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Commercial Regulatory Issues

Access to Justice is the ‘Biggest Loser’ from Supreme Court Decision

Whilst it has only been a matter of days since the landmark decision from the UK Supreme Court, with a judgement establishing that litigation funding agreements (LFAs) should be classified as damages-based agreements (DBAs), there has already been a huge amount of discussion and debate about the ruling’s significance. In an op-ed for The Law Society Gazette, Tets Ishikawa, managing director of LionFish Litigation Finance, suggests that the biggest takeaway from last week is that “this judgement can only be seen as a step back in respect of access to justice.” Ishikawa argues that by raising questions about the validity of litigation funding, the Supreme Court has delivered “a significant hit on the credibility of this jurisdiction in commercial terms”, which may result in hesitation on the part of investors to provide capital for litigation. As a result, those who suffer the most will be the claimants who lack the financial resources to pursue meritorious litigation on their own. Contrary to some of the speculation that the Supreme Court’s ruling would deal a major blow to funders, Ishikawa believes that “the litigation funding industry will adapt rapidly in the best evolutionary traditions of financial services industries.” He points out that there are a number of routes forward that funders can take, whether adopting a multiple-based model, or adapting existing agreements to meet the requirements of DBA compliance. On the other hand, Ishikawa’s primary concern is the decision’s impact on access to justice, highlighting that defendant lawyers will undoubtedly look to exploit the situation and find ways to trap funders in technical arguments around compliance and regulatory adherence. Furthermore, Ishikawa argues that new challenges may emerge from the idea that litigation funding can be considered a type of “claims management services”, whether that be by making funding a “VAT-able service” or new calls for the FCA to regulate the industry.
Commercial Special Features

