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Commercial Legal Innovation

Growing Strength of Insurers Represents Competition for Litigation Funders

In panel discussions at industry forums and conferences, there is often much conversation around the harmonious relationship between litigation funders, litigation risk insurers and law firms. However, new insights from industry executives suggest that insurers are not just partners in the world of legal finance, but instead are more frequently positioning themselves as genuine competitors to traditional funders.  Reporting by Bloomberg Law examines the growing influence of insurers in the legal finance market, featuring insights from numerous industry executives who suggest that insurers are able to offer attractive products and services, allowing insurers to take business from traditional litigation funders. Stephen Kyriacou, managing director at Aon Plc, explains that through the offering of judgment preservation insurance, “funders have started to kind of cede that ground to us and focus on other avenues.” Bob Koneck, senior vice president at Atlantic Global Risk, highlights that insurers can compete with funders for their law firm clients because “it’s a more economical way for them to finance their litigation.” Megan Easley, who left a position at Omni Bridgeway to join CAC Speciality, argues that insurers are able to offer “more tools and more ways to create good outcomes for clients.” The article also notes that beyond the activity of these insurers in the market, their growing strength is reflected in the fact that we have seen professionals, such as Easley, leaving positions at funders to join insurers. Jason Bertoldi, head of contingent risk solutions at Willis Towers Watson, explains that “there’s been a noted influx of really talented people who are entering the space,” and there are no signs that this trend is slowing down. Reacting to the growing momentum behind insurers in the market, litigation funders are taking a pragmatic view of the impact this will have on their own businesses. Burford Capital’s co-COO, David Perla describes insurers as being an ‘adjacent’ presence to funders, rather than ‘competition’ for their market share. Cesar Bello, research and portfolio manager at Corbin Capital Partners, goes a step further and argues that whilst there has been growing discussion and concern over insurers replacing funders, “it just hasn’t happened.”
Case Developments Commercial

$23M Settlement Reached in Shareholder Class Action with Wellard

The Australian class action landscape continues to show the significance of funded claims, as we have seen numerous settlements announced and approved over recent months. This trend has continued as the respondent in a shareholder class action has announced that it has reached a settlement agreement with the group members. An ASX announcement from Wellard Limited revealed that the company has reached a $23 million settlement agreement in a class action brought by a group of its shareholders in 2020. The company, which operates as a livestock carrier operator, specified that ‘the settlement is without any admission of liability’ and that if the settlement receives court approval, the settlement payment ‘will be fully met from available insurance proceeds.’ John Klepec, executive chairman of Wellard, stated that the company is “pleased that this matter has been resolved, so we can focus on the operations of the business,” and offered reassurance that “the settlement will not impact Wellard’s cashflow.”  The class action was brought against Wellard over allegations that the prospectus for its Initial Public Offering (IPO), published in November 2015, ‘contained misleading statements or material omissions.’ Furthermore, the lawsuit claimed that Wellard had breached its continuous disclosure obligations and ‘made misleading representations as to its forecast financial performance for FY2016.’ The group members in the class action are represented by Quinn Emanuel Urquhart & Sullivan, and entered into a litigation funding agreement with ICP Funding Pty Ltd.  The case is Ewok Pty Ltd as trustee for the E & E Magee Superannuation Fund v Wellard Limited, in the Federal Court of Australia, Victoria Registry.
Announcements Commercial Legal Innovation

Dealbridge.ai Revolutionizes Deal Management With Launch of Groundbreaking Generative AI Platform

