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Commercial Deals

Italian Funder LexCapital Looks to Engage with Swiss Legal Market

For those funders who are newer entrants to the litigation finance market, their focus may initially be limited to domestic proceedings within their native jurisdiction. However, as these funders look to grow, it is often a natural next step to look outside their own borders, and engage with cases in other jurisdictions that have a connection to their home country. An article in Corriere Del Ticino highlights the activities of Italian litigation funder LexCapital, speaking with the company’s COO, Giuseppe Farchione, about the funder’s work in Italy and its recent expansion to engage with legal matters taking place in Switzerland.  Farchione discussed the company’s proprietary algorithm, ‘LexCapital Litigation Assessment’, which allows the funder to analyse the potential outcome and proceeds from a case, utilising a database which includes over 1.2 million civil matters in the Italian courts. The database contains a variety of statistical information that the algorithm can draw upon, including the duration of these cases, the subject and forum of the proceedings, and the division of these cases based on whether they were accepted or rejected. Farchione explained that the company hopes to begin incorporating data from international arbitration proceedings and cases in other jurisdictions. Farchione went on to discuss LexCapital’s nascent activities in the Swiss legal market, having engaged in its first case in Ticino, an Italian-speaking region of southern Switzerland, working with local lawyer Marco Compagnino. Farchione said that LexCapital would be open to working with other law firms in Switzerland, noting that the costs involved in Swiss cases are high but can lead to substantial returns for those proceedings that reach successful conclusions. He went on to say that LexCapital’s primary interest in Swiss litigation funding is in those cases which have a connection to Italy, such as those matters that involve an Italian company operating in Switzerland or a Swiss company that is involved in a dispute with an Italian counterpart.
Announcements Case Developments Commercial

LitFin Funded Case to Recover Khatib Family’s Stolen Art Leads to Raids in Paris and Frankfurt

Many examples of funded litigation involve high profile companies or sovereign states, with alleged scandals and injustices that can quickly dominate headlines. However, an ongoing European legal action may stand out above the rest, with a story so eventful that it sounds as if it could have been lifted from a Hollywood script, as a litigation funder is supporting a family’s efforts to recover stolen paintings worth hundreds of millions of euros. A press release from the Khatib family provided an update on its legal battle to recover valuable paintings that were stolen from their collection, as French bailiffs and police conducted a raid on a storage facility in Paris. The raid was authorised by court orders issued in Paris, which follows the same pattern as raids conducted by German authorities following court orders issued in Frankfurt. The Paris raid reportedly recovered a ‘large number of paintings belonging to a collection of works of Russian Avantgarde stolen from the Khatib family.’ These raids are the result of a legal case that began following the December 2019 theft of around 1,800 paintings, valued in the hundreds of millions of euros, from Wiesbaden in Germany. Since the theft, the Khatib family have been pursuing legal action to recover the stolen artwork, with the litigation funded by Prague-based funder, LitFin, and led by Dentons’ offices in Frankfurt and Paris. The press release included a statement from the spokesperson for the Khatib family, who said: "With the help of Dentons and LitFin, we will follow the perpetrators around the world. We will continue to recover our property and encourage anyone who considers buying works from the Russian Avantgarde to diligently check its provenance and make sure it is not a stolen piece belonging to our family".
Case Developments Commercial

High Court Denies ‘Dieselgate’ Defendants’ Request to Order Disclosure of Claimants’ Funding Agreement

As the UK litigation finance industry continues to stay in the public spotlight, discussions continue around what any future regulation might entail and whether it would increase requirements around the transparency or disclosure of funding agreements. For now, a recent judgement from the High Court has ruled in favour of the claimants in a high-profile group claim, by denying a request for the disclosure of any funding agreements. An article in The Law Society Gazette highlights a ruling in the High Court of Justice of England and Wales, Kings Bench Division, that dealt with a request for the disclosure of any funding agreements in the ‘Dieselgate’ group claim. The judgement dealt with two sets of applications, with the second being a funding disclosure application from the defendants that sought to compel the claimants and their lawyers, Pogust Goodhead, to provide ‘information as to their funding position’.  The request was sought by the defendants as they stated that they ‘are considering making an application under CPR 25.14(2)(b) for security for costs against the Funders.’ In their judgement, Mrs Justice Cockerill and Mr Justice Constable, declined ‘to order disclosure of Pogust Goodhead’s funding agreement, but instead consider that it will be appropriate to revisit the issue relatively shortly, to the extent it is pursued.’ They wrote that this could be done after legal budgets were fixed and once the claimants have had the opportunity to secure ATE insurance, meaning that ‘the question of security against Gramercy would be rendered redundant.’ The full judgement can be read here.
Commercial

Lawdragon Publishes 100 Global Leaders in Litigation Finance for 2024

Lawdragon has released its 100 Global Leaders in Litigation Finance list for 2024, with the fifth edition of its annual guide ‘dedicated to the leaders of this fascinating – and necessary – avenue of the legal profession.’ The list includes 164 senior executives from all over the glove, representing the entire spectrum of those companies involved in litigation finance, including funders, law firms, insurers, investors, and advisors. Of those companies with leaders included on the list, Burford Capital saw the highest number of executives recognised with 17, with Omni Bridgeway close behind at 12 individuals, and Harbour which had eight of its team listed.  Looking at the breakdown by jurisdiction across the 165 litigation finance leaders recognised, the US was the most represented country with 73 individuals listed. The UK came in a close second with 55 leaders recognised, and Australia came behind it with 17 executives profiled. As part of it’s 2024 litigation finance leaders list, Lawdragon has also identified those individuals who are listed in its Hall of Fame, which recognises ‘members and other outstanding lawyers who have made a remarkable contribution to the profession.’ Within litigation finance, three individuals are included in the Hall of Fame:
  • Louis Young, co-founder & CEO, Augusta Ventures
  • Stuart Grant, co-founder & managing director, Bench Walk Advisors
  • Andy Lundberg, managing director, Burford Capital
The full list of individuals recognised in 100 Global Leaders in Litigation Finance list can be found here.
Commercial Regulatory Issues

Russian Billionaires Evading Sanctions by Funding Cases in UK & US

One of the latest critiques of the litigation finance industry is that it represents a potential threat to US national security, due to the possibility of foreign governments and entities by funding lawsuits that target American companies and strategic national interests. Whilst there has been scant evidence of this being a tangible issue, a new investigation has revealed that Russian billionaires have been avoiding international sanctions by financing lawsuits in the West. The detailed investigation by Bloomberg Law focuses on the activities of the investment company A1, its parent corporation Alfa Group, and A1’s directors. Following Russia’s invasion of Ukraine in February 2022, Alfa Group has been sanctioned by both the United States and United Kingdom, as were A1’s billionaire directors Petr Aven, Mikhail Fridman, German Khan, and Alexey Kuzmichev. The US also individually sanctioned A1 in September 2023. Bloomberg’s investigation reveals that A1 has financed and been directly involved in the proceedings of bankruptcy lawsuits in both New York and London, having spent approximately $20 million across these cases. The investigation highlights that A1’s sanctioned directors attempted to avoid the reach of their individual sanctions by selling the company to another of its directors, Alexander Fain, for the miniscule sum of $900. In a witness statement for one of the bankruptcy cases, Fain explained that his directors had sold the company because “it became obvious that A1 LLC would no longer be able to operate normally and that there was a risk of default on its obligations to fund the litigation.” Commenting on the investigation, J. Scott Maberry, partner at Sheppard Mullin, described A1’s funding activities as “a big development in that sense because it kind of puts the US judicial system on par with the New York Stock Exchange and the US dollar as things that we need to start thinking carefully about how to deny access to.” Matt Webb, senior vice president at the Chamber of Commerce’s Institute for Legal Reform, argued that “A1’s actions are an example of the problems that arise when foreign entities can finance litigation.” The full details of A1’s involvement in these cases, as well as the roles played by sanctioned individuals can be read in Bloomberg Law’s article.
Commercial Deals