Funders Respond to the UK Supreme Court Judgement 

Earlier this week, the UK Supreme Court handed down a long-awaited judgement that many believe will have a significant impact on the short-term future of the UK litigation funding market. The ruling in the case of R (on the application of PACCAR Inc and others) (Appellants) v Competition Appeal Tribunal and others (Respondents) held that litigation funding agreements (LFAs), where the funder’s remuneration is based on a percentage of the recovered damages, should be classified as damages-based agreements (DBAs). Whilst we cannot yet predict how the industry will respond, nor whether we will see legislative action from Westminster to address this issue, it is important to look back at how we arrived at this moment.  We should also consider the variety of reactions to this judgement and assess whether industry leaders, analysts and commentators view this as an inflection point for litigation finance in the UK, or simply another challenge that funders will have to adapt to moving forward. Background to the Judgement The journey that led to the Supreme Court’s judgement on 26 July 2023 can be traced back to its beginnings in July 2016, when the European Commission (EC) found that five truck manufacturers – MAN, Volvo/Renault, Daimler, Iveco, and DAF – had breached the European Union’s antitrust rules. The Commission stated that these companies had “colluded for 14 years on truck pricing and on passing on the costs of compliance with stricter emission rules”, and imposed a fine of nearly €3 billion. Only MAN avoided a fine due to its role in disclosing this cartel’s existence to the EC. Unsurprisingly, the Commission’s fine was not the end of the story, as customers across Europe, who had bought trucks from companies involved in the cartel, began to take legal action in an effort to seek financial compensation from the manufacturers. Legal proceedings were brought in various jurisdictions across Europe, including claims in the Netherlands, Germany and the UK. In the UK, the Road Haulage Association Ltd (RHA) and UK Trucks Claim Ltd (UKTC) sought collective proceedings orders (CPOs) from the Competition Appeal Tribunal (CAT), to bring collective proceedings on behalf of these customers against DAF and other truck manufacturers. As is the case with many such claims brought, the RHA and UKTC each secured third-party litigation financing from Therium and Yarcombe respectively. The LFAs for both claimants were structured so that in the event of a successful outcome, the litigation funders would receive a financial return based on a percentage of the damages recovered. In response, the DAF opposed the CPOs and argued that such litigation finance arrangements fell under the classification of ‘claims management services’, as defined by the Compensation Act 2006. Therefore, DAF asserted, the LFAs actually constituted DBAs as defined in section 58AA of the Courts and Legal Services Act 1990, which would mean that the LFAs were unenforceable, as they failed to comply with the requirements of the DBA Regulations 2013. In 2019, the CAT ruled against DAF and found that the LFAs were not DBAs according to the meaning of section 58AA, thereby asserting that the agreements were both lawful and enforceable in the case of the CPOs sought by RHA and UKTC. Subsequently, DAF’s appeal to the Court of Appeal was denied due to a lack of jurisdiction, but proceeded as a Divisional Court to hear DAF’s requested judicial review of the DBA issue. In 2021, the Divisional Court’s judges unanimously dismissed DAF’s claim and upheld the CAT’s ruling, concurring with the tribunal’s decision that the LFAs should not be considered DBAs. Under the leap-frog procedure, DAF appealed directly to the Supreme Court, with hearings taking place on 16 February 2023. The Court also gave the Association of Litigation Funders of England & Wales permission to intervene and make written submissions for the appeal.  The Judgement After five months of waiting, the Supreme Court released its judgement on 26 July and sent shockwaves through the UK litigation funding industry, as it overturned the CAT and Court of Appeal decisions. Lord Sales’ ruling was in clear agreement with DAF that LFAs should be considered “claims management services” as described in the Compensation Act 2006, meaning that they are in fact DBAs and therefore unenforceable. Lord Sales’ judgement explored the wording of the 2006 Act in detail and found that: ‘Parliament deliberately used wide words of definition in the 2006 Act precisely because of the nebulousness of the notion of “claims management services” at the time and in order to ensure that the general policy objective of Part 2 of the 2006 Act would not be undermined.’ Furthermore, he clarified that: ‘The language of the main part of the definition of “claims management services” in section 4(2)(b) is wide and is not tied to any concept of active management of a claim.’ As a result, Lord Sales concluded that LFAs cannot be excluded from the definition of “claims management services” simply because litigation funders do not actively manage the claim itself. The judgement acknowledged the impact that the ruling would have on the funding industry, stating that ‘the likely consequence in practice would be that most third party litigation funding agreements would by virtue of that provision be unenforceable as the law currently stands.’ Lord Reed, Lord Leggatt and Lord Stephens all joined Lord Sales’ judgement in agreement, but Lady Rose offered a sole dissenting judgement and agreed with the previous rulings of the Divisional Court and the CAT. In the conclusion to Lady Rose’s dissent, she clearly rejected Lord Sales’ interpretation, arguing that all of the legislation and case law shows that: ‘Parliament did not intend by enacting section 58AA suddenly to render unenforceable damages-based litigation funding agreements’. Despite this dissent, the result of the Supreme Court’s judgement is that not only are the LFAs in the DFA case unenforceable, but it is also true that the majority of similar LFAs are likely to be held as unenforceable. Industry Reaction In the two days since the judgement was released by the Supreme Court, we have seen a wide variety of responses to the ruling, ranging from strong opposition, to those who have argued for a more cautious and patient approach to see what the consequences of this decision will be. In a poll on LFJ’s LinkedIn page, we asked the question: What impact will the recent UK Supreme Court ruling have in regard to dissuading funders from pursuing meritorious claims in the UK? As of the time of publication, 41% of respondents agreed that it would have a ‘significant impact’, 41% stated that it would have a ‘minor or moderate impact’, whilst 19% believed it would have ‘no meaningful impact’. Clearly, most respondents believe that although there will be a noticeable impact on funders, there isn't yet a consensus as to whether the impact will be significant in regard to funders pursuing claims in the UK. As mentioned above, responses to the ruling from inside the industry have varied over the last 48 hours.  The International Legal Finance Association and the Association of Litigation Funders of England and Wales came out with a joint statement on the day of the judgement, restating their opposition to the decision, but suggesting that its impact may not be severe: “The decision is not generally expected to impact the economics of legal finance and will not deter our members’ willingness to finance meritorious claims. It will only affect how legal finance agreements are structured so that they comply with the regulations and individual financiers will have been considering what if any changes are needed to their own legal finance agreements as a consequence of this decision.” Woodsford’s chief investment officer, Charlie Morris called on the UK’s lawmakers to take proactive steps to address this ruling: “This decision is bad news for consumers and other victims of corporate wrongdoing. Parliament urgently needs to reclarify what its intentions were when it introduced DBAs, and take any necessary remedial action to ensure the proper functioning of the CAT to the benefit of those who have been wronged.” Mohsin Patel, director at Factor Risk Management, acknowledged that whilst the “full extent of fallout” is not yet known, the judgement must also be considered in a wider context: “The outcome of this judgement arises in the main due to the failure of legislators to set out a clear and consistent legal framework, despite attempts made to clarify the law, and instead leaving it to the Supreme Court to deal with the legislative and regulatory patchwork that exists. The ultimate beneficiaries of this decision will be the large corporates who utilise every trick in the book to frustrate and delay meritorious claims. This decision is therefore a bad day not just for funders and lawyers but for consumers in the UK as a whole.” Glenn Newberry, head of costs and litigation funding at Eversheds Sutherland, also emphasised the impact the judgement would have on consumers: “The decision is potentially a blow for the government as the collective funding of consumer claims has helped bridge the gap caused by the erosion of state funded legal assistance for civil claims. Funders themselves may well start to actively lobby to seek legislation which effectively reverses this decision.” Tets Ishikawa, managing director of LionFish, suggested that the judgement itself is hardly the end of the story, rather the beginning of a new chapter for litigation funding: “It’s fair to say that few expected this judgement. It certainly raises more questions than it answers, with the potential for a multitude of unintended consequences extending beyond litigation funding agreements. At the same time, the judgement leaves significant scope for litigation funding agreements to continue their evolution and long term growth in a compliant way, so that it continues supporting the drive to improve access to justice”. Neil Johnstone, barrister and founder of FundingMyClaim.com, argued that the initial shock from the decision will naturally be followed by a measured and effective response from funders: “The fact that the Supreme Court’s decision has been widely reported as a ‘Shockwave’ for the industry perhaps shows how unexpected this result was. However, prudent funders who have taken steps to redraft existing agreements where possible may now be counting the benefits of having ‘hoped for the best but prepared for the worst.’ Of course, a key feature of shockwaves is that they pass; and far from being a disaster, this decision is rather a hallmark of the kind of growing pains inherent to a maturing industry. Where funders have positive and constructive relations with their clients, renegotiation of existing agreements should be perfectly possible.” Garbhan Shanks, commercial litigation partner at Fladgate, also suggested that the judgement would be a temporary obstacle that the industry would overcome: “The Supreme Court’s ruling that the litigation funding agreements in place for collective proceedings in the Competition Appeal Tribunal are not enforceable because they fall foul of the Damages Based Agreement statutory conditions is clearly an unwanted outcome for claimant side lawyers and funders in this space. It will be quickly cured, however, with restructured compliant agreements, and the increase in collective and group action proceedings in the UK supported by ever increasing third party funding capacity will continue at pace.” Nick Rowles-Davis, CEO of Lexolent, stated that it would be unwise to downplay the impact of the judgement at such an early stage: “The impact of it, the disruption and the distraction it will cause to funders should not be underestimated, nor should the potential damage to law firms relying upon monthly drawdowns in funded cases – particularly in matters in the CAT. It's wishful thinking to suggest that all funded parties will play ball and allow edits. It is also wishful thinking that there will not be several years of satellite litigation to clarify the old LFA position and a possible cohort of funded parties seeking restitution. This is a statement of the law as it has always been, not new law.” Closing Thoughts With limited consensus as to what the true scale of the impact from the Supreme Court’s decision will be, LFJ will continue to monitor developments in the industry over the coming weeks and months. It will be of particular interest if any public disputes between funders and clients where LFAs must be rewritten or completely replaced. Beyond the individual changes to funding agreements, eyes will now turn to Westminster to see whether there are any efforts by the Government to address the issue with specific legislation, or if there will be renewed calls for holistic legislation that deals with the UK litigation finance industry. LFJ will continue to report on reactions to the decision, and welcomes input from industry leaders and analysts.
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Commercial Regulatory Issues

Ireland’s Implementation of the EU Representative Actions Directive Avoids Tackling Litigation Funding