DealBridge.ai, a leading innovator in Deal Relationship Management (DRM), proudly announces the official release of its groundbreaking generative AI platform. This cutting-edge solution harnesses the power of Generative AI to automate financial, legal, and insurance processes, revolutionizing deal origination, due diligence, and distribution in the industry. As the first DRM platform to integrate Generative AI, DealBridge.ai sets itself apart by streamlining the handling of unstructured data within data rooms. Traditionally, the manual review of extensive data was a time-consuming process, but DealBridge.ai's DRM platform intelligently structures this data, enabling instantaneous freeform querying. The platform's unique ability to summarize vast amounts of information in seconds positions it as a game-changer in the deal-making arena. DealBridge.ai prioritizes data security, compliance, and risk mitigation. The platform provides a white-label Software as a Service (SaaS) solution hosted on DealBridge's secure cloud infrastructure, aligning with the robust security measures of Microsoft Office products. DealBridge's hosted Large Language Models (LLMs) ensure data privacy, and compliance is upheld with SOC2-compliant blob storage, addressing audit needs in sectors such as banking, finance, law, and insurance. "The introduction of Generative AI in DealBridge.ai's latest release marks a pivotal moment in the evolution of Deal Relationship Management. We are empowering deal professionals to redefine the way they approach due diligence and decision-making," says Joshua Masia, CEO of DealBridge.ai. DealBridge.ai's use of embedded LLMs and self-hosted vector databases, along with proprietary Retrieval Augmented Generation (RAG) solutions, sets it apart from other generative AI solutions. By building personalized models for each deal, the platform eliminates the risk of hallucinations, ensuring accuracy, reliability, and precision in the information generated. "Generative AI is not about replacing human expertise but enhancing it. Our platform ensures a seamless integration of human judgment with advanced AI capabilities, providing a synergy that is unmatched in the industry," emphasizes Jon Burlinson, Co-founder and CEO. DealBridge.ai's decision to emerge from stealth was driven by the need to engage early adopters who share the company's vision. The platform's MVP development benefited significantly from the insights and feedback provided by its initial partners, setting the stage for a practical and easy-to-adopt solution in the deal-making space. Early adopters, including Pat Shannon at Equine Capital Solutions, have expressed enthusiasm for DealBridge.ai's transformative capabilities. "The official release marks a pivotal moment, opening the floodgates for wider adoption and feedback to further improve the platform. DealBridge.ai's Generative AI is a game-changer for our industry. We are excited to integrate this innovative solution into our processes, enhancing the efficiency and accuracy of our Litigation Finance program." "The beauty of our solution is its agnosticism to asset class and industry. If you have data, we help extract value from it automatically. Whether it's Litigation Finance, Medical Underwriting, M&A, you name it, we do it," affirms Joshua Masia. DealBridge.ai has a robust roadmap with continuous updates and features based on client demands. The company is currently in trials with over a dozen partnerships and plans to announce several formal collaborations in the coming quarters. "We are on the cusp of even greater innovations. DealBridge.ai has a robust roadmap of future developments, and there's no slowing down. We are committed to continuously pushing the boundaries of what's possible in Deal Relationship Management," adds Christopher Benjamin, Co-founder and CTO. DealBridge.ai's generative AI software is available through the company's website, offering a simple onboarding process for users to join, create deals, and leverage the platform's powerful capabilities. At any point, you can elect to create your own branded white label experience that furthers your isolation of your data into a standalone environment.

ABOUT DEALBRIDGE.AI

DealBridge.ai is a trailblazing company in the field of Deal Relationship Management (DRM), offering the first platform to leverage Generative AI for automating financial, legal, and insurance processes in deal-making. With a commitment to security, compliance, and innovation, DealBridge.ai is shaping the future of secure and confident deal management. Website: www.DealBridge.ai
Commercial

Exton Advisors Offers Seven Predictions for Litigation Finance in 2024

With less than two weeks until the end of 2023, industry leaders are busy planning for next year and attempting to forecast how the litigation finance market will evolve in 2024. In a post on LinkedIn, Exton Advisors looks ahead to what opportunities and challenges the litigation finance market will face over the next 12 months, offering its top seven predictions for 2024:
  1. Increased opportunities for well capitalised funders
  2. Pricing will increase
  3. Law firm financing will increase
  4. Regulation will continue to be a topic of conversation
  5. The secondary market will continue to expand and develop
  6. Key judgements will impact funding
  7. AI and tokenisation will be disruptive
Exton’s prediction of increased opportunities highlights the potential for rising volumes of insolvency and commercial disputes, whilst the likely increase in pricing is predicted to be ‘driven by high interest rates and the overall cost of financing.’ These factors are also the drivers behind the prediction of increased law firm financing, as funders may move away from single case funding for small to mid-sized commercial claims. However, Exton’s prediction of an increase in pricing is also paired with the suggestion that funders will explore alternative fee structures and focus their capital on a smaller number of transactions. To read Exton’s full predictions and the accompanying explanations, click here.
Case Developments Commercial