Westfleet Publishes 2023 Litigation Finance Market Report

Westfleet Advisors has published its fifth annual Litigation Finance Market Report, providing a data-driven overview of the commercial funding industry in the United States from 1 July 2022 to 30 June 2023.  Westfleet summarises its findings as ‘indicative of an industry in a state of flux, with some notable players exiting the industry, numerous professionals making lateral moves, and capital commitments to new deals contracting by nearly 14%.’ With regard to the decreasing volume of new capital commitments, Westfleet attributes this trend to the difficult global economic conditions that are affecting all industries, rather than a decline in demand for litigation funding. Despite this contraction on new capital, Westfleet still found that ‘many funders thrived both in terms of new capital raised, capital committed to new deals, growth in their headcount, and profitability.’ Westfleet’s report suggests that the data from 2023 indicates that the market is still favourable for those established funders ‘with strong track records and a proven ability to consistently attract new capital.’ Key highlights from the 2023 report include:
  • $15.2B in assets under management for 2023, representing a small increase from $15.1B in 2022
  • $2.7B in new commitments to deals in 2023, down from £3.2B in 2022
  • The average deal size declined from $8.6M in 2022 to $7.8M in 2023
  • This was driven by a reduction in the average size of portfolio deals from $10.5M in 2022 to $9.9M in 2023
  • In contrast the average size of single-matter transactions increased from $4.3M in 2022 to $4.8M in 2023
  • The share of new capital dedicated to claim monetization reached 21% in 2023, continuing the upward trend from 14% in 2022 and 8% in 2021
To read the full report from Westfleet Advisors, click here.
Commercial Regulatory Issues

Nick Rowles-Davies Shares Thoughts on a Post-PACCAR World

A new piece of analysis by Nick Rowles-Davies, founder and CEO of Lexolent, sheds light on the current state of the litigation funding market post-PACCAR.
As is customary of Rowles-Davies, his analysis pulls no punches. Writing on LinkedIn, he opines that industry stakeholders have varying perspectives on the Litigation Funding Agreements Bill.  Despite the Supreme Court's judgement and the industry's claims of adaptability and compliance, not all funders operate transparently, according to Rowles-Davies. The speed of the proposed new legislation and the lobbying efforts to expedite its implementation have also raised concerns.
The litigation funding industry is diverse, with different funders operating in different ways. There is a growing call for regulation, particularly as 90% of the London Solicitors Litigation Association believe it's time for the industry to be regulated. The PACCAR decision has created uncertainty and led to attempts to reopen concluded deals. As a result, a thorough review by the Civil Justice Council is needed.
The proposed 'Litigation Funding Agreements (Enforceability) Bill' aims to restore the pre-PACCAR regime, allowing individuals and small businesses to fund large claims against corporations. While many eyebrows have certainly been raised, the litigation funding industry isn't going anywhere any time soon, even if future regulation is on the horizon.
Case Developments Commercial

Subpostmaster’s Lawyer Calls on SRA to Examine Legal Costs in Post Office Litigation

The Post Office scandal, and its rise to the forefront of public attention in the UK, has been repeatedly cited as a prime example of the crucial role that litigation finance plays in securing access to justice for victims. However, arguments over the legal costs and funder’s returns in this case continue to be aired, as a lawyer for one of the subpostmasters is calling on regulators to get involved. Reporting by The Telegraph, and shared by Yahoo Finance, reveals that one of the subpostmasters in the Post Office Horizon litigation is calling for the Solicitors Regulation Authority (SRA) to investigate the legal fees paid out from the £58 million settlement fund. The subpostmaster’s lawyer, Jim Diamond, has written to the SRA after he has repeatedly asked for additional information from Freeths, the firm which represented the victims in the case, about how the settlement was divided between the law firm, litigation funder and the claimants. Mr Diamond explained in his letter that he has twice asked Freeths to provide the information along with supporting documents, but the law firm has rebuffed his outreach and said that as the litigation is now closed, they are not open to engaging on the subject. Diamond is asking the SRA to clarify whether the law firm is obligated to comply with his request and provide the documents to their former client, the postmaster. Mr Diamond also used the letter to criticise the recent article written by Neil Purslow, founder and chief investment officer of Therium Capital Management. In the guest article published in The Times, Purslow had refuted suggestions that Therium’s remuneration accounted for 80% of the settlement fund. In his letter to the SRA, Diamond argued that Therium’s founder should not have discussed the breakdown of costs in public, as these details are ‘private and confidential.’ At the recent Brown Rudnick European Litigation Funding Conference, Mr Purslow once again denied the claims about an ‘80% payout’ to Therium and offered a detailed explanation of the funder’s involvement in the case.
Case Developments Commercial

Illinois Court Grants Burford and Sysco’s Request to Substitute Plaintiff in Poultry Antitrust Litigation

As LFJ reported last month, the ongoing saga of Burford Capital and Sysco’s antitrust lawsuits continued, as both parties appealed a Minnesota judge’s denial of a joint request for the substitution of plaintiff in the antitrust case. As we wait to see the outcome of that appeal, Burford and its subsidiary, Carina Ventures, have secured a favourable ruling in another antitrust case in the United States District Court for The Northern District of Illinois. Reporting by Reuters provides the latest update on the Sysco antitrust cases funded by Burford Capital, as U.S. District Judge Thomas M. Durkin granted Sysco’s request to assign the ‘Broiler Chicken Antitrust Litigation’ to Burford’s affiliate company, Carina Ventures. The Illinois judge rejected each of the arguments brought by the defendants who objected to the substitution, stating: ‘An invalid assignment might have been a reason to deny the motion. But the Court has rejected those arguments.’ Explaining his decision to grant the substitution of plaintiff in the case, Judge Durkin said that “despite defendants protestations to the contrary, the assignment does not appear to be a very unusual circumstance either.” He further reasoned that “such assignments are a fact of modern litigation”, and therefore he had no reason to “interfere with sophisticated parties’ business decisions." The favourable ruling in this poultry case in Illinois will be welcomed by Burford Capital and Sysco, as their efforts to similarly reassign the pork antitrust claim in Minnesota were denied last month. Whilst the initial denial of their request for substitution of plaintiff in that case was disappointing, Burford will no doubt see Judge Durkin’s ruling as a positive factor in their appeal of the Minnesota court order.
Announcements Commercial Fundraising

