Trending Now

All Articles

3225 Articles
Commercial Special Features

Lawyer Directed Litigation Funding Agreements And Professional Conduct Rule 5.4

The following article was contributed by John Hanley, Partner at Rimon Law, and Ryan Schultz, Vice President of Business Development for Woodsford Litigation Funding. Third-party litigation funding (“TPLF”) involves financing of expenses incurred in a lawsuit (for example, expert fees and usually some portion of legal fees incurred) in exchange for a share of the final judgment or settlement. The funding is typically non-recourse (i.e., the amounts funded need not be repaid if the lawsuit is unsuccessful) and is often repaid through a financial interest in the attorneys’ fees realized by the law firm if the case is successful. These arrangements have become common in the marketplace: in 2022, $3.2 billion in capital was committed for new TPLF; 61% of that capital was deployed to law firms as opposed to clients and claimants; and 28% of the funding recipients were members of the Am Law 200.1 The question of the permissibility of such arrangements in light of Rule 5.4(a) of the New York Rules of Professional Conduct, which prohibits fee sharing with a non-lawyer, and TPLF arrangements arises. This Insight focuses on New York practice. As stated below, substantial precedent suggests that Rule 5.4(a) was not intended to preclude TPLF arrangements, and the New York City Bar Association has made two proposals intended to clarify Rule 5.4(a) in that regard. Rule 5.4(a) And TPLF Arrangements Rule 5.4(a) of the New York Rules of Professional Conduct provides, in relevant part, that a “lawyer or law firm shall not share legal fees with a non-lawyer.”2 In July 2018, the New York City Bar Association issued a non-binding opinion which concluded that future payments to a litigation funder contingent on the lawyer’s receipt of legal fees could violate Rule 5.4’s prohibition on fee sharing with non-lawyers.[1] The main thrust of the non-binding opinion was to protect the lawyer’s professional independence and judgment. The opinion was widely criticized and met with strong disagreement from the litigation finance community and some legal ethicists, who declared it is simply “wrong” or, at a minimum, overly broad and misguided.[2] In October 2018, the City Bar’s President formed the Litigation Funding Working Group (the “Working Group”) to study TPLF and provide a report. In 2020, the Working Group released a 90-page report finding that the prior opinion was neither binding nor a required rule of practice, and that Rule 5.4 should be revised to make clear that litigation funding should not be prohibited.[3] The report stated that Rule 5.4 “should be revised to reflect contemporary commercial and professional needs and realities” and “lawyers and the clients they serve would benefit if lawyers have less restricted access to funding.” The report made two proposals, both of which focused on lawyer independence and disclosure of the arrangement to clients.  The proposals are substantially similar. Proposal A would require TPLF be used for a specific legal representation, prohibit participation in the litigation by the funder and require the client’s informed consent.  Proposal B would permit funding to be used for the lawyer’s or law firm’s practice generally, allow the funder to participate in the litigation for the benefit of the client and not require the client’s informed consent although the client must be informed of the arrangement in writing. As of today, neither proposal has been implemented, and the Working Group noted that “a number of lawyers and funders believe that such a statement is unnecessary under the current Rules of Professional Conduct,” given that Rule 5.4 was not designed to prohibit such arrangements, as discussed in the following section. Court Rulings Regarding Rule 5.4 And TPLF Arrangements The courts that have addressed litigation funding in light of Rule 5.4 have concluded that the ethics rules do not preclude a financing interest in future attorneys’ fees or law firm revenue. In 2013, in Lawsuit Funding, LLC v. Lessoff, a New York trial court held that the litigation funding arrangement at issue did not violate Rule 5.4.[4] In that case, the law firm received an advance secured by future contingency fees through a litigation funding agreement styled as a Sale of Contingent Proceeds. “The [agreement] called for [the funder] to receive a portion of the contingent legal fee that [attorneys] were expected to receive if five specifically named lawsuits were adjudicated in favor of [the] clients.”[5] The court noted that “several other jurisdictions have addressed the interplay of alternative litigation financing and Rule 5.4(a),” and did not find an ethical violation.[6] Judge Bransten adopted the PNC Bank Court’s reasoning and held that the litigation funding arrangement did not violate Rule 5.4, and went on to state that:
