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Commercial Deals

Shoosmiths Report: 31% of UK GC’s Would Consider Third-Party Litigation Funding

As legal industry analysts continue to predict increasing degrees of litigation risk for corporations, in-house counsel are being forced to develop strategies to manage their resources that are already under threat from budget cuts. New research suggests that litigation funders may find a receptive audience among these legal professionals, with GCs at large UK companies showing interest in exploring alternative funding for litigation. Shoosmiths’ Litigation Risk 2024 report provides insight into the attitudes of in-house legal professionals in the UK, surveying over 360 senior general counsels and senior lawyers. The survey covered a wide variety of topics including emerging areas of litigation risk, allocating resources for disputes, anticipating and mitigating exposures, and responding to these increasing litigation risks. In the introduction to the report, Alex Bishop, partner and head of dispute resolution & litigation, says that ‘the fallout from geopolitical turmoil and other external shocks, GCs can rightly anticipate increasing caseloads alongside escalating litigation costs.’ As a result, report sheds some light on the views of these in-house lawyers towards the use of third-party funding to manage these escalating costs. In the section of the report on ‘allocating resources for disputes’, Shoosmiths highlight its finding that ‘increasing costs associated with litigation encourage organisations to explore new methods of funding.’ 31% of respondents said that they would consider using third-party litigation funding in response to rising litigation costs. When looking at those surveyed broken down into their respective industries, Shoosmiths found that when it comes to third-party funding, ‘twice as many GCs in the technology sector likely to consider it as a tool to combat rising costs compared with those working in financial services’. As for the reason behind this divide across industries, Shoosmiths’ report suggests that ‘financial services businesses may be less inclined to adopt third-party funding because they are less likely to be in the position of claimant.’
Commercial

Speakers and Agenda Announced for Brown Rudnick’s Litigation Funding Conference 2024

The speakers and agenda for Brown Rudnick’s upcoming Litigation Funding Conference have been announced, with an impressive range of speakers from across the litigation finance industry set to engage in a day of insightful discussions. The conference will be kicking off with a keynote speech from Camille M. Vasquez, partner and co-chair of Brown Rudnick’s Brand & Reputation Management group. Vasquez is best known for her co-leadership of Johnny Depp’s legal team in the Depp v. Heard defamation trial. The morning of the event will include three panel discussions, beginning with an opening session looking at the ‘State of the Market’, featuring Susan Dunn from Harbour Litigation Funding and Matthew Lo from Exton Advisors. This will be followed by a panel focusing on UK class actions in a post-PACCAR world, and another looking at litigation funding from the in-house perspective. Following the lunch break, the conference’s focus will expand to include discussions on law firm funding and the secondary market opportunities for litigation finance, with speakers including thought leaders from Gramercy, Leigh Day, Omni Bridgeway, and Augusta. The penultimate session of the day aims to look outside the UK, with a panel discussion focusing on collective redress in Europe. A variety of perspectives from different European jurisdictions will be included, with speakers sharing insights from the Netherlands, France, Italy and Spain. The final item on the agenda for the day will be a discussion on the latest trends and challenges in the CAT regime, featuring insights from Adam Erusalimsky at Litigation Capital Management, Genevieve Quierin at Stephenson Harwood, and Anneli Howard KC from Monckton Chambers. The full agenda and details for the conference can be found here, and LFJ looks forward to reporting live from the event on Thursday, 14 March.
Commercial Deals

Maturing Litigation Finance Market Creates Opportunities for General Counsel

The benefits of litigation funding for general counsel and legal departments are regularly espoused by litigation funders, who see a huge opportunity to support companies in monetizing their claims. In addition to reducing risk and freeing up corporate cash flow that would otherwise be lost in financing these claims, a new article suggests that in-house counsel can take advantage of third-party funding in a variety of ways.  In a guest article for Today’s General Counsel, Michael Kelley, partner at Parker Poe, takes a look at the maturation of the litigation finance industry and explores the different ways that in-house counsel can third-party funding to ‘turn the legal function from a cost center to a profit center in the eyes of their C-suites and boards of directors.’ Kelley begins his article by highlighting some of the less common use cases for litigation finance, noting that when it comes to the defense side, ‘an increasing number of corporate leaders are thinking about litigation finance as an important tool in how they manage risk.’ Whilst plaintiff-side funding is more regularly used, Kelley notes that funding agreements can be structured for defense-side clients by using a ‘repayment formula based on what the projected liability of the company would be if all claims against the company are successful.’ Kelley also points out that some legal departments are accessing litigation finance services to cover the costs of judgment preservation insurance, thereby allowing the business ‘to prudently hedge its bets in case the appeals court reduces or overturns the judgment.’ Turning to the more common use of funding to pursue claims, Kelley argues that third-party financing can allow C-suite executives to ‘think about those claims as assets they can monetize,’ whilst also preserving the company’s own cash to fuel other growth areas.  Kelley suggests that the increasing maturity of the litigation finance market brings added benefits for GCs considering third-party funding, as the growing number of established funders means that ‘the competition for meritorious and financially viable deals has increased.’
Commercial People Moves