Litigation Finance Firm Invests €25 million into Spanish Legal Tech Business

A Manchester firm has signed a groundbreaking €25 million deal to support a pioneering Spanish legal tech company, renowned for its expertise in handling claims related to cartel price fixing.
In a bid to increase access to justice across Europe, IQuote Limited will provide financial backing to Málaga based Cartel.es as it looks to expand across the continent. The Spanish company, which is the trading name of LegalTech Ventures S.L, was founded to tackle the vehicle cartel price-fixing scandal, which implicated 23 vehicle manufacturers from 2006 - 2013.
For two decades, Spain has seen a rise in these cartels involving companies in the same sector covertly fixing prices, sharing territories and customers, and exchanging sensitive commercial data.
The scandal, brought to light by the National Markets and Competition Commission (CNMC) in 2015, is thought to impact about 9.7 million consumers in Spain. This latest agreement to supply a funding facility of up to €25 million, is aimed to support Cartel.es in its expansion across Europe.
Craig Cornick, IQuote’s CEO and founder, said the investment is a strategic move to help more people across Spain obtain the justice they deserve. “Cartel.es is doing a very important job for the people affected by these corporate cartels and we couldn’t be prouder to be supporting the firm’s mission. The investment will not only provide financial backing to the company but also make justice a tangible reality for those in Spain and beyond.”
Cartel.es has made significant investments in proprietary technology allowing it to assess and quantify each claimant before court proceedings, facilitating faster resolutions. Co-founder and Chief Investment Officer, Adam Peake, said: “We are very proud of the work that we do.  These types of claims are not easy to approach so we are very excited to be partnering with IQuote, which has such a track record when it comes to complex legal matters.
“We’ve seen tremendous success so far and we’re looking forward to IQuote’s support and expertise in making lasting contributions to the European legal landscape, bringing justice closer to more people.”
Founded in 2016, IQuote Limited, specialises in legal asset and opex capital loans, with a primary focus on legal asset investing. The firm is constantly pushing for inventive solutions and investment opportunities to firms in the legal, technology and customer service sectors.
Mr Cornick added: “It is very important for us to champion businesses that put in great effort to help people access justice, it’s the core of what we do. With this investment and future expansion into Europe we are committed to bridging the gap between individuals and their right to legal resource. We’re hoping to keep growing the company and continue our mission to break down barriers to justice across the globe.”
Commercial Regulatory Issues

Litigation Funding Bill Introduced in House of Lords

Earlier this month, the UK government announced that it would introduce legislation to protect litigation funding by reversing the impact of the Supreme Court’s decision in PACCAR. Whilst it was uncertain at the time of the announcement how quickly the government would move forward with these plans, we have now seen that no time has been wasted to introduce simple legislation to Parliament. Earlier this week, the Litigation Funding Agreements (Enforceability) Bill 2024 was introduced in the House of Lords, delivering on the government’s promise to roll out new legislation to reverse the effects of the Supreme Court’s PACCAR ruling. HL Bill 56, ‘a Bill to amend section 58AA of the Courts and Legal Services Act 1990 to make provision about the enforceability of litigation funding agreements’, was introduced by Lord Evans of Rainow on 19 March 2024. The text of the bill is succinct and only makes two amendments to subsection (3) of section 58AA of the Courts and Legal Services Act, with the first being to insert the following text after paragraph (a): “an agreement is not a damages-based agreement if or to the 5 extent that it is a litigation funding agreement.” The second amendment, which is to be inserted after subsection (3), provides a straightforward definition of a litigation funding agreement with regards to the roles of the funder and the litigant within such agreements.  The bill states that these amendments ‘are treated as always having had effect.’ The second section of the draft legislation also clarifies that this act applies solely to England and Wales, and that it ‘comes into force on the day on which it is passed.’ The bill was introduced on 19 March and had its first reading in the House of Lords, and according to the UK Parliament website, it now has a second reading scheduled for 15 April 2024. The second reading of the bill allows for a general debate on the details of the bill.
Announcements Consumer

Mass Tort Industry Leader Nicholas D’Aquilla Joins Counsel Financial

In a strategic move to bolster its litigation finance and loan servicing capabilities, Counsel Financial welcomes Nicholas (Nick) D’Aquilla, Esq. as its new Managing Director. With over a decade of experience in the mass tort industry and as a former civil defense litigator for the Louisiana Department of Justice, D’Aquilla brings a wealth of knowledge and a proven track record of success to the Counsel Financial leadership team.

D’Aquilla has distinguished himself as a leading figure in administering complex settlements, contributing to the administration of more than $20 billion in mass tort settlements across many high-profile cases. His expertise in solution design and oversight services has contributed to the resolution of more than 40 mass tort and class action litigations, spanning environmental, pharmaceutical, medical device, and sexual assault matters.

D'Aquilla will focus on enhancing Counsel Financial's mass tort underwriting processes and loan servicing offering, enhancing the development of valuation models based on historical settlement data. He will also leverage his experience as a consultant for multiple legal technology companies to help drive continued refinement of the company's servicing platform.

“Adding Nick to our team marks a significant enhancement of our litigation finance and loan servicing offerings,” said Paul Cody, President & CEO of Counsel Financial. “Coupling our team’s 200+ years of legal, financial and litigation experience with Nick’s knowledge and insight into the mass tort sector provides unparalleled resources that can be leveraged by both our law firm clients and institutional investors utilizing our servicing platform.”

Before joining Counsel Financial, D’Aquilla played a pivotal role in a complex settlement fund advisory team for a national bank, where he developed innovative underwriting methodologies that enabled credit extensions to mass tort plaintiffs’ firms. There, he also analyzed and valued over $1.5 billion in loan collateral derived from mass tort dockets.

About Counsel Financial

Counsel Financial is an industry leader in originating, underwriting and servicing loans and other financing solutions for contingent fee law firms. For over two decades, Counsel Financial has provided more than $2 billion in capital investments across 300+ law firms. These investments have financed the growth of firms in every area of plaintiffs’ litigation, including personal injury, mass torts, class action and labor and employment.

