With the numbers of insolvencies on the rise in the aftermath of the pandemic, insolvency litigation funders are seeing the market begin to shift in their favour, as reflected in new financial reporting from one of the UK’s leading funders of insolvency litigation. Manolete Partners released its unaudited half-year results for the six months up to 30 September 2023, reporting that the business has seen significant increases in case completions, new case investments and total revenues. According to the H1 FY24 results, Manolete recorded 116 case completions during this period, which marked a 21% increase from the 95 cases completed during H1 FY23. Across these cases, the average duration dropped from 14.9 months in FY23 to only 11.5 months in FY24. Manolete suggested that ‘this signifies a return to the Company's long established case duration of around 12.7 months, which had expanded temporarily due to the challenges presented by Covid.’ The funder also confirmed that it ended H1 FY24 with 417 cases that are still ongoing, which once again represented a significant increase of 58% over the same period in FY23. Moving on to Manolete’s investments, the funder reported a total of 179 new case investments in H1 FY24, representing a 116% rise from last year’s H1 total of 83 new investments. Manolete explained this increase, stating that ‘the higher level of insolvencies in the economy translated to higher new cases signed as well as the impact of the Barclay Bounce Back Loan Pilot (BBLs).’ Regarding the BBL pilot scheme, Manolete reported that since the start of the calendar year it has signed 80 of these cases and has already achieved completion on 27 cases. As LFJ reported in October, Manolete confirmed that it ‘is hopeful to shortly commence a separate BBL pilot with another well-known bank.’ Overall, Manolete recorded a 104% increase in total revenues, achieving £11.2m in H1 FY24 compared to £5.5m in H1 FY23 In his statement on the results, Steven Cooklin, Chief Executive Officer, highlighted the importance of the return of large company insolvencies “back to pre-pandemic levels”, which is now filtering down to create increased opportunities for funders focusing on insolvency litigation. He explained that “as the insolvency market develops through the current business cycle, the Directors anticipate a return to higher average case sizes, reflecting a greater mix of larger company insolvencies.”

Jade Road Investments Limited (AIM: JADE), the London quoted company focused on seeking the best risk-adjusted returns globally, announces a new investment of $250,000 into Heirloom Litigation Funding 2022 SPV XI ("Heirloom Litigation Finance").  The investment was made in support of JADE's updated Investment Policy to invest in attractive, uncorrelated, risk adjusted return opportunities. This is the second investment made by JADE under its new Investment Policy approved in February 2023.  Its first investment, in April 2023, was into an Alternatives fund which invests primarily in asset-backed and/or income-producing opportunities such as equipment leasing, agriculture and infrastructure, and that are highly uncorrelated to the general market.  Heirloom Litigation Finance has issued JADE a 1-year, 14% cash interest debt note, that is backed by a diversified portfolio of disbursement fundings for small consumer litigation claims in the UK, all backed by insurance. Interest is paid quarterly. Unlike many litigation finance opportunities, these claims fall under established precedents or quasi-governmental compensation programs, which are expected to increase the chance of success and reduce the length of time to settlement. The investment is a related party transaction under the Aim rules for Companies as Heirloom Investment Management LLC is a substantial shareholder in the Company and Heirloom Litigation Finance is a self-managed Cayman Islands company wholly owned by Heirloom Holdings. The Directors of the Company consider, having consulted with WH Ireland Limited, the Company's nominated adviser, that the terms of the transactions are fair and reasonable insofar as its shareholders are concerned. JADE recognizes the importance of genuine diversification in this volatile market, and how alternative investing can reduce volatility and improve returns in an investment portfolio.  JADE is pleased to add another investment that would be difficult for most investors to either access or diligence, and which aims to provide genuine diversification and risk-adjusted return enhancement to an investor's portfolio.  John Croft, the Company's Executive Chairman, commented: "JADE's investment in Heirloom Litigation Funding 2022 SPV XI continues to build on our updated Investment Policy and our commitment to providing our shareholders with a portfolio of investments with solid risk-adjusted global returns.  With its strong return profile, insurance -backing, short duration and high coupon, which is paid quarterly, the Heirloom Litigation Finance investment is another step forward in JADE's on-going transformation." 

