An article in Iberian Lawyer covers the announcement of PLA Litigation Funding’s appointment of Alipio Conde Herrero as a director at the company. Before PLA, Conde most recently served as Head of Legal Advisory at Bankinter, where he served for over 17 years and ‘showcased his ability to navigate complex legal matters and provide strategic counsel at the highest level.’

Commenting on the appointment, Jesús Rodrigo Lavilla, CEO of PLA Litigation Funding said: “We are thrilled to welcome Alipio to our team. His extensive experience and industry knowledge will undoubtedly strengthen our organization and further our commitment to providing top-tier legal services to our clients.”

Whilst funders operating in the UK may be waiting until after July 4 to see how the next government will approach the litigation finance industry, this does not seem to have dissuaded the appetite for funding high value class actions being brought in this jurisdiction.

An article in City A.M. covers the announcement of the UK’s ‘biggest ever’ class action case, as Willkie Farr & Gallagher has filed a claim on behalf of the British Independent Retailers Association (BIRA) against Amazon. The claim, which has been filed in the Competition Appeal Tribunal (CAT), focuses on allegations Amazon misused the data of its marketplace’s retailers and manipulated the ‘Amazon Buy Box’ feature for its own financial benefit over the interests of these retailers.

The claim is being funded by Litigation Capital Management, with the total value of the class action estimated to be worth up to £1 billion. Willkie Farr will reportedly be submitting over 1,150 pages of documents to support the allegations being made in the claim.

BIRA’s Chief Executive Andrew Goodacre provided the following statement:

“The filing of the claim today is the first step towards retailers obtaining compensation for what Amazon has done. I am confident that the CAT will authorise the claim to go forward, and I look forward to the opportunity to present the case on behalf of UK retailers. This is a watershed moment for UK retailers, but especially for small independent retailers in this country.”

IMN hosted its 6th annual Financing, Structuring and Investing in Litigation Finance conference in New York City yesterday. The event was well-attended and featured a diverse array of stakeholders, including funders, law firms, investors and corporate counsel. One of the panels covered the topic of General Counsel and their mindsets, attitudes and approach to adopting litigation funding.

The panel was moderated by Martin Gusy (MG), Partner at Bracewell. Panelists included Edward Reilly (ER), Managing Member at McDonald Hopkins, Vincent Montalto (VM), Partner at DLA Piper, and William Derrough (WD), Managing Director at Moelis & Company.

The discussion covered the following topics:

• When and how should corporate general counsel utilize litigation finance?
• Can litigation finance replace corporate legal budgets? Should it?
• How attractive is the monetization of solid cases and arbitration? Is the factoring of legal fees a bad habit to start?
• What are issues large corporations face when using litigation finance? Are there reputational issues? Others?
• Will more disclosure in the market make the use of litigation finance more attractive and viable for public companies?
• How active are corporates in monetizing large claims?

Below are some key takeaways from the discussion:

MG:  Is the GC office looked at as being a profit center, or cost center? Can you make that shift (from cost to profit)?  The benefits can take years to realize, so it’s a challenge to get the GC to think about making an investment for a payout 5 or 6 years down the road. 

VM: GCs do not have the mindset of affirmative recovery. It takes a shift in mindset for in-house counsel to start thinking about pursuing affirmative recovery.  There are too many other important things to do, and limited resources. Funders need to get some wins, and show them it works.  When a portion of the settlement or award goes back to the GC office, then they will begin to shift their mindset towards being more of a profit center.

ER: There is a corporate mindset in the GC office—they are risk averse.  A GC’s job is to avoid all kinds of risk.  It takes a lot to get a GC to think outside the box.  If you look at the Buford surveys, finance guys always have an interest in litigation funding, until they look at cost of capital and think ‘I can do better than that.’  They don’t want to take the risk on the case, and even if they win, pay off a huge percentage. So it will take a lot to change their mindsets.

WD: We've been working on a case for 7-8 years.  The CFO or CEO can easily decide to stop spending money on this at any time.  So duration risk is a real risk. That said, we think it almost always makes sense, even with higher cost of capital. Take any WACC, and it is almost always recourse. Litigation funding is non-recourse. So that is a great selling point tot he CFO.

Also, the number of players out there has probably doubled in last 5 or 6 years, so when we run a process, we can get interesting participation, not cookie cutter proposals. Some want to be in New York state court, some don’t.  Different jurisdictions are favored. So you can find the funder that works best for you.  

And remember, the perception of an asset class can change over time. There was a time when asset-based financing was a dirty word.  Nobody at the bank did any loan-to-value work. If you needed extra money, you went to asset-based lenders. All of those funders have been bought out by banks.  Now ABS is a massive market.  We have to get past people’s natural responses… showing people IRR, examples of successful litigation.  This will help change minds.

MG: Disclosure is a topic we should consider. By show of hands:  How many of you have dealt with cases where you had to disclose the identity of a funder?

(very few hands are raised).

How many of you had to disclose the entirety of a funding agreement?

(a few more hands, but not many).

VM: There are some GCs who would take offense if a funder takes an adverse position to them in a case.  If they find out funder X is funding a case against them, they might write off that funder forever.  I’ve had that happen to clients. This brings up part of the risk of disclosure, for funders. There is still an emotional response from GCs around this. 

