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Commercial

IMN Recap: Developments in Class Action and Group Litigation

As expected, the thriving class action landscape has been a prominent topic at IMN’s International Litigation Finance Forum, with the final panel of the morning focusing on developments in class action and group litigation. The discussion was led by Andrew Jones, director at Fortress Investment Group, who guided the conversation across everything from recent changes in the class action process, to the ethical considerations for funders and lawyers, and managing origination risks. John Astill, managing director at Exton Advisors, kicked off the discussion with a detailed overview of the differing approaches taken by funders as they have been responding to the Supreme Court’s PACCAR decision. He noted that whilst there has been some divergence in pricing, most increases in multiples have been very reasonable and that when reviewing new structures, “we have to be very careful on the impact that has on the stakeholders.”  Astill went on to explain that whilst there are already several different approaches being taken in restructuring LFAs, such as introducing IRRs as a floor for duration risk, he suggested that “we will see more divergence as the market matures.” Furthermore, Astill stated that PACCAR hadn’t resulted in a downturn in demand for finding, instead they have been “seeing more appetite for law firm arrangements.”  Elena Rey, partner at Brown Rudnick, offered an optimistic perspective on concerns that had been raised that the PACCAR ruling would lead to a series of client-funder disputes. Rey explained: “We are not seeing a lot of disputes, we are working one or two coming out of PACCAR, but mostly our clients (law firms or funders) were able to mutually agree on new arrangements. We are not seeing a negative impact onto the litigation funding space, so the parties have adjusted well to the PACCAR judgement.” Moving to a more general discussion of the opportunities and challenges involved in funding class actions, Alexander Garnier, founding partner at NorthWall Capital, highlighted that it remains “a high risk space compared to some of the assets we invest in.” He described it from the investor’s perspective by saying “it’s often sailing uncharted waters, so the returns need to reflect that”, but he also noted that “it’s not just about financials, this is about levelling the playing field for people who have been wronged.” Looking at the changing environment for the funding of class actions, Lara Melrose, co-head litigation finance at Orchard Global, said that “the fundraising environment is challenging, the cost of capital is going up, there are other asset classes which are more attractive to investors than these long duration, high risk claims.” However, she also countered this by asserting that it was not a wholly treacherous climate for class action funding and said, “on the positive side, the courts are demonstrating a flexible and pragmatic approach to facilitating these claims.” Bringing the perspective of law firms back into the discussion, Becca Hogan, partner at Signature Litigation, suggested that one of the most noticeable trends was a recent but noticeable cultural change within the UK that has seen people become more comfortable with participating in claims compared to previous years. Hogan added that this has been supported by the “courts’ willingness to take a more pragmatic approach to group claims, which has driven the increase in class actions.”
Commercial Special Features

Member Spotlight: Jon Burlinson

As the Co-Founder and CEO of DealBridge.ai, Jon Burlinson has over 25 years of experience in information management, software engineering, and technical management. He is passionate about delivering advanced SaaS solutions that leverage AI and data analytics to automate tasks, optimize decision-making, and provide valuable insights, ultimately enhancing efficiency and driving better deal outcomes. Company Name & Description: DealBridge.ai is the first Deal Relationship Management (DRM) platform, revolutionizing the way private market deals are handled. Harnessing the power of Generative AI and other advanced algorithms, DealBridge.ai automates the complexities and non-linearity of deal-making. The platform streamlines origination, due diligence, and distribution of private assets, eliminating traditional, labor-intensive processes. DealBridge.ai empowers sellers and buyers of alternative products to connect effortlessly at the deal level, enhancing the overall human experience and allowing users to focus on building and nurturing valuable relationships. With automation at its core, DealBridge.ai maximizes revenue potential and elevates deal-making capabilities in private markets. Company Website: https://DealBridge.ai Year Founded: 2021 Headquarters: New York Area of Focus: Building solutions for the litigation finance community. He aims to solve core issues that have plagued the space for years, facilitating more efficient and effective deal management for all stakeholders. Member Quote: "Litigation finance evens the odds, granting access to legal recourse for parties who might otherwise be outmatched. Advanced technologies such as AI and blockchain are becoming game-changers in the litigation finance sector. They are instrumental in transforming the way we handle legal transactions, making them more transparent, streamlined, and accessible to all stakeholders involved."
Commercial