Commercial Special Features

Highlights from Brown Rudnick’s Litigation Funding Conference 2024

Last week, Brown Rudnick hosted its third annual European Litigation Funding Conference, proving once again to be one of the premier gatherings of industry thought leaders and executives. The one-day event featured an agenda full of insightful discussions, as senior representatives from funders, law firms, insurers, and other industry firms, all provided their perspectives on the most pressing issues facing the European funding market. The conference served as a reminder of the growing interest in litigation finance, as the venue was packed with attendees and without an empty seat in sight at the start of proceedings. Before the panel discussions began, the event kicked off with a keynote speech from Camille Vasquez, partner and co-chair of the brand & reputation management group at Brown Rudnick. Vasquez, who gained international recognition for her involvement in the Depp v. Heard trial, offered an alternative perspective on litigation funding, exploring its potential use in defamation cases brought by high-profile individuals or companies. As Vasquez explained, whilst it is commonly assumed that celebrities and other public figures have access to large amounts of liquid capital, this is often not the case. In such situations, Vasquez suggested that litigation funders may be able to play a crucial role in supporting high-profile plaintiffs who are eager to pursue defamation litigation but lack the funds to seek justice. A Post-PACCAR World and the Future of Regulation Unsurprisingly, the hottest topic at the litigation funding conference was the ongoing impact of the Supreme Court’s PACCAR ruling and the recent announcement by the UK government that it would introduce legislation to reverse the effects of that decision on litigation funding.  Looking at the long-term impact of the Supreme Court’s decision, Susan Dunn from Harbour provided the quote of the morning, when she emphatically stated that the PACCAR ruling would be remembered as “a footnote in history, not a chapter.” Similarly, Nicholas Bacon KC of 4 New Square Chambers, described it as “a blip in the landscape” of the UK funding market, and pointed out that the situation had in some ways had positive effects as it had brought wider public attention to litigation funding. However, speakers across the day recognised that PACCAR had created unnecessary uncertainty for investors considering engaging with the UK market, and had created fresh talking points for the most vocal opponents of third-party funding. NorthWall Capital’s Alexander Garnier reported that the Supreme Court’s judgement had “made people more nervous about investing in the UK and London”, because it had increased the risk of investments or had increased the perception of those risk levels. According to Professor Rachael Mulheron KC, another negative side-effect of the decision has been the “unfortunate conflation between regulation and PACCAR,” which has made productive discussions around the future of industry oversight more challenging. As the event’s participants discussed the effects of PACCAR, these exchanges naturally turned to the government’s announcement of new legislation and a potential review into the litigation funding market. With the review suggesting the possibility of enhanced regulation of third-party funding, Woodsford’s Charlie Morris admitted that this aspect of the government’s announcement was unfortunate, as it had “given an opportunity for the anti-funding lobby” and compared it the “politically motivated campaign” that took place in Australia to crack down on litigation funders. As to what future regulations could (or should) look like, speakers at the conference were divided on certain issues such as a potential cap on the level of returns a funder could take from any award or damages. Morris once again emphasised the need to avoid “broad brush statutory prohibitions”, whilst Dunn firmly argued that a cap on funders’ returns “should not be part of any regulation.” In contrast, Garnier expressed an openness to some form of cap, explaining that he would “welcome clarity” on industry regulations, “even if it involves a regime that includes a cap on damages.” Offering the most succinct perspective on the funding industry’s view of new legislation, Matthew Lo from Exton Advisors argued that there is “nothing to be afraid of about regulation in general, but the devil is in the detail.” On a similar note, Professor Mulheron suggested that the most important thing for any government plans to introduce new regulations is that “funders have to be around the table” for these discussions. The Impact of the Post Office Scandal Closely tied to the UK government’s ongoing attempts to soften the blow of PACCAR, is the role played by the Post Office scandal and the impact it had on bringing the vital role of litigation funding in securing access to justice to the public’s attention. One of the highlights of the day’s discussions was the insight provided by Neil Purslow of Therium, who offered a fascinating account of the funder’s involvement in the sub-postmasters litigation and expressed some frank reflections on the ways it had highlighted the nefarious tactics of defendants. Purslow described the case as a perfect example of a defendant “spending money on lawyers rather than doing the right thing”, and noted that the Post Office had spent £100 million to fight the case rather than actually providing compensation to the victims upfront. Purslow emphasised this fact in combination with a rebuttal of the oft-repeated claim that Therium had taken 80% of the damages awarded to the sub-postmasters, explaining that the actual return for the funder was around 41%. In light of these facts, Purslow described the arguments in favour of a broader cap on funders’ fees as “nonsense”, and instead highlighted the case as yet another instance of defendants taking “a scorched earth approach to litigation.” Purslow concluded his contribution to the day’s discussion by recognising that whilst the PACCAR decision had been “a self-inflicted wound”, the industry and government’s reaction has clearly demonstrated that the UK “is a jurisdiction that is supportive to litigation finance.” Furthermore, Purslow praised his fellow litigation funders for “working together collaboratively and sharing ideas” to protect the UK funding industry, and highlighted the value of institutions like ILFA in providing a powerful voice that could “address the issue and get the government to act.” Economic Pressures, Corporate Cases and Law Firm Funding During the day’s panel discussions, speakers offered their views on the trends, opportunities and challenges that industry participants have seen over the last twelve months. As many industry leaders have spoken about in the last year, whilst litigation funding is broadly seen as an uncorrelated asset class, that does not mean that it has been, as Matthew Lo put it, “immune to the wider economic environment”. The majority of panellists agreed that the rise in interest rates had continued to apply pressure on funders’ pricing, which then increased cost of financing creating challenges for those funders looking to raise capital. However, due to these challenging economic conditions, speakers noted that there has been an increase in demand for funding from law firms and corporations, both of whom are facing similar budget pressures whilst still looking to manage their litigation strategies. As Christiane Deniger of Burford Capital explained, many listed companies are actively seeking funding for a portfolio of cases and are “ready and willing to not spend their own money if they can take ours.” Rocco Pirozzolo from Harbour Underwriting added that these corporate cases were often attractive, because key decision makers at these companies share the funder’s perspective that “they have to be commercial and they have to be reasonable.” When it came to working with corporate GCs and CFOs, there was a broad consensus among the industry leaders present that there was still plenty of work to do around educating these inhouse decision-makers on the nuances of litigation funding. Ayse Yazir from Bench Walk noted that there is often still “concern over the control of the case”, with critics of the litigation finance industry contributing to fears that funders would seize control of the litigation process. Nathaniel Cortez of Moelis acknowledged that whilst these corporate leaders “don’t need to be experts on litigation finance”, it was clear that many GCs and financial directors did not “understand the breadth and depth of the industry”. The discussions focused on law firm funding proved to be some of the most enlightening exchanges of the conference, with funders and lawyers alike sharing their perspectives on some of the unique challenges and opportunities that this avenue of investing entailed. Hugo Lestiboudois from SYZ Capital made a clear delineation between straightforward litigation financing and the process of lending directly to law firms. He explained that law firm funding “is not as commoditised as litigation finance is today”, with investors needing to approach it from a business perspective and often having to “compete on terms, rather than on price.” Reinforcing this viewpoint, Chris Benson from Leigh Day argued that this type of funding crucially involves “getting lawyers to think like economists”, and acknowledged that this can be challenging as “a lot of lawyers have no interest in finance.” Looking at the practical steps involved in law firm funding, both in terms of the due diligence undertaken pre-funding and the ongoing monitoring and reporting that must take place post-funding, the speakers once again provided useful insights. Joshua Katz from Gramercy said that from his firm’s perspective, part of the journey was understanding the law firm’s wider strategic objectives, saying that Gramercy recognised that for a firm there are “some cases you should pursue even if they’re not economical, for the greater good.” Similarly when it came to the ongoing relationship between the funder and law firms, it was not only crucial for practical issues like reporting systems to be in alignment, Lestiboudois highlighted the need for a “cultural fit” between firms. A High Benchmark for Industry Conferences By the end of the day, the event’s attendees had been treated to a plethora of engaging discussions across seven separate panels, bolstered by plenty of opportunities for networking and connections between sessions. The full scope and detail of every speaker’s insights could not be encompassed in this single overview of the day’s proceedings, but by the time the agenda concluded with informal refreshments, the conference had succeeded in providing an impressively diverse array of perspectives on litigation funding in Europe. Brown Rudnick’s third European Litigation Funding Conference proved to be an enlightening experience for those in attendance, with the proceedings expertly guided by the conference chair Elena Rey and fellow moderators from Brown Rudnick, who skilfully guided the event’s packed schedule. LFJ’s team were delighted to meet with fellow attendees who expressed their enjoyment of the event, and we are already looking forward to covering next year’s iteration of Brown Rudnick’s conference.
Announcements Commercial Legal Innovation

Legal Finance Firm Set to Reboot Industry with Multi-Million Pound Investment in AI-Tech.

