Trending Now

All Articles

3380 Articles
Commercial

Lake Whillans and Above The Law Release Annual Litigation Finance Survey Report

As we approach the end of the calendar year, it is always useful to take stock and assess the state of the litigation finance industry, with the publication of an annual market survey providing useful context for industry leaders as they plan their strategies for 2024. Lake Whillans and Above The Law announced the release of their 2023 Litigation Finance Survey Report, which sought feedback from in-house counsel and attorneys at law firms on their perspective of the litigation funding market. The highlights from the report begin with a booming endorsement for the practice, as 81% of respondents who used litigation funding services for the first time said they would use it again. Even more impressively, 85% of these first-time users said that they would recommend the use of third-party funding to others. The positive experience that first-time users are having is perhaps best reflected in the fact that 38% of respondents said that litigation finance has ‘become more relevant’ to their practice in the last year. The responses from lawyers also showed that clients were the main driver behind these legal professionals using litigation funding, with 61% of respondents saying that the client’s business leaders or legal department were the main drivers behind the decision to seek outside funding. The reason for this client-driven approach is also explained, as 43% of in-house counsel stated that their strongest motivation for pursuing funding was to hedge the risk of litigation. In contrast, 45% of law firm partners highlighted a lack of funds as the key motivation. When it came to the factors that lawyers considered when choosing a funder to work with, the ‘economic terms’ of the financing was ranked as the most important issue. The survey’s data consisted of answers from 314 respondents, with in-house counsel accounting for 33% of those surveyed. The full in-depth report can be read here.
Case Developments Commercial

Australian High Court Rules in Favour of NT First Nations Community in Habitable Housing Dispute

While we often highlight the achievements in lawsuits that receive funding from large commercial litigation funders, it is also crucial to recognize the vital work that non-profit legal funders are involved in, especially in those cases that see disadvantaged and marginalized communities looking to seek justice and compensation from governmental authorities. Reporting by CHOICE covers the recent success in a case brought by residents of the Northern Territories First Nations community of Ltyentye Apurte (or Santa Teresa) against the NT government, over the local authority’s failure to provide habitable and safe housing. On November 1, the High Court ruled that the residents had a right to compensation from the government, due to its inaction when it came to maintaining these properties and thereby failing to meet the necessary legal standards. The case, which began in 2016 saw 70 households bring the case against the government, with legal representation from the Australian Lawyers for Remote Aboriginal Rights (ALRAR). The lawsuit also received third-party financing from the Grata Fund, which describes itself as ‘Australia’s first specialist non-profit strategic litigation incubator and funder.’ In a media release from Grata Fund, the non-profit’s executive director, Isabelle Reinecke highlighted that this case “is the first residential tenancy case heard by Australia’s highest court in a generation, and this historic win will have far-reaching consequences for renters nationwide.” Dan Kelly, solicitor at ALRAR also said that “the judgement establishes an important principle that public housing tenants can be compensated for distress caused by failures to maintain a rental property, and has broader implications for all tenants across the country.”  The summary of the High Court decision in Young V Chief Executive Officer (Housing) [2023] HCA 31 can be read here.
Commercial Deals

Dispute Funding as a Risk Mitigation Tool for Mining Companies

As litigation finance continues to serve a growing array of industries, it is important for funders to be able to demonstrate a keen understanding of the particular challenges facing these individual sectors, and how third-party funding can help solve these issues.  In a blog post from Omni Bridgeway, Naomi Loewith, director of strategic partnerships for Canada, analyses the three main risk factors affecting the mining industry and how litigation finance ‘can help both mitigate and address the challenges in the industry’. Drawing upon insights from EY’s latest report on the mining industry, Loewith focuses on the three following risks: capital, geopolitics, and cost and productivity. Firstly, Loewith looks at the large amounts of capital required by mining companies, who are facing increased demand for vast quantities of materials to support the global transition towards clean energy. With this pre-existing demand for capital, Loewith suggests that mining companies look at dispute financing as ‘another route to capital’, especially where these companies are engaged in commercial or investment treaty disputes that we see regularly. Secondly, Loewith highlights the increasingly contentious state of geopolitics and EY’s warning that in some countries, precious minerals and materials may be nationalized. In these situations, companies may need to pursue litigation or arbitration to safeguard their investments, with dispute funding enabling companies to pursue these meritorious cases without taking on additional risk or financial burdens. Finally, Loewith examines the dual pressures of rising costs, driven by factors such as inflation, labour and decarbonization, and the need to maximise productivity without further inflating internal costs. Loewith suggests that third-party funding can provide a key tool to remove some costs off the books by offloading legal expenses, which can have ‘a positive accounting impact while helping the company demonstrate its commitment to cost efficiency.’
Commercial Deals

