in litigation stemming from the Camp Lejeune toxic water scandal has been consistently on the rise, as a combination of legal advertising and litigation funding are contributing to what may become one of the largest mass tort cases in US history. However, the tremendous amount of attention focused on these lawsuits is now turning into a double-edged sword, as skyrocketing numbers of fraudulent claims are coming to light. An article by Bloomberg provides an in-depth overview of reports that the Camp Lejeune case is becoming a magnet for false claims, with huge numbers of robocalls and a lack of due diligence from lawyers referring cases has led to a dramatic rise in the number of fraudulent attempts to file a claim. Mikal Watts, capital partner at Watts Guerra, revealed that his firm already has 6,000 Camp Lejeune clients and that whilst auditing referrals from other lawyers, they found hundreds of bogus claims including individuals who had been specifically recruited by call centers. As Bloomberg had previously reported earlier this year, the Camp Lejeune litigation has attracted almost $2 billion in litigation funding, as funders see the strong potential of returns in a case where the settlements are guaranteed by the government. Brian Roth, CEO of Rocade Capital, spoke to Bloomberg about this surge in fraudulent claims and aptly noted that in these situations, “an influx of capital invites greed.” Roth put the spotlight on bad-faith legal marketing companies, explaining that “where you have issues is when you have leads being marketed to multiple different buyers, you have call centers without oversight.”   Driven by the government-approved payout scheme, Bloomberg confirmed from a Navy spokesperson that they had already received 117,000 claims by mid-October. All of these claims will have to be individually vetted by the Navy, but with the window to submit claims open until August 2024, the vetting required to verify each claim will likely lead to an incredibly protracted process. In the meantime, law firms representing clients in Camp Lejeune litigation will have to devote a large amount of time and resources to due-diligence when vetting new potential claimants.
Announcements Commercial People Moves

Andrey Elinson Departs A1 For His Own Investment Venture Inweasta

Established in 2022 by Andrey Elinson, Inweasta has rapidly evolved into an international business with a robust presence in prominent cities such as Dubai, Hong Kong, and Istanbul. The company's range of services is both comprehensive and continuously expanding. Catering to the financial and industrial sectors, the company offers an extensive array of consulting, legal, and investment solutions. The group's core competencies encompass investment strategies, cross-border dispute resolution, litigation funding, and distressed asset management. Andrey Elinson's departure from A1 and his subsequent dedication to Inweasta signify more than just a shift in professional allegiance; It underscores his profound belief in the company's mission and its boundless potential. Elinson expressed: "As I embark on this new chapter with Inweasta, I'm driven by the wealth of knowledge and experience I've gained in executive roles. Inweasta, with its adept team and ambitious vision, provides the perfect platform to harness that expertise. Over the next five years, we aim to evolve Inweasta into a dynamic international powerhouse, leveraging our seasoned team to deliver cutting-edge solutions and services, setting new standards in our industry." Andrey Elinson's professional track record, spanning two decades, is a testament to his expertise in private equity, strategic business development, and corporate management. In 2018, Elinson became a managing partner at A1, a prominent private equity firm and international litigation funder. Preceding this, in 2014, he held the position of Director of Assets Management at the Alfa Group Consortium, a major Russian business entity. From 2007 to 2014, Andrey Elinson devoted seven years to Basic Element, one of Russia's largest industrial conglomerates, initially serving as the Director of Corporate Governance and Internal Control, and later advancing to the role of Deputy CEO. Throughout his career, Elinson held positions on the boards of directors of various prominent companies, including AlfaStrakhovaniye, Ingosstrakh, Rosvodokanal, and En+ Group. In 2016, Andrey Elinson became a Member of the Supervisory Board of X5 Retail Group, one of Russia's largest retail operators. However, in 2020, he retired as a member of the Supervisory Board of X5 Retail Group. He also served as a member of the supervisory board of the Alfa Group Consortium and A1 Investment Holding, all of which he departed from by 2020. His departure from A1 signifies his exit from all appointed roles, redirecting his focus exclusively to his personal investment enterprise. As the founder, Andrey Elinson dedicates special focus to Inweasta, ensuring a hands-on approach to its growth and success. In return, the company places substantial trust in Elinson's well-established reputation and the professionalism exhibited by the entire team. The Inweasta team has outlined ambitious strategic goals for the upcoming five years, harnessing decades of combined experience to pioneer new industry benchmarks and propel innovation forward. About Inweasta Inweasta is an international group of companies launched in 2022. The company specializes in investments, cross-border disputes resolution, litigation funding and distress assets management. Inweasta provides full range of services related to a resolution of complex disputes and situations:
  • Litigation Funding
  • Cross-border Litigation Management
  • Investments in Distressed Assets
  • Corporate Finance and Debts Restructuring
  • Inheritance Structuring and Protection
  • Mediation of Disputes
  • Having legal, financial, investments, security, PR and other competences in-house gives Inweasta the ability to work efficiently on complicated projects that require multiple competences being applied.
Announcements Commercial People Moves

