Trending Now

John Freund's Posts

3077 Articles
Commercial Fundraising

Qanlex Raises $30MM for Third Litigation Investment Fund

With competition among funders increasing across the major markets of the US, UK and Australia, emergant funders are keen to explore opportunities in jurisdictions that lack a well-established funding market. The investment appetite for these specialist regional funders appears to remain healthy, as a funder with a focus on Latin America has completed a new $30 million fundraising round.  An article from Financecommunity.es covers an announcement by Qanlex, a litigation funder with operations in both Europe and Latin America, that it has raised $30 million for its third litigation investment fund.  Fernando Folgueiro, co-founder of Qanlex, stated that the establishment of a third investment fund will allow the funder to expand its operations and pursue its goal of “levelling the playing field in the legal system and ensuring that justice is accessible to all.” Qanlex’s other co-founder, Yago Zavalia Gahan emphasised that this latest fundraising “underlines the confidence that investors have in our business model and our mission to democratize access to justice.” As LFJ reported in September 2022, Qanlex has also conducted two separate fundraising rounds to develop its proprietary Case Miner platform, which allows the funder to find and analyse potential cases for investment. Last year’s $3 million fundraising round saw Qanlex secure investments from private capital including The LegalTech Fund, Carao Ventures, FJ Labs and J Ventures. In Latin America, Qanlex has a presence in Argentina, Brazil, and Columbia, with European operations in Spain and France.
Case Developments Commercial

Rockhopper Enters Into Funding Agreement to Monetize Arbitration Award

In August 2022, LFJ reported on the €190 million arbitration award secured by Rockhopper Exploration, a UK-based oil and gas exploration company, from the Italian government over its breach of the Energy Charter Treaty (ECT). Whilst LFJ reported at the time that Harbour Litigation Funding had provided the legal finance for Rockhopper to pursue the arbitration proceedings, it now appears that the company has entered into an agreement with a new funder to monetize its ICSID award. A press release from Rockhopper Exploration reveals that it has signed ‘a funded participation agreement with a regulated specialist fund with over $4bn in investments under management.’ The agreement will allow Rockhopper to ‘retain legal and beneficial ownership’ of the ICSID award, which will allow the business to remove any additional costs from pursuing the award whilst accelerating the enforcement process. The terms of the new funding agreement are split into three tranches, with the first payment of €45 million to be paid immediately, of which, Rockhopper will receive around €15 million. The second ‘contingent payment of €65 million’ will be made following a successful annulment hearing outcome, with the amount reduced if the annulment is only partially successful. The third third tranche includes ‘potential payment of 20% on recovery of amounts in excess of 200% of the Specialist Fund's total investment including costs.’  The terms of the agreement ensure that Rockhopper will pay ‘€26 million of the Tranche 1 proceeds to discharge all of its liabilities under the agreement with the Original Arbitration Funder.’ Samuel Moody, chief executive of Rockhopper, explained that the funded participation agreement “provides near-term certainty for Rockhopper and de-risks our exposure to the annulment process, while maintaining potentially significant upside exposure both to a successful annulment outcome and eventual recovery.”  This move to secure new funding for monetisation and enforcement of the award follows a protracted process over the last year, as Italy sought to annul the award under Article 52 of the ICSID convention. The ad-hoc ICSID committee had issued a provisional stay of enforcement in March 2023 to allow Rockhopper and Italy to pursue measures to discuss risk mitigation for non-recoupment if the award was annulled. The stay of enforcement was lifted in July and Rockhopper states the Italian government ‘has not responded to Rockhopper's September 2022 request for payment of €247 million, or to multiple subsequent attempts to engage in negotiating a settlement.’ The ICSID annulment hearing is set for April 2024.
Case Developments Commercial

Attorney in Patent Infringement Case Files Motion to Withdraw, Citing Issues with Funder

The role of funders in patent litigation has come under much scrutiny over the last year, with objections arising over the lack of disclosure of funder involvement and the level of control that funders can assert. An emergency motion for withdrawal made by a plaintiff’s attorney has provided some insight into one such case, where the relationship between legal counsel and plaintiff has broken down over the actions of an outside funder. A blog post on Patently-O by Dennis Crouch, law professor at the University of Missouri School of Law, analyses an ongoing dispute between a plaintiff and its attorney over the role of a third-party funder in its patent infringement case.  The conflict emerged in the case of CTD Networks v. Microsoft, an infringement lawsuit that was dismissed in the Western District of Texas for a failure to ‘include plausible allegations of infringement’, and which has subsequently been appealed. However, since the appeal was filed, the plaintiff’s attorney, William P. Ramey III has filed an emergency motion seeking court approval to withdraw from the case.  Ramey’s motion alleges that CTD’s funder, AiPi failed to pay legal fees and that ‘CTD is controlled by AiPi, whose principal recently formed Whitestone Law.’ Ramey explains that the conflict over control emerged because AiPi’s co-founder, Eric Morehouse, ‘explained that he controls CTD because he bought the patents which allowed him to do what he wants with the patents and settlements.’ He also alleges that the funder and its owner ‘appear to be purposely prejudicing Ramey LLP’s and CTD Network’s interests in the pending appeal at the Federal Circuit by not filing an appeal brief.’  CTD has filed a response to Ramey’s request to withdraw, arguing that ‘CTD Networks is not controlled by any other party’, and that ‘AiPi is not "adverse" to Mr. Ramey, AiPi is adverse to improper handling of litigation.’ The brief places the blame squarely on Ramey, stating that the attorney ‘is facing sanctions in a number of other matters in a number of other jurisdictions and has been sanctioned in a number of cases over the past few years.’ Whilst CDT does not object to Ramey’s withdrawal from representing the business, it argues that Ramey cannot withdraw wholly from the matter, as they remain responsible for their actions in this matter and remain as a party from whom Defendant is seeking sanctions.’   This ongoing conflict once again demonstrates the issues that can arise in cases where the line between a funder of patent litigation and an entity controlling the litigation is blurred.
Commercial Legal Innovation

Growing Strength of Insurers Represents Competition for Litigation Funders

In panel discussions at industry forums and conferences, there is often much conversation around the harmonious relationship between litigation funders, litigation risk insurers and law firms. However, new insights from industry executives suggest that insurers are not just partners in the world of legal finance, but instead are more frequently positioning themselves as genuine competitors to traditional funders.  Reporting by Bloomberg Law examines the growing influence of insurers in the legal finance market, featuring insights from numerous industry executives who suggest that insurers are able to offer attractive products and services, allowing insurers to take business from traditional litigation funders. Stephen Kyriacou, managing director at Aon Plc, explains that through the offering of judgment preservation insurance, “funders have started to kind of cede that ground to us and focus on other avenues.” Bob Koneck, senior vice president at Atlantic Global Risk, highlights that insurers can compete with funders for their law firm clients because “it’s a more economical way for them to finance their litigation.” Megan Easley, who left a position at Omni Bridgeway to join CAC Speciality, argues that insurers are able to offer “more tools and more ways to create good outcomes for clients.” The article also notes that beyond the activity of these insurers in the market, their growing strength is reflected in the fact that we have seen professionals, such as Easley, leaving positions at funders to join insurers. Jason Bertoldi, head of contingent risk solutions at Willis Towers Watson, explains that “there’s been a noted influx of really talented people who are entering the space,” and there are no signs that this trend is slowing down. Reacting to the growing momentum behind insurers in the market, litigation funders are taking a pragmatic view of the impact this will have on their own businesses. Burford Capital’s co-COO, David Perla describes insurers as being an ‘adjacent’ presence to funders, rather than ‘competition’ for their market share. Cesar Bello, research and portfolio manager at Corbin Capital Partners, goes a step further and argues that whilst there has been growing discussion and concern over insurers replacing funders, “it just hasn’t happened.”
Case Developments Commercial