Tips for Lawyers Seeking Litigation Funding

Entering into a litigation funding agreement can be a daunting prospect for lawyers who do not have experience engaging with funders, with the confidential nature of the industry leading to a lack of publicly available information on best practices for securing third-party funding.  In a post on LinkedIn, Mikołaj Burzec, an independent litigation finance advisor and broker, offers a range of advice for lawyers when it comes to approaching litigation funders and achieving the best financing arrangements.  Burzec suggests that the first and most important step for lawyers is to ensure they have a thorough understanding of what acceptance standards are held by litigation funders. In particular, this means bringing cases that will align with a funder’s ‘diligence processes and investment criteria’.  Beyond this overarching maxim, Burzec emphasises the importance of choosing the right funders to approach, as individual funders will have different preferences when it comes to the size of a deal, specific type of litigation, jurisdiction, and current stage of litigation. As part of this process, he highlights the need for lawyers to demonstrate a detailed analysis of the potential risks and challenges involved with the case, explaining that ‘providing comprehensive information helps build trust with funders, increasing the likelihood of a positive response.’ Once funders have expressed interest in a case, Burzec says that it’s equally important to have awareness of ‘the different negotiation processes employed by various funders and recognizing non-negotiable provisions in funding agreements.’ Following on from this careful navigation of the negotiation process, Burzec recommends a ‘judicious’ approach when it comes to granting exclusivity to a funder. Taking this more cautious tone whilst closely analysing a funder’s approach, ‘can help lawyers avoid potential pitfalls and maintain flexibility in pursuing alternative funding options.’
Commercial Regulatory Issues

The State of Third-Party Funding in Asia

As the litigation funding market continues to grow more competitive, enterprising funders are keen to identify regions where there is still room to build a dominant market share. Of these regions, Asia stands out as an exciting prospect for funding growth, but remains a market that is not as accessible for international funders. In an article for the China Business Law Journal, Mariana Zhong, partner at Hui Zhong Law Firm, provides an overview of the current state of litigation finance in Asia. The article provides a detailed analysis of the existing rules governing third-party funding in different Asian jurisdictions, explaining recent developments across both litigation and arbitration funding, as well as highlighting some up-and-coming domestic funders in China. Looking at the current state of regulation, Zhong points out that many of the major arbitration institutions have introduced rules allowing for the provision of third-party funding over the last decade. These institutions include the Singapore International Arbitration Centre (SIAC), the China International Economic and Trade Arbitration Commission (CIETAC), the Beijing International Arbitration Centre (BIAC), and the Hong Kong International Arbitration Centre (HKIAC). However, Zhong also emphasised that there is little uniformity among these different institutions, with disclosure requirements varying significantly between CIETAC, which has imposed stringent disclosure rules, and SIAC, which requires a much narrower disclosure around the existence of funding arrangements. In terms of recent Chinese court rulings on the legitimacy of third-party funding, Zhong explains that there have been positive signs, such as Case No. (2022) Jing 04 Min Te No. 368, where the court recognised ‘that the parties’ choice to engage third-party funders was well within their legal rights.’ However, other rulings have raised issue with the presence of outside funding, including Case No. (2021) Hu 02 Min Zhong No. 10224, in which the court ruled against the legality of the funding arrangement due to concerns over the conflict between third-party funding and ‘with public order and good morals.’ Zhong notes that whilst the global market is still dominated by large international funders, the Chinese market has seen the emergence of a few firms who are hoping to meet the demand in this burgeoning market. She highlights Hou Zhu (Hold Capital) and Ding Song (DSLC) as two Chinese funders who are ‘rapidly maturing’ and ‘engaging zealously in domestic and Asian-wide funding activities.’
Case Developments Commercial