One of the stories that will be important to monitor throughout 2023 is how each country within the European Union will handle the implementation of the EU’s Representative Action Directive, particularly as it relates to the use of third-party funding for collective redress in each jurisdiction. LFJ has reported on both the Dutch and German approaches to implementation of the directive, with Ireland’s recent implementation now being highlighted as an example of a jurisdiction which has largely avoided addressing the problem of third-party funding. In a new piece of analysis published on Irish Legal News, Catherine Derrig and Marie-Alice Cleary of McCann FitzGerald, examine the impact of the Representative Actions for The Protection of the Collective Interests of Consumers Act 2023. Derrig and Cleary note that whilst Ireland is one of the first member states to fully implement the EU’s new directive, it has not brought comprehensive answers to all questions around collective redress, and has not brought significant clarity to the role that litigation finance will play. Derrig and Cleary raise the important point that the EU’s directive specifically requires member states to ensure that qualified entities are not prevented from seeking legal redress due to unaffordable costs. However, given the fact that the Law Reform Commission has only recently published its consultation paper on third-party funding, and the commission’s full review is not expected before next year, the Irish government has effectively moved forward with implementation whilst putting the question of litigation funding on hold. One observation from Derrig and Cleary that is particularly striking, is that the implementation of the directive stands in stark contrast to Ireland’s recent decision to expressly permit the use of third-party funding in international commercial arbitration. Unlike the reforms to arbitration funding, the implementation act only allows for funding in limited circumstances where it is “permitted in accordance with law”. It is therefore almost a certainty that Ireland will not see any significant increase in litigation funding for collective redress in the near future, and industry leaders will have to continue to wait for the outcome of the Law Reform Commission’s review.
Commercial Deals

Covid Disruption Lawsuits Against UK Universities Receive £13 Million in Funding 

As LFJ recently reported, the aftermath of the Covid-19 pandemic is proving to be fertile ground for lawsuits, including litigation being brought by university students who argue that they did not receive the services they paid for due to these institutions’ response to the pandemic. In a high profile case being brought against UCL, the judge ordered the students and the university to try and reach an agreement through alternative dispute resolution, but new reporting shows that this case is only one of many being backed by litigation financing. An article in The Financial Times provides an overview of the array of cases being brought against UK universities by students over Covid disruption, with the article noting that at least 18 institutions have received letters from lawyers representing groups of students. In a sign of the level of interest in these lawsuits, the US litigation funder, TRPG Capital, has reportedly provided £13 million in financing to support the group litigation orders targeting higher education providers. At the core of these students’ argument is that the universities breached their contract with students by failing to provide an adequate service, alleging that these organisations failed to deliver the quality of services that were advertised when the students enrolled. However, these lawsuits are not without their challenges, as Ane Vernon, head of education at Payne Hicks Beach, highlights that despite their legitimate grievances, the students’ biggest challenge “will be to prove liability for loss.” According to Shimon Goldwater, partner at Asserson, who is acting for the students, there is a clear argument that the universities failed to deliver their services, and as a result, the students are entitled to compensation for the “difference in value”. Other observers have noted that this is a difficult balancing act, with Charlotte Hadfield from 3PB barristers, suggesting that whilst it is not an impossible case, “calculating the loss to a student in a higher education claim can be very difficult”.
Case Developments Commercial

Shopify Undeterred in Efforts to Compel Disclosure of Plaintiff’s Litigation Funding

The topic of funding disclosure in patent litigation has continued to be one of the most pressing issues in the US market, driven by ongoing efforts in Delaware to put the spotlight on funders. Last month, LFJ reported on another patent infringement lawsuit in Texas where Shopify unsuccessfully attempted to force the plaintiff to disclose its funding sources.  New reporting from Bloomberg Law reveals that Shopify has not been deterred by its initial failure to force Lower48 IP LLC into revealing details around any litigation funding it has received, with the e-commerce giant now filing an objection to the magistrate judge’s denial of the motion to compel disclosure. Despite Shopify highlighting the apparent connections between Lower48 and IP Edge LLC in its original motion, Magistrate Judge Derek T. Gilliland had rejected Shopify’s request on the grounds that this level of disclosure had not previously been required for patent litigation cases in Texas. Shopify’s new objection argues that both the magistrate judge and the case’s presiding judge David A. Ezra lacked the necessary information as to whether Lower48’s ties to IP Edge represented a conflict of interest. Having previously cited the ongoing efforts by Judge Colm F. Connolly in Delaware to mandate disclosure of litigation funding in such cases, Shopify argued that IP Edge intentionally seeks to obscure the funding sources for its patent litigation efforts, and that the court and the public “should know who else stands to benefit.”
Case Developments Commercial