A leading litigation finance firm is investing circa £2m into AI technology as the company looks to continue its meteoric global growth.  Nera Capital, which has offices in Dublin, Manchester and a newly established presence in The Netherlands, plans to significantly enhance its process optimisation and strengthen data analytics.  The investment is expected to significantly benefit the various law firms across Europe, UK and the US that are currently partnered with the company as it seeks to expedite the legal process and ultimately create greater access to justice.  Director Aisling Byrne highlighted the impact of technology on the company’s future plans: "Our investment in AI shows our commitment towards efficiency and innovation.  "We believe this increase in investment will enhance our entire operations, revolutionising further the way we approach various aspects of our business. By leveraging advanced AI technologies, we aim to further streamline processes, boost efficiency, and drive innovation across the board. The decision is a huge step forward, and I am proud of our continued commitment to staying at the forefront of advancement in legal technology.” Since the company’s inception in 2011, Nera Capital has grown to become a major global player in the world of litigation finance, with operations across several European locations. The company is a specialised funding provider catering to law firms by extending support across diverse claim portfolios such as financial mis-selling, data breach, Cartel damages, personal injury and Antitrust. 

It previously announced the creation of 10 new jobs in key areas including legal, auditing, finance and origination, after opening a new office in Weert, Netherlands. Aisling added: “I take immense pride in witnessing the remarkable growth of Nera Capital as it expands worldwide.

“In the face of a rapidly evolving world, our industry has often been considered slow to adapt in relative terms. We are determined to break free from that inertia and lead the charge towards meaningful change. By embracing cutting-edge AI technology, we have entered a transformative chapter for our firm. The fusion of innovation and data-driven insights empowers us to navigate legal landscapes with even greater efficiency, ensuring our partnered law firms receive the swift and insightful solutions they deserve which can hopefully speed up the justice process for those that need it.” 

Nera Capital are expected to look at further expansion into new locations in the near future. 

About Nera Capital

  • Established in 2011, Nera Capital is a specialist funding provider to law firms.
  • Provides Law Firm Lend funding across diverse claim portfolios in both the Consumer and Commercial sector.
  • Headquartered in Dublin, the firm also has offices in Manchester and The Netherlands.
  • www.neracapital.com
Announcements Commercial People Moves

Zachary Segal Joins LCM as an Investment Manager

Litigation Capital Management (LCM) has announced that Zachary Segal has joined the team as an Investment Manager. In a post on LinkedIn, LCM announced the new hire to their over 3,600 followers. Segal has more than 20 years of experience in the legal profession, specializing in all forms of dispute resolution, and in particular international arbitration, including investor-state disputes, and commercial litigation. LCM hopes that with his impressive background, he will play a key role in driving LCM’s growth and success. The team at LCM wrote: "We are thrilled to have Zach onboard and look forward to the valuable contribution he will make to our team."
Announcements Commercial People Moves

DELTA CAPITAL PARTNERS WELCOMES ACCOMPLISHED PRIVATE EQUITY FUND PROFESSIONAL AS CHIEF FINANCIAL OFFICER

Delta Capital Partners Management, a global private equity firm specializing in litigation and legal finance, is pleased to announce that Jonathan Patrick has joined the firm as its Chief Financial Officer and Chief Compliance Officer.  Patrick will be based in the firm’s Chicago headquarters. Patrick will oversee Delta’s finance, accounting, compliance, human resources, and administrative functions; and will work closely with senior management on all capital market activities, tax and valuation matters. Prior to joining Delta, Patrick served for over 10 years as the Controller of EnCap Investments, a leading provider of private equity growth capital (over $20 billion of AUM) to independent energy companies, focusing on treasury, fund operations and management company financial reporting.  Additionally, Patrick spent over five years in public accounting, including time at Deloitte in their Audit and Enterprise Risk Services practice, and has experience in the Treasury and SEC Financial Reporting functions for Ares Management in Los Angeles. Christopher DeLise, Delta’s Founder, CEO, and Co-CIO stated that “Delta is incredibly pleased to have someone of Jonathan’s caliber and expertise join the firm as we continue to scale our business to increase market share and better serve our investors and customers across the globe.  Jonathan’s experience and responsibilities at EnCap will enable him to bring best practices in the areas of private equity, capital markets, and finance to Delta in anticipation of our significant planned growth in 2024 and beyond.” “I am excited to join and look forward to applying my experience and skillset to Delta Capital Partners.  Collaborating with the established team here is such a great opportunity and I am eager to be part of this growth.” said Patrick. About Delta Delta Capital Partners Management LLC is a US-based, global private equity firm specializing exclusively in litigation and legal finance, judgment and award enforcement, and asset recovery.  Delta creates bespoke financing solutions for professional service firms, businesses, governments, financial institutions, investment firms, and individual claimants to enable them to investigate claims, pursue litigation or arbitration, recover assets, enforce judgments or awards, and more effectively manage their risks, cash flow, and capital expenditures.
Announcements Commercial People Moves

DELTA CAPITAL PARTNERS WELCOMES ESTEEMED PRIVATE EQUITY AND ASSET MANAGEMENT PROFESSIONAL TO ITS BOARD OF ADVISORS

Delta Capital Partners Management, a global private equity firm specializing in litigation and legal finance, is pleased to announce that effective March 1, 2024, Anthony Donofrio has joined its Board of Advisors. Prior to joining Delta, Donofrio spent 16 years as the Managing Director, Head of Legal Transactions, and Chief Operating Officer of Co-Investments at Hamilton Lane Advisors, one of the world's leading private markets investment management firms with over $900 billion of assets under management and supervision.  In his capacity as Head of Legal Transactions, Mr. Donofrio led a team of attorneys in the negotiation and execution of thousands of private equity primary, secondary, and co-investment transactions and private market credit investments.  As the Chief Operating Officer of Co-Investments, Mr. Donofrio oversaw all operational aspects of Hamilton Lane’s $5 billion co-investment strategy, with both the team and assets under management of the program more than doubling in size during his tenure. Christopher DeLise, Delta’s Founder, CEO, and Co-CIO stated that “Delta is honored to have such a respected and accomplished private equity and asset management professional join its Board of Advisors.  One of the things that sets Delta apart from other litigation funders is the strength, depth, and accomplishments of its Board.  Anthony is a welcomed addition to such an esteemed group and we very much look forward to benefitting from his wisdom, experiences, and talents for many years to come.” “It is an incredible privilege to join Delta’s Board of Advisors.  I am energized to work alongside Chris and the rest of Delta’s best-in-class team, and I look forward to contributing my private equity and legal experience as Delta continues to execute its global growth strategy,” said Donofrio. About Delta Delta Capital Partners Management LLC is a US-based, global private equity firm specializing exclusively in litigation and legal finance, judgment and award enforcement, and asset recovery.  Delta creates bespoke financing solutions for professional service firms, businesses, governments, financial institutions, investment firms, and individual claimants to enable them to investigate claims, pursue litigation or arbitration, recover assets, enforce judgments or awards, and more effectively manage their risks, cash flow, and capital expenditures.
Commercial Regulatory Issues