High Court Rules in Favour of Funders in Dispute with Bugsby Property

As LFJ reported last month, the effects of the Supreme Court’s PACCAR decision are already being felt in ongoing court cases, with disputes arising between funders and their clients. Following the High Court’s rulings granting asset preservation orders for both Omni Bridgeway and Therium in their disputes with Bugsby Property, the two funders have won yet another favourable decision. An article from CDR highlights a recent decision in the High Court of England and Wales in the case of Omni Bridgeway and Therium v Bugsby Property, where the court dismissed Bugsby’s application ‘for fortification of cross-undertakings in damages’ given by Omni Bridgeway and Therium.  Bugsby had argued to the court that it required some form of security for the cross-undertakings to ensure that both funders would honour their obligations. Omni Bridgeway and Therium had argued, in their opposition to the application, that there was no significant risk that either funder would fail to meet the obligations of those cross-undertakings and that Bugsby had not provided evidence for its claim for loss. In his dismissal of the application, Mr Justice Jacobs held that Bugsby’s claim for loss was “speculative” and stated that the company had “failed to establish a good arguable case that the claimed loss will be suffered in consequence of the injunctions sought.” In response to concerns that the funders would not honour the cross-undertakings, the judge noted that both Omni Bridgeway and Therium possessed substantial capital, and there was “no real doubt as to their ability to meet a liability for GBP 5.14 million between them.” Neil Purslow, chief information officer at Therium, provided the following comment on the High Court’s decision: “We are pleased that in addition to the Asset Preservation Order, the High Court has again found against Bugsby who failed to establish that there was a realistic prospect of them entering the litigation funding market, and that as the judgement says, any claimants relying on funds provided by Bugsby might have “additional reasons for being cautious” in light of Bugsby not paying Therium and another funder what it owes them.”
Commercial Special Features