UK Supreme Court Ruling Riles Litigation Funders

One of the most significant court rulings for litigation funders in the UK was handed down today, as the Supreme Court announced its decision in the case of R (on the application of PACCAR Inc and others) (Appellants) v Competition Appeal Tribunal and others (Respondents). The Supreme Court’s majority judgement found that where litigation funding agreements are entitled to a portion of the damages recovered in a case, these fall under the definition of damages-based agreements (DBAs).  In the Supreme Court’s judgement, Lord Sales ruled that “where a third party litigation financing arrangement takes the form of a DBA it will be unenforceable unless certain conditions are complied with”. Whilst this ruling was solely in relation to the funding of collective proceedings brought against European truck manufacturers, the judgement acknowledged that “the likely consequence in practice would be that most third party litigation funding agreements would by virtue of that provision be unenforceable as the law currently stands.” Lord Sales’, who was joined in his judgement by Lord Reed, Lord Leggatt and Lord Stephens, found that litigation funding agreements do fall within the definition of ‘claims management services’ under the Compensation Act 2006. Whilst the Court acknowledged the difficulty in interpreting the exact meaning of this term, Lord Sales highlighted that the language used in the 2006 Act “is wide and is not tied to any concept of active management of a claim”, thereby rejecting arguments from respondents that litigation funding does not full under ‘claims management services’ because funders do not actively manage claims. Before concluding his judgement, Lord Sales included a statement which was specifically targeted at the case before him, but may also come to be the defining words for the litigation finance industry from this ruling: “As a matter of substance, the LFA retains the character of a DBA as defined.” In the hours following the Supreme Court’s judgement, we have already seen strong opposition to this ruling. Funders, law firms and industry experts are highlighting the damage this judgement could inflict on access to justice.  Woodsford’s chief investment officer, Charlie Morris called on the UK’s lawmakers to take proactive steps to address this ruling: “This decision is bad news for consumers and other victims of corporate wrongdoing. Parliament urgently needs to reclarify what its intentions were when it introduced DBAs, and take any necessary remedial action to ensure the proper functioning of the CAT to the benefit of those who have been wronged.” Garbhan Shanks, commercial litigation partner at Fladgate, highlighted that whilst the ruling was a blow to litigation funding in the UK, it would not stop the industry: “The Supreme Court’s ruling today that the litigation funding agreements in place for collective proceedings in the Competition Appeal Tribunal are not enforceable because they fall foul of the Damages Based Agreement statutory conditions is clearly an unwanted outcome for claimant side lawyers and funders in this space. It will be quickly cured, however, with restructured compliant agreements, and the increase in collective and group action proceedings in the UK supported by ever increasing third party funding capacity will continue at pace.” An article by The Law Society Gazette, provides additional quotes from industry figures, including a joint statement from the International Legal Finance Association and the Association of Litigation Funders of England and Wales: “We are disappointed by this decision as it runs contrary to the accepted understanding that financing agreements are not damages based agreements. The decision is not generally expected to impact the economics of legal finance and will not deter our members’ willingness to finance meritorious claims. It will only affect how legal finance agreements are structured so that they comply with the regulations and individual financiers will have been considering what if any changes are needed to their own legal finance agreements as a consequence of this decision.” Glenn Newberry, head of costs and litigation funding at Eversheds Sutherland, put particular emphasis on the troubles this judgement may cause political leaders in Westminster: “The decision is potentially a blow for the government as the collective funding of consumer claims has helped bridge the gap caused by the erosion of state funded legal assistance for civil claims. Funders themselves may well start to actively lobby to seek legislation which effectively reverses this decision.” And Tets Ishikawa, Managing Director of LionFish, added: “It’s fair to say that few expected this judgment. It certainly raises more questions than it answers, with the potential for a multitude of unintended consequences extending beyond litigation funding agreements. At the same time, the judgment leaves significant scope for litigation funding agreements to continue their evolution and long term growth in a compliant way, so that it continues supporting the drive to improve access to justice”.
Case Developments Commercial

ICSID Rules in Favour of LCM-Backed Indiana Resources Claim Against Tanzania

An area of litigation and arbitration that has become increasingly associated with funded claims is the world of international investment treaties, and claims brought by corporations against governments for being in breach of these treaties. The latest occurrence of such a dispute has seen an arbitral panel order the Tanzanian government to pay over $109 million to an Australian mining company, for the government’s breach of a bilateral investment treaty. An article in The East African reports on the decision by an ICSID ad hoc arbitral panel, which found that Tanzania had breached the UK-Tanzania Bilateral Investment Treaty when it cancelled a mining retention license and seized the Ntaka Hill Project which had been held by a trio of three companies under majority ownership of Indiana Resources. As the manager of the joint venture, Indiana Resources had led the claim of arbitration against the Tanzanian government since 2019 and according to an announcement in August 2020, had secured $4.65 in funding from Litigation Capital Management. Indiana Resources’ executive chairman Bronwyn Barnes praised ICSID’s award for reflecting the “substantial investment that has been lost by shareholders through Tanzania’s unlawful expropriation of the Ntaka Hill project,” and stated that the company would now look to enforce the award. In an article by Stockhead in February 2021, Barnes had highlighted the importance of LCM’s funding as a sign of the merit of the claim, pointing out that the funder “don’t back claims they don’t research fully, and don’t expect to win.”
Commercial Legal Innovation

Burford Highlights ‘Industry Standard’ for Legal Finance Valuation and Reporting

As the litigation finance industry continues to mature, there will naturally be an expectation that the industry should move towards standardized approaches and methodology. Reflecting this trend, Burford Capital’s CEO and CFO have recently published an article discussing their new valuation methodology for litigation finance investments, suggesting that “its widespread adoption seems inevitable”. In an article published on Law.com, Christopher Bogart and Jordan Licht of Burford Capital highlight its new methodology for valuing and reporting on litigation finance investments, describing it as a process that “sets a new standard for the industry and will lead to enhanced transparency.” Burford’s executives explain that the funder developed this methodology with input from the US Securities and Exchange Commission (SEC), with the aim of creating “a legal finance valuation methodology that is consistent with global accounting standards.” Bogart and Licht summarise the methodology as being a synergy of two core concepts: “First, that legal finance asset value is driven by observable events as cases progress, and second, that the value of any asset, including legal finance assets, is impacted by duration and the time value of money.” In essence, this means that valuation must inevitably change “given the passage of time”, irrespective of whether a significant “case event” has happened during the valuation period. It is argued that this approach should be considered logical rather than novel, given the principle that as a case progresses, it is inevitably “more valuable because it is closer to resolution”. Citing the oft-repeated critique that litigation funding lacks transparency as an asset class, Bogart and Licht argue that just because litigation itself necessitates limited transparency to those outside the matter, this is “no reason to fail to enumerate a company’s investments according to available industry standards.” They further state that they expect this valuation methodology to become the new best practice for the industry, and that its use “will enhance still more growth and maturation in this industry.”
Announcements Commercial Deals

Funding Opportunity: 4 Rivers Seeks Funding for RICO Claim

4 Rivers has a case which requires urgent funding. It is a RICO claim against a large insurance company, which has recently been found to be already engaging in serious misconduct, including a Punitive Damages award against it, and found vicariously liable for assisting arsonists. The Claimant has been the subject of a meticulously orchestrated and sustained campaign of intimidation, cyber stalking, computer related crimes, fraud, harassment, and life-altering interference, for almost two decades, much like the recent eBay cyber stalking and harassment case, which eBay lost. The interference effectively prevented the Claimant from developing a transformational and disruptive biotech company which reduces causes of cancer, an area where damages have just been established in the $11 – 16 billion range by US court judgments. Damages reports from highly reputable consulting firms show mid 9-figure damages before trebling and costs. We also have a suite of legal memos from a RICO expert which demonstrate, inter alia, the extent and number of the predicate acts and the damages flowing from them. Additionally, we have two of the leading RICO authorities in the United States acting as close personal advisors to the Claimant.  A motion to dismiss (MTD) filed by the defendant was denied on all counts and has not been appealed. We are looking for a funding facility of approx. $1 million, to be drawn over the next few months. Trial is set for October 2023 but there is a strong dynamic for a settlement to be secured prior to this, meaning that a funder would achieve a very quick return on investment.  Please contact Peter Petyt of 4 Rivers at peter@4rivers.legal urgently if you wish to discuss this opportunity further.
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Commercial Special Features