Aon is a global insurance brokerage and professional services firm with approximately 50,000 employees across 120 countries that offers a wide array of risk mitigation products and structured solutions.  Aon’s Litigation Risk Group focuses on de-risking adverse outcomes in active and potential future litigation for corporate, private equity, hedge fund, law firm, and litigation finance clients through the use of insurance. Aon has spearheaded the rapid development of this insurance market over the past five years with pioneering solutions like judgment preservation insurance, insurance-backed judgment monetization, and portfolio-based “principal protection” coverage for funders and plaintiff-side law firms.  Aon’s Litigation Risk Group is the dominant market leader in the litigation and contingent risk space, having placed nearly $5 billion in total limits over just the last several years, including over $1 billion in limits in 2023 alone. Website:  https://www.aon.com/m-and-a-transaction/transactionsolutions/litigationsolutions.jsp Founded:  1982 HQ:  London (Global) and Chicago (US), with Aon’s Litigation Risk Group being based in New York About Aon’s Litigation Risk Group: Aon’s Litigation Risk Group works with a wide variety of clients across all industries and sectors of the economy, but the fastest-growing appetite for insurance solutions by far comes from litigation funders and other similar investors in litigation-related assets. Aon helps these clients protect their downside in litigation-related investments in many different circumstances, whether protecting a judgment they have obtained in a case in which they invested at inception, wrapping a loan they are making to a plaintiff-side law firm with principal protection insurance, or insuring an entire portfolio of uncorrelated investments in cases at different stages of the litigation lifecycle. Aon has fostered strong partnerships with dozens of insurance markets to bring our clients the most creative bespoke insurance solutions for the most complex litigation-related risks on the best possible coverage terms.  As the Director of Underwriting for a well-established litigation funder on whose behalf Aon has placed over $70 million in limits across a number of different investments put it:  “We have worked with the Aon’s Litigation Risk Group on a number of insurance policies over the years, and I can say unequivocally that they are second to none.  Besides being fantastic to work with, the team was also able to leverage their litigation know-how and strong relationships with insurers to obtain favorable terms for each of our policies.  Even when we had to file a claim on a policy, they jumped on it right away, handling it quickly and professionally without any need to involve a separate claims team.  We have been very happy with our partnership.”  Points of Differentiation: Innovation – Aon is a leader in terms of pushing the limits of what litigation and contingent risk insurance policies can do.  While this area of the insurance industry got its start on the defense side in the context of M&A transactions, where what is now refered to as “adverse judgment insurance” or “AJI” was used to ring-fence litigation risks that were getting in the way of an acquisition, they were the first to place insurance on plaintiff-side judgments, which led to Aon coining the term “judgment preservation insurance” or “JPI,” which is now used industry-wide and beyond. Aon was also the first to have the insight that once a judgment is insured, so long as the defendant is sufficiently creditworthy, the combination of “judgment plus JPI policy” can serve as collateral for a loan that can be made on more attractive terms than would be available without insurance.  Aon was among the first broker in the insurance industry to facilitate loans against this combination of “judgment plus insurance,” a solution they named “insurance-backed judgment monetization,” and which has now also become widespread and provided a significant boost to the broader litigation and contingent risk insurance industry.  Their team prides itself on finding new and unique uses for insurance to help our clients achieve their goals, and excels at using insurance capital to solve complex litigation-related issues. Pre-Underwriting­ – Aon’s team of former litigators has earned a reputation for submitting to insurers only the highest quality risks, after thoroughly analyzing their merits before submission to insurers. As one of the leading insurers in the litigation and contingent risk insurance space, Ambridge Partners, put it:  “We’re always happy to receive contingent risk submissions from the Aon team.  The deals are always pre-vetted and well-presented, and it’s clear that they’ve asked themselves ‘What would I want to see as an underwriter?’ – and then provide exactly that.  It makes Aon’s deals very attractive easy for us to consider.” And per Alston & Bird litigation partner Steve Penaro, “As outside counsel working with underwriters in the contingent risk space, when we see a contingent risk submission from Aon, we immediately know that is has been thoroughly vetted and the issues meticulously scrutinized.  And, once the underwriting process begins, Aon actively partners with us to ensure all relevant information is readily available and all questions have been answered allowing for a smooth close.  From the initial submission to the binding of the policy, Aon is there every step of the way.”  Given the explosive growth in this space, Aon values their underwriters’ scarce time, and enjoys a competitive advantage knowing that underwriters move Aon submissions to the top of their piles. Relationships with Insurers – Aon is not only a market leader in terms of litigation and contingent risk insurance, but also other lines of insurance written by the same carriers such as representations and warranties and tax insurance. As one lawyer we have worked with on policies for two different clients put it: “The Aon team did a magnificent job in placing adverse judgment insurance for one of my clients and judgment protection insurance for another.  They have deep contacts with the insurance market, and it was apparent to me that insurers trust their expertise and judgment.  