$23M Settlement Reached in Shareholder Class Action with Wellard

The Australian class action landscape continues to show the significance of funded claims, as we have seen numerous settlements announced and approved over recent months. This trend has continued as the respondent in a shareholder class action has announced that it has reached a settlement agreement with the group members. An ASX announcement from Wellard Limited revealed that the company has reached a $23 million settlement agreement in a class action brought by a group of its shareholders in 2020. The company, which operates as a livestock carrier operator, specified that ‘the settlement is without any admission of liability’ and that if the settlement receives court approval, the settlement payment ‘will be fully met from available insurance proceeds.’ John Klepec, executive chairman of Wellard, stated that the company is “pleased that this matter has been resolved, so we can focus on the operations of the business,” and offered reassurance that “the settlement will not impact Wellard’s cashflow.”  The class action was brought against Wellard over allegations that the prospectus for its Initial Public Offering (IPO), published in November 2015, ‘contained misleading statements or material omissions.’ Furthermore, the lawsuit claimed that Wellard had breached its continuous disclosure obligations and ‘made misleading representations as to its forecast financial performance for FY2016.’ The group members in the class action are represented by Quinn Emanuel Urquhart & Sullivan, and entered into a litigation funding agreement with ICP Funding Pty Ltd.  The case is Ewok Pty Ltd as trustee for the E & E Magee Superannuation Fund v Wellard Limited, in the Federal Court of Australia, Victoria Registry.
Announcements Commercial Legal Innovation

Dealbridge.ai Revolutionizes Deal Management With Launch of Groundbreaking Generative AI Platform

DealBridge.ai, a leading innovator in Deal Relationship Management (DRM), proudly announces the official release of its groundbreaking generative AI platform. This cutting-edge solution harnesses the power of Generative AI to automate financial, legal, and insurance processes, revolutionizing deal origination, due diligence, and distribution in the industry. As the first DRM platform to integrate Generative AI, DealBridge.ai sets itself apart by streamlining the handling of unstructured data within data rooms. Traditionally, the manual review of extensive data was a time-consuming process, but DealBridge.ai's DRM platform intelligently structures this data, enabling instantaneous freeform querying. The platform's unique ability to summarize vast amounts of information in seconds positions it as a game-changer in the deal-making arena. DealBridge.ai prioritizes data security, compliance, and risk mitigation. The platform provides a white-label Software as a Service (SaaS) solution hosted on DealBridge's secure cloud infrastructure, aligning with the robust security measures of Microsoft Office products. DealBridge's hosted Large Language Models (LLMs) ensure data privacy, and compliance is upheld with SOC2-compliant blob storage, addressing audit needs in sectors such as banking, finance, law, and insurance. "The introduction of Generative AI in DealBridge.ai's latest release marks a pivotal moment in the evolution of Deal Relationship Management. We are empowering deal professionals to redefine the way they approach due diligence and decision-making," says Joshua Masia, CEO of DealBridge.ai. DealBridge.ai's use of embedded LLMs and self-hosted vector databases, along with proprietary Retrieval Augmented Generation (RAG) solutions, sets it apart from other generative AI solutions. By building personalized models for each deal, the platform eliminates the risk of hallucinations, ensuring accuracy, reliability, and precision in the information generated. "Generative AI is not about replacing human expertise but enhancing it. Our platform ensures a seamless integration of human judgment with advanced AI capabilities, providing a synergy that is unmatched in the industry," emphasizes Jon Burlinson, Co-founder and CEO. DealBridge.ai's decision to emerge from stealth was driven by the need to engage early adopters who share the company's vision. The platform's MVP development benefited significantly from the insights and feedback provided by its initial partners, setting the stage for a practical and easy-to-adopt solution in the deal-making space. Early adopters, including Pat Shannon at Equine Capital Solutions, have expressed enthusiasm for DealBridge.ai's transformative capabilities. "The official release marks a pivotal moment, opening the floodgates for wider adoption and feedback to further improve the platform. DealBridge.ai's Generative AI is a game-changer for our industry. We are excited to integrate this innovative solution into our processes, enhancing the efficiency and accuracy of our Litigation Finance program." "The beauty of our solution is its agnosticism to asset class and industry. If you have data, we help extract value from it automatically. Whether it's Litigation Finance, Medical Underwriting, M&A, you name it, we do it," affirms Joshua Masia. DealBridge.ai has a robust roadmap with continuous updates and features based on client demands. The company is currently in trials with over a dozen partnerships and plans to announce several formal collaborations in the coming quarters. "We are on the cusp of even greater innovations. DealBridge.ai has a robust roadmap of future developments, and there's no slowing down. We are committed to continuously pushing the boundaries of what's possible in Deal Relationship Management," adds Christopher Benjamin, Co-founder and CTO. DealBridge.ai's generative AI software is available through the company's website, offering a simple onboarding process for users to join, create deals, and leverage the platform's powerful capabilities. At any point, you can elect to create your own branded white label experience that furthers your isolation of your data into a standalone environment.

ABOUT DEALBRIDGE.AI

DealBridge.ai is a trailblazing company in the field of Deal Relationship Management (DRM), offering the first platform to leverage Generative AI for automating financial, legal, and insurance processes in deal-making. With a commitment to security, compliance, and innovation, DealBridge.ai is shaping the future of secure and confident deal management. Website: www.DealBridge.ai
Read More
Commercial

Exton Advisors Offers Seven Predictions for Litigation Finance in 2024

With less than two weeks until the end of 2023, industry leaders are busy planning for next year and attempting to forecast how the litigation finance market will evolve in 2024. In a post on LinkedIn, Exton Advisors looks ahead to what opportunities and challenges the litigation finance market will face over the next 12 months, offering its top seven predictions for 2024:
  1. Increased opportunities for well capitalised funders
  2. Pricing will increase
  3. Law firm financing will increase
  4. Regulation will continue to be a topic of conversation
  5. The secondary market will continue to expand and develop
  6. Key judgements will impact funding
  7. AI and tokenisation will be disruptive
Exton’s prediction of increased opportunities highlights the potential for rising volumes of insolvency and commercial disputes, whilst the likely increase in pricing is predicted to be ‘driven by high interest rates and the overall cost of financing.’ These factors are also the drivers behind the prediction of increased law firm financing, as funders may move away from single case funding for small to mid-sized commercial claims. However, Exton’s prediction of an increase in pricing is also paired with the suggestion that funders will explore alternative fee structures and focus their capital on a smaller number of transactions. To read Exton’s full predictions and the accompanying explanations, click here.
Case Developments Commercial