Lawyer Directed Litigation Funding Agreements And Professional Conduct Rule 5.4

The following article was contributed by John Hanley, Partner at Rimon Law, and Ryan Schultz, Vice President of Business Development for Woodsford Litigation Funding. Third-party litigation funding (“TPLF”) involves financing of expenses incurred in a lawsuit (for example, expert fees and usually some portion of legal fees incurred) in exchange for a share of the final judgment or settlement. The funding is typically non-recourse (i.e., the amounts funded need not be repaid if the lawsuit is unsuccessful) and is often repaid through a financial interest in the attorneys’ fees realized by the law firm if the case is successful. These arrangements have become common in the marketplace: in 2022, $3.2 billion in capital was committed for new TPLF; 61% of that capital was deployed to law firms as opposed to clients and claimants; and 28% of the funding recipients were members of the Am Law 200.1 The question of the permissibility of such arrangements in light of Rule 5.4(a) of the New York Rules of Professional Conduct, which prohibits fee sharing with a non-lawyer, and TPLF arrangements arises. This Insight focuses on New York practice. As stated below, substantial precedent suggests that Rule 5.4(a) was not intended to preclude TPLF arrangements, and the New York City Bar Association has made two proposals intended to clarify Rule 5.4(a) in that regard. Rule 5.4(a) And TPLF Arrangements Rule 5.4(a) of the New York Rules of Professional Conduct provides, in relevant part, that a “lawyer or law firm shall not share legal fees with a non-lawyer.”2 In July 2018, the New York City Bar Association issued a non-binding opinion which concluded that future payments to a litigation funder contingent on the lawyer’s receipt of legal fees could violate Rule 5.4’s prohibition on fee sharing with non-lawyers.[1] The main thrust of the non-binding opinion was to protect the lawyer’s professional independence and judgment. The opinion was widely criticized and met with strong disagreement from the litigation finance community and some legal ethicists, who declared it is simply “wrong” or, at a minimum, overly broad and misguided.[2] In October 2018, the City Bar’s President formed the Litigation Funding Working Group (the “Working Group”) to study TPLF and provide a report. In 2020, the Working Group released a 90-page report finding that the prior opinion was neither binding nor a required rule of practice, and that Rule 5.4 should be revised to make clear that litigation funding should not be prohibited.[3] The report stated that Rule 5.4 “should be revised to reflect contemporary commercial and professional needs and realities” and “lawyers and the clients they serve would benefit if lawyers have less restricted access to funding.” The report made two proposals, both of which focused on lawyer independence and disclosure of the arrangement to clients.  The proposals are substantially similar. Proposal A would require TPLF be used for a specific legal representation, prohibit participation in the litigation by the funder and require the client’s informed consent.  Proposal B would permit funding to be used for the lawyer’s or law firm’s practice generally, allow the funder to participate in the litigation for the benefit of the client and not require the client’s informed consent although the client must be informed of the arrangement in writing. As of today, neither proposal has been implemented, and the Working Group noted that “a number of lawyers and funders believe that such a statement is unnecessary under the current Rules of Professional Conduct,” given that Rule 5.4 was not designed to prohibit such arrangements, as discussed in the following section. Court Rulings Regarding Rule 5.4 And TPLF Arrangements The courts that have addressed litigation funding in light of Rule 5.4 have concluded that the ethics rules do not preclude a financing interest in future attorneys’ fees or law firm revenue. In 2013, in Lawsuit Funding, LLC v. Lessoff, a New York trial court held that the litigation funding arrangement at issue did not violate Rule 5.4.[4] In that case, the law firm received an advance secured by future contingency fees through a litigation funding agreement styled as a Sale of Contingent Proceeds. “The [agreement] called for [the funder] to receive a portion of the contingent legal fee that [attorneys] were expected to receive if five specifically named lawsuits were adjudicated in favor of [the] clients.”[5] The court noted that “several other jurisdictions have addressed the interplay of alternative litigation financing and Rule 5.4(a),” and did not find an ethical violation.[6] Judge Bransten adopted the PNC Bank Court’s reasoning and held that the litigation funding arrangement did not violate Rule 5.4, and went on to state that:
There is a proliferation of alternative litigation financing in the United States, partly due to the recognition that litigation funding allows lawsuits to be decided on their merits, and not based on which party has deeper pockets or stronger appetite for protracted litigation. See A.B.A. Comm. on Ethics 20/20, Informational Report to the House of Delegates 2 n.6 February 2012 . . . Sandra Stern, Borrowing from Peter to Sue Paul: Legal & Ethical Issues in Financing a Commercial Lawsuit ¶ 27.02[3] (2013). Therefore, this Court adopts the PNC Bank court’s reasoning and finds that the Stipulation does not violate Rule 5.4(a) and is not unenforceable as against public policy.
In 2015, in Hamilton Cap. VII, LLC, I v. Khorrami, LLP, another New York trial court stated that “other courts have analyzed the legality of [litigation] financing arrangements between factors and law firms and held them not to run afoul of the applicable ethical rules.”[7] In that case, the lender was entitled “to a percentage of the Law Firm's gross revenue as part of the consideration for the money loaned to the Law Firm.”[8] There, the plaintiff was in the business of lending money to law firms and the loans were secured by the law firm’s accounts receivable. The law firm asserted, among other things, that the contract was unenforceable because the additional compensation to be paid to the lender in the amount of 10% of the law firm’s gross revenues collected between dates certain was an illegal fee-sharing arrangement. The court pointed to Judge Bransten’s decision in Lessoff and described it as “on point and persuasive.” Judge Kornreich ruled in favor of the lender, found the agreement was enforceable and did not violate Rule 5.4:
While it is well settled that actual fee-sharing agreements are illegal and unenforceable . . . the case law cited by defendants does not support the proposition that a credit facility secured by a law firm's accounts receivable constitutes impermissible fee sharing with a non-lawyer. To the contrary, as Justice Bransten [in Lawsuit Funding, LLC v. Lessoff] explained, courts have expressly permitted law firms to fund themselves in this manner. Providing law firms access to investment capital where the investors are effectively betting on the success of the firm promotes the sound public policy of making justice accessible to all, regardless of wealth. Modern litigation is expensive, and deep pocketed wrongdoers can deter lawsuits from being filed if a plaintiff has no means of financing her or his case. Permitting investors to fund firms by lending money secured by the firm's accounts receivable helps provide victims their day in court. This laudable goal would be undermined if the Credit Agreement were held to be unenforceable. The court will not do so.11