IMN Recap: Using Insurance to De-risk and Monetize Litigation and Arbitration

IMN’s agenda continued with a panel focused on the role of litigation insurance in the funding market, with the panelists attempting to answer the question: ‘how can litigants and funders use insurance to de-risk and monetize litigation and arbitration?’ Moderated by Simon Warr, lead underwriter for legal expenses at AmTrust International, the panel discussion explored the range of products being used in the industry, which types of insurance policies are seeing growth, and how funders, insurers and lawyers can continue to enhance their collaborations. Beginning with a discussion of the different types of litigation insurance that is available, the panelists focused on the prevalence of after-the-event (ATE) insurance in the UK market, whilst also putting a spotlight on the explosive growth of judgement preservation insurance (JPI) in the US. Robin Ganguly, executive director, UK & EMEA for Aon, highlighted the “huge explosion in the JPI market” and explained that as that market has matured, they are seeing a shift from “pure JPI” and towards “working with funders on a diversified portfolio basis.” The panelists also discussed the warning signs that insurers look for when receiving enquiries, with Tom Davey, co-founder of Factor Risk Management, providing the audience with some straightforward advice: “Do your homework, prepare well and take your broker’s advice.” Nathan Hull, director at VALE Insurance Partners, emphasised the importance of timing and citing situations where they receive “enquiries where the hearing has taken place and then they want to take out insurance before the judgement has come out.”  The other panelists focused on the issue of due diligence during these enquiries, as Rocco Pirozzolo, underwriting director at Harbour Underwriting, highlighted that there are real issues where clients fail to give adequate responses to supplementary questions. He encouraged prospective insurance buyers to not “be shy about the fact that there might be issues with the case.” Boris Ziser, partner at Schulte Roth & Zabel, also emphasised that there can be related risks for the insurer depending on the client, as he said that “depending on who you’re insuring, there can be a moral hazard.” Moving on to the future of the industry, Ziser highlighted that they are seeing “a lot of insurance for mass tort or collective actions cases.” Davey built upon this point and suggested that one possible reason for this increase in activity is due to the fact that “collective actions in the UK are effectively stepping into the shoes where regulators should be, the law is filling the gap.” In the US, Hull returned to the topic of JPI and stated that its popularity in the US was “because you can not only insure the judgement award but you can monetise it.”   Ending with a note of caution for the industry, Pirozzolo expressed concern that there was still not enough education and communication between lawyers and their clients about the use of insurance to manage risk. He stated that he was “not convinced those conversations are happening at a high level,” and suggested that “this is where the value of a broker comes in, when solicitors don’t feel comfortable having to explore the risk appetite of their clients.”
Commercial Deals

IMN Recap: The State of the European Litigation Finance Market

The opening panel of IMN’s Litigation Finance Forum in London provided a lively discussion around the topic of ‘The Current State of the European Litigation Finance Market’. The panel, which was moderated by Rosie Ioannou, director – legal assets at Fortress Investment Group, covered everything from the ongoing drivers of change in the market, to the innovation and competition between competing models of third-party financing. Tackling the question of what is fueling the pace of change in the market, Sarah Lieber, co-founder of JBSL, explained that “the primary driver of change is the institutionalisation of the asset class”, with the growing diversity of types of investor and capital involved leading to changes in deal structuring. Iain McKenny, director and co-founder of Profile Investment, highlighted that funders are facing pressure from both “internal and external sources”, which has led to a “hot bed of evolution […] and as a consequence you get these competing models” for litigation funding. Turning to the role of insurance in the European market, Edward Yell, managing director at Litica, stated that “the growth in Europe over the last year has been spectacular”, but emphasised that “there isn’t a single European approach” due to the differing requirements across individual jurisdictions. Yell also pointed to the entrance of new participants to the market resulting in growing sophistication in deal types, explaining that as “it’s harder to deploy capital into Europe, funders have had to be more creative to make the deals worthwhile.” Speaking from the perspective of law firms who work on the defence side of litigation, Alice Darling, senior associate at Clifford Chance, explained that there are numerous barriers to entry for defendants including a lack of awareness and a lack of desire to engage with funders. In particular, Darling said that there is a “hesitancy about bringing a third party into the case if they don’t need to”, especially where a corporate doesn’t necessarily need the capita,l and where reputational risks are high. When it comes to that issue, Darling noted that the “Burford-Sysco case did not help the narrative” around litigation funding. Looking at potential future developments for the European market, Lieber stated that “secondary trading is the hallmark of a maturing asset class,” and that moving forward it will be “necessary to think about from the beginning of every funding deal.” Yell returned to the relationship between insurers and funders, asserting that whilst the two businesses are not direct competitors at the moment, “there are products coming onto the market where you could achieve the same effect with an insurer as you would with a funder.” Darling closed the panel with an overview of developments in regulation and case law, highlighting that we would not see the real impact of PACCAR for a while, whilst the Voss Report has “gone into the long grass of the European Commission.” McKenny also suggested that a lot of the calls for regulation of third-party funding in Europe “are actually really about concerns with the litigation system rather than about funding itself.”
Commercial Special Features