Meta Class Action Set for Certification Hearing in January

As a busy year of activity for UK class actions comes to a close, the industry’s sights are already set on funded proceedings which are looking to advance in early 2024. Among the high profile cases to watch next year, an opt-out claim being brought against Meta has received an early Christmas present, as a date for its certification hearing has been announced.  An article in CDR reports that the proposed opt-out class action filed against Meta will have its certification hearing before the Competition Appeal Tribunal (CAT) on 8 and 9 January. The application for the class action, which was originally filed on 6 October, has been revised following comments from the CAT and now includes ‘an expert report from Fiona Scott Morton, Theodore Nierenberg Professor of Economics at the Yale School of Management.’ The claim, which has secured funding from Innsworth and representation from Quinn Emanuel Urquhart & Sullivan, focuses on allegations that ‘Meta has violated UK competition law by forcing users to share their data from activities outside of the Facebook platform.’ Dr Liza Lovdahl Gormsen is the proposed class representative, with the class action looking to represent any UK Facebook users who had an account “at any time between 14 February 2016 and the date of final judgment or earlier settlement of the present proposed collective proceedings, inclusive”. Kate Vernon, partner and head of the competition litigation practice at Quin Emanuel, stated that they were “pleased that a quick certification hearing for the revised application has now been listed for 8–9 January”, and emphasised that the newly included expert report “sets out a clear blueprint to trial of this important claim on behalf of the UK users of Facebook.”
Case Developments Commercial

NSW Supreme Court Ends Class Action, Citing Lack of Funding

Over recent months we have seen numerous victories for funded class actions in Australia, with litigation funders earning significant returns on their investments. However, a judgement from one of the state Supreme Courts shows that if funders lose confidence in a case, the prospect of success for group members can quickly disappear.  A judgement by the Supreme Court of New South Wales in the case of Australian Retirement Group Pty Ltd v The Commonwealth Bank of Australia Ltd (No 4), approved the settlement and discontinuance of proceedings the class action brought against CBA after the plaintiffs failed to secure litigation funding to continue the litigation.  In his decision, Justice Ball explained that ‘it is not realistic to think that the plaintiffs will be able to obtain alternative litigation funding or representation by counsel on a contingency basis.’ He went on to say that as ‘the underlying claim appears to have poor prosects of success’, and he remained unconvinced that the plaintiffs would be able to secure either funding or representation. The class action had previously received litigation funding from JustKapital Limited, with Shine Lawyers paid to represent the plaintiffs. However, JustKapital stopped funding for the case on 29 September 2020. Following the cessation in funding, Hall Partners acted for the plaintiffs starting from 20 May 2021, but ‘neither Hall Partners nor the plaintiffs have been able to arrange alternative funding.’ The class action was first brought in 2016 on behalf of small business customers of Bankwest, now a subsidiary of CBA, ‘who were placed into the Credit Asset Management (CAM) division of Bankwest and were not subsequently “rehabilitated”.’ The litigation focused on allegations that after Bankwest was acquired by CBA, the bank ‘engaged in unconscionable conduct by treating the loans of group members as nonperforming and bringing them to an end in a way that was harsh, unconscionable and in breach of provisions of the Banking Code of Conduct.’ The terms of the proposed settlement for ending the proceedings include CBA receiving a payment of $2.9 million to cover legal costs. This will be paid by AmTrust Europe Limited, ‘which provided an indemnity as security for CBA’s costs.’ In return, CBA will pay £375,000 as a contribution towards the group members’ legal costs. The full judgement can be read here.
Commercial Regulatory Issues

UK Government ‘Considering Options’ for Legislative Solutions to PACCAR

As many industry commentators suggested when the Supreme Court released its PACCAR judgement, one of the most important and interesting elements has been the UK government’s response to the decision. In a story that is developing week after week, we are beginning to see how a potential solution may not emerge from one singular piece of legislation, but could instead be divided across multiple bills. Reporting by The Law Society Gazette provides an update on the ongoing parliamentary debate over the Digital Markets, Competition and Consumers Bill (DMCC), which includes an amendment (Clause 126) that has solved the issue for funding agreements in opt-out collective actions in the Competition Appeal Tribunal (CAT). However, this amendment only provides a solution for one type of funded proceeding, and industry leaders have been keen to understand how the government may provide a wider legislative fix. During the debate in the House of Lords, this issue was raised by Lord Sandhurst (Guy Mansfield KC), who argued that ‘clause 126 needs to be redrafted and expanded’ in order to address funded cases outside of opt-out cases before the CAT. He noted that there are a wide range of funded matters that require a solution, including opt-in cases in the CAT, ‘conventional bi-party litigation’, and claims brought in the High Court.  Lord Sandhurst emphasized that without a broader legislative solution, “Claimants will have no effective access to litigation funding agreements and many cases already in the pipeline face considerable problems.” However, the Gazette article also reports that in response to a parliamentary question, Lord Bellamy, the Parliamentary Under-Secretary of State for Justice, stated that “the government is assessing the impact of the judgment and considering options for non-CAT proceedings.” Whilst no details were specified for what these options might include, this is another encouraging sign for the UK litigation funding industry, given that the government is actively looking for more comprehensive solutions to the PACCAR ruling.
Commercial Fundraising

UK Funder Sandfield Capital Raises £20M to Fuel Expansion 

Whilst the largest international funders tend to dominate the headlines in the world of litigation finance, there is a still a plethora of activity among smaller funders operating within regional markets. An article on TheBusinessDesk.com covers the news that Sandfield Capital, a UK funder based out of Liverpool, has raised £20 million in funding through a credit facility from Ampla Finance. This initial tranche is part of a wider £100 million in fundraising led by Altimapa Capital, which will allow Sandfield to further its expansion plans including bringing on an additional 10 staff to its operations team. Steven Ambrosio, co-founder and CEO of Stanfield Capital, explained the company’s strategy which focused on “cases in areas of clear demand which have been overlooked by other finance providers and help tenants, home owners and others to seek justice through the courts.” He went on to say that the £20 million “is the first phase in our journey to raise £100m to transform our business”, which will allow the funder to “meet the growing demand” of this market.  Ampla Finance’s CEO, Richard Kennerley said that his firm had identified “a number of evolving tech trends in the civil litigation arena”, and that this new capital would allow Sandfield to capitalise on these advancements whilst also providing its client base with a high quality, ethical and comprehensive offering.” Pedro Tavares, founder and CEO of Altimapa Capital, also praised Sandfield for having “a well-thought-out business model and a sound proposition,” which had been overlooked by traditional funders.  Sandfield Capital currently operates from both its Liverpool and London offices, with a staff of eight employees including Paul Meehan who serves as COO and Mark Siney as the funder’s Head of Finance.
Commercial

Omni Bridgeway Highlights Funding as a ‘Strategic Risk Management Tool’