Both the Lessof and Hamilton cases relied significantly on PNC Bank, Delaware v. Berg, 12 in which the Delaware Superior Court noted that it is common practice for a lender to have a security interest in an attorney’s accounts receivable and there is no real “ethical” difference in a security interest in contract rights (fees not yet earned) and accounts receivable (fees earned). In finding that the financing arrangement at issue did not violate Rule 5.4, the court stated:[9]
[D]efendants suggest that it is “inappropriate” for a lender to have a security interest in an attorney's contract rights. Yet it is routine practice for lenders to take security interests in the contract rights of other business enterprises. A law firm is a business, albeit one infused with some measure of the public trust, and there is no valid reason why a law firm should be treated differently than an accounting firm or a construction firm. The Rules of Professional Conduct ensure that attorneys will zealously represent the interests of their clients, regardless of whether the fees the attorney generates from the contract through representation remain with the firm or must be used to satisfy a security interest. Parenthetically, the Court will note that there is no suggestion that it is inappropriate for a lender to have a security interest in an attorney's accounts receivable. It is, in fact, a common practice. Yet there is no real “ethical” difference whether the security interest is in contract rights (fees not yet earned) or accounts receivable (fees earned) in so far as Rule of Professional Conduct 5 .4, the rule prohibiting the sharing of legal fees with a nonlawyer, is concerned. It does not seem to this Court that we can claim for our profession, under the guise of ethics, an insulation from creditors to which others are not entitled.
Washington D.C., Utah and Arizona and other States  Washington D.C. adopted a modified rule 5.4(b) in 1991 and, until the developments beginning with Utah and Arizona in 2020, was the only jurisdiction in the United States to permit partial, limited non-lawyer ownership of law firms which removes ethical constraints that may arise regarding lawyer directed TPLF and rule 5.4(a). The Utah Supreme Court issued Standing Order No. 15 effective August 14, 2020 (the “Order”).[10] The Order establishes a pilot legal regulatory sandbox and an Office of Legal Services Innovation to oversee the operation of non-traditional legal providers and services, including entities with non-lawyer investment or ownership with the goal of improving meaningful access solutions to justice problems.  The Order has been amended twice (most recently September 21, 2022) and the program will continue until 2027.  At that time the Supreme Court will determine if and in what form the Office of Legal Services Innovation will continue. The Arizona Supreme Court issued a unanimous order that eliminated its rule 5.4 entirely, creating a new licensing requirement for alternate business structures that are partially owned by non-lawyers but that provide legal services.[11] These reforms remove ethical obstacles presented by rule 5.4(a) regarding lawyer directed TPLF but that is just incidental to their purpose – increased access to the justice system and lower costs. Other states that have considered or are considering similar regulatory reform to close the access to justice gap in the U.S. include California, Illinois, Oregon, Nevada, New Mexico, Indiana, Connecticut and New York, according to the ABA Center for Innovation's Legal Innovation Regulatory Survey.[12] Qualified Conclusion This Insight is limited to our review of the New York Rules of Professional Conduct and, in particular, Rule 5.4(a), and the limited related precedent. We note that there is no appellate decision in New York to address these issues but the two trial court decisions are persuasive authority. Practitioners should take these limitations into account in analyzing the risks associated with transactions similar to those described in this Insight. Based on the foregoing it would not be unreasonable to conclude that  a court of competent jurisdiction acting reasonably, applying the legal principles developed under the case law discussed above, after full and fair consideration of all relevant factors, and in a properly presented and argued case, would not find a TPLF arrangement which provided a lender a contingent interest in law firm revenue on a case or group of cases, similar to the arrangements discussed above, to violate Rule 5.4(a). John Hanley is a Partner at Rimon Law and drafts and negotiates litigation funding agreements on behalf of lawyers, law firms, claimants and litigation funders. Read more here Ryan Schultz is a Vice President of Business Development for Woodsford and works with claimants and leading lawyers around the world to identify meritorious claims in need of funding.  Prior to joining Woodsford, Ryan was a Partner in the Intellectual Property & Technology Group at Robins Kaplan, LLP.  Ryan helped clients monetize their IP assets in the US and around the world to provide maximum value for their innovations.  Read more here If you are interesting learning more about Litigation Funding, please reach out to John Hanley or Ryan Schultz. -- [1] The Association of the Bar of the City of New York Committee on Professional Ethics, Formal Opinion 2018-5: Litigation Funders’ Contingent Interest in Legal Fees. [2] See, e.g., Paul B. Haskel & James Q. Walker, New York City Bar Opinion Stuns the Litigation Finance Markets, Lexology (Aug. 31, 2018), available here. [3] Report to the President by the New York City Bar Association Working Group on Litigation Funding, available here [4] Lawsuit Funding, LLC v. Lessoff, No. 650757/2012, 2013 WL 6409971, at *5 (N.Y. Sup. Ct. Dec. 04, 2013). [5] Id. at *1. [6] Id. at *5 (citing PNC Bank, Delaware v. Berg, No. 94C-09-208-WTQ, 1997 WL 529978, at *10 (Del. Super. Ct. January 21, 1997); Cadle Co. v. Schlichtmann, 267 F.3d 14, 18 (1st Cir. 2001); Core Funding Grp., L.L.C. v. McDonald, No. L-05-1291, 2006 WL 832833, at *11 (Ohio Ct. App. Mar. 31, 2006); ACF 2006 Corp. v. Merritt, No. CIV-12-161, 2013 WL 466603, at *3 n.1 (W.D. Ok. Feb. 7, 2013); U.S. Claims, Inc. v. Yehuda Smolar, PC, 602 F.Supp.2d 590, 597 (E.D. Pa. March 9, 2009); U.S. Claims, Inc. v. Flomenhaft & Cannata, LLC, 519 F.Supp.2d 515, 521 (E.D. Pa Nov. 13, 2006)). [7] Hamilton Cap. VII, LLC, I v. Khorrami, LLP, 48 Misc. 3d 1223(A), 22 N.Y.S.3d 137 (N.Y. Sup. Ct. 2015). [8] Id. [9] Id. [10] Utah Supreme Court Standing Order No. 15 (Amended September 21, 2022) (utcourts.gov) [11] Order re R-20-0034 (azcourts.gov) [12] Legal Innovaon Regulatory Survey – An overview of the legal regulatory landscape related to legal innovaon and access to jusce.
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Case Developments Commercial