Zachary Krug Joins NorthWall Capital as Managing Director of Legal Assets

In a post on LinkedIn, NorthWall Capital announced the appointment of Zachary Krug to the position of Managing Director of Legal Assets. Krug joins NorthWall Capital from his position as Director at Signal Capital Partners, where he led the firm’s litigation finance and legal assets strategy through a joint venture, SLF Capital Limited.  Krug’s career in litigation funding also includes over four years at Woodsford as a Senior Investment Officer, with a focus on investment opportunities in U.S. litigation, Latin American disputes, and international arbitration matters. Prior to his move into litigation finance, Krug spent a decade as a qualified litigator, having served as a senior trial associate in Quinn Emanuel’s Los Angeles office. In the announcement, NorthWall Capital highlighted Krug’s ‘decades of experience’ and stated that he would ‘play a prominent role in the expansion of our legal assets strategy.’
Announcements Commercial People Moves

Ignite Specialty Risk Launches in the US with Litigation Capital Protection Insurance

 Ignite Specialty Risk, a leading provider of litigation risk insurance, announced today the US launch of its Litigation Capital Protection Insurance offering and the appointment of litigation finance expert and former litigator, Nicole Silver as Lead Underwriter and Head of US Operations.

Ignite’s Litigation Capital Protection Insurance enables litigation funders and law firms to deploy capital across a portfolio of litigation assets with the assurance that their underlying investment will be protected even if the portfolio does not perform as expected. It is backed by a panel of AM Best A- (Excellent) rated capacity.

Ignite was founded in the UK in 2022 by a team with deep experience in both litigation funding and insurance. Following the company’s London market success offering the most extensive range of litigation insurance products among UK providers, Ignite is now bringing its Litigation Capital Protection Insurance product to the US market.

“Litigation Capital Protection Insurance is a relatively new concept to many funders and law firms, but it is quickly gaining popularity for its ability to protect a litigation asset portfolio investment and, as a result, facilitate a more efficient and robust capital structure within the asset class,” said Byron Sumner, Ignite CEO and Co-founder. “Ignite’s US team has significant experience in the structuring of these policies, having been at the forefront of their design for several years. We are excited to bring this expertise to the US market to help litigation funders and law firms benefit from a meaningful risk-transfer in the context of litigation, and ultimately secure access to justice for claimants with meritorious disputes.”

Silver, head of Ignite’s US operations, brings a 20-year track record litigating complex disputes. She has worked at Winston & Strawn and Greenberg Traurig and has appeared before numerous courts and tribunals including the US Supreme Court, various appellate and district courts, as well as the ICDR, ICC, ICSID, UNCITRAL, and the USTR. Silver’s experience in litigation finance includes work at Validity Finance, where she supervised and advised on litigation matters including performing due diligence and underwriting portfolios of cases. As a funder, she has had exposure to all aspects of litigation insurance, including ATE, judgment protection, and litigation capital protection insurance.

“Not only is Nicole considered to be a highly skilled attorney, she brings along an excellent track record of success litigating complex disputes, and her work as a funder has given her an insider’s view on all aspects of litigation insurance,” said Sumner. “Her extensive expertise within the insurance, investment, and legal communities will be invaluable to Ignite in the US market, and we could not be more delighted to be launching here with Nicole leading the charge.”

About Ignite:

Ignite Specialty Risk provides an extensive range of insurance products to meet the growing demands of the commercial litigation marketplace. Founded in March 2022 Ignite provides litigation risk insurance with AM Best Financial Strength Rating of A- (Excellent) capacity to a range of clients including litigation funders, law firms, and other lenders.

For a full list of licenses, visit ignitespecialty.com.

Consumer

Florida Litigation Finance Bill Stalls in House Without Committee Support

As LFJ reported in recent weeks, the Florida state legislature has been the latest venue to see bills introduced which seek to impose a greater array of restrictions on the use of third-party litigation funding. Whilst the Senate saw success with its draft legislation at the committee stage, the House version of the bill has now failed to move forward twice. Reporting from Florida Politics provides an update on HB 1179, the ‘Litigation Investment Safeguards and Transparency Act’, which once again had its committee vote deferred and failed to progress past the House Justice Appropriations Subcommittee. The vote on the bill was deferred due to it failing to garner the support of Republican Representatives Mike Beltran, Mike Redondo and Paula Stark, along with the absence of Rep. Wayne Duggan.  With one absentee and three Republicans remaining opposed to the bill, the vote was deferred rather than face defeat by the Democrat representatives on the committee who would constitute a majority and are also opposed to the draft legislation. In an attempt to move the bill forward, Rep. Tyler Sirois has proposed an amendment that would soften disclosure requirements around financing agreements, by excluding the amount of funding provided and details of attorney’s fees and costs from any disclosure. It is unknown whether such an amendment will be sufficient to win majority support from the committee members, and if it is, when the committee could schedule a third attempt at a vote.
Case Developments Commercial