Meta Class Action Set for Certification Hearing in January

As a busy year of activity for UK class actions comes to a close, the industry’s sights are already set on funded proceedings which are looking to advance in early 2024. Among the high profile cases to watch next year, an opt-out claim being brought against Meta has received an early Christmas present, as a date for its certification hearing has been announced.  An article in CDR reports that the proposed opt-out class action filed against Meta will have its certification hearing before the Competition Appeal Tribunal (CAT) on 8 and 9 January. The application for the class action, which was originally filed on 6 October, has been revised following comments from the CAT and now includes ‘an expert report from Fiona Scott Morton, Theodore Nierenberg Professor of Economics at the Yale School of Management.’ The claim, which has secured funding from Innsworth and representation from Quinn Emanuel Urquhart & Sullivan, focuses on allegations that ‘Meta has violated UK competition law by forcing users to share their data from activities outside of the Facebook platform.’ Dr Liza Lovdahl Gormsen is the proposed class representative, with the class action looking to represent any UK Facebook users who had an account “at any time between 14 February 2016 and the date of final judgment or earlier settlement of the present proposed collective proceedings, inclusive”. Kate Vernon, partner and head of the competition litigation practice at Quin Emanuel, stated that they were “pleased that a quick certification hearing for the revised application has now been listed for 8–9 January”, and emphasised that the newly included expert report “sets out a clear blueprint to trial of this important claim on behalf of the UK users of Facebook.”
Case Developments Commercial

NSW Supreme Court Ends Class Action, Citing Lack of Funding

Over recent months we have seen numerous victories for funded class actions in Australia, with litigation funders earning significant returns on their investments. However, a judgement from one of the state Supreme Courts shows that if funders lose confidence in a case, the prospect of success for group members can quickly disappear.  A judgement by the Supreme Court of New South Wales in the case of Australian Retirement Group Pty Ltd v The Commonwealth Bank of Australia Ltd (No 4), approved the settlement and discontinuance of proceedings the class action brought against CBA after the plaintiffs failed to secure litigation funding to continue the litigation.  In his decision, Justice Ball explained that ‘it is not realistic to think that the plaintiffs will be able to obtain alternative litigation funding or representation by counsel on a contingency basis.’ He went on to say that as ‘the underlying claim appears to have poor prosects of success’, and he remained unconvinced that the plaintiffs would be able to secure either funding or representation. The class action had previously received litigation funding from JustKapital Limited, with Shine Lawyers paid to represent the plaintiffs. However, JustKapital stopped funding for the case on 29 September 2020. Following the cessation in funding, Hall Partners acted for the plaintiffs starting from 20 May 2021, but ‘neither Hall Partners nor the plaintiffs have been able to arrange alternative funding.’ The class action was first brought in 2016 on behalf of small business customers of Bankwest, now a subsidiary of CBA, ‘who were placed into the Credit Asset Management (CAM) division of Bankwest and were not subsequently “rehabilitated”.’ The litigation focused on allegations that after Bankwest was acquired by CBA, the bank ‘engaged in unconscionable conduct by treating the loans of group members as nonperforming and bringing them to an end in a way that was harsh, unconscionable and in breach of provisions of the Banking Code of Conduct.’ The terms of the proposed settlement for ending the proceedings include CBA receiving a payment of $2.9 million to cover legal costs. This will be paid by AmTrust Europe Limited, ‘which provided an indemnity as security for CBA’s costs.’ In return, CBA will pay £375,000 as a contribution towards the group members’ legal costs. The full judgement can be read here.
Commercial Regulatory Issues

