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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.

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.”
Commercial Regulatory Issues

Ireland Approves Third Party Rules for International Arbitration Funding 

Ireland's President has approved legislation that allows third parties to finance international commercial arbitration. Historically, Ireland has enacted a very restrictive approach to third party funding vehicles to finance litigation costs in the name of champerty.  Mondaq reports that legislative approval of Ireland's "Courts and Civil Law (Miscellaneous Provisions) Act 2023" advances many provisions concerning Ministerial Order. While Ireland still maintains a hawkish approach to champerty, now litigation financiers can enter into investment agreements to fund international arbitration proceedings.  Anticipation has been building that Ireland's Law Reform Commission may release new guidelines to vacate the broad prohibition of third party funding. Specifically, Ireland has only approved third party funding of dispute level proceedings, including international commercial arbitration, mediation, conciliation and/or court proceedings derived from international commercial arbitration. Previously, Ireland's Supreme Court had been hesitant to embrace the notion of litigation finance in any form.
Announcements Commercial Legal Innovation

FIGHTRIGHT Technologies Launches LawGeek, an AI Chatbot for Initial Legal Guidance, Under its “BharatKanoon” Brand

FIGHTRIGHT Technologies, a startup specializing in litigation funding & analytics, has announced the launch of its generative AI-based chatbot, LawGeek, today. This innovative tool, the first offering under the BharatKanoon brand, is engineered to provide users with a foundational direction for their legal queries, a pioneering move in their legal research journeys.
LawGeek, pronounced as 'logic,’ is currently in the beta phase and will serve as an initial guidepost for legal research. It will save users time by pointing them in the right direction and providing the critical information they need.
This project marks a significant stride towards revolutionizing the realm of legal research and is poised to be a precious asset for law students, legal professionals, and the general public in search of legal information.
"At FIGHTRIGHT, we have always believed in the transformative power of AI in redefining how we access legal advice," said Nitin Jain, CEO and Co-Founder of FIGHTRIGHT Technologies. "Our AI chatbot, LawGeek, in its beta version under the BharatKanoon brand, demonstrates our steadfast commitment to making basic legal knowledge more readily available to everyone."
Differentiating itself through the employment of a sophisticated generative AI model, LawGeek, in its beta phase, doesn't merely offer static responses based on pre-set rules. Instead, it is designed to comprehend users' queries in-depth and generate responses carrying pertinent information.
With continuous learning and enhancements in subsequent versions, LawGeek is expected to offer deeper insights into the litigation journeys users are embarking upon.
"Our AI chatbot is named LawGeek, combining the essence of law with the modern era's technology obsession," stated Vishal Mangal, COO and Co-Founder of FIGHTRIGHT Technologies. "The name 'LawGeek' perfectly encapsulates our vision of creating a tool that is both proficient in the complexities of law and passionate about technology, much like a 'geek'. We see LawGeek as a digital ally for those starting their legal journeys in this digital era."
The beta launch of LawGeek follows intensive testing and development, emphasizing a user-friendly, intuitive, and technically proficient tool. This launch, under the BharatKanoon brand, represents an exciting leap forward in how legal professionals and laypeople can access and understand basic legal information.
About FIGHTRIGHT Technologies
FIGHTRIGHT Technologies is an innovative startup based in Kolkata, India. Its primary areas of focus include:
Litigation Funding: FIGHTRIGHT Technologies offers non-recourse funding to claimants/litigants with commercial claims to support their litigation expenses.
Litigation Analytics: The company employs advanced AI and machine learning technologies to provide practical and reliable legal information that is strategic to any litigation. Their tools assist in processing and analyzing vast volumes of legal data, leading to more informed decisions and strategies.
Under the BharatKanoon brand, and with the beta launch of LawGeek, FIGHTRIGHT Technologies takes an essential first step towards making basic legal knowledge even more accessible. Users can now receive immediate, preliminary answers to their legal queries.
To explore how the beta version of LawGeek under BharatKanoon can provide immediate answers to your law-related questions, please visit: https://bharatkanoon.ai/
We invite you to experience the potential of AI in simplifying your legal journey, starting with LawGeek.
Case Developments Commercial