When illustrating the benefits of litigation funding for businesses, funders are keen to point out the wider strategic benefits available to companies beyond the provision of capital. In a blog post on LinkedIn, Paul Rand, Chief Investment Officer (Canada) at Omni Bridgeway, discusses the use cases and benefits of litigation finance, explaining how it can be used by businesses to take ‘a more strategic approach to affirmative litigation.’ Rand argues that businesses who see litigation ‘exclusively as something to avoid’ are missing out on strategic opportunities, and that ‘his approach may avoid risk, it doesn’t manage the risk.’ Instead, Rand lays out the case for companies to take a proactive approach to litigation, noting that business leaders can still pursue meritorious disputes whilst mitigating risk through litigation funding. He goes on to suggest that companies can ‘use funding to generate successful outcomes’, reframing disputes as assets rather than seeing them solely as liabilities.  Rand goes on to explain the different ways that litigation funding can reduce risk, beyond the individual provision of non-recourse funding. These benefits include providing strategic guidance and expertise when determining whether to pursue a case, as well as managing the risks around judgement collection. The full blog post can be read here.
Commercial Regulatory Issues

LCM Argues PACCAR Decision is ‘Old News’ for Funded Opt-Out Claims

Following the Supreme Court’s PACCAR ruling, opinions on the impact of the decision ranged from descriptions of it as a small bump in the road, to predictions that there would be no easy solutions for funders looking to modify their funding agreements. A new insights post from Litigation Capital Management (LCM) looks at two of the most important developments that have occurred in the wake of the PACCAR decision, and questions whether its impact on funding agreements in opt-out collective actions has dissipated. The article first highlights the current draft of the Digital Markets, Competition and Consumers Bill (DMCC), which now includes an amendment which clarifies ‘that a DBA is only unenforceable in opt-out collective proceedings before the CAT if the agreement is with a provider of advocacy or litigation services.’ This specification, along with the removal of any reference to ‘claims management services’, has been lauded for resolving the issue of enforceability for these types of cases. However, it should be noted that industry leaders and analysts have continued to raise concerns around the limited scope of the DMCC amendment, arguing that it is still only a ‘partial solution’ to issues raised by PACCAR. The second development that LCM’s post addresses, is the CAT’s decision in November to certify the opt-out claim brought against Sony, and particularly the CAT’s dismissal of Sony’s objections over changes to the funding agreement. The article points out that ‘Sony sought to attack the new arrangements on a number of fronts’, but in each and every case, the tribunal disagreed with Sony and rejected their arguments in turn. LCM concludes by arguing that in contrast to the doomsaying following the Supreme Court’s decision in PACCAR, the funding of opt-out claims has largely survived intact. The article suggests that ‘Defendants can now concentrate on the merits of the claims, rather than being distracted by unmeritorious attempts to derail valid proceedings by reference to the supposed wider ramifications of the PACCAR judgment.’
Commercial Regulatory Issues

UK Lobby Group Calls for Regulation to Protect Consumers from ‘Opportunistic Claimant Law Firms’

Whilst recent court victories and settlements have demonstrated the benefits that funded class actions can bring to consumers, there are still groups who argue that there are insufficient regulatory measures to govern these claims, and to protect the interests of businesses.  An article in The Law Society Gazette highlights lobbying efforts by Fair Civil Justice (FCJ) against the proliferation of ‘no win, no fee’ advertising from law firms, and calling for the UK government to crack down on the practice through tougher regulation. These calls for regulation are part of FCJ’s latest research focused on what it describes as the UK’s ‘predatory claim culture’, which supposedly misleads people about these lawsuits by underselling the risks involved. Seema Kennedy, executive director of FCJ, called on the government to ‘take notice and update the regulations to protect people from opportunistic claimant law firms.’ The FCJ suggests that these regulations should include more rigorous regulation of advertisements, such as banning targeted claims adverts on social media, a 60-day cooling off period for those who register for a group claim, and the option for these claimants to end the retainer without facing additional costs. Kenny Henderson, partner at CMS, is quoted in the article and echoes concerns around the current state of UK class actions. He suggests that whilst the market is beneficial for funders and law firms, ‘it is questionable whether it is good for consumers and it is definitely not good for the UK’s business environment.’ The Gazette’s article points out that whilst the source of FCJ’s funding is unknown, reporting by Law.com in December 2022 claimed that the group was launched by the US Chamber of Commerce’s Institute for Legal Reform. Readers will of course be very familiar with the Chamber’s lobbying efforts against litigation funding in the US and will notice the familiar language around the ‘opportunistic’ nature of claimant law firms and funders. Earlier this week, the British Chamber of Commerce (BCC) announced that it had become a member of FCJ, stating that the campaign group “is striving to protect the interests of consumers, businesses and the civil justice system.”
Case Developments Commercial

Funded Class Action Targets UK Mobile Operators for Overcharging Customers

In the face of alleged corporate wrongdoing, consumer-led group actions are continuing to gather momentum in the UK, with litigation funders eagerly stepping up to provide the financial support needed to bring these claims. Reporting from The Guardian provides an overview of the latest UK class action to be brought against big business, as the UK’s largest mobile operates are faced with a new lawsuit focusing on allegations that they have overcharged customers after the handsets were paid off in their contracts. The opt-out class action could represent up to 4.8 million consumers who purchased contracts with EE, O2, Three or Vodafone, arguing that customers could have been collectively overcharged as much as £3.28 billion since 2007. Justin Gutmann, who is acting as the proposed class representative for the lawsuit, said that “these four mobile phone companies have systematically exploited millions of loyal customers across the UK through loyalty penalties.” Law firm Charles Lyndon has been instructed by Gutmann to represent group members, and according to the Loyalty Penalty Claim website, LCM Funding UK Limited is providing the financing for the claim. The website states that Gutmann is ‘seeking a total compensation sum of £2.822 billion plus interest for the proposed classes as a whole.’ Gutmann has been involved in a number of other consumer-led class actions, including the case brought against Apple, which as LFJ reported, recently saw the CAT grant the application for a collective proceedings order (CPO). Of the four mobile operators targeted by the claim, only O2 provided a comment, with its spokesperson stating that the company has “long been calling for an end to the ‘smartphone swindle’ and for other mobile operators to stop the pernicious practice of charging their customers for phones they already own.” The spokesperson also emphasized that it is “the first provider to have launched split contracts a decade ago which automatically and fully reduce customers’ bills once they’ve paid off their handset.”
Case Developments Commercial

Australian Federal Court Approves $30M Settlement in BT Super Class Action

The use of litigation funding for class actions in Australia continues to achieve successful results for both the group members and the funder, as the Federal Court has approved another class action settlement along with a significant deduction for the funder.  An article from Financial Standard highlights a recent ruling from the Federal Court of Australia, where Justice Murphy approved a $29.95 million settlement sum in Ghee v BT Funds Management Limited. The class action had first been brought in 2019 against BT Funds Management Limited (BTFM) and Westpac Life Insurance Services Ltd (WLIS), on behalf of members of BT Super for Life Superannuation Fund (SFL) who were invested in the Super Cash option.  The class action focused on allegations that BTFM had ‘breached various legal duties owed to members’ by investing funds in WLIS’ life policy. Slater & Gordon, who represented group members, argued that ‘BTFM’s contraventions caused loss to be suffered by the Applicant and group members, in that higher investment returns would have been earned if those contraventions had not occurred.’ The court order approved a $9.6 million deduction from the settlement to be paid to Therium, who funded the class action.. This figure was divided into $2.7 million for paid legal costs, $1.2 million for the reimbursement of ATE insurance costs, and $5.7 million. In his ruling, Justice Murphy said that it was “appropriate to order the deduction of total funding charges of $6,888,500 which equates to 23% of the gross settlement,” and described the deduction as “reasonable and proportionate in the circumstances of the case.” According to Slater & Gordon’s class action page, following the various deductions from the overall settlement sum, the final amount distributed to group members will likely total approximately $15.45 million, plus interest. There are approximately 15,000 registered group members who are eligible to receive money from the settlement distribution scheme.
Case Developments Commercial