Analyzing the Potential Impact of Florida’s Litigation Funding Bill

Florida is one of the latest US states to see the introduction of draft legislation focused on the regulation of litigation finance. Whilst the bill is currently stalled within the Florida legislature, it is important to consider what impact such a piece of legislation would have, if it is eventually signed into law in its current form. An insights piece from John J. Hanley, partner at Rimon Law, examines the current draft legislation making its way through the Florida legislature, which aims to place new guidelines and restrictions on the use of third-party litigation funding in the state. Hanley begins his analysis by noting that this bill has been the subject of intense lobbying, with 67 lobbyists from interest groups and industry associations contributing to the debate over the legislation. Looking at the core features of the Litigation Investment Safeguards and Transparency Act (LISTA), Hanley points out that the idea the bill is designed to protect consumers is misguided, as the focus of the legislation is directed towards commercial litigation finance arrangements.  Hanley also explains that whilst the bill prohibits various ways funders could control the litigation process, these are largely superfluous measures, given that every funding agreement that Rimon has reviewed already contains these provisions. Similarly, the legislation’s prohibition on funders paying commissions or referral fees is not expected to have a significant impact on the industry, because these commissions ‘are paid by the party receiving funding and not the funder.’ On the bill’s requirement that funders should not receive a larger portion of any damages or award than the plaintiffs themselves, Hanley states that ‘this is a good idea’ and highlights that many ‘reputable funders are already striving to achieve this.’ In contrast, Hanley says that the legislation’s ban on the assignment or securitization of funding agreements ‘is probably the worst feature of LISTA.’ He argues that if such a prohibition were enacted, it would ‘kill liquidity and make it difficult for funders to allocate capital which in turn will drive up pricing and further hurt small business in Florida seeking to fight deep pocketed defendants.’
Announcements Commercial

Burford Capital Reports Record 2023 Results

Burford Capital Limited ("Burford"), the leading global finance and asset management firm focused on law, today announces its fourth quarter and full year 2023 results. In addition, Burford has made available an accompanying fourth quarter and full year 2023 results presentation, a shareholder letter and capital provision-direct and capital provision-indirect asset data tables on its website at http://investors.burfordcapital.com. Christopher Bogart, Chief Executive Officer of Burford Capital, commented: "Burford had an extraordinary year. Our earnings per share rose 19x to $2.74, driven by a tripling of consolidated total revenues to $1.1 billion in 2023 due to significant growth in capital provision income, with and without our YPF-related assets. We achieved a Burford-only net income margin of 63%. With the courts fully back in business, we had an active year and we anticipate further substantial levels of activity in 2024 and 2025. Increased portfolio velocity was reflected in record core legal finance realizations, cash receipts and realized gains, as well as sizeable unrealized gains arising from the portfolio moving forward. Our ROTE soared to 32% in 2023 from 2% in 2022, and we increased tangible book value by 34% to $9.85."
Commercial Regulatory Issues

CAT Continues to Send Revised Funding Agreements to the Court of Appeal

As the UK government accelerates its efforts to implement new legislation to address the impact of the Supreme Court’s PACCAR ruling on litigation funding, the courts continue to deal with ongoing attempts to revise litigation funding agreements to comply with PACCAR. An article in Legal Futures provides an overview of activity in the CAT in 2024, which has granted permission for a number of revised litigation funding agreements (LFAs) to go before the Court of Appeal in the wake of the Supreme Court’s PACCAR ruling. The CAT’s latest decision is the third time this year that the CAT has sent funding agreements to the Court of Appeal, after the terms of the funder’s remuneration in each agreement had been reworked to comply with the PACCAR judgement. The first of these decisions from the CAT was in January and related to the collective proceedings brought against Sony over allegations that it overcharged customers through its distribution of videogames in the Playstation Store. In that case, the CAT ruled that the revised funding agreement which allowed for the funder to receive a percentage of the damages only if this was “enforceable and permitted by applicable law” did not violate the PACCAR ruling. Permission was granted to send the funding agreement to the Court of Appeal, with the CAT saying that a “conclusive” decision was required. The second permission granted for an LFA was in the case of Kent v Apple, where the funding agreement’s terms had been revised to specify that the funder’s returns would be calculated based on a multiple of costs rather than a percentage of damages.  The latest example cited by Legal Futures is the CAT’s decision on the funding agreements on the dual opt-in and opt-out collective proceedings which have been brought against Mastercard and Visa. In these proceedings, the returns for funders in the LFAs were revised from a percentage-based recovery to one based on the funder and ATE insurer’s costs, and a multiple of the funder’s spend. Once again, the CAT ruled in favour of sending the revised agreements to be reviewed, stating that the continuing uncertainty about these issues of funding enforceability arising in a series of cases before the tribunal is unlikely to be resolved without determination of the issues by the Court of Appeal”.
Case Developments Commercial

Delaware District Judge Rules in Favour of Woodsford Subsidiary in Dispute with Hosie Rice

In what appears to be the final word on the long-running dispute between Woodsford and Hosie Rice, a Delaware judge has ruled in favour of the litigation funder in its efforts to recoup $1.8 million from the law firm. An article in Legal Newsline covers the decision by U.S. District Judge Colm Connolly to rule in favour of Woodsford’s subsidiary Frome Wye, upholding the prior court order from a magistrate judge requiring Hosie Rice to pay $1.8 million to the funder. In his ruling, Judge Connolly said that Hosie Rice’s objections were “without merit” and found that they were not protected by Delaware’s usury law with regards to the law firm’s obligations to remunerate the funder. The origins of this dispute date back to Woodsford providing around $800,000 in funding for Space Data’s case against Google, with Space Data refusing to pay Hosie Rice after it reached a settlement with Google in 2020. After an arbitrator ruled that Space Data owed the law firm up to $4 million in costs but no contingency fee, Hosie argued that it was not required to award Woodsford any additional fee beyond the original loan repayments.  The $1.8 million award was handed down by an arbitration panel as a result of Woodsford’s subsequent lawsuit against Hosie Rice, in which the funder argued that it was owed additional remuneration as the $4 million client payment constituted a ‘revenue event’ for the law firm. 
Case Developments Commercial

High Court Judge Rules that Anonymous Funder’s Identity is Relevant in Webster v HMRC

The issue of disclosure in regards to litigation funding has been most associated, in recent years, with patent infringement litigation in the United States, as defendants and judges have probed the nature of the financiers backing lawsuits. However, an ongoing case in the High Court has brought this issue to light in a very different manner, after a claimant said that even they did not know the identity of their litigation funder. Reporting by International Tax Review highlights the case of Webster v HMRC in the High Court, where Justice Rowena Collins Rice ruled against the claimant’s application to strike out an abuse of process defense, over HMRC’s attempts to identify Webster’s litigation funder. Jennifer Webster, the claimant in the case, has stated that she does not know who is funding her case, as the funder has only backed the claim on the condition that its identity remains anonymous and would withdraw from the litigation if its identity was made public. According to the judge’s ruling, Mishcon de Reya, the law firm representing Webster, are aware of the litigation funder’s identity. The ruling came about after HMRC successfully sought a court order to force the claimant to disclose their funder’s identity, which led Webster’s legal team to attempt to have this defence struck out. In her ruling, Justice Collins Rice explained that the funder’s identity was relevant as it addresses concerns over this mystery financier’s motivations for the case. The judge stated:  “Funder identity goes, on HMRC’s case, to the core issue of whether this is a genuine private law claim, albeit a test case, generously funded by a disinterested and publicity-shy benefactor with a commitment to human rights, or whether the court’s processes are being abused by an unregulated attack, on a government department exercising statutory public functions in the public interest, made in the service of agencies whose own commitment to the UK public interest, and the interests of justice, is unapparent.” Commenting on the judgement, Dan Neidle, director of Tax Policy Associates, argued that despite the judge’s ruling being “very strange”, it was unlikely that the claimant would be successful if they appealed the decision. As for the mystery funder’s reasons for seeking anonymity, Neidle suggested that it could be a benign motivation or “possibly something more sinister: a person with something to hide, using this litigation to block the rules that prevent its secrets from being uncovered”.
Announcements Commercial People Moves