UK Government ‘Considering Options’ for Legislative Solutions to PACCAR

As many industry commentators suggested when the Supreme Court released its PACCAR judgement, one of the most important and interesting elements has been the UK government’s response to the decision. In a story that is developing week after week, we are beginning to see how a potential solution may not emerge from one singular piece of legislation, but could instead be divided across multiple bills. Reporting by The Law Society Gazette provides an update on the ongoing parliamentary debate over the Digital Markets, Competition and Consumers Bill (DMCC), which includes an amendment (Clause 126) that has solved the issue for funding agreements in opt-out collective actions in the Competition Appeal Tribunal (CAT). However, this amendment only provides a solution for one type of funded proceeding, and industry leaders have been keen to understand how the government may provide a wider legislative fix. During the debate in the House of Lords, this issue was raised by Lord Sandhurst (Guy Mansfield KC), who argued that ‘clause 126 needs to be redrafted and expanded’ in order to address funded cases outside of opt-out cases before the CAT. He noted that there are a wide range of funded matters that require a solution, including opt-in cases in the CAT, ‘conventional bi-party litigation’, and claims brought in the High Court.  Lord Sandhurst emphasized that without a broader legislative solution, “Claimants will have no effective access to litigation funding agreements and many cases already in the pipeline face considerable problems.” However, the Gazette article also reports that in response to a parliamentary question, Lord Bellamy, the Parliamentary Under-Secretary of State for Justice, stated that “the government is assessing the impact of the judgment and considering options for non-CAT proceedings.” Whilst no details were specified for what these options might include, this is another encouraging sign for the UK litigation funding industry, given that the government is actively looking for more comprehensive solutions to the PACCAR ruling.
Commercial Fundraising

UK Funder Sandfield Capital Raises £20M to Fuel Expansion 

Whilst the largest international funders tend to dominate the headlines in the world of litigation finance, there is a still a plethora of activity among smaller funders operating within regional markets. An article on TheBusinessDesk.com covers the news that Sandfield Capital, a UK funder based out of Liverpool, has raised £20 million in funding through a credit facility from Ampla Finance. This initial tranche is part of a wider £100 million in fundraising led by Altimapa Capital, which will allow Sandfield to further its expansion plans including bringing on an additional 10 staff to its operations team. Steven Ambrosio, co-founder and CEO of Stanfield Capital, explained the company’s strategy which focused on “cases in areas of clear demand which have been overlooked by other finance providers and help tenants, home owners and others to seek justice through the courts.” He went on to say that the £20 million “is the first phase in our journey to raise £100m to transform our business”, which will allow the funder to “meet the growing demand” of this market.  Ampla Finance’s CEO, Richard Kennerley said that his firm had identified “a number of evolving tech trends in the civil litigation arena”, and that this new capital would allow Sandfield to capitalise on these advancements whilst also providing its client base with a high quality, ethical and comprehensive offering.” Pedro Tavares, founder and CEO of Altimapa Capital, also praised Sandfield for having “a well-thought-out business model and a sound proposition,” which had been overlooked by traditional funders.  Sandfield Capital currently operates from both its Liverpool and London offices, with a staff of eight employees including Paul Meehan who serves as COO and Mark Siney as the funder’s Head of Finance.
The LFJ Podcast

Episode 81: Blake Trueblood and Ed Gehres

Hosted By Invenio Law |
In this episode, we speak with Blake Trueblood and Ed Gehres, founding partners of Invenio, LLP, a law firm specializing in legal funding transactions. Blake and Ed discuss their firm's approach and services, why claimants and law firms both benefit from having counsel with an expertise in litigation funding, the top concerns of borrowers when sourcing funders, and how Invenio works with borrowers through the full life cycle of the investment. [podcast_episode episode="12310" content="title,player,details"]