ASB Appeals High Court Decision to Allow Opt-Out Class Action to Proceed

Large scale class action claims remain a top priority for many leading funders, providing an opportunity to give significant volumes of consumers access to justice and seek compensation from large corporations. However, these claims can still face challenges and appeals from defendants before they even begin, particularly when opt-out claims look to represent a large number of consumers. An article by Interest.co.nz provides an update on a class action lawsuit that is being brought on behalf of 150,000 customers of ANZ and ASB banks, with the claim being dually funded by CASL from Australia and LPF Group in New Zealand. ASB appeared in the Court of Appeal earlier this week, to appeal last year’s High Court decision which gave the green light for the class action to proceed against the banks on an opt-out basis. The claim focuses on the banks’ alleged failure to give their customers sufficient ‘compliant disclosure’ from June 2015 until 2018, and aims to represent all customers who had a home or personal loan with the bank during this time period. The claim is seeking financial compensation for the customers, with the plaintiffs arguing that under the Credit Contracts and Consumer Finance Act (CCCFA), the banks were not entitled to charge fees or interest on the loans during the time they failed to comply with the disclosure requirements. In its appeal, ASB’s lawyer, Jack Hodder KC, argued that by allowing the claim to proceed under the opt-out basis and with these guidelines, the scope of the class action was too broad and lacked definition. In a statement, ASB noted that “the size of the proposed class is unknown”.  In response to ASB’s arguments, the plaintiff’s lawyer, Davey Salmon KC, responded that the breadth of the opt-out class action would ensure that individual customers who were affected but did not have time to pursue a claim would not be left out.
Commercial Regulatory Issues

German Implementation of the EU Representative Actions Directive Set to Impose Tighter Requirements on Litigation Funding

Among the discussion of new regulations which could affect litigation funding, one of the most important angles to consider is how each country’s implementation of the EU’s Representative Action Directive will shape the future of third-party funding for collective redress. As LFJ recently highlighted, the Dutch implementation of the directive saw litigation funding largely unaffected aside from some added disclosure requirements, but it appears not all jurisdictions will take such a light-touch approach. In a blog post from Linklaters, Mirjam Erb, litigation, arbitration & investigations senior associate, analyses the recent bill adopted by the German Bundestag for the implementation of the EU’s directive, having made alterations to the Government’s original draft. Erb provides a useful summary of the major changes which have largely seen a loosening of requirements around the opt-in period, the types of claims that can be grouped together, and capping the financial risk for claimants in the event of a loss. However, when it came to litigation funding, the Bundestag has tightened requirements compared to the Government bill, including limiting the funder’s reward to 10 per cent of the economic benefit of the successful action. When it comes to disclosure requirements, the German parliament has also gone further than the Dutch bill, by not only mandating disclosure of the existence of litigation funding but also requiring disclosure of the contractual agreements. The bill will now go to the Bundesrat, the other chamber of the German parliament, with the legislation not expected to come into force before October. Whilst this new draft has made Germany’s implementation of the directive incredibly welcoming to consumers involved in collective actions, it appears that funders may have to consider whether they wish to engage in German actions given the strict requirements.
Announcements Commercial Legal Innovation

Lex Ferenda Litigation Funding LLC Announces New ESG Initiatives Focused on Litigation Finance Education and Philanthropy