Valve Alleges Law Firm and Litigation Funder are Attempting to ‘Extort a Settlement’

A common criticism of litigation funders' involvement in claims against large corporations is that funders are more concerned with generating ROI than with assisting the consumers being represented. A recent complaint filed by the world’s largest video games distributor bears a striking resemblance to this critique. An article in Reuters highlights an ongoing lawsuit filed by video game company Valve, alleging that a law firm and funder had planned to take advantage of the company’s users and ‘extort Valve for their own benefit’. The filing alleges that Zaiger, LLC ‘hatched a scheme’ with the litigation funder to ‘weaponize’ the Steam Subscriber Agreement (SSA), which Valve uses to resolve disputes with customers of its video game marketplace, Steam. The origins of Valve’s complaint lie in the allegation that Zaiger has planned to ‘to recruit 75,000 clients and then bring arbitrations on behalf of a subset (no more than 160) of those clients to drive a settlement on behalf of all 75,000 of its clients.’ The complaint goes on to illustrate how Zaiger’s plan would use the SSA’s arbitration clause, in which ‘Valve agrees to pay the fees and costs associated with arbitration’, to expose Valve to ‘potentially millions of dollars of arbitration fees alone.’ These allegations are based on a presentation that Zaiger gave to Black Diamond Capital Management, a company which Valve claims is the unnamed litigation funder. Valve’s complaint then highlights that Zaiger’s presentation planned to “offer a settlement slightly less than the [arbitration] charge—$2,900 per claim or so—attempting to induce a quick resolution.” They further argue that Zaiger made no reference to ‘Steam users’ concerns or interests’ and provided ‘no space in that lifecycle for investigating the legal issues involved or evaluating the facts of any particular Steam user’s situation.’ The filing asserts two causes of action: ‘tortious interference’ and ‘abuse of process’, arguing that ‘Zaiger and its funder are engaging in an egregious abuse of the litigation process.’ Going even further, Valve’s complaint makes the claim that ‘the point of all of Defendants’ actions against Valve is to improperly interfere in Valve’s valid contractual relationships with its customers and to use the arbitration system to extort a settlement from Valve.’ Jeffrey Zaiger, in response to Reuter’s request for comment, described Valve’s legal action as “meritless” and said that it was “a transparent attempt to intimidate my law firm into abandoning meritorious claims on behalf of our clients.”
Announcements Commercial

International Legal Finance Association Adds Orchard Global as New Member

The International Legal Finance Association (ILFA), the only global association of commercial legal finance companies, has announced the addition of Orchard Global to the organization’s rapidly growing membership base.  Orchard Global is a multi-strategy alternative asset management firm that launched its legal finance strategy in 2015 and has made over 100 legal finance investments across its managed funds. The firm launched its standalone legal finance fund in November of last year.  “As the only global association representing the commercial legal finance industry, ILFA is excited to welcome Orchard Global as its newest member,” said Gary Barnett, ILFA’s Executive Director. “Orchard’s addition continues to demonstrate that ILFA’s membership is made up of the world’s leading legal finance providers and to strengthen ILFA’s role in promoting the highest standards of operation and service for the commercial legal finance sector around the world.” “We are thrilled that the team at Orchard Global will be joining ILFA’s ranks,” said Neil Purslow, ILFA Chairman and Co-Founder of Therium, an ILFA member. “The addition of yet another leading legal finance provider will serve to bolster our efforts as the voice of the legal finance industry throughout the world.” “We look forward to joining the ILFA membership, supporting ILFA’s mission and deepening our collaboration with our colleagues across the industry,” said Co-Heads of Litigation Finance at Orchard Global, Ben Moss and Lara Melrose.  Orchard Global provides creative and flexible litigation financing solutions to lawyers and claimants, investing in commercial litigation and arbitration cases globally, with a focus on England and Europe, as well as other common law and other selective jurisdictions. The firm’s investments span a broad spectrum of commercial claim types and structures, including general commercial disputes, group actions, competition claims, insolvency-related disputes, law firm lending, equity stake investments and portfolio financing.  About the International Legal Finance Association  The International Legal Finance Association ILFA represents the global commercial legal finance community, and its mission is to engage, educate and influence legislative, regulatory and judicial landscapes as the global voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA has local chapter representation around the world. For more information, visit www.ilfa.com and find us on LinkedIn and X @ILFA_Official.  About Orchard Global Orchard  Global is an alternative asset manager providing transformational solutions to banks, asset managers, and other borrowers seeking capital solutions to complex problems. Orchard provides lending and risk-transfer solutions across a range of private and public markets strategies. Orchard Global manages capital on behalf of pensions, sovereigns, endowments, hospitals, educational institutions, families, and many others around the world. Orchard Global offers private credit and public credit strategies by leveraging its complex structuring capabilities, an in-house legal team, comprehensive credit expertise, and global reach.
Read More
Announcements Commercial Deals

Omni Bridgeway Announces: Secondary market transaction completed in relation to Fund 4’s IP portfolio

Omni Bridgeway Limited (Omni Bridgeway, OBL, Group) (ASX: OBL) announces that it has completed the sale of a 25% interest in a portfolio of 15 intellectual property (IP) investments (Investments) in Fund 4 (Fund) to an affiliate of GLS Capital Partners Fund II, LP (GLS) for an initial amount of US$21.5 million, representing a multiple on invested capital (MOIC) of 2.0x of the apportioned aggregated deployments to date.  GLS will receive a preferred return on its deployments alongside OBL, beyond which OBL retains further profit rights on the 25% interest.  The cash consideration is anticipated to be received within five business days.  The total committed capital of the Investments is US$104.4 million with total deployed capital of US$42.9 million. The future budgeted costs (committed but undeployed capital) of US$61.5 million will be split proportionately between the Fund and GLS.  The sale will be treated as a partial completion of each of the 15 Investments for our fund and performance reporting. The full estimated portfolio value (EPV) of the Investments, at 30 September 2023, was approximately A$3.3 billion, with the Fund’s remaining proportionate share being A$2.5 billion.  The transaction will result in the deconsolidation of the Investments and an estimated net gain before non-controlling interests (NCI) of approximately US$51.0 million EBITDA (after NCI of approximately US$4.6 million EBITDA) before management and performance fees.  The residual interests of the Investments will be recognised as “Litigation Investments - investment in associate” within the Group Consolidated Financial Statements.
Transaction detailsUS$ million
Cash consideration21.5
add fair value of the residual interest179.5
less derecognition of associated net assets, capitalised overheads, direct costs and expenses1(50.0)
Group net profit151.0
Attributable to NCI1(46.4)
Group net profit after NCI1,24.6
  1. Amounts are estimated and subject to finalisation of costs and audit of balances. 2. Excluding management and performance fees.
Raymond van Hulst, Managing Director and CEO, commented “The conclusion of this transaction with an expert litigation finance investor with strong IP capability demonstrates the continued growth and depth of the secondaries market as well as the intrinsic value of our portfolio. The thorough due diligence process undertaken affirms our belief in the value of the Investments.  “Opportunities in IP are expected to exceed our concentration limits within Fund 4, this deal strategically frees up capacity for this growing and highly accretive sub asset class. It enables us to redeploy capital towards our strong pipeline of new, attractively priced IP investments, while retaining majority ownership in the Investments. It furthermore supports diversification of our portfolio overall.  “This also reinforces our commitment to diversifying revenue sources, while concurrently mitigating underwriting risks, monetising the incremental value created from the portfolio and advancing our strategic priorities,” said Mr van Hulst.  Adam Gill, Managing Director of GLS commented “GLS is pleased to partner with Omni Bridgeway in this transaction which accomplishes important strategic goals for both parties. The transaction provides GLS an attractive risk-reward proposition in a highly diversified and collateralized portfolio of litigation finance investments, curated and managed by an industry leader. We look forward to our continued collaboration with Omni Bridgeway to maximize the value of this portfolio for our respective investors.”
Read More
Case Developments Commercial