I have not hesitated to recommend them to other attorneys.” Given the volume of business that Aon does in the broader transaction solutions insurance market, they maintain deep relationships with insurers, and that benefits their clients by helping them deliver the best possible coverage terms, pricing, and claims service. Key Metrics: Aon's Litigation Risk Group has placed billions of dollars in limits on litigation and contingent risks in the last several years, including ten separate insurance programs that each provided more than $100 million in coverage limits and four that provided at least $500 million in coverage limits. The policies placed by Aon have arisen in a variety of procedural contexts and run the gamut in terms of subject matter and types of claims – commercial litigation, breach of contract, patent infringement, trade secret misappropriation, and antitrust, just to name a few.  Aon has placed adverse judgment insurance on the defense side and judgment preservation insurance on the plaintiff side, including pre-trial, pre-judgment insurance for litigation funders to protect the value created by important evidentiary rulings that were the subject of interlocutory appeals. Aon has also placed principal protection insurance on several hundred million dollars that have been invested into early stage, pre-complaint patent litigations across multiple unique patent families. They have procured insurance for defendants who have lost significant damages verdicts at trial against the risk that an appellate court will not reverse, and have insured against adverse outcomes related to regulatory processes.  Put simply, as long as their team has access to sufficient underwritable information about the litigation risk to be insured, there are few limits on the kinds of cases or procedural postures that Aon can insure. Jurisdictions and Sectors Served: Aon’s Litigation Risk Group has insurance broking teams not only in the United States, but also in the United Kingdom (which can insure risks across much of EMEA), Bermuda, and Southeast Asia, which enables them to deliver to our clients truly global solutions across myriad jurisdictions. While the core of Aon's business remains insuring the outcome of judicial proceedings in the United States, they understand where to go to find appetite to insure litigation in other domestic courts, as well as insuring the outcome of international arbitration proceedings.  Key Stakeholders: Stephen Davidson is a Managing Director and both the Head of Aon’s Litigation Risk Group and Head of Claims for Aon’s broader Transaction Solutions team.  As Head of the LRG, Stephen works with clients and insurance markets on the development of litigation and contingent risk insurance.  As Head of Claims, Stephen manages transaction liability claims – which includes not only litigation and contingent risk insurance claims but also representation and warranty and tax insurance claims – and has overseen and helped negotiate the favorable resolution of hundreds of such claims in North America and around the world.  Prior to joining Aon in 2016, Stephen was a commercial litigation partner in DLA Piper’s New York office, and he began his career at Schulte Roth & Zabel LLP, where he worked as a litigation associate for several years. Stephen Kyriacou is a Managing Director and Senior Lawyer in Aon’s Litigation Risk Group, and was the first insurance industry hire dedicated solely to the litigation and contingent risk insurance market, which he has been working to develop and grow since 2019.  Stephen has twice received the designation of “Power Broker” from Risk & Insurance Magazine (in 2022 and 2023), which called him “a pioneer in judgment preservation insurance,” and is the only litigation and contingent risk insurance broker to have been so recognized.  While Stephen places insurance across all of Aon’s solution lines, he specializes in single-case judgment preservation insurance and adverse judgment insurance placements.  Prior to joining Aon, Stephen spent close to a decade as a complex commercial litigator at Boies, Schiller & Flexner, where he amassed significant trial, appellate, and arbitration experience representing both plaintiffs and defendants in the U.S. and abroad across a wide array of practice areas, and clerked in the U.S. District Court for the District of Columbia. Ed Conlon is a Managing Director in Aon’s Litigation Risk Group, and is the team’s resident insurance industry veteran, having been in the industry for over 15 years and having placed litigation and contingent risk insurance since 2015, when the market for such insurance was still in its embryonic stages.  While Ed brokes across all of Aon’s litigation and contingent insurance lines, he focuses primarily on developing cutting edge bespoke portfolio-based coverage structures for law firms, litigation funders, and other investors in litigation.  Ed also leverages his deep, battle-tested relationships across the broader insurance industry to bring new carriers into the growing litigation and contingent risk insurance market and to maximize limits and optimize coverage terms on Aon policies.  Prior to his current role, Ed led Aon’s Financial Institutions Group and, before that, was a complex commercial litigator and ran a complex commercial claims desk at AIG. David Hodges is a Vice President and joined Aon’s Litigation Risk Group in 2021.   David brokes across all of Aon’s litigation and contingent insurance lines, and focuses primarily on single-case judgment preservation and adverse judgment insurance placements.  Prior to joining Aon, David was a complex commercial litigator at Boies, Schiller & Flexner and Lankler Siffert & Wohl, and was also a law clerk for federal judges on the Second Circuit and D.C. District Court. Bill Baker is a Managing Director in Aon’s Litigation Risk Group and joined the team in early 2020.  Bill leads the team’s work on structured solutions, including loans that are collateralized by judgment preservation insurance policies and other financing solutions that are customized to meet the unique capital needs of our clients.  Prior to joining Aon, Bill was an investment banker at various firms throughout a 15-year career, after which time he worked in private equity and corporate roles, including strategy, corporate development, and investor relations. Mike Kenny is a Director in Aon’s Litigation Risk Group and joined the team in 2021.  Mike is responsible for the team’s structured finance solutions, including premium finance and judgment monetization.  Mike works with clients to structure bespoke credit transactions, allowing them to leverage the combination of their judgments and insurance to access the capital markets and obtain liquidity.  Mike uses his industry relationships and a broad network of investors to help clients find the best deal terms and structure for their specific needs.  Mike is also a licensed investment banker with Aon Securities.  Prior to joining Aon, Mike was an investment banker at BTIG, where he focused on M&A, public and private financing, and strategic advisory for software industry clients.  