Dane Lund Joins Juris Capital as Managing Director

Juris Capital, an investment manager specializing in innovative financial solutions for commercial litigants and law firms, is delighted to announce that Dane Lund has joined as a Managing Director. As Juris begins to expand its offerings of tailored financial solutions for commercial claimants, top-tier law firms and litigation boutiques, Lund will play a leading role in developing and executing new strategies for the firm. With the addition of Lund, Juris will offer more bespoke solutions for a wide range of cost needs, whether in the hundreds of thousands or millions. With over a decade of legal and financial experience, Dane brings valuable insight to Juris Capital. Dane has worked across a breadth of industries, including legal services, banking, litigation finance, and blockchain services, providing unique perspectives that can propel Juris’ business forward. "I am honored to join Juris Capital, an industry pioneer and one of the most successful firms in legal finance," said Lund. "I look forward to furthering Juris Capital's mission of providing innovative, client-focused solutions. I envision Juris growing to become not only a commercial litigation funder of choice, but also a balance sheet partner to the most innovative law firms in the country." About Juris Capital: Juris Capital is a capital partner to commercial litigants and law firms that has led financings ranging from $250k-$29mm. Since 2009, Juris has set a standard for ethical and collaborative legal financing. Juris helps commercial claimants and law firms manage litigation risk, pursue meritorious claims despite high litigation costs, and reallocate capital to core business purposes. Juris also works directly with law firms to help optimize their balance sheets, enable thoughtful growth and expand firm offerings. Dane Lund: dlund@juriscapitalcorp.com Juris Capital: www.juriscapitalcorp.com
Commercial Legal Innovation

Quantum Data Analysis Meets Litigation Finance and Investment

While engaging quantum computing across the legal spectrum is still in its infancy, litigation funders are increasingly looking to manage financial risk exposure with in-house data analytics systems. A new article pressure tests the most evident matters concerning quantum data and litigation finance.  Mondaq reports on how litigation financiers are integrating algorithmic data tools into their decision making. With the potential of billions of dollars in proceeds, it is important to understand the impact of data architecture through self inventory, extraction and analysis. Spotting holes in data systems is essential, and should be encouraged to promote a nimble innovation strategy within an organization.  Current popular uses of data analysis in litigation finance include quantifiable forecasts of economic harm caused by defendant actions, and contemplation of settlement proposals. Devising solutions to mitigate data disasters is also a prime concern for third party funding. For example, some litigation funders are compiling “data literacy” manuals to increase and enhance engagement between colleagues.   The future of quantum data analysis in litigation finance will belong to those who conceptualize systems that maximize ROI and improve operational efficiencies.  
Announcements Commercial Legal Innovation

LegalPay Awarded the Best LegalTech Startup of the Year by Entrepreneur India at Tech and Innovation Summit 2024

LegalPay, India's leading litigation finance company, has been named the BEST LEGALTECH STARTUP OF THE YEAR by Entrepreneur India at the prestigious Tech and Innovation Summit 2024. This recognition underscores LegalPay's unwavering commitment to revolutionizing the legal finance landscape and empowering businesses with innovative solutions.

LegalPay tackles the chronic issue of delayed payments faced by businesses. Their groundbreaking financing solution, QuickSettle, offers a lifeline to thousands of businesses struggling with cash flow. QuickSettle provides immediate funding to creditors, allowing them to receive their dues upfront. Simultaneously, debtors benefit from flexible repayment plans, easing financial strain and facilitating a win-win outcome for all parties involved.

"In today's dynamic economic climate, access to flexible financing solutions is vital for businesses to thrive," says Mr. Kundan Shahi, Founder & CEO of LegalPay. "We are incredibly honored to be recognized by Entrepreneur India. This award is a testament to our steadfast dedication to pushing the boundaries of innovation in the legal finance industry. We remain committed to empowering businesses and fostering a culture of faster dispute resolution in India."

LegalPay’s innovation transcends traditional boundaries. By bridging the gap between creditors and debtors, QuickSettle fosters collaboration and trust, reducing the need for costly litigation. In today’s dynamic business landscape, access to working capital is paramount. QuickSettle liberates working capital, allowing businesses to focus on growth and expansion.

The recognition from Entrepreneur India serves as a testament to LegalPay's dedication to pushing the boundaries of innovation in the legal and financial technology sector. As businesses continue to seek efficient and sustainable solutions to recover their dues, LegalPay remains steadfast in its mission to empower businesses and drive positive change in the industry.

About LegalPay:

Founded in 2019 by Kundan Shahi, LegalPay has emerged as India's largest litigation funding company, currently managing over USD 400 Million worth of claims. Through innovative solutions like QuickSettle, LegalPay empowers businesses to navigate financial hurdles seamlessly and unlock their true potential.

Commercial Regulatory Issues

Industry Reacts to UK Government’s Announcement of Legislation to Reverse PACCAR Ruling

Earlier this week, LFJ covered the announcement by the Ministry of Justice (MOJ) that it would introduce new legislation to reverse the effects of the Supreme Court’s PACCAR ruling, and protect access to third-party litigation funding. As part of this announcement, the government also revealed that it would be conducting a review of litigation funding, to ensure that claimants who access funding receive an adequate share of any compensation secured through funded litigation. Since the announcement, we have seen a variety of responses from litigation funders and legal professionals, as the industry looks towards the future of litigation finance in the UK. Reacting to the announcement on Monday, Factor Risk Management’s managing director, Mohsin Patel, described it as ‘very welcome news to funders, claimants and lawyers alike’, adding that the proposed law ‘will provide much needed certainty and clarity for stakeholders in future.’ However, he voiced caution around the Government’s plans for reform of litigation funding in the UK, emphasising that it should not ‘take any steps that may jeopardise its development.’ The president of the Law Society of England and Wales, Nick Emmerson said that his organisation welcomed ‘the UK government’s aim of helping the public achieve access to justice.’ With regards to the planned review of the litigation finance market, he acknowledged that ‘there could be merit in a review,’ but suggested that the government should consider ‘the risk of the funding arrangement rendering any victory hollow for the consumers affected.’ A statement from Martyn Day, co-president of The Collective Redress Lawyers Association (CORLA), described the government’s plans as ‘a very sensible and welcome development’ and suggested that the new legislation would prevent ‘corporations tying up court time and money in trying to unpick the funding agreements that make the claims possible.’ Similarly to other industry figures, Day argued that any planned reforms around the funding of collective actions ‘must build on today’s welcome announcement and not undermine it.’ Furthermore, he expressed CORLA’s willingness to ‘work closely with government on any reform that gives clarity, certainty and fairness to claimants and those who support them in bringing their claims.’ In a letter to the Financial Times, Steven Friel, chief executive of Woodsford, focused on the Lord Chancellor’s suggestion that as part of the review of litigation funding, it would consider a cap on the fees paid to litigation funders. Friel stated that instituting a cap ‘would be a mistake’, arguing that with a competitive market already providing a measure of self-regulation on fees, ‘a cap that will inevitably be lower than the market is prepared to go on some cases will cause many meritorious claims to become economically unviable to fund.’ Instead, Friel suggested that the government should ‘redirect the obligation to pay some or all of the litigation funding fees from the victims to the wrongdoers.’ Tets Ishikawa, managing director of LionFish Litigation Finance, offered a similar verdict on the government’s intention to conduct a review into third-party funding, arguing that recoverability of funders’ fees is the best solution. Ishikawa suggested that ‘allowing recoverability would allow the funding industry to support the many impecunious clients with cases smaller than the Post Office matter that we currently have to turn away.’ Jack Bradley-Seddon, partner and litigation funding specialist at Thaxted Capital, celebrated the ‘positive tone in the announcement’ and highlighted that it  was a welcome contrast with ‘a lot of the negative sentiment that has been printed about the industry previously.’ He went on to caution that ‘the devil will be in the detail’ of the proposed legislation, noting that there is ‘a big difference between positive soundbites before an election, and a precise and carefully worded piece of legislation that actually fixes the problem.’
Case Developments Commercial