An LFJ Conversation with Byron Sumner, CEO and Co-founder, Ignite

Byron Sumner is the CEO and Co-founder of Ignite, a specialist litigation insurer built on its founding members' significant litigation and reinsurance expertise. Ignite offers large capacity limits on 'A' rated paper across various case types, along with an extensive product suite tailored to each stakeholder's unique needs. Their solutions range from straightforward contract disputes up to multi-billion pound international arbitrations. Ignite's mission is to transform the legal expenses insurance experience by providing swift and simplified solutions, transparent communication, tailored problem-solving, and unwavering support to help clients achieve their desired outcomes. Byron’s experience over the past decade includes a plethora of cross-class responsibilities within the (Re)Insurance industry, having held both analytical and transactional roles at several leading insurance organisations, including Argo Syndicate 1200, Chubb, and Aon. As well as founding an analytics and targeted client acquisition business, Byron has supported the capacity acquisition, product development, and growth strategies of several market leading MGAs. Byron’s commitment in the co-founding of Ignite is driven by a strong appetite to further develop the harmonisation of Insurance and Commercial Litigation. Below is our LFJ Conversation with Byron Sumner: Can you please provide the basics on Capital Protection Insurance (CPI)? At its most basic level, how does it work, whom does it protect, and what are the benefits?  At its core, a CPI policy safeguards an agreed portion of a funder’s outlay. A CPI policy can be purchased for a single piece of litigation, or across several litigation assets that form a portfolio of investments. Simply put, if the agreed portion of capital is not generated by a specified date outlined in the policy wording, the insurer is obligated to pay a claim in line with the deficit between the funder’s return and the policy’s limit of indemnity. The benefits of CPI go beyond the scope of most conventional insurance products, which primarily focus on the provision of ‘sleep easy’ downside protection. When leveraged efficiently, CPI offers litigation funders the opportunity to unlock a wider pool of potential investment partners and more attractively priced debt capital. How does the rise of CPI within the legal services landscape impact litigation funders when it comes to their case selection and underwriting approach?  The CPI policy does not intend to allow funders to dilute their DD approach to cases. Ignite collaborates with top-tier litigation funders who are not only expected to maintain the same high level of DD, whether insured or not, but are also obligated to adhere to specific case selection criteria and other underwriting processes to satisfy the policy’s requirements. Eligible only for discerning customers, Ignite’s CPI policy is designed to be a highly utilisable safety net in the event of an unexpected loss rather than an instrument employed to eliminate legitimate litigation risk in its entirety. What would you say the interest level is from litigation funders around your CPI product? What sorts of questions are they asking you / what concerns do they have - and how do you allay those concerns?  Interest in CPI products has steadily increased over the past three to five years. While most prospective insured partners encountered by Ignite are funders seeking to protect a portion of their capital, we now see requests for additional cover such as insured premiums and ‘upside protection’, which involves ensuring the return of a portion of capital in excess of the principal investment (>1X MOIC). The primary concern of litigation funders and their LPs/financiers regarding CPI revolves around the insurer’s ability to pay a claim in the event of a large loss. This concern is largely mitigated by Ignite’s capacity partners’ A- rating and market-leading internal underwriting team. Through adept policy structuring and procedural stipulation, we reduce the risk of a lost case to a minimum. When Ignite partners with litigation funders, what criteria are you looking for in your diligence? Ignite’s DD is extensive, and underwriting portfolio CPI ‘wrappers’ is a more complex, bespoke process when compared to single case, open market policies. Transparency is critical to the process; working in partnership with its prospective customers, Ignite’s underwriting team will initially explore a fund manager’s historical track record, as well as their internal experience and expertise, including that of their investment committee. To gain an early understanding of viability, Ignite’s team also evaluates a funder’s IRR and MOIC expectations underpinned by their assumptions around case success rate and associated recoverability. How do you see the continuing emergence of insurance products within the litigation funding sector contributing to the evolution of litigation finance over the coming years, and how will Ignite play a role in that ongoing story?  Utilisation of insurance is still a relatively new concept to many funders, particularly in the context of CPI over more traditional ATE products such as adverse costs cover. I am confident that insurance products will play a significant role in the future of litigation funding and Ignite’s increased receipt of insurance applications unequivocally attests to this upward trend. A CPI policy can not only facilitate a reduced cost of capital for funders, but also unlock the litigation asset class through the utilisation of an investment grade rating for traditionally risk-averse investors such as pension funds and insurance companies. As a result of the growing harmonisation of insurance and commercial litigation, I anticipate a greater influx of appropriately priced capital and access to justice for those claimants/plaintiffs with meritorious claims. Ignite will continue to play a leading role in this evolution by providing specialist insurance products that fulfil the needs of our customers. Ignite’s offering, which itself is always evolving, aims to work back-to-back with funders on baskets of cases which are cross collateralised, allowing insurers to benefit from the familiar benefits of diversification. As litigation funders explore new avenues to mitigate risk, the role of insurance products like CPI becomes increasingly significant. Could you share some insights into how Ignite caters to the needs and expectations of litigation funders in this changing environment? Ignite dedicates a significant amount of time and resources to developing a profound understanding of its target market. The company collaborates closely with some of the world’s premier funders to explore innovative and well-established strategies to assist in the management of their portfolios to utilise their capital more efficiently to drive better returns for all stakeholders. Ignite’s success is intricately linked to the success of its insureds, and this dynamic serves as a solid foundation for future collaborations. For example, this strong working relationship typically manifests in the seamless adaptation of standard policy documentation to cater to the specific individual needs of the funder client. Ignite consistently maintains a sharp focus on delivering a catalyst for an increase in successful case outcomes, which, ultimately benefits plaintiffs and claimants.
Commercial Special Features