Lex Ferenda Litigation Funding LLC "LF2" recently launched two new initiatives in conjunction with its commercial funding operations. "LF2 University" or "LF2U" offers programming and content promoting education about litigation finance. Meanwhile, "LF2 Gives" serves as LF2's philanthropic arm and corporate citizenship program, through which LF2 supports the local communities in which it works. LF2U is a first-of-its-kind educational initiative that seeks to promote a better understanding of the litigation finance industry, which the program achieves by partnering with industry and subject matter experts to offer valuable, timely insights.  "We are excited to kick-off LF2U, which promotes the importance of knowledge-sharing and education in a rapidly growing and evolving industry," said Andrew Kelley, LF2's Managing Director, Underwriting & Risk. "Our expanding purpose-built course catalog is geared for and from the perspectives of different stakeholders in our ecosystem, providing access to course materials that cover a broad coverage of topics, from our Litigation Finance 101 class, to more complex subject matter like Litigation Finance Economics and Finance Ethics," said Kelley. Meanwhile, LF2 also announced its new philanthropy initiative, LF2 Gives. Alternating between community action programs and legal services offerings, LF2 Gives will sponsor twice-yearly "Action Days" during which LF2 personnel will offer their time to serve communities in which LF2 operates. LF2 Gives' first community action program took place on Tuesday, July 11, 2023, when Chief Investment Officer, Michael German, Chief Operating Officer, Chris Baildon, and Summer Associate Director, Andrew Bourhill, volunteered with The Food Brigade in New Jersey, while Mr. Kelley volunteered with the Food Bank of the Rockies. "The launch of LF2U and LF2 Gives is one of the things I've been most excited about here at LF2 because we finally get to demonstrate our commitment to industry education and corporate social responsibility," said Mr. German. Mr. Baildon, added: "Through LF2U, we seek to promote clarity, insight, and comprehension of litigation finance, ultimately driving greater understanding of the industry. With LF2 Gives, we hope to make a positive impact in our communities through meaningful volunteering efforts." LF2 invites interested parties to learn more about these initiatives (or join us!) by visiting our website. LF2 looks forward to collaborating with legal services providers, lawyers, community action organizations, and others who share our commitment to service and education.
Commercial

Litigation Finance Industry Faces ‘Rough Ride’ with Rising Inflation and Interest Rates

As LFJ outlined in an article last week, one of the key challenges facing the litigation funding market over the coming years is going to be uncertainty in the global economy, with governments battling to keep a lid on inflation. Despite an increase in disputes amid an economic downturn, funders will need to continuously monitor the situation and carefully adjust their strategies as market conditions continue to change. In a new article shared on LinkedIn, Hash Dave, managing director at Exton Advisors, offers some analysis on the impact of these challenging economic conditions on funders. Dave begins by setting out the primary issue: that litigation finance, just like any other asset class, is being ‘repriced’ and with that will come the inevitable increase in the cost of litigation financing. Additionally, Dave argues that we can expect to see more sophisticated investors turning their attention away from litigation finance and towards asset classes that are “more liquid, collateralized, scalable”. Dave suggests that under such conditions, there will be lawsuits which no longer appear financially viable for most funders, but this may not result in an overall drop in the volume of disputes due to the tremendous supply of third-party funding that is entering the market. Looking at specific areas that may suffer, Dave highlights mass torts as one type of disputes that could be at risk, due to its traditional reliance on “a series of refinancings that may require law firms to foot the economic pain”, which only become more costly moving forward. To survive these challenges, Dave argues that whilst solutions such as insurance and secondary market deals can alleviate the pain to an extent, the industry needs “to work together on innovations that can boost liquidity and change risk profiles in terms of downside protection and duration.”  Whilst Dave concludes by predicting that not all market participants will survive these turbulent times, he states that the goal should be “to ensure that the industry collectively retains the energy and momentum that’s been building for the past decade.”
Commercial Deals

Regional UK Law Firm Makes Acquisition, Supported by Funding from Harbour

One of the largest areas of growth for litigation funders in the next decade could be through funding law firms, either via broader portfolio funding structures or the more emergent trend of funders taking ownership stakes in law firms. Whilst there has been more focus on developments in regulations governing law firm ownership in the United States, a new story suggests that the UK may also be a viable setting for increased funder involvement in law firm growth. An article by The Law Society Gazette highlights the news of two regional law firms from the Midlands, Talbots Law and Rothley Law, who are expanding their operations through acquisitions. The latter of these acquisitions is of particular interest, as according to Gazette’s reporting, Rothley Law’s acquisition of Shoosmiths’ ‘private client practice’ is being backed by leading litigation funder, Harbour. Whilst the value of the acquisition has not been disclosed, this move aligns with Harbour and other funders’ ambitions to take an increasingly active role in the funding and ownership of law firms. John Verrill, chair of Rothley Law, highlighted that this acquisition is only one part of their growth plan, stating: “with Harbour’s backing, we have the flexibility and appetite for further acquisitions, with a number of potential opportunities clearly in our sights.”