A panel consisting of Rebecca Berrebi, Founder & CEO of Avenue 33, Daniel Bond, Senior VP of DUAL North America, Jarvis Buckman, Managing Partner at Leste, and Steven Penaro, Partner at Alston & Bird, discussed the intersection of insurance and litigation funding. The panel was moderated by Stephen Kyriacou, Managing Director & Senior Lawyer at Aon. Stephen Kyriacou opened by pointing out how litigation risk insurance began on the defense-side, yet plaintiff-side insurance solutions are now dominating the legal insurance space. Over 90% of Aon’s litigation policies are plaintiff side. He then began the discussion on the topic of judgment preservation insurance. Mr. Kyriacou introduced a hypothetical IP case where the funder and attorney each expect to earn $20MM, and the claimant will take home $60MM. The question was asked, why should funders or attorneys look to insure their award? Jarvis Buckman pointed out the risk mitigation strategy of protecting either part or all of his judgment, in order to take some chips off the table. Rebecca Berrebi added that having an insurance-backed return helps the company book those returns on the current books and not rely as heavily on the final outcome. So even when there is an expectation of collection, insurance can often make sense. Stephen Kyriacou then laid out the three components of a submission package (at least as far as Aon is concerned):

• Case overview memorandum – Laying out counsel’s view of the strength of the judgment
• The risk profile – What the risks of the claim are, and the likelihood of their outcomes
• Aon’s perspective on the insurance – Explaining the motivations for seeking insurance, and the coverage being sought

Daniel Bond pointed out that there is alignment between how he approaches a claim with the process laid out by Stephen Kyriacou. He enjoys having that ‘new case feeling’ which you don’t often get as an attorney. The variability of outcomes provides multiple paths for underwriting, which is different than being an attorney and knowing that there is a binary outcome to your case. Mr. Bond noted that the process involves a lot of communication, to understand his counter-party and what their goals are, along with the business alignments and counter-party risks. Steven Penaro added that the matters have been heavily vetted by the time they get to his desk, as an underwriting counsel. So that implies that there is already a lot of clarification around where things stand. He studies the submission documents and develops an underwriting report and sets up an underwriting call, where the interested parties can discuss and ask questions. Typically, the process takes four to six weeks from when they get the first call until when the policy binds. Mr. Bond added that having people come in with a fresh set of eyes and ‘beat the hell out of the case’ at that juncture in its lifecycle is an extremely valuable process, even notwithstanding the insurance component. Just having experts evaluate the case is a powerful resource. The panel then covered how judgment preservation insurance might pay out, client interests around insuring legal claims, and how clients might pull proceeds from an insurance claim through insurance-backed judgment monetization. The panel offered a thorough deep dive into the insurance landscape—a topic that will no doubt be covered in future events, as these two industries continue to collaborate on mutually beneficial products and services.

Ted Farrell, Founder of Litigation Funding Advisors moderated a panel which included Fred Fabricant, Managing Partner of Fabricant LLP, Molly Pease, Managing Director of Curiam Capital, and Boris Ziser, Partner at Schulte Roth and Zabel. The topics covered in this panel discussion were:

• Getting up to speed on funding & insurance products
• How to fast track diligence and deal with exclusivity
• Negotiating key terms and spotting red flags
• Benchmarking numbers & making the waterfall work for you

The topic of insurance came up first. Molly Pease began the discussion by noting that it isn’t always the case that funders are looking to lower risk in every situation. “It’s not always the case that we’re looking to minimize risk with insurance, because that comes with a cost,” Pease noted. “We don’t necessarily want to cut into our return, so there has to be a good fit for the insurance product.” The moderator, Ted Farrell then pointed out that starting a litigation funder isn’t exactly about lowering risk.  So, risk mitigation is important, but not the primary driver of investment decision making. Boris Ziser agreed, yet noted how insurance opens the door to lot of other investors.  “More than half of our mass tort deals have insurance,” said Ziser, “with either the entire deal or a tranche of deals being insured.” Getting wrapped by a single A-rated carrier allows certain investors to participate in the investment. On the issue of judgement preservation in the IP space, Fred Fabricant explains that in the patent space, he hasn’t seen a lot of insurance products in the pre-judgement section of the case. “There are too many uncertainties, and it is very hard to assess the risk in this phase of the case.”  Fabricant is looking forward to insurance products in this phase. “In post-judgement, much easier for insurance to assess the risk, because you’ve eliminated lots of uncertainties.”  For his part, Fabricant is interested in insurance products to mitigate risk, especially in portfolio funding cases, though he hasn’t had much experience with insurance products yet. Further topics discussed included exclusivity (Fred Fabricant noted he doesn’t shop deals between funders, in order to maintain long term relationships), funder communication with clients (funders want to move just as quickly or even more quickly than lawyers and claimants—the process can be slow sometimes if claimants need to vet whether the terms are appropriate), and funder due diligence (it’s always better to be upfront about the risks of a case, since the funder will find those out eventually anyway—and every case has risks, no sense in pretending you have a panacea of a legal claim). In the end, it was an expansive panel discussion that covered a range of topics pertinent to securing a litigation funding deal.

At the European Litigation Funding Conference in March of this year, it was notable that one of the first panels of the event focused on the potential growth of litigation targeting cryptocurrency companies that have allegedly defrauded customers. Whilst it is still uncertain how viable these claims can be, given the difficulties around the valuation of the underlying assets, the announcement of a new claim being brought in the UK suggests that the appetite for these lawsuits is still present. In a press release, Mishcon de Reya LLP have announced that it will be bringing a claim in the High Court in London against those behind the OneCoin cryptocurrency scheme, which allegedly defrauded investors from around the globe. The opt-in claim will allege that OneCoin was not a legitimate cryptocurrency offering but instead “operated as a Ponzi scheme”, taking in over £4 billion in investment and resulting in the founder and their associates “pocketing vast sums of misappropriated investor funds.” Rhymal Persad, partner at Mishcon de Reya, stated: “The fraudulent OneCoin scheme concocted by Ruja Ignatova and others greatly impacted the lives of its victims who ranged from sophisticated to lay investors. The forthcoming claim in the High Court in London aims to achieve at least partial redress for those investors who were taken in by the deception and who suffered losses as a result". In the announcement, the law firm revealed that it had already secured financing from an unnamed third-party litigation funder. OneCoin investors who feels they are victims of the OneCoin scheme are encouraged to join the claim at: https://www.onecoinvictims.com/