£1.5M Settlement Approved by CAT in ‘Car Delivery Charges’ Class Action

Despite the ongoing consternation over the future of litigation funding’s role in UK class actions, we continue to see victories and major milestones achieved in funded cases over recent weeks. The approval of a settlement in the ‘car delivery charges’ class action represents another such success for claimants and their funders. Reporting by CDR confirms that the Competition Appeal Tribunal (CAT) has approved the £1.5 million settlement in the opt-out class action brought against Compañía Sudamericana de Vapores (CSAV), following the settlement agreement being reached in October. The CAT approved the settlement in Mark McLaren v MOL and Others at a hearing on 6 December but have yet to publish a written judgement. Following the CAT’s approval, this now stands as the first ever settlement in a UK opt-out class action. Class representative Mark McLaren praised the approval of the settlement, saying that it would “provide redress to those British consumers and businesses who bought new cars and vans and have suffered a loss as a result of the cartel.”  Scott+Scott’s Belinda Hollway, who acted for the class representative, said that the CAT’s decision demonstrated “that collective settlements can be achieved and that the regime is working to deliver compensation to the victims of breaches of competition law.” Woodsford provided litigation funding for the claim. As LFJ reported in October, claims have been brought against five international shipping companies: MOL, “K” Line, NYK, WWL/EUKOR and CSAV, over allegations that they engaged in a price-fixing scheme between 2006 and 2015. The settlement with CSAV was hailed as a “significant milestone” by McLaren, but it still only represents a small portion of the overall class action, as CSAV is the smallest of the defendants with a 1.5% market share. The remaining four defendants are currently set to continue their defence at trial in 2025, having previously been censured by the CAT ‘for undermining the ethos of collective actions by communicating directly with class members.’
Commercial Regulatory Issues

UK Government’s Amendment to DMCC Bill Offers a Partial Solution to PACCAR Ruling

The UK litigation finance industry has been closely watching the government’s response to the Supreme Court’s PACCAR decision, with many hoping that there will be a quick legislative fix regarding the enforceability of litigation funding agreements (LFAs). According to one industry expert, a parliamentary debate held earlier this week has offered an indication of what shape a legislative solution may take. A post from Clyde & Co’s director of policy and government affairs, Alistair Kinley, provides insights into the recent debate on the House of Lords over the Digital Markets, Competition and Consumers Bill (DMCC), and its potential consequences for the government’s plans to provide a legislative solution to the PACCAR decision. Kinley highlights two key takeaways from a speech by Minister Viscount Camrose. Firstly, that it appears the government has acknowledged that the current amendment to the DMCC bill only addresses the issue of LFA enforceability for cases in the Competition Appeal Tribunal (CAT). Secondly, the government has indicated that it will attempt to provide a legislative solution for funded cases outside the CAT, as ‘the DMCC Bill is not the place to address this.’ Kinley suggests that this can be considered a mixed result for the litigation funding industry. On the positive side, if the DMCC bill is brought into law then it will solve the enforceability issue for LFAs in the CAT, whilst also having a ‘retrospective effect.’ However, even though there are signs that the government will look for another legislative venue to provide a solution for non-CAT cases, ‘it is likely to be slower in coming to fruition than that proposed for funded opt-out cases in the CAT.’
Commercial Deals

The Funders’ Perspective on Criteria for Case Selection

For lawyers or claimants who have no prior experience in working with litigation funders, it can often seem an opaque process through which funders arrive at a ‘yes’ or ‘no’ decision when choosing whether to fund a case. As a result, it is incredibly useful to understand the funder’s perspective, and through that lens, understand which funders to approach. An article in Concurrences by Thierry de Bovis, director at Equity & Claims Lux, provides an overview of the latest developments in litigation funding and offers useful insights into the factors which funders consider when selecting the most attractive cases for investment. de Bovis begins by exploring the ‘rather undefined concept’ of the term ‘litigation funder’, before examining the different types of litigation finance, from single case funding and the monetization of claims, to law firm funding and special court funding. The article then provides a helpful overview of the main ‘funding criteria’ used by investors, outlining nine separate factors which are often considered by funders during case evaluation and selection. de Bovis identifies the following nine criteria:
  • Matter and financial thresholds
  • Book-building strategy and the passing-on defence
  • The right moment to fund a dispute
  • Dispute Team
  • Recovery of the defendant
  • Which jurisdictions?
  • Pricing the risk
  • Mitigating the risk: Insurance
  • Legal structuring and tax 
de Bovis explains that ‘an investor in litigation finance does not fund a dispute but invests in a legal context that is made up of any criteria’, and that the relative importance of each of these factors to an individual funder ‘will typically be determined by its culture, its legal structure, and its risk appetite.’ Due to this lack of uniformity among funders, de Bovis recommends that ‘the claimant and its counsel should consider the specificity of each funder in relation to these criteria.’ The full article with in-depth explanations for each of these criteria can be found here.
Announcements Consumer

Stellium’s Anthony Johnson Launches New Website

Anthony Johnson launched a new thought leadership website based on customer feedback on December 7, 2023. “The new platform is specifically designed to cater to the needs of legal professionals and firms,” says Anthony Johnson (AJ). “We took extensive customer feedback into account while building this platform, aiming to provide a comprehensive guidance system that enhances operational efficiency, client satisfaction, and profitability.” The new website's mission is clear: to address the frustrations, wants, fears, and aspirations of legal professionals, enabling them to achieve positive business outcomes. AJ understands the importance of sound business management principles and up-to-date legal technology reporting in today's competitive landscape. Transparency fosters trust, collaboration, and innovation within the legal system. Therefore, the site emphasizes the benefits of transparent legal data practices to empower legal professionals and promote excellence in the field. The platform offers a wide array of free educational downloadables and media resources, enabling the audience to navigate the complexities of the legal industry and succeed in their endeavors. AJ is committed to providing valuable content that equips legal professionals with the knowledge and tools they need to excel. The site will continue to deliver high-quality content and empower legal professionals. Visit https://awesomeattorney.io/ to explore the available resources. To learn more about Anthony, click the link below. https://www.linkedin.com/in/awesomeattorney/ For media inquiries contact: Margaret@stellium.co
Read More
Commercial