Jamie is a Naval Academy graduate with a Johns Hopkins’ Masters in Finance. He served on a ground combat tour in Iraq, on hazardous duty in the Arabian Gulf and at the Pentagon managing an $800 million tech fund before entering the civilian sector as the CFO of a multi-million-dollar startup. He later became the COO of a 1,000-employee company owned by a NYSE listed entity. Allen then transitioned to the litigation finance sector in 2021 with the founding of Allen & Calabro. Below is our LFJ Conversation with Jamie Allen: I understand you made the transition from service member to litigation finance investor. What drove you to make this transition, and what about litigation finance has surprised you the most?  Following graduation from the US Naval Academy, I spent nearly eight years on active duty in assignments around the world.  After my service, I attended Johns Hopkins for business school (finance) and began consulting for “David like” plaintiffs in disputes stemming from the crisis of 2008.   During my own experience as an entrepreneur and an executive of a NYSE listed entity, litigation and funding thereof became my focus.  After successes with investments in probate, employment, and RICO claims, it made sense to make the transition to a full-time investor and to operate a fund, as I had managed an $800 million tech portfolio while serving at the Pentagon.  Additionally, my dad, a Navy Veteran, lawyer and seasoned entrepreneur, and J. Toji Calabro, Esq., a coast-to-coast litigator, were available to join as my co-founders.  Together, we are “business, litigation and finance,” the three staples of commercial litigation finance. The thing that has been the most surprising is the amount of open space for investments with smaller contingency based, plaintiff counsel.  Many such offices are unfamiliar with litigation finance for commercial disputes. What types of cases does Allen Calabro invest in, and what differentiates you from other funders in the market? We focus on whether the claim is meritorious first and foremost.  After that, we like small to medium investments where a small business owner or entrepreneur is out of business—or their only assets are the legal claims against the wrongdoer.  We have been in those shoes and came out successfully—and want to help our clients do the same. How does your past military and business experience inform your partnerships with your clients? The military helped me learn how to listen to varying ideas--getting along with others that may not share the same viewpoints or opinions and those with diverse backgrounds.  Listening to our clients and understanding their challenges when their backs are against the wall—enabling them with the resources to carry out the battle plan to defeat Goliath and sharing how to adapt and overcome. What are the key questions / concerns that clients ask when considering a funding partnership, and how do you allay those concerns? Clients want to know their rights and responsibilities. The amount and timing of our investment are of keen interest. We review and discuss the proposed budget explaining our risk analysis that includes the complexity of the case, defenses, the defendant’s ability to pay and an estimate of the duration of the investment among other things. The generally non-recourse nature of our investment and our willingness to provide advice from our experiences, if requested, allay many concerns. Our clients know we’ve been in “their shoes” and through our empathy and emotional support they identify with us. What are some interesting trends we should be aware of in the litigation funding space?  How do you see this sector evolving over the coming years? The trends we see are more ominous than interesting. First, there are seemingly more and more defendants that disregard the “rule of law.”  They commit clear wrongs with the knowledge that the wronged party has little ability to pursue the claim and/or “remain in the fight” as they unnecessarily prolong and add expenses to the proceedings. Second, as smaller law firms and sole practitioners become more comfortable with commercial litigation funding, we see an improvement in civil justice.  Unfortunately, we also see the potential for an economic downturn like 2008.  That will increase the demand for commercial litigation funding, and we will be there to help our “Davids.”