High Court Orders Stay on GLO Application Brought by UCL Students with £4.4 Million in Litigation Funding

Over three years after the outbreak of Covid-19, claims are still being brought by individuals or groups who suffered losses due to actions taken by organizations during the pandemic. In one example of a funded group claim being brought against a university, the courts have demonstrated a desire for such cases to be resolved outside of the courtroom, and for the parties to make use of alternative dispute resolution (ADR) rather than through costly court proceedings. An article in The Law Society Gazette provides the details of judgement by Senior Master Barbara Fontaine in the High Court, which ordered an eight-month stay on the group litigation order (GLO) application made on behalf of 924 students, who claimed that UCL breached its contract in services during strike action and the pandemic. Master Fontaine ordered the stay and adjourned the application, stating: “These claims are all individually of low or modest value, group litigation can be costly, and there is a statute-backed ADR scheme in place, all factors that point in favour of the parties attempting construction discussions through some medium of ADR.” Fontaine cited concerns about the potential for significantly high costs for both parties, noting that the claimants had secured £4.4 million in litigation funding and obtained after-the-event insurance cover for any adverse costs. Fontaine highlighted that due to these factors, if the claimants were successful in their case, they would likely “receive only some two-thirds of the damages awarded to them” and even with 100 per cent of damages, it would represent only “a modest sum for each claimant.” Fontaine encouraged both parties to engage in ADR to find a suitable outcome, highlighting that the length and costly nature of such a group claim were not ideal, especially for a university whose “management, time and funds could be more productively spent than on substantial legal costs.”
Case Developments Commercial

Camp Lejeune Claims Attracting $2 Billion in Litigation Funding

The Camp Lejeune tainted water scandal has been previously discussed as one of the most promising opportunities for mass claims in the US, with new reporting suggesting that the scale of litigation has already attracted almost $2 billion in investments from several funders. An article by Bloomberg Law details the range of litigation funding that is being supplied to law firms pursuing lawsuits on behalf of approximately one million veterans who were affected by water contamination at Marine Corps Base Camp Lejeune in North Carolina, between 1953 and 1987. Citing research by Morning Investments, the article suggests that cases representing Camp Lejeune claimants have already experienced around $2 billion in litigation financing committed. Michael McDonald, partner at Morning Investments, has stated that the claims are already “saturated” with third-party funding. By analysing Uniform Commercial Code filings, Bloomberg Law has identified three law firms involved in Camp Lejeune litigation, which have already received third-party funding: TorHoerman Law, Milberg, and Bell Legal Group.  Whilst the identity of the specific funders involved has not been confirmed in each of these instances, Bloomberg’s reporting has identified Pravati Capital and Rocade Capital as two funders which have provided financing to Bell Legal Group, with the latter also having a lien with TorHoerman Law. Rocade’s CEO, Brian Roth, stated that whilst the funder’s loan to Bell Legal Group was not typical for its strategy, the law firm’s early involvement in the Camp Lejeune case was a key factor, highlighting that “Bell has been involved really longer than probably just about any firm at scale in the market.”  Jerrold Parker, founding partner at Parker Waichman LLP, another firm representing Camp Lejeune victims, suggested that funders are particularly interested in these cases because “the way the law that passed was written, it makes the recovery extremely likely.” Epitomising the value that many funders are seeing in this opportunity, Rebecca Berrebi, founder of Avenue 33, said that “nothing in investing is a sure thing, but when you’re looking for a sure thing, this is kind of the closest you can get to it.” Bloomberg also identified American Law Firm Capital as another funder that had approached law firms who are considering bringing Camp Lejeune claims. In contrast, C Cubed Capital Partners had declined a request from a law firm for $50 million in funding, with co-founder Lisa DiDario stating that whilst recovery was guaranteed in these cases, “the amounts and the timing is still to be determined.”
Announcements Case Developments Commercial

Litigation Capital Management Limited: Progress on Fund I investment

Litigation Capital Management Limited (AIM:LIT), an alternative asset manager specialising in dispute financing solutions internationally, announces a positive development on an investment within its Fund I portfolio. LCM has funded a claim advanced in respect of a breach of a bilateral investment treaty and brought under the International Centre For Settlement Of Investment Disputes (ICSID) Convention. An ICSID tribunal has issued an award on jurisdiction, liability, damages and costs in favour of LCM’s funded party. The quantum of the award entered in favour of LCM’s funded party is USD$ 76.7m (c. AUD$ 109m) plus interest and costs. This means that LCM’s funded party has succeeded in the claim. If the award is not subject to challenge and is not satisfied the dispute will move to an enforcement stage. We will assess any further funding requirements once the enforcement strategy has been finalised. The issuing of the award in favour of LCM’s funded party has significantly de-risked this investment. LCM has invested approximately AUD$ 5.7m (USD$ 4m) in this dispute to date. In line with our usual practice LCM’s returns are calculated as a rising multiple of invested capital over time. As such we cannot calculate our overall return on this investment until it concludes. The investment however is no longer attended with liability and quantum risk as that has been decided. Final performance will be announced to the market after conclusion of the investment. Patrick Moloney, CEO of LCM, commented: “This is a significant and positive development in this investment. Subject to any challenge to the very favourable award we now move to an enforcement stage, after which we will see the benefit of the leveraged returns available from our Fund Management strategy.” About LCM Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing solutions internationally, which operates two business models. The first is direct investments made from LCM's permanent balance sheet capital and the second is third party fund management. Under those two business models, LCM currently pursues three investment strategies: Single-case funding, Portfolio funding and Acquisitions of claims. LCM generates its revenue from both its direct investments and also performance fees through asset management. LCM has an unparalleled track record driven by disciplined project selection and robust risk management. Currently headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT. www.lcmfinance.com
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Announcements Commercial Legal Innovation