If the industry spoke in one voice, that would be a lot easier for corporates.  Some funders are in favor of disclosure of a funding agreement.  Others say absolutely no disclosure, period.   We can all agree, disclosure of a funding agreement In its entirety has work product and other issues—everyone in the industry should agree on that.  So that can be a starting point. The industry needs to speak in one voice on this, so GCs can better wrap their heads around the issue. 

Whilst the UK government has demonstrated support for the litigation finance industry through its legislation, state governments within the US continue to indicate a growing preference for tighter rules and increased oversight around the use of third-party funding.

An article in Bloomberg Law covers the progression of SB355 through the Louisiana legislature, as it received unanimous approval from the state Senate last week and will now be sent to Governor Jeff Landry to be signed into law. SB355 requires any foreign litigation funder involved in a civil action in Louisiana to disclose its details to the state’s attorney general (AG), and to provide the AG with a copy of the funding agreement. The bill would also prohibit funders from controlling the legal action in any way and also prohibits them from being ‘assigned rights in a civil action for which the litigation funder has provided funding’.

State Senator Jeremy Stine, the legislator who introduced SB355, said that the bill will ensure that “Hostile foreign nations and sovereign wealth funds associated with hostile governments will no longer interfere in our justice system.” 

Bloomberg’s reporting notes that whilst Gov. Landry has not publicly stated whether he will sign SB355, a similar bill was vetoed by his predecessor John Bel Edwards when it was sent to the governor’s desk last year.As LFJ reported last month, SB355 is one of two pieces of draft legislation concerning third-party funding in Louisiana, with HB336 introducing additional disclosure requirements for funders involved in civil actions.

As LFJ reported in March, attempts made by Burford Capital, and its subsidiary Carina Ventures, to replace Sysco as the plaintiff in its antitrust lawsuits had achieved some success, with an Illinois court ruling in favour of their Joint Motions for Substitution of Plaintiff. However, the parties have now faced another setback as a Minnesota court has affirmed a prior ruling from a magistrate judge that denied their request.

Reporting from Reuters provides an update on the Burford-Sysco story, as a judge in the US District Court for the District of Minnesota ruled that Sysco should remain as the plaintiff in the antitrust lawsuits that Burford Capital funded. District Judge John R. Tunheim concurred with the February ruling by U.S. Magistrate Judge John Docherty, saying that there was no evidence to show that the “decision to deny the Joint Motions for Substitution of Plaintiff was clearly erroneous, especially considering the unique facts of this case.” 

Judge Tunheim’s ruling follows on from Judge Docherty’s February ruling, which found that Burford could not be named as the plaintiff in the antitrust lawsuits, as it did not have an interest in the case beyond its financial investment in the litigation. In the ruling, Judge Tunheim rejected arguments brought by Burford and Sysco that the Magistrate Judge had erred in his judgement, both on the grounds that it contravened Federal Rule of Civil Procedure 25(c) and that public policies cited by Judge Docherty actually favoured the motion for substitution.

Judge Tunheim went on to say that “Sysco and Burford’s conduct is precisely the kind of conduct of which courts are wary”, and that their motion for substitution of plaintiff “directly resulted from their attempt to resolve the dispute over whether Sysco or Burford should control this litigation.” According to Reuters, Burford is now reviewing Judge Tunheim’s decision, whilst Sysco declined to provide a comment.Judge Tunheim’s full ruling can be read here.

There have been few funded disputes that have reached the worldwide footprint of the Malaysia Sulu case, with arbitration and enforcement proceedings, criminal charges, and a significant geo-political fallout all taking place across Spain, Malaysia, France, Luxembourg, and the Netherlands. In a dispute that has now been ongoing since 2017, we do not appear to be approaching the finish line in the back-and-forth conflict between the core parties.

Reporting by Bloomberg Law covers the latest development in the ongoing saga of the Sulu dispute as Petronas Azerbaijan, an energy company owned by the Malaysian state, is now accusing Therium Capital Management of impropriety in its funding of the Sulu heirs’ case. The company has applied to the United States District Court, Southern District of New York, for an order to “conduct discovery for use in foreign proceedings” and to serve Therium with subpoenas for documents and communications that relate to the funder’s attempts to seize Petronas’ assets in Luxembourg.

Petronas’ Application for Order has its basis in the $14.9 arbitration award issued by Spanish arbitrator Gonzalo Stampa, who was later found guilty of contempt of court for improperly filing enforcement actions and ignoring orders from the Madrid High Court of Justice. Petronas said that they intended to “seek disclosure from various entities acting as custodians of records that could be relevant to its proposed civil and criminal actions against Mr. Stampa, the Funder, the Sulu Claimants, and the Sulu Claimants’ attorneys.”

Explaining the need for the disclosure of these materials, Petronas’ application stated that they “reasonably believe that the Therium Group used one or more of them to facilitate payments to Mr. Stampa”. The application goes on to say that the funder, arbitrator, the claimants and their attorneys, “collectively and/or individually knowingly and intentionally supported Mr. Stampa’s unlawful actions.” Petronas’ explained that this discovery “is for use in contemplated proceedings before a foreign tribunal”, with Spain and Luxembourg mentioned as two jurisdictions where Petronas is considering bringing claims against the aforementioned parties.The full Application for Order can be read here.