LegalPay Appoints Tanya Prasad as Chief Investment Officer

With this strategic addition to the team, LegalPay aims to reinforce its position as a dominant player in the legal finance industry, setting its sights on managing INR 50,000 crores worth of claims by the end of 2026.  LegalPay, the largest player in the litigation funding industry in India, is proud to announce the appointment of Tanya Prasad as its new Chief Investment Officer (CIO), effective immediately.  Prasad brings over 10 years of experience in cross-border litigation and international arbitration proceedings in the fields of international trade, construction disputes, energy, banking, and finance, as well as Investor-State disputes. She specialises in International Dispute Resolution and earned her LL.M. degree from the prestigious Humboldt University, Berlin. rings a wealth of experience from her previous roles at PwC, Karanjawala & Company, and MRP Advisory. She will be responsible for overseeing LegalPay’s investment strategy, portfolio management, and risk assessment.  LegalPay has enjoyed unprecedented success in the Indian litigation funding market. Its achievements have garnered widespread attention from various international litigation funders, leading to strategic partnerships with many of them.  “I welcome Tanya Prasad as our new Chief Investment Officer at LegalPay. Her extensive experience in litigations and expertise in arbitrations make her the ideal choice to lead our company’s growth in the dynamic field of litigation funding,” said Kundan Shahi, Founder & CEO of LegalPay. He further added, “Tanya Prasad’s appointment as CIO represents a pivotal moment in LegalPay’s journey. With her exceptional expertise, we are confident in our ability to scale new heights and continue making a positive impact in the legal finance industry.”  Tanya Prasad commented: “I am excited to take on the new role of Chief Investment Officer and to fulfil all responsibilities that come with it. It’s a great honour for me to be in a position to steer the growth of LegalPay in the litigation funding ecosystem in India and to strive to make LegalPay a global player. It is also important to me to further the mission of LegalPay, which is- access to justice for all.”  Furthermore, LegalPay plays a pivotal role in supporting companies undergoing insolvency by providing them with the necessary capital during such times.
Commercial Regulatory Issues

Broadridge Says Institutional Investors Don’t Need to Panic over PACCAR Decision

Much of the commentary on the Supreme Court’s ruling in PACCAR regarding litigation funding agreements (LFAs), has focused on the impact on litigation funders and law firms. However, it is also worth recognising that investors who provide the needed capital for these funding arrangements are also concerned about how their investments could be affected. A new insights article from Broadridge looks at the potential impact of the Supreme Court’s PACCAR decision on institutional investors, offering an overview of the judgement itself and providing key takeaways for those investors who are currently engaged in LFAs.  The leading takeaway from Broadridge is spelled out in clear terms: ‘do not panic.’ The fintech company argues that the Supreme Court’s ruling ‘is not going to turn the litigation funding market on its head in the UK’, with funders and law firms having been preparing in advance for this outcome. The article goes a step further and suggests that the decision may be beneficial for the industry in the long-term, providing ‘crucial guidance’ for the drafting of LFAs to avoid any questions of non-compliance or impropriety. Broadridge does note that any existing LFAs will be reviewed by funders and may require amending, but says that the degree of changes required will vary depending on the wording of each agreement. In addition, the piece emphasises that institutional investors do not need to be concerned about any proceedings where the litigation has been solely funded by the law firm itself.