Latest Burford Quarterly journal of legal finance addresses top trends in business of law

Burford Capital, the leading global finance and asset management firm focused on law, today releases its latest Burford Quarterly, a journal of legal finance that explores the top trends impacting the business of law. The latest issue of the Burford Quarterly 3 2023 includes:
  • Best practices for building contingency fee practices
Co-Chair of Cadwalader's antitrust litigation group Philip Iovieno shares best practices for firms and lawyers expanding contingency fee practices with Burford Chief Marketing Officer Liz Bigham.
  • Diversity, equity and inclusion in the business of law
Laura Durrant, Chief Executive Officer of the Black Talent Charter (recently signed by the UK's Supreme Court), discusses diversity in law and how to move the needle in professional services with Burford Vice President Hannah Howlett. 
  • Best practices for managing accurate litigation budgets
In-house lawyers say litigation budgets are less accurate than they would like. Senior Vice President Suzanne Grosso shares guidance on litigation budgeting. 
  • Monetization of corporate patents and patent divestitures
A group of patent experts discuss how businesses, both large and small, are monetizing corporate patents in a roundtable moderated by Managing Director Eric Carlson.
  • Mining sector dispute trends
With a $1.7 trillion increase in investment anticipated in the mining sector, experts agree that disputes are likely to arise. Experts from top firms and consultancies discuss, in a roundtable moderated by Director Jeffery Commission.
  • The rise of award monetization in Europe
More businesses in continental Europe are monetizing or assigning arbitration claims and awards to accelerate value and de-risk matters. Burford's Head of Europe Philipp Leibfried and Director Jörn Eschment discuss this trend.
  • Legal finance case law update
Recent court decisions reflect the growing acceptance of commercial legal finance. Burford Director Andrew Cohen provides an overview of relevant legal finance case law from the last year.
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Commercial Regulatory Issues

Irish Law Reform Commission Publishes Consultation Paper on Third-Party Litigation Funding

Although the use of litigation funding continues to increase in many jurisdictions, both in terms of the volume of funded disputes and in the value of the legal actions being financed, those countries where its use is still prohibited are often proving slow to move towards a welcoming regulatory environment. Ireland is one such jurisdiction that many industry observers have been watching to see whether there would be any positive movement towards the acceptance of litigation financing, and we have seen a potentially encouraging sign from the Law Reform Commission. An article from Independent.ie covers the news that Ireland’s Law Reform Commission has published its ‘Consultation Paper on Third-Party Litigation Funding’, which sets out the current position on litigation finance and seeks external views on the country’s path forward. The 207-page document is divided into seven sections, which include analyses of the current Irish law on third-party funding, and then looks at policy considerations around legalisation, as well as the kinds of legislative models that could be used in any potential legalisation. In its analysis of models, the paper considers examples from England and Wales, New Zealand, and Hong Kong; with the commission examining the advantages and disadvantages of each country’s regulatory structure, and how they might be applied to Ireland’s legal system. As the commission is seeking external views on the paper, it has provided a list of questions to guide this feedback that are aimed at tackling the most important issues for any future legalisation or regulation of third-party funding in Ireland.  The commission requests any views to be submitted by 3 November 2023 and can be submitted by email at ThirdPartyFunding@lawreform.ie, or by post to the Law Reform Commission, Styne House, Upper Hatch Street, Dublin 2 D02 DY27.
Announcements Commercial

Litigation Capital Management to announce strongest results to date, dividend payment, and transition to fair value accounting

Litigation Capital Management Limited (AIM:LIT), a leading alternative asset manager of disputes financing solutions, provides a market update for the twelve month period to 30 June 2023 (“FY2023”).

Following a number of recent resolutions in the second half of FY23, the result for the full year will deliver LCM’s strongest performance to date by a significant margin. The Company is well positioned for the year ahead with in excess of A$80m in cash held at period end. We will provide further details with the release of our year end results.

The Company wishes to update the market on two important developments.

Reporting update – Transition to Fair Value Accounting

The evolution of the Company’s business over the past two years, transitioning away from the legacy direct investments business model and towards positioning LCM as an Alternative Asset Manager, necessitated the need to review the Company’s accounting policies. In consultation with our advisers, the Board has taken the important decision to transition to Fair Value accounting.  This will put LCM in line with industry peers in both accounting policy and fair value framework. In doing so, we expect to announce our audited results for FY2023 under both the existing accounting policies as well as the newly adopted Fair Value accounting. This will provide our investors with better transparency on the impact of the transition.

Dividend

Following the strong financial performance of the business during FY2023, the Board has decided to pay a dividend of 2.25p per ordinary share payable to Shareholders. The dividend timetable for this distribution will be contained within the FY2023 results announcement.

Patrick Moloney, Chief Executive Officer, commented: “We are pleased with the performance of the business over the past 12 months, particularly as we begin to see the benefits of moving to a fund management business model. Our strong financial performance is the best in LCM’s history and reflected in the Board’s decision to pay a dividend.”

Jonathan Moulds, Chair, commented: “The transition to Fair Value accounting is a significant milestone for LCM.  We believe this decision just taken by the Board should be welcomed by investors. Given the strong performance, the underlying pipeline and cash reserves LCM has built up, it is an appropriate time to pay this dividend.  The Board will continue to keep under review the optimal way to return value to shareholders, balancing our future investment opportunities with the importance of rewarding our shareholders.”

About LCM

Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing solutions internationally, which operates two business models. The first is direct investments made from LCM's permanent balance sheet capital and the second is third party fund management. Under those two business models, LCM currently pursues three investment strategies: Single-case funding, Portfolio funding and Acquisitions of claims. LCM generates its revenue from both its direct investments and also performance fees through asset management.

LCM has an unparalleled track record driven by disciplined project selection and robust risk management. Currently headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT.

www.lcmfinance.com

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Announcements Commercial Fundraising

EJF CAPITAL AND ROCADE LLC RAISE APPROXIMATELY $470 MILLION FOR CREDIT-FOCUSED LITIGATION FINANCE PLATFORM

EJF Capital LLC (“EJF Capital”), a global alternative asset management firm, today announced the successful close of its fourth installment of litigation finance investment vehicles, Rocade Capital Fund IV LP and Rocade Capital Offshore