Member Spotlight: Blake Trueblood

Blake Trueblood, a seasoned advocate and litigator, brings over eighteen years of experience to the forefront of the litigation finance industry. As co-founder of Invenio LLP, Blake has played a pivotal role in the firm's dedication to the emerging litigation finance sector. His extensive background includes serving as General Counsel for a group of litigation finance and claims management companies, where he assisted plaintiffs and law firms in various practice areas, from personal injury to mass torts.
Blake's entrepreneurial spirit led him to co-found and manage a Florida-based law firm, specializing in representing claimants in personal injury, discrimination, and commercial claims. His practice has catered to both individuals and businesses seeking just compensation. Beyond his legal expertise, Blake has earned the trust of entrepreneurs, Native American tribes, and media personalities. His insightful commentary on topics like litigation finance and Tribal economic development has solidified his reputation as a thought leader. Born in the Midwest and raised in Florida, Blake now splits his time between Washington, D.C., and Fort Lauderdale, where he has a home with his significant other Maria, their daughter Amber,  and his dog Bella, a chihuahua-beagle mix. As an enrolled member of the Choctaw Nation of Oklahoma, Blake is deeply connected to Native American culture and its economic development initiatives. In his free time, he's an avid hiker, runner, and Brazilian Jiu-Jitsu practitioner, holding a black belt since 2015, with a second-degree earned in 2021. Company Name & Description: Invenio LLP is a leading provider of legal services for those navigating the complexities of the litigation finance industry. Our founding partners have extensive experience in claimant funding, law firm lending, and litigation supported by third-party funding. We serve claimants, the law firms who advocate on their behalf, and the lenders and funders that provide the capital necessary to see justice through. Our lawyers bring a wealth of experience to the rapidly evolving litigation finance landscape. We’ve represented both plaintiffs and defendants in litigation, and immersed ourselves in venture start-ups and private equity ventures catering to plaintiffs, law firms, and claims development experts, giving us a unique blend of expertise suited to untangle the complexities of the litigation finance space and find solutions. Invenio is committed to increasing access to civil justice by helping plaintiffs of all types access courts and level the playing field against well-resourced defendants.  We believe litigation finance can be a force multiplier for plaintiffs and the firms that represent them. We aim to make the process of exploring and obtaining litigation finance clear, fair, and straightforward. Company Website: inveniolaw.com Year Founded: 2022 Headquarters: Invenio has joint headquarters in Washington, D.C. and Fort Lauderdale. Area of Focus: Invenio LLP is fully engaged in all aspects of the rapidly emerging litigation finance industry. The firm’s founding partners have each worked on multiple claimant funding and law firm loan transactions and have themselves litigated cases where law firm portfolio funding or third-party case funding was used. Our clients are law firms borrowing for their cases or portfolios, claimants seeking traditional third-party funding, lenders seeking assistance with underwriting and servicing of cases or portfolios of cases, and parties to disputes or workouts. We focus on Case & Portfolio Underwriting; Borrower & Claimant Side Representation; and Pre-Settlement, Post-Settlement & Medical Lien Funding. Member Quote: "We believe that litigation finance levels the playing field in the fight for access to justice, both for claimants and the attorneys and law firms that represent them on the front lines. Invenio LLP was founded on that principle, and we focus our efforts each day on ensuring that plaintiffs, their advocates, and the investors who fund their efforts get the guidance they need to navigate this complex industry."
Commercial Regulatory Issues

Lord Gold Argues Government Should Provide ‘Legislative Solution’ to PACCAR Issues

As we continue to watch the aftermath of the Supreme Court’s PACCAR decision play out in court cases and judgements, there remains the unanswered question of how the government will respond to calls for new regulations that will more clearly define the place of litigation funding agreements (LFAs).  In an op-ed for The Law Society Gazette, Lord David Gold, principal of Gold Collins Associates and investment committee chairman of Balance Legal Capital, argues that ‘it is crucial that the uncertainty created by this decision be urgently resolved.’ Lord Gold highlights the important role that legal funding plays in the UK’s civil justice system, suggesting that ‘the availability of third party funding for claimants boosts the UK courts’ status as a global legal centre.’ Given the ‘widespread market uncertainty’ caused by the PACCAR ruling, Lord Gold says that the court system will now be forced to dedicate a huge amount of time and resources to resolve all the issues around the enforceability of LFAs, ‘time which could be better allocated to dealing with other matters.’  Lord Gold argues that the best solution would be for the government to clarify the statutory position of LFAs as being separate from regulations governing DBAs, which Gold says is ‘consistent with the long held understanding of the legal market (and with the government’s original policy intent)’. He calls on the government to act swiftly, and states that a legislative fix would ‘restore contractual certainty, avoid unnecessary demands on court time and resources, and avoid disruption in the court system.’