On the back of its successful launch of 11Onze Recommends, Europe’s leading community fintech has added housing litigation to enhance its funding offer. 11Onze has also lowered the entry requirement for the product to € 10,000 (from € 25,000) to widen its access to more members. The housing claims are for housing disrepair, especially social housing disrepair. Explaining the new offer, 11Onze Chairman James Sène said, “11Onze Recommends is a social justice product and it lets us finance lawsuits against banks and institutions that have used illegal practices against their clients.” “In times of economic distress when conditions are uncertain, it makes perfect sense to diversify savings into safe-haven assets such as precious metals or investments that help fight inflation if we want to protect our capital. Although bank deposits are beginning to improve their yields as a result of rising interest rates, they are still not enough to compensate for the loss of purchasing power caused by high inflation.” “So, to offer our members and clients a sound return on investment (ROI), 11Onze launched 11Onze Recommends as it secures the short-term purchasing power of investors when there are no viable alternatives to maintain the value of money.” Sène added, “Right now, our UK provider is arranging litigation funding with a win rate of over 90%. This is because many large banks have been proven to have committed illegal practices against their clients and have had to provide more than 60 billion euros.” Litigation funding enables these claims to be pursued by financing the court cases of the pertinent law firm. In return, the profits are shared between the plaintiffs and those who finance the lawsuits. It achieves returns of between 9% and 11% for a minimum contribution of €10,000. On the back of success in litigation funding against banks, 11Onze decided to enter the litigation on housing claims. In the UK, if you live in rented social housing that is in poor condition, the law requires the landlord to make repairs to ensure a decent standard of living. For their part, councils who are responsible for maintenance of social housing, fail to do so sometimes, causing damage to tenants’ homes, who will have to be compensated. Explaining the popularity of the products, Sène added, “Litigation Funding is a product that in the short term, for 1 or 2 years depending on the amount, generates high returns, between 9% and 11%, well above the average of Spanish investment funds (1.91% average return in the last 15 years) or the returns of the accounts offered by Apple to its American clients. Apple offers 4.5% while the minimum return of Litigation Funding is double this amount. In any case, it is a low-risk product because the capital contributed by the litigation is insured with an AM Best insurance that fully covers it, regardless of the amount contributed. So, it has been very popular with our members and clients.”

A panel consisting of Rebecca Berrebi, Founder & CEO of Avenue 33, Daniel Bond, Senior VP of DUAL North America, Jarvis Buckman, Managing Partner at Leste, and Steven Penaro, Partner at Alston & Bird, discussed the intersection of insurance and litigation funding. The panel was moderated by Stephen Kyriacou, Managing Director & Senior Lawyer at Aon. Stephen Kyriacou opened by pointing out how litigation risk insurance began on the defense-side, yet plaintiff-side insurance solutions are now dominating the legal insurance space. Over 90% of Aon’s litigation policies are plaintiff side. He then began the discussion on the topic of judgment preservation insurance. Mr. Kyriacou introduced a hypothetical IP case where the funder and attorney each expect to earn $20MM, and the claimant will take home $60MM. The question was asked, why should funders or attorneys look to insure their award? Jarvis Buckman pointed out the risk mitigation strategy of protecting either part or all of his judgment, in order to take some chips off the table. Rebecca Berrebi added that having an insurance-backed return helps the company book those returns on the current books and not rely as heavily on the final outcome. So even when there is an expectation of collection, insurance can often make sense. Stephen Kyriacou then laid out the three components of a submission package (at least as far as Aon is concerned):

• Case overview memorandum – Laying out counsel’s view of the strength of the judgment
• The risk profile – What the risks of the claim are, and the likelihood of their outcomes
• Aon’s perspective on the insurance – Explaining the motivations for seeking insurance, and the coverage being sought

Daniel Bond pointed out that there is alignment between how he approaches a claim with the process laid out by Stephen Kyriacou. He enjoys having that ‘new case feeling’ which you don’t often get as an attorney. The variability of outcomes provides multiple paths for underwriting, which is different than being an attorney and knowing that there is a binary outcome to your case. Mr. Bond noted that the process involves a lot of communication, to understand his counter-party and what their goals are, along with the business alignments and counter-party risks. Steven Penaro added that the matters have been heavily vetted by the time they get to his desk, as an underwriting counsel. So that implies that there is already a lot of clarification around where things stand. He studies the submission documents and develops an underwriting report and sets up an underwriting call, where the interested parties can discuss and ask questions. Typically, the process takes four to six weeks from when they get the first call until when the policy binds. Mr. Bond added that having people come in with a fresh set of eyes and ‘beat the hell out of the case’ at that juncture in its lifecycle is an extremely valuable process, even notwithstanding the insurance component. Just having experts evaluate the case is a powerful resource. The panel then covered how judgment preservation insurance might pay out, client interests around insuring legal claims, and how clients might pull proceeds from an insurance claim through insurance-backed judgment monetization. The panel offered a thorough deep dive into the insurance landscape—a topic that will no doubt be covered in future events, as these two industries continue to collaborate on mutually beneficial products and services.

Ted Farrell, Founder of Litigation Funding Advisors moderated a panel which included Fred Fabricant, Managing Partner of Fabricant LLP, Molly Pease, Managing Director of Curiam Capital, and Boris Ziser, Partner at Schulte Roth and Zabel. The topics covered in this panel discussion were:

• Getting up to speed on funding & insurance products
• How to fast track diligence and deal with exclusivity
• Negotiating key terms and spotting red flags
• Benchmarking numbers & making the waterfall work for you

The topic of insurance came up first. Molly Pease began the discussion by noting that it isn’t always the case that funders are looking to lower risk in every situation. “It’s not always the case that we’re looking to minimize risk with insurance, because that comes with a cost,” Pease noted. “We don’t necessarily want to cut into our return, so there has to be a good fit for the insurance product.” The moderator, Ted Farrell then pointed out that starting a litigation funder isn’t exactly about lowering risk.  So, risk mitigation is important, but not the primary driver of investment decision making. Boris Ziser agreed, yet noted how insurance opens the door to lot of other investors.  “More than half of our mass tort deals have insurance,” said Ziser, “with either the entire deal or a tranche of deals being insured.” Getting wrapped by a single A-rated carrier allows certain investors to participate in the investment. On the issue of judgement preservation in the IP space, Fred Fabricant explains that in the patent space, he hasn’t seen a lot of insurance products in the pre-judgement section of the case. “There are too many uncertainties, and it is very hard to assess the risk in this phase of the case.”  Fabricant is looking forward to insurance products in this phase. “In post-judgement, much easier for insurance to assess the risk, because you’ve eliminated lots of uncertainties.”  For his part, Fabricant is interested in insurance products to mitigate risk, especially in portfolio funding cases, though he hasn’t had much experience with insurance products yet. Further topics discussed included exclusivity (Fred Fabricant noted he doesn’t shop deals between funders, in order to maintain long term relationships), funder communication with clients (funders want to move just as quickly or even more quickly than lawyers and claimants—the process can be slow sometimes if claimants need to vet whether the terms are appropriate), and funder due diligence (it’s always better to be upfront about the risks of a case, since the funder will find those out eventually anyway—and every case has risks, no sense in pretending you have a panacea of a legal claim). In the end, it was an expansive panel discussion that covered a range of topics pertinent to securing a litigation funding deal.