There is a proliferation of alternative litigation financing in the United States, partly due to the recognition that litigation funding allows lawsuits to be decided on their merits, and not based on which party has deeper pockets or stronger appetite for protracted litigation. See A.B.A. Comm. on Ethics 20/20, Informational Report to the House of Delegates 2 n.6 February 2012 . . . Sandra Stern, Borrowing from Peter to Sue Paul: Legal & Ethical Issues in Financing a Commercial Lawsuit ¶ 27.02[3] (2013). Therefore, this Court adopts the PNC Bank court’s reasoning and finds that the Stipulation does not violate Rule 5.4(a) and is not unenforceable as against public policy.
In 2015, in Hamilton Cap. VII, LLC, I v. Khorrami, LLP, another New York trial court stated that “other courts have analyzed the legality of [litigation] financing arrangements between factors and law firms and held them not to run afoul of the applicable ethical rules.”[7] In that case, the lender was entitled “to a percentage of the Law Firm's gross revenue as part of the consideration for the money loaned to the Law Firm.”[8] There, the plaintiff was in the business of lending money to law firms and the loans were secured by the law firm’s accounts receivable. The law firm asserted, among other things, that the contract was unenforceable because the additional compensation to be paid to the lender in the amount of 10% of the law firm’s gross revenues collected between dates certain was an illegal fee-sharing arrangement. The court pointed to Judge Bransten’s decision in Lessoff and described it as “on point and persuasive.” Judge Kornreich ruled in favor of the lender, found the agreement was enforceable and did not violate Rule 5.4:
While it is well settled that actual fee-sharing agreements are illegal and unenforceable . . . the case law cited by defendants does not support the proposition that a credit facility secured by a law firm's accounts receivable constitutes impermissible fee sharing with a non-lawyer. To the contrary, as Justice Bransten [in Lawsuit Funding, LLC v. Lessoff] explained, courts have expressly permitted law firms to fund themselves in this manner. Providing law firms access to investment capital where the investors are effectively betting on the success of the firm promotes the sound public policy of making justice accessible to all, regardless of wealth. Modern litigation is expensive, and deep pocketed wrongdoers can deter lawsuits from being filed if a plaintiff has no means of financing her or his case. Permitting investors to fund firms by lending money secured by the firm's accounts receivable helps provide victims their day in court. This laudable goal would be undermined if the Credit Agreement were held to be unenforceable. The court will not do so.11
Both the Lessof and Hamilton cases relied significantly on PNC Bank, Delaware v. Berg, 12 in which the Delaware Superior Court noted that it is common practice for a lender to have a security interest in an attorney’s accounts receivable and there is no real “ethical” difference in a security interest in contract rights (fees not yet earned) and accounts receivable (fees earned). In finding that the financing arrangement at issue did not violate Rule 5.4, the court stated:[9]
[D]efendants suggest that it is “inappropriate” for a lender to have a security interest in an attorney's contract rights. Yet it is routine practice for lenders to take security interests in the contract rights of other business enterprises. A law firm is a business, albeit one infused with some measure of the public trust, and there is no valid reason why a law firm should be treated differently than an accounting firm or a construction firm. The Rules of Professional Conduct ensure that attorneys will zealously represent the interests of their clients, regardless of whether the fees the attorney generates from the contract through representation remain with the firm or must be used to satisfy a security interest. Parenthetically, the Court will note that there is no suggestion that it is inappropriate for a lender to have a security interest in an attorney's accounts receivable. It is, in fact, a common practice. Yet there is no real “ethical” difference whether the security interest is in contract rights (fees not yet earned) or accounts receivable (fees earned) in so far as Rule of Professional Conduct 5 .4, the rule prohibiting the sharing of legal fees with a nonlawyer, is concerned. It does not seem to this Court that we can claim for our profession, under the guise of ethics, an insulation from creditors to which others are not entitled.