Key Takeaways from LFJ’s Digital Event: Legal Tech and LitFin

On December 6th, 2023, Litigation Finance Journal produced its final event of the year: Legal Tech and LitFin: How Will Tech Impact Litigation Finance Globally? Tets Ishikawa moderated an insightful and pertinent discussion on the use of legal tech in the litigation finance industry. Panelists included Nick Rowles-Davies (NRD), Founder of Lexolent, Isabel Yang (IY), Founder of Arbilex, and Joshua Masia (JM), Co-Founder and CEO of Dealbridge.ai. Below are some key takeaways from the event (answers have been truncated for the purpose of this article): Legal tech is quite a broad term.  What does the legal tech landscape mean to you, and how does it fit into your business? IY: We’re in a very exciting time in legal tech. Where I sit, I primarily deal with the underlying technology being artificial intelligence (AI). The primary advances in advanced AI have primarily occurred out of language being the source data. A lot of these text-based AI advancements all hold great significance for the practice of law. At Arbilex, we are taking advantage of large language modeling (LLM) to reduce the cost of data acquisition. When we take court briefings and unstructured data and try to turn that into structured data, the cost of that process has dramatically decreased, because of Chat GPT and the latest LLMs. On the flipside, because AI has become so advanced, a lot of off-the-shelf solutions have tended towards a black box solution. So the model’s output has become a more challenging task. At Arbilex, we have always focused on building the most stable AI—so we focus on how we can explain a particular prediction to our clients. We are increasingly investing a lot of our time and human capital into building that bridge between AI and that use case. How relevant has legal tech been, and will it be, in the growth of the litigation finance sector?  JM: When we look at scaling operational processes, a lot of times we have to put our traditional computer science hat on and ask, ‘how have we historically solved these problems and what has changed in the past several years to evolve this landscape?’ A lot of the emphasis with technology has been about normalizing and standardizing how we look at these data sets. There’s a big issue when you look at this approach and what existing platforms have been doing—this is a very human business. Because of that, there’s a lot of ad hoc requests that get mixed in. So what gen-AI is doing, we’re getting to a point where you don’t have to over-structure your sales or diligence process. Maybe the first few dozen questions you’re asking of a given data set are the same, but eventually we want to be able to ask questions that are specific to this deal. So being able to call audibles and ad-hoc analysis of data sets was really hard to do before the addition of generative AI. NRD: Legal tech is becoming increasingly relevant, but the real effect and usefulness has grown over time. It makes repetitive tasks easier, and provides insights that are not always readily apparent. But in terms of the specific use of AI to triage outcoming matters, we identify matters in different areas—is this something we simply aren’t going to assess, will it be sent back for further information, does it fit the bucket of something we would fund per our original mandate, or does it go on the platform for the purpose of others to look at and invest in that particular matter. AI is having an increasing impact and is being used with more regularity by litigation funders who are funding they can increase efficiency and get to a ‘yes’ much more quickly. A lot of lawyers would say, this is fascinating, but ultimately this is a human industry. Every circumstance will be different, because they will come down to the behaviors of human beings in that time. Is there a way that AI can capture behavioral dynamics? IY: In general, we need to have realistic expectations of AI. That comes from, what humans are uniquely good at are not necessarily the things that AI is good at. AI is really good at pattern-spotting. Meaning, if I train the model to look for recurring features of particular cases—say, specific judges in specific jurisdictions, when coming up against a specific type of argument or case—then AI in general has a very good ability to assign the weighting to a particular attribute in a way that humans instinctively can come to the same place, you can’t really quantify the impact or magnitude of a specific attribute. The other thing that we need to be realistic about, is that cases are decided not just on pattern, but on case-specific fact attributes (credibility of a witness, availability of key evidence). If you train AI to look for things that are so specific to one case, you end up overfitting the model, meaning your AI is so good at looking for one specific variable, that it loses it general predictive power over a large pool of cases. What I would caution attorneys, is use AI to get a second opinion on things you believe are a pattern. In arbitration, attorneys might use AI on tribunal matters—tribunal composition. AI models are way better at honing in on patterns—but things like ‘do we want to produce this witness vs. another witness,’ that is not something we should expect AI to predict. For the full panel discussion, please click here.
Read More
Commercial Deals

Omni Bridgeway’s Loewith Discusses Canadian Litigation Finance Market

Whilst the North American litigation finance market is dominated by the huge volume of cases in need of funding in the US, the industry’s leading funders are keen to exploit the potential of a Canadian market that is ripe for growth. An article by Law360 Canada provides insight into the country’s litigation funding market through an interview with Naomi Loewith, director of strategic partnerships - Canada, at Omni Bridgeway. Loewith explains that whilst third-party funding is still in its early developmental years in Canada, “the courts are comfortable with it and sophisticated lawyers know about it.” Reflecting on her own career move into the world of litigation finance, Loewith highlights that she relishes “the idea of defining people’s expectations about helping establish the industry, helping clients realize why it’s so attractive and important to them.” Discussing the value that Omni Bridgeway can bring to clients through its team of experienced litigators and specialists, Loewith notes that funders can provide clients with both “capital and assistance if they want it.” Looking at the future of litigation funding in Canada, Loewith states that “another trend we’re likely to see is law firms working with litigation finances to enable them to offer more creative fee arrangements to their clients.” Comparing the developing market with the United States, Loewith says that “many more top tier firms are comfortable acting on a partial success fee basis,” and expects to see that trend reflected in Canada moving forward.
Announcements Commercial Regulatory Issues

Triple-I: Plaintiffs Should Disclose Third-Party Funding Arrangements

Ohio’s defendants should know whether a third-party litigation funding firm is financing a lawsuit against them, the Insurance Information Institute’s (Triple-I) chief insurance officer, Dale Porfilio said, in testimony today before the state Senate’s Judiciary Committee. Third-party litigation funders (TPLF) provide billions of dollars each year to U.S. plaintiffs and their legal counsel, yet only a handful of U.S. states, such as Indiana and Montana, have required plaintiffs to disclose in court whether a TPLF is financially supporting a civil lawsuit. "Without any direct ties to litigated cases and minimal transparency, institutional investors and even sovereign nations are contributing significant amounts of capital toward litigation suits for the sole intent of making a profit," Porfilio stated. "Without transparency, we are not able to provide deep data-driven insights about TPLF’s impacts on consumers and the insurance industry. Therefore, Triple-I supports mandatory disclosure of TPLF so we can study the impacts on consumers and carriers alike." A Swiss Re Institute report published in 2021 estimated more than half of the $17 billion in TPLF monies deployed globally in 2020 were in the U.S. Moreover, while TPLF investments offered internal rates of return exceeding 25 percent, commercial liability plaintiffs who used TPLF firms to finance their litigation saw the settlement proceeds allocated to them decrease by 12 percent, this same Swiss Re Institute report estimated. "The insurance industry retains claim adjusters, litigation managers, and defense attorneys to help settle claims. The portion allocated to defense costs are defined as ’Defense and Cost Containment Expenses’ (DCC). These expense dollars across all P&C (property and casualty) products increased 30 percent from 2016 to 2022, while increasing 60 percent for general liability (GL) products across these same years. GL products are where more of the complex and high-limit litigation occurs for large corporations. Because TPLF is not disclosed in Ohio as well as most other states, Triple-I cannot today quantify how much TPLF is contributing to the increase in DCC and the industry’s financial results," Porfilio testified. Triple-I has been educating and informing consumers about its growing concern with third-party litigation funding under the broader umbrella of what the organization refers to as "legal system abuse." Triple-I defines legal system abuse as policyholder or plaintiff attorney practices which increase costs and time to settle insurance claims. While litigation is considered a policyholder’s last resort, Porfilio continued, legal system abuse exploits litigation when a disputed claim could have been resolved without judicial intervention. Legal system abuse contributes to higher costs for insurance operations and policyholder pricing, Triple-I’s chief insurance officer concluded.
Read More
Consumer