Member Spotlight: Wendie Childress

Wendie Childress is an experienced commercial trial lawyer and litigation funder with an extensive and deep network across the U.S. legal and funding market. She joined Westfleet Advisors in 2023 after years of working with funding pioneers at Validity Finance and well over a decade of practicing commercial litigation at powerhouse boutique Yetter Coleman, one of the nation's premier boutique trial law firms.
In her private practice, Wendie had a winning track record representing both plaintiffs and defendants in commercial disputes across a variety of industries, including energy, financial services, healthcare, and IT. She graduated with Honors from the University of Texas at Austin, where she earned her JD in 2000. She then served for two years as General Counsel to the Texas Senate Committee on Business and Commerce. Wendie has been named to the Lawdragon "Global 100 Leaders in Litigation Finance" list and a "Houston Top Lawyer" in Business & Commercial Litigation by H Texas Magazine. She is a member of the State Bar of Texas, Texas Bar Foundation, Houston Bar Association, and Women of Litigation Finance Steering Committee. Company Name and Description:  Westfleet Advisors is the most experienced litigation finance advisory firm in the world. Our core mission is to make litigation finance work better for lawyers and their clients by equipping them with the transparency, expertise, and resources they need to secure the best terms with the right capital partner. Company Website:  https://www.westfleetadvisors.com/ Year Founded: 2013 Headquarters: Nashville Area of Focus: As Managing Director and Counsel in the Westfleet Advisors Houston office, Wendie works directly with clients and their counsel in evaluating opportunities for litigation finance transactions and advising and shepherding them through all stages of the process to ensure that they get the best possible experience and terms. Member Quote: "As a former trial lawyer and member of the litigation funding community, I have seen firsthand the need for balanced access to justice for all litigants and how funding presents an innovative and valuable way to mitigate risk and bring good cases to trial. I am so impressed with the quality of counsel and professionals within the litigation funding industry who are a pleasure to work with and eager to partner with firms and help clients succeed. I also see sweeping changes across the industry as it matures and evolves with intra-market movement, new entrants appearing daily, and new and creative solutions being derived to meet the market's changing needs. As a member of the Westfleet team, my goal is to help clients and their counsel navigate this dynamic industry to have successful outcomes with their funding experience and ultimately, their cases."
Commercial People Moves

Brendan Dyer Joins Law Finance Group as Funding Director

Law Finance Group (LFG) has announced that Brendan Dyer has joined its team, taking on the position of Funding Director and based on the East Coast. Dyer arrives at LFG with a depth of experience in both litigation funding and the wider legal sector, having most recently held the position of Vice President, Business Development at Woodsford. Prior to that, Dyer had served as the Manager of Pricing and Project Management at Goodwin, and as Senior Pricing and Business Analyst at Wilmer Hale. Dyer also founded a legal finance brokerage, LongRock Advisors, providing deal origination for commercial litigation finance. In the announcement, Dyer stated that he was “excited to work with a diverse group of colleagues and to be part of a funder with LFG’s singular longevity.” Explaining his reasoning for joining the funder, Dyer went on to emphasise “LFG’s client focus and commitment to building long-term strategic partnerships.” LFG’s president & CEO, Kevin McCaffrey expressed that they were “thrilled to be adding Brendan to the LFG team”, highlighting that Dyer’s experience “in strategy and pricing for three AmLaw firms gives him a keen understanding of law firm economics and the attendant operational constraints.” McCaffrey added that Dyer’s “ability to put himself in the shoes of all parties in the funding agreement” would further enhance LFG’s services and its “ability to provide bespoke and creative financial solutions.”
Commercial Regulatory Issues

Westfleet Advisors Publishes Study of Litigation Funding and Confidentiality

There are few issues concerning litigation finance that have received more scrutiny and commentary than the ongoing debates around transparency in third-party funding, and conversely, the level of confidentiality that is afforded to lawyers and clients who engage with funders. To provide detailed guidance for industry participants, a leading litigation finance broker and adviser has published a new study that offers detailed insights into recent developments regarding confidentiality in litigation funding. Westfleet Advisors has published a new edition of its white paper, ‘Litigation Funding and Confidentiality: A Comprehensive Analysis of Current Case Law’, which aims to provide a thorough analysis of court decisions on the ‘confidentiality of information and documents about litigation funding.’ The report notes in its introduction that the number of decisions on this subject have risen dramatically over recent years, with Westfleet’s study analysing a total of 106 court decisions. The white paper explains that there has been a common misconception that ‘lawyers were unable to predict whether a court would compel discovery of information shared with a commercial litigation funder because few decisions existed on the issue.’ It goes on to explain that despite the lack of concrete appellate court rulings on the subject, ‘enough case law exists to see the shape and trend of the law on these questions.’ Through its analysis of these 106 trial court decisions, Westfleet found that in most cases (68%), the court denied or limited discovery of any communications with litigation funders or the actual litigation funding agreements. The report also looks at the volume of decisions on this subject over time, and found that ‘since 2011, each year has seen more courts denying discovery requests related to litigation funding than granting them.’ This has been consistently true, despite the fact that the number of rulings concerning confidentiality of litigation funding has risen over the last decade. The full report, which delves into the specifics of these decisions, the reasoning that the courts applied, and the conclusions that can be drawn from these trends, can be read here.
Commercial