Music Royalty Claimant Points the Finger at Litigation Funder

When large companies are targeted by lawsuits supported by third-party litigation funders, it is not uncommon for these defendants to draw public attention to the presence of these funders to raise questions about the nature of the claim itself. A press release from one such corporate defendant appears to show this same tactic being used, with the company positioning the information as part of its response to ‘media commentary’ on the lawsuit. An article in Proactive Investors covers an announcement from Hipgnosis Songs Fund (SONG), a music royalty group, related to the ongoing legal claims being brought against it in the High Court. The litigation was filed last year by Hipgnosis Music Limited, who accused SONG, its founder Merck Mercuriadis, and the company’s investment adviser Hipgnosis Songs Management (HSM), of ‘diverting business opportunities to the trust and HSM.’ The company announcement largely focused on SONG’s appointment of commercial litigation specialists, Kastle Solicitors, ‘to review the claim’, and its intention to ‘seek to secure an indemnity from Mr Mercuriadis and Hipgnosis Songs Management against any liability that might be incurred.’  However, the announcement also revealed that SONG ‘has recently become aware that Hipgnosis Music Limited has secured litigation funding’, as the plaintiff is looking to ‘recover a substantial but as yet unquantified sum under the claim’. The announcement did not reveal the identity of the litigation funder or how the company has discovered the involvement of a third-party financier.
Commercial Deals

Gordon Legal Exploring Funded Class Action Against Magnis Energy Technologies

Class actions representing investors who lost money due to the failings or fraudulent behaviour of corporate directors are a top target for litigation funders, with Australia being a prime jurisdiction for these claims. The appetite for these class actions has been highlighted once again as an Australian law firm has stated that it is exploring a claim, supported by litigation funding, against a battery manufacturing company. Reporting by The Australian reveals that Gordon Legal is investigating a potential class action against Magnis Energy Technologies, which would represent both current and former Magnis investors who suffered financial losses. The claim would primarily focus on Magnis’ actions from 2021 onwards, with the law firm exploring potential wrongdoing around the company’s directors ‘providing market sensitive information to shareholders, while the market remained uninformed.’ Speaking with The Australian, Andrew Grech, partner at Gordon Legal, emphasised that the law firm was “at the beginning, not the end, of our investigations,” but explained that the scope of the claim could include “the conduct of the directors, officers, and (Magnis’) auditors Hall Chadwick.” He also revealed that the firm had already made progress towards securing third-party funding for any potential claim, saying, “The discussions with funders are proceeding as we would hope and like us they want to get to all the facts and circumstances before any decision is made.”
Commercial Deals

Litigation Funders See ‘Incredible Opportunity’ in Impact Investing

Whilst there is much debate about what constitutes ESG investing and to what extent it is driven by a desire to achieve positive outcomes rather than increase financial returns, there can be no doubt that the litigation funding industry is increasingly focused on impact investments. An article in Bloomberg Law looks at the ongoing trend of litigation funders focusing their investments on cases with a positive social impact, with ESG issues at the forefront of many funders’ investment strategies. The article highlights several examples of new funders launching their businesses with an explicitly stated focus on impact investing, including the likes of Aristata Capital, Vallecito Capital, and Flashlight Capital. For Aristata Capital’s chief executive, Rob Ryan, the interest from funders in social impact cases is a clear result of the “recognition from investors that this is an incredible opportunity to generate impact and some significant returns.” Will Zerhouni, managing director at Flashlight Capital, argues that it speaks to the reason why legal professionals take on their vocation in the first place: “it wasn’t because this was the fastest way to money, but this was the fastest way to justice.” Looking at the trend from an outside perspective, Richard Wiles, president of the Center for Climate Integrity, acknowledges that whilst “hedge funds are going to bring a profit motive and will have a narrower set of cases that they’ll want to get involved in,” they can still offer a helping hand to plaintiffs who lack the financial resources to bring a claim.  Michael Gerrard, founder and faculty director at the Sabin Center for Climate Change Law, argues that the true test for the longevity of funders’ interest in social impact “is which of these cases will yield money.” Gerrard points out that, to date, “there hasn’t been a single court decision anywhere in the world awarding money damages against fossil fuel companies because of climate change.”