$18 Million Settlement Agreed in Merivale Underpayment Class Action

The strength of litigation funding for class actions in Australia continues to be demonstrated, as a class action representing underpaid hospitality workers has reached a multimillion dollar settlement with the employer. An article in the Australian Financial Review covers the resolution of a class action brought against hospitality company, Merivale, who has agreed to a without-admission settlement of $18 million. If approved by the Federal Court, $8.6 million of the settlement will be distributed to cover the legal costs and the commission for the class action’s litigation funder, ICP Funding. The class action was brought against the hospitality giant over allegations that it had underpaid around 14,000 employees, with the total amount of unpaid wages amounting to $129 million. The lawsuit alleged that Merivale had been relying on an outdated ‘WorkChoices’ agreement from 2007, which had not been legitimately approved and failed to meet the industry award. Despite agreeing to settle the case, Merivale’s spokesperson said that the company “strongly denies these allegations and continues to do so.” The group action’s members were represented in the case by Adero Law, with the costs of the case covered by ICP Funding. The terms of the settlement agreement would see the funder receive roughly 25% of the total amount, with $2.5 million for costs and $4.4 million as commission. Adero would receive $1.25 million for its deferred costs, plus $500,000 to cover its administration costs for distributing the remaining settlement.
Case Developments Commercial

Ontario Court Approves Funding Arrangements in Class Actions Targeting Canadian Banks

Within North America, it is the US market which sees the majority of activity when it comes to funded litigation. However, north of the border, there are still viable opportunities for funders to engage with, as has been demonstrated by an Ontario court’s decision to approve the funding agreements in a number of class actions brought against Canadian banks. An article on Advisor.ca highlights a decision by Ontario’s Superior Court of Justice to approve third-party funding arrangements for several proposed class actions targeting four of Canada’s largest banks. The class actions are being brought against Bank of Montreal, CIBC, Bank of Nova Scotia, and Royal Bank of Canada, over allegations that these financial institutions improperly charged their customers with ‘duplicative insufficient funds (NSF) fees for failed pre-authorized debit (PAD) transactions.’ Whilst each of the class actions is technically a separate lawsuit, due to the similarities and overlap between the claims, the Superior Court provided a single ruling to approve the litigation funding arrangements for all four cases. As part of its ruling, the court approved the scale of the funder’s returns, which will vary between 7% and 12% of any final damages awarded, based on the point at which the case is settled or resolved. In addition, the court found that the funder had sufficient capital to cover a costs award, if the defendants are successful in the cases. In its ruling, the Superior Court wrote that the terms of the funding agreements allowed for “a reasonable reward for the funder in exchange for providing the necessary costs indemnity and disbursement funding.” Appearing to acknowledge the importance of third-party funding in such cases, the court went on to say that “the funding agreements are thus necessary to facilitate access to justice for the class, and promote behaviour modification.” With the funding agreements approved and the plaintiffs’ motions approved, the class actions are now able to proceed.
Commercial Regulatory Issues

Proposed Litigation Funding Disclosure Rule Rejected by Supreme Court Of New Jersey’s Civil Practice Committee

Moves by state legislatures to introduce new laws governing litigation financing have dominated much of the recent conversation around the regulation of third-party funding. However, the roles of state and federal courts in implementing rules around funding disclosure are helping to shape the future of litigation finance in the US. Reporting by The National Law Review provides an overview of the decision by the Supreme Court of New Jersey’s Civil Practice Committee to reject a proposal that would require the disclosure of litigation funding arrangements at the start of any civil lawsuit. The proposal had been brought by the New Jersey Civil Justice Institute, which had argued that such a rule would provide transparency around third-party litigation funding, and would ensure that all parties were aware of funding arrangements that could affect resolution and settlement proceedings. In its rejection of the proposed rule, the Committee argued that it did not have the “sufficient experience to meaningfully develop a rule change at this time,” and suggested that attempts to draft such a rule “may prove difficult.” Whilst the Committee has declined to introduce a disclosure rule at this time, it acknowledged that legal or regulatory developments may require the issue to be revisited “at some point in the future.” The Committee’s decision stands in contrast to the action taken by the District Court for the District of New Jersey in 2021, when it passed Local Civil Rule 7.1.1. This rule requires the disclosure of information surrounding litigation funding, including the identity of the funder and their financial interest in the case, for all cases in New Jersey’s federal courts. The District Court’s decision echoed similar moves to introduce a disclosure rule by many federal District Courts across the country, along with six United States Courts of Appeal.
Announcements Consumer

Counsel Financial Announces $25M Equity Transaction and Launch of New Loan Servicing Business

Counsel Financial, a pioneer in providing financing solutions to the plaintiffs’ bar, is proud to announce the successful close of a $25 million private equity transaction and the launch of its innovative loan servicing business. This strategic development marks a significant milestone in the company’s 25-year history. “Our team possesses unparalleled technology-enabled underwriting and monitoring capabilities, and we look forward to institutional investors leveraging our experience through our enhanced servicing platform,” said Counsel Financial President and CEO Paul Cody. The equity transaction has paved the way for Counsel Financial to renew and extend its nearly $200 million in credit facilities, enhancing its capacity to support law firms with efficient and flexible financing options. Counsel Financial’s equity partners have expanded access to hundreds of millions of investment capital in support of the company’s law firm financing strategies. This influx of capital and confidence from financing partners underscores Counsel Financial’s strong position in the market and its commitment to serving the unique needs of law firms and their clients. The rollout of the loan servicing business represents a natural extension of Counsel Financial’s expertise in underwriting plaintiffs’ law firms and managing contingent fee case collateral. Designed to cater to institutional investors, the new technology-enabled servicing platform offers a comprehensive suite of tools for underwriting, managing, and valuing litigation finance assets, enabling clients to leverage decades of industry experience and a vast repository of historical data to provide unmatched oversight and investment insights. About Counsel Financial Counsel Financial is an industry leader in originating, underwriting and servicing loans and other financing solutions for contingent fee law firms. For over two decades, Counsel Financial has provided more than $2 billion in capital investments across 300+ law firms. These investments have financed the growth of firms in every area of plaintiffs’ litigation, including personal injury, mass torts, class action and labor and employment.