Washington D.C., Utah and Arizona and other States  Washington D.C. adopted a modified rule 5.4(b) in 1991 and, until the developments beginning with Utah and Arizona in 2020, was the only jurisdiction in the United States to permit partial, limited non-lawyer ownership of law firms which removes ethical constraints that may arise regarding lawyer directed TPLF and rule 5.4(a). The Utah Supreme Court issued Standing Order No. 15 effective August 14, 2020 (the “Order”).[10] The Order establishes a pilot legal regulatory sandbox and an Office of Legal Services Innovation to oversee the operation of non-traditional legal providers and services, including entities with non-lawyer investment or ownership with the goal of improving meaningful access solutions to justice problems.  The Order has been amended twice (most recently September 21, 2022) and the program will continue until 2027.  At that time the Supreme Court will determine if and in what form the Office of Legal Services Innovation will continue. The Arizona Supreme Court issued a unanimous order that eliminated its rule 5.4 entirely, creating a new licensing requirement for alternate business structures that are partially owned by non-lawyers but that provide legal services.[11] These reforms remove ethical obstacles presented by rule 5.4(a) regarding lawyer directed TPLF but that is just incidental to their purpose – increased access to the justice system and lower costs. Other states that have considered or are considering similar regulatory reform to close the access to justice gap in the U.S. include California, Illinois, Oregon, Nevada, New Mexico, Indiana, Connecticut and New York, according to the ABA Center for Innovation's Legal Innovation Regulatory Survey.[12] Qualified Conclusion This Insight is limited to our review of the New York Rules of Professional Conduct and, in particular, Rule 5.4(a), and the limited related precedent. We note that there is no appellate decision in New York to address these issues but the two trial court decisions are persuasive authority. Practitioners should take these limitations into account in analyzing the risks associated with transactions similar to those described in this Insight. Based on the foregoing it would not be unreasonable to conclude that  a court of competent jurisdiction acting reasonably, applying the legal principles developed under the case law discussed above, after full and fair consideration of all relevant factors, and in a properly presented and argued case, would not find a TPLF arrangement which provided a lender a contingent interest in law firm revenue on a case or group of cases, similar to the arrangements discussed above, to violate Rule 5.4(a). John Hanley is a Partner at Rimon Law and drafts and negotiates litigation funding agreements on behalf of lawyers, law firms, claimants and litigation funders. Read more here Ryan Schultz is a Vice President of Business Development for Woodsford and works with claimants and leading lawyers around the world to identify meritorious claims in need of funding.  Prior to joining Woodsford, Ryan was a Partner in the Intellectual Property & Technology Group at Robins Kaplan, LLP.  Ryan helped clients monetize their IP assets in the US and around the world to provide maximum value for their innovations.  Read more here If you are interesting learning more about Litigation Funding, please reach out to John Hanley or Ryan Schultz. -- [1] The Association of the Bar of the City of New York Committee on Professional Ethics, Formal Opinion 2018-5: Litigation Funders’ Contingent Interest in Legal Fees. [2] See, e.g., Paul B. Haskel & James Q. Walker, New York City Bar Opinion Stuns the Litigation Finance Markets, Lexology (Aug. 31, 2018), available here. [3] Report to the President by the New York City Bar Association Working Group on Litigation Funding, available here [4] Lawsuit Funding, LLC v. Lessoff, No. 650757/2012, 2013 WL 6409971, at *5 (N.Y. Sup. Ct. Dec. 04, 2013). [5] Id. at *1. [6] Id. at *5 (citing PNC Bank, Delaware v. Berg, No. 94C-09-208-WTQ, 1997 WL 529978, at *10 (Del. Super. Ct. January 21, 1997); Cadle Co. v. Schlichtmann, 267 F.3d 14, 18 (1st Cir. 2001); Core Funding Grp., L.L.C. v. McDonald, No. L-05-1291, 2006 WL 832833, at *11 (Ohio Ct. App. Mar. 31, 2006); ACF 2006 Corp. v. Merritt, No. CIV-12-161, 2013 WL 466603, at *3 n.1 (W.D. Ok. Feb. 7, 2013); U.S. Claims, Inc. v. Yehuda Smolar, PC, 602 F.Supp.2d 590, 597 (E.D. Pa. March 9, 2009); U.S. Claims, Inc. v. Flomenhaft & Cannata, LLC, 519 F.Supp.2d 515, 521 (E.D. Pa Nov. 13, 2006)). [7] Hamilton Cap. VII, LLC, I v. Khorrami, LLP, 48 Misc. 3d 1223(A), 22 N.Y.S.3d 137 (N.Y. Sup. Ct. 2015). [8] Id. [9] Id. [10] Utah Supreme Court Standing Order No. 15 (Amended September 21, 2022) (utcourts.gov) [11] Order re R-20-0034 (azcourts.gov) [12] Legal Innovaon Regulatory Survey – An overview of the legal regulatory landscape related to legal innovaon and access to jusce.
Read More
Case Developments Commercial