Incorporating Litigation Funding into Preferred Legal Panels

As legal departments in companies across every sector face increasing pressures on their budgets and litigation strategies, funders are keen to demonstrate the different ways in which they can provide support, both through direct provisions of capital and by lending their expertise in litigation matters. In an insights post from Omni Bridgeway, Carrie Freed and Matt Leland offer an overview of the challenges facing legal departments using preferred legal panel (PLP) programs, and how in-house counsel can use litigation funding to enhance these PLPs.  The use of third-party funding by in-house attorneys allows these teams to ease budget pressures, whilst still maintaining sustainable relationships with high quality outside counsel. Looking at the benefits available to legal departments, Freed and Leland begin by stating the most immediately apparent benefit that by using litigation funding, ‘the company reduces its financial risks by capping or possibly eliminating its legal fees for the life of the litigation.’  Furthermore, the rigorous analysis that funders undertake before financing a case is a useful tool for ensuring the strength of the claim, which can provide ‘reassurance to in-house counsel, business partners, and directors who might be wary about filing a claim.’ In addition to verifying the merits of a claim, funders can also bring a wealth of experience both from their teams and the vast number of past engagements with similar cases, providing in-house counsel with ‘fresh perspectives about strategy or to pressure-test arguments.’ Freed and Leland therefore recommend that companies incorporate litigation funding into their PLPs, firstly by educating their law firms about funding opportunities and then by including ‘litigation funding provisions in PLP documents’. They suggest that this could include a variety of provisions, such as setting the expectation that a law firm would ‘solicit at least one proposal for litigation funding when pitching for a plaintiff-side case.’
Announcements Commercial Legal Innovation

Doorway Capital Launches New Product: The Shelf Facility

Doorway Capital, a specialist in legal funding solutions, has launched a new funding product designed to support law firms looking for M&A opportunities to achieve their growth ambitions.

The Shelf Facility provides a firm with pre-agreed access to funding - the facility is fully underwritten and documented in advance of being required, with funds being made available as they are needed.  This structure allows firms to actively pursue acquisition opportunities in the knowledge that they can act swiftly and decisively when they find the right target.

The product is an extension of the flexible solutions Doorway Capital has been offering law firms since 2015, including funding for the merger of Moore Blatch and Barlow Robins, and various acquisitions made by AWH Solicitors, Simpson Millar and other firms.

“Doorway Capital’s new shelf facility is a gamechanger” says Abdul Hussain, Chief Executive of AWH Solicitors.  “It means that we can secure access to additional funds when we find a suitable investment opportunity in the M&A market without having to wait on credit approval.”

The launch comes in response to increased demand from across the sector, with leading M&A broker, Acquira Professional Services, reporting more than 60 M&A deals in 2023 to date, with a spike expected shortly to coincide with the PII renewal season.

“Over the last 18 months, law firms have increasingly asked Doorway for a funding commitment that can be established in advance of needing to draw upon it” says Steve Din, founder of Doorway Capital.  “The catalyst for this is, undoubtedly, the desire for law firms to make acquisitions and ensuring acquisition funding is available to be drawn, often, at very short notice.”

For more information please contact Steve Din (funding@doorwaycapital.com) or Phil Hales (bd@doorwaycapital.com).

About Doorway Capital

Doorway Capital has been providing specialist funding solutions for UK law firms since 2015.  Facilities are typically written up to values of £20m and tailored to clients’ individual needs.

“The team at Doorway Capital are extremely knowledgeable – they spent time and effort designing a facility that gave us the depth and flexibility we needed at a crucial time in our growth.  I couldn’t recommend a better funding partner for a law firm.” – Shane Hensman, CEO of Cordus Law.

As Doorway’s founder, Steve Din, was a former managing director of the global investment bank Morgan Stanley and European Head of Restructurings at Citigroup, it is no surprise that Doorway has chosen to pay close attention to the needs of law firms looking to grow by acquisition.