American Tort Reform Foundation Calls Louisiana a Judicial Hellhole, Citing Influence of Litigation Funding

Among the critics of the litigation finance industry, some of the loudest and harshest voices are associations representing the businesses and industries, who view funders as a driving force behind the increasing volume of lawsuits targeting American corporations. A press release from the American Tort Reform Foundation (ATRF) highlights its ongoing objections to litigation funding, describing it as a ‘multi-billion-dollar industry influencing legal outcomes with, often, zero transparency.’ The release focuses on Louisiana’s place in the ATRF’s 2023-2024 Judicial Hellholes report, where the state was ranked at no.7, and places much of the blame on outgoing Governor John Edwards’ veto of legislation that sought to impose additional disclosure requirements on litigation funding. Tiger Joyce, president of ATRF, cited the case of law firm McClenny Moseley & Associates (MM&A) as an example of the negative impact of litigation funding. MM&A were sanctioned for fraudulently filing claims on behalf of victims of hurricane damage, having received around $30 million in third-party funding. Joyce described it as “a potentially fraudulent scheme between a Texas trial lawyer firm, litigation funders, and a roofing company.”  Joyce failed to note that, as LFJ recently reported, the two funders who lent money to MM&A are also petitioning to recoup their investments from the law firm. ATRF expressed hope that governor-elect Jeff Landry represented a ‘glimmer of cautious optimism for legal reform,’ and stated that ‘there might be an opportunity for the state to improve its civil justice environment.’ The ATRF’s press release makes clear that it hopes the new governor will reverse his predecessor’s position on legislation reforming disclosure requirements.
Case Developments Commercial

Judge Denies Woodsford’s Request for Temporary Restraining Order in Dispute with Hosie Rice

As recently as last week, LFJ reported on the ongoing dispute between Woodsford and Hosie Rice over unpaid fees from a litigation funding deal, as the funder sought to block the transfer of proceeds from the sale of a house owned by Hosie Rice’s founders. An article from Reuters provides an update on the case of Frome Wye v. Hosie Rice, et al. in the Northern District of California, as U.S. District Judge Edward Chen ruled against Woodsford subsidiary Frome Wye’s request for an injunction to stop Hosie Rice disbursing $1.8 million from the sale of the property.  In his denial of the request for a temporary restraining order, Judge Chen stated that Woodsford’s “purely financial” injury should be solved with a damages award. The ruling concluded that Woodsford  “has not shown a likelihood of irreparable injury”, and that the funder “has not submitted any evidence that any or all three Defendants who entered into the funding agreement are insolvent or that they would not be able to pay the amount owed.” Spencer Hosie and Diane Rice, the law firm’s founders, expressed satisfaction with the judge’s ruling and said that they hoped the ruling “puts an end to this long Woodsford saga." However, Woodsford’s Steven Friel noted that the funder would “pursue the debt until full satisfaction”, noting that the case had reinforced the fact that Hosie Rice still owes Woodsford the $1.8 million awarded by the arbitration panel.
Announcements Commercial Deals

Odyssey Marine Exploration Secures Additional Capital as it Pursues NAFTA Claim Against Mexico

As litigation funders are keen to regularly emphasise, third-party financing is not only useful to directly support a company’s legal claims, it is also a valuable tool to allow the business to continue its operations unhindered whilst pursuing meritorious litigation. In a press release from Odyssey Marine Exploration, Inc., the mineral exploration company announced that it has secured a debt financing deal including capital from Drumcliffe Partners, its primary litigation funder. The financing has been secured to support its ongoing operations and strategic initiatives, whilst it pursues an arbitration claim against Mexico over allegations that the country’s government ‘wrongfully denied environmental approval of the ExO Phosphate project in breach of NAFTA.’ The note and warrant purchase agreement was agreed on December 1, with Two Seas Capital leading the financing and additional investors including, Four World Capital Management, and the DP Special Opportunities Fund I, LLC (managed by Drumcliffe Partners). The financing deal includes ‘the issuance of promissory notes with an 11.0% annual interest rate, totaling up to $6.0 million, and warrants that allow them to purchase shares of Odyssey's common stock over the next three years.’ Sina Toussi, founder and chief investment officer of Two Seas Capital, highlighted that the funding would “bridge Odyssey to what we believe will be a just judgment in the arbitration and position Odyssey to pursue several new high-value projects.” James C. Little, CEO of Drumcliffe Partners stated they “continue to believe in the strong merits of the claim and Odyssey’s entitlement to compensation as the result of Mexico’s arbitrary and unfair treatment in breach of international law.”  The arbitration panel’s decision in the NAFTA case is expected in early 2024.
Read More
Commercial Deals

Lenders for Indian Airline Considering Litigation Finance Options

Although the litigation finance market in India is currently in a developmental stage, domestic and international funders have repeatedly identified it as a country with huge potential for growth in the adoption of third-party funding. A developing story regarding an insolvent airline suggests that this optimism is well-founded, as the company’s lenders are reportedly investigating third-party funding options to pursue legal proceedings.  Reporting by BQ Prime and Mint provide insight into the legal woes of the bankrupt Indian airline, Go First, whose financial backers are reportedly considering pursuing litigation financing options to fund its legal actions against engine manufacturer Pratt & Whitney. Last month, BQ Prime reported that Go First’s lenders led by the Bank of Baroda were meeting to discuss third-party funding options to support the airline’s litigation against Pratt & Whitney, for its failure to supply engines as contracted.  Following up on BQ Prime’s reporting, an article from Mint suggests that these lenders will move forward with a search for litigation finance providers, with the goal being to secure ‘up to ₹12,000 crore tied up in various lawsuits’. According to an anonymous source who spoke with Mint, the plan would be for the “existing legal costs can be paid off to lawyers by the lenders, and then a credit fund or a large stressed-debt fund can be roped in for financing all the litigation going forward and help Go First win the cases." The source went on to suggest that whilst the actual costs for the various litigation may total “less than ₹100 crore”, the lenders are hoping that “a favourable court verdict may fetch up to ₹12,000 crore."