High Court Orders Stay on GLO Application Brought by UCL Students with £4.4 Million in Litigation Funding

Over three years after the outbreak of Covid-19, claims are still being brought by individuals or groups who suffered losses due to actions taken by organizations during the pandemic. In one example of a funded group claim being brought against a university, the courts have demonstrated a desire for such cases to be resolved outside of the courtroom, and for the parties to make use of alternative dispute resolution (ADR) rather than through costly court proceedings. An article in The Law Society Gazette provides the details of judgement by Senior Master Barbara Fontaine in the High Court, which ordered an eight-month stay on the group litigation order (GLO) application made on behalf of 924 students, who claimed that UCL breached its contract in services during strike action and the pandemic. Master Fontaine ordered the stay and adjourned the application, stating: “These claims are all individually of low or modest value, group litigation can be costly, and there is a statute-backed ADR scheme in place, all factors that point in favour of the parties attempting construction discussions through some medium of ADR.” Fontaine cited concerns about the potential for significantly high costs for both parties, noting that the claimants had secured £4.4 million in litigation funding and obtained after-the-event insurance cover for any adverse costs. Fontaine highlighted that due to these factors, if the claimants were successful in their case, they would likely “receive only some two-thirds of the damages awarded to them” and even with 100 per cent of damages, it would represent only “a modest sum for each claimant.” Fontaine encouraged both parties to engage in ADR to find a suitable outcome, highlighting that the length and costly nature of such a group claim were not ideal, especially for a university whose “management, time and funds could be more productively spent than on substantial legal costs.”
Case Developments Commercial

Camp Lejeune Claims Attracting $2 Billion in Litigation Funding

The Camp Lejeune tainted water scandal has been previously discussed as one of the most promising opportunities for mass claims in the US, with new reporting suggesting that the scale of litigation has already attracted almost $2 billion in investments from several funders. An article by Bloomberg Law details the range of litigation funding that is being supplied to law firms pursuing lawsuits on behalf of approximately one million veterans who were affected by water contamination at Marine Corps Base Camp Lejeune in North Carolina, between 1953 and 1987. Citing research by Morning Investments, the article suggests that cases representing Camp Lejeune claimants have already experienced around $2 billion in litigation financing committed. Michael McDonald, partner at Morning Investments, has stated that the claims are already “saturated” with third-party funding. By analysing Uniform Commercial Code filings, Bloomberg Law has identified three law firms involved in Camp Lejeune litigation, which have already received third-party funding: TorHoerman Law, Milberg, and Bell Legal Group.  Whilst the identity of the specific funders involved has not been confirmed in each of these instances, Bloomberg’s reporting has identified Pravati Capital and Rocade Capital as two funders which have provided financing to Bell Legal Group, with the latter also having a lien with TorHoerman Law. Rocade’s CEO, Brian Roth, stated that whilst the funder’s loan to Bell Legal Group was not typical for its strategy, the law firm’s early involvement in the Camp Lejeune case was a key factor, highlighting that “Bell has been involved really longer than probably just about any firm at scale in the market.”  Jerrold Parker, founding partner at Parker Waichman LLP, another firm representing Camp Lejeune victims, suggested that funders are particularly interested in these cases because “the way the law that passed was written, it makes the recovery extremely likely.” Epitomising the value that many funders are seeing in this opportunity, Rebecca Berrebi, founder of Avenue 33, said that “nothing in investing is a sure thing, but when you’re looking for a sure thing, this is kind of the closest you can get to it.” Bloomberg also identified American Law Firm Capital as another funder that had approached law firms who are considering bringing Camp Lejeune claims. In contrast, C Cubed Capital Partners had declined a request from a law firm for $50 million in funding, with co-founder Lisa DiDario stating that whilst recovery was guaranteed in these cases, “the amounts and the timing is still to be determined.”
Announcements Case Developments Commercial

Litigation Capital Management Limited: Progress on Fund I investment

Litigation Capital Management Limited (AIM:LIT), an alternative asset manager specialising in dispute financing solutions internationally, announces a positive development on an investment within its Fund I portfolio. LCM has funded a claim advanced in respect of a breach of a bilateral investment treaty and brought under the International Centre For Settlement Of Investment Disputes (ICSID) Convention. An ICSID tribunal has issued an award on jurisdiction, liability, damages and costs in favour of LCM’s funded party. The quantum of the award entered in favour of LCM’s funded party is USD$ 76.7m (c. AUD$ 109m) plus interest and costs. This means that LCM’s funded party has succeeded in the claim. If the award is not subject to challenge and is not satisfied the dispute will move to an enforcement stage. We will assess any further funding requirements once the enforcement strategy has been finalised. The issuing of the award in favour of LCM’s funded party has significantly de-risked this investment. LCM has invested approximately AUD$ 5.7m (USD$ 4m) in this dispute to date. In line with our usual practice LCM’s returns are calculated as a rising multiple of invested capital over time. As such we cannot calculate our overall return on this investment until it concludes. The investment however is no longer attended with liability and quantum risk as that has been decided. Final performance will be announced to the market after conclusion of the investment. Patrick Moloney, CEO of LCM, commented: “This is a significant and positive development in this investment. Subject to any challenge to the very favourable award we now move to an enforcement stage, after which we will see the benefit of the leveraged returns available from our Fund Management strategy.” About LCM Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing solutions internationally, which operates two business models. The first is direct investments made from LCM's permanent balance sheet capital and the second is third party fund management. Under those two business models, LCM currently pursues three investment strategies: Single-case funding, Portfolio funding and Acquisitions of claims. LCM generates its revenue from both its direct investments and also performance fees through asset management. LCM has an unparalleled track record driven by disciplined project selection and robust risk management. Currently headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT. www.lcmfinance.com
Read More
Announcements Commercial Legal Innovation

Latest Burford Quarterly journal of legal finance addresses top trends in business of law

Burford Capital, the leading global finance and asset management firm focused on law, today releases its latest Burford Quarterly, a journal of legal finance that explores the top trends impacting the business of law. The latest issue of the Burford Quarterly 3 2023 includes:
  • Best practices for building contingency fee practices
Co-Chair of Cadwalader's antitrust litigation group Philip Iovieno shares best practices for firms and lawyers expanding contingency fee practices with Burford Chief Marketing Officer Liz Bigham.
  • Diversity, equity and inclusion in the business of law
Laura Durrant, Chief Executive Officer of the Black Talent Charter (recently signed by the UK's Supreme Court), discusses diversity in law and how to move the needle in professional services with Burford Vice President Hannah Howlett. 
  • Best practices for managing accurate litigation budgets
In-house lawyers say litigation budgets are less accurate than they would like. Senior Vice President Suzanne Grosso shares guidance on litigation budgeting. 
  • Monetization of corporate patents and patent divestitures
A group of patent experts discuss how businesses, both large and small, are monetizing corporate patents in a roundtable moderated by Managing Director Eric Carlson.
  • Mining sector dispute trends
With a $1.7 trillion increase in investment anticipated in the mining sector, experts agree that disputes are likely to arise. Experts from top firms and consultancies discuss, in a roundtable moderated by Director Jeffery Commission.
  • The rise of award monetization in Europe
More businesses in continental Europe are monetizing or assigning arbitration claims and awards to accelerate value and de-risk matters. Burford's Head of Europe Philipp Leibfried and Director Jörn Eschment discuss this trend.
  • Legal finance case law update
Recent court decisions reflect the growing acceptance of commercial legal finance. Burford Director Andrew Cohen provides an overview of relevant legal finance case law from the last year.
Read More
Commercial Regulatory Issues

Irish Law Reform Commission Publishes Consultation Paper on Third-Party Litigation Funding

Although the use of litigation funding continues to increase in many jurisdictions, both in terms of the volume of funded disputes and in the value of the legal actions being financed, those countries where its use is still prohibited are often proving slow to move towards a welcoming regulatory environment. Ireland is one such jurisdiction that many industry observers have been watching to see whether there would be any positive movement towards the acceptance of litigation financing, and we have seen a potentially encouraging sign from the Law Reform Commission. An article from Independent.ie covers the news that Ireland’s Law Reform Commission has published its ‘Consultation Paper on Third-Party Litigation Funding’, which sets out the current position on litigation finance and seeks external views on the country’s path forward. The 207-page document is divided into seven sections, which include analyses of the current Irish law on third-party funding, and then looks at policy considerations around legalisation, as well as the kinds of legislative models that could be used in any potential legalisation. In its analysis of models, the paper considers examples from England and Wales, New Zealand, and Hong Kong; with the commission examining the advantages and disadvantages of each country’s regulatory structure, and how they might be applied to Ireland’s legal system. As the commission is seeking external views on the paper, it has provided a list of questions to guide this feedback that are aimed at tackling the most important issues for any future legalisation or regulation of third-party funding in Ireland.  The commission requests any views to be submitted by 3 November 2023 and can be submitted by email at ThirdPartyFunding@lawreform.ie, or by post to the Law Reform Commission, Styne House, Upper Hatch Street, Dublin 2 D02 DY27.
Announcements Commercial

Litigation Capital Management to announce strongest results to date, dividend payment, and transition to fair value accounting

Litigation Capital Management Limited (AIM:LIT), a leading alternative asset manager of disputes financing solutions, provides a market update for the twelve month period to 30 June 2023 (“FY2023”).

Following a number of recent resolutions in the second half of FY23, the result for the full year will deliver LCM’s strongest performance to date by a significant margin. The Company is well positioned for the year ahead with in excess of A$80m in cash held at period end. We will provide further details with the release of our year end results.

The Company wishes to update the market on two important developments.

Reporting update – Transition to Fair Value Accounting

The evolution of the Company’s business over the past two years, transitioning away from the legacy direct investments business model and towards positioning LCM as an Alternative Asset Manager, necessitated the need to review the Company’s accounting policies. In consultation with our advisers, the Board has taken the important decision to transition to Fair Value accounting.  This will put LCM in line with industry peers in both accounting policy and fair value framework. In doing so, we expect to announce our audited results for FY2023 under both the existing accounting policies as well as the newly adopted Fair Value accounting. This will provide our investors with better transparency on the impact of the transition.

Dividend

Following the strong financial performance of the business during FY2023, the Board has decided to pay a dividend of 2.25p per ordinary share payable to Shareholders. The dividend timetable for this distribution will be contained within the FY2023 results announcement.

Patrick Moloney, Chief Executive Officer, commented: “We are pleased with the performance of the business over the past 12 months, particularly as we begin to see the benefits of moving to a fund management business model. Our strong financial performance is the best in LCM’s history and reflected in the Board’s decision to pay a dividend.”

Jonathan Moulds, Chair, commented: “The transition to Fair Value accounting is a significant milestone for LCM.  We believe this decision just taken by the Board should be welcomed by investors. Given the strong performance, the underlying pipeline and cash reserves LCM has built up, it is an appropriate time to pay this dividend.  The Board will continue to keep under review the optimal way to return value to shareholders, balancing our future investment opportunities with the importance of rewarding our shareholders.”

About LCM

Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing solutions internationally, which operates two business models. The first is direct investments made from LCM's permanent balance sheet capital and the second is third party fund management. Under those two business models, LCM currently pursues three investment strategies: Single-case funding, Portfolio funding and Acquisitions of claims. LCM generates its revenue from both its direct investments and also performance fees through asset management.

LCM has an unparalleled track record driven by disciplined project selection and robust risk management. Currently headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT.

www.lcmfinance.com

Read More
Announcements Commercial Fundraising

EJF CAPITAL AND ROCADE LLC RAISE APPROXIMATELY $470 MILLION FOR CREDIT-FOCUSED LITIGATION FINANCE PLATFORM

EJF Capital LLC (“EJF Capital”), a global alternative asset management firm, today announced the successful close of its fourth installment of litigation finance investment vehicles, Rocade Capital Fund IV LP and Rocade Capital Offshore Fund IV LP (the “Funds”) with approximately $220 million in investor subscriptions and commitments. Previously, EJF Capital and funds affiliated with Barings LLC, one of the world’s leading investment managers, formed a joint venture specialty finance company, Rocade LLC (“Rocade”), with $250 million of committed capital designed to invest alongside the Funds. The combined capital commitments raised across Rocade and the Funds totals approximately $470 million.

Headquartered in the Washington, D.C. area, Rocade provides flexible law firm financing solutions, with facilities ranging in size from $10 million to over $100 million secured by contingent fees receivable or other litigation assets. Since the strategy’s inception in 2014, Rocade and its predecessor have funded over $1 billion of loans to leading law firms within mass tort and other complex litigation, unlocking potential for dozens of growing law firms.

Brian Roth, Chief Executive Officer and Chief Investment Officer of Rocade, said, “We are grateful to our investors for their strong support and are pleased to welcome new institutional investors to the Rocade platform. We believe Rocade is well-positioned to leverage the team’s deep sector expertise, flexible structuring capabilities, and long-term investment approach to best serve our law firm clients.”

Emanuel Friedman, Co-Founder and Co-CEO of EJF Capital, added, “We are pleased to support Rocade’s continued growth. This expanded capital base will allow Rocade to quickly scale its platform and enable EJF to offer investors access to what we believe is an uncorrelated asset class with a credit-focused approach that offers attractive risk-adjusted returns.”

About EJF Capital

EJF Capital LLC is a global alternative asset management firm headquartered outside of Washington, D.C. with offices in London, England and Shanghai, China. As of March 31, 2023, EJF manages approximately $6.9 billion across a diverse group of alternative asset strategies. EJF has 50 employees, including a seasoned investment team of 20 professionals. The firm was founded in 2005 by Manny Friedman and Neal Wilson. To learn more, please visit http://ejfcap.com and please read additional Risks and Limitations located here.

About Rocade

Rocade LLC is a private credit firm which provides flexible growth capital for plaintiff law firms in order to finance case acquisition, manage working capital or realize settled cases. Its flexibility, industry expertise, track record and long-term focus position it to be a leading credit provider in the litigation finance space. Rocade has an experienced team of professionals, located in the Washington, D.C. area and Houston, TX, which includes both finance industry veterans as well as litigation experts. For more information, please visit https://rocadecapital.com/.

About Barings

Barings is a $362+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment.

*Assets under management as of March 31, 2023.

Read More
Case Developments Commercial

In-Principle Settlement Agreement Reached in Colonial First State Class Action

The combination of class actions and litigation funding has proven to be an incredibly powerful tool in holding large corporations to account, providing the needed capital to balance the scales between consumers and companies. This can be important for those lawsuits that must go all the way to completion to succeed, and proves that the power of third-party funding often lies in its ability to bring the defendant to the negotiating table to agree to a settlement. Reporting by Insurance News covers the latest development in the class action brought against Colonial First State Investments, which alleged that the wealth manager charged its customers excessive fees to pay commissions to financial advisers, without those advisers providing services to those customers. Following a court-ordered mediation on June 16, Colonial First State and Slater & Gordon, who have been leading the class action on behalf of consumers, agreed to a $100 million settlement which will now need to be approved by the court. Following the initial agreement of the settlement, Colonial First State said that if approved, the settlement will be distributed to “eligible group members” of the class action following any deductions to cover legal fees and commission to the third-party funder. Whilst the article does not name the specific litigation funder who has been financing this class action, Slater & Gordon’s website already confirmed that the lawsuit has been fully funded by a third-party, and none of the class action members would be required to cover the litigation costs. Even though Colonial First State has agreed to resolve the litigation through a settlement, the company made clear that it “continues to deny the allegations and makes no admissions of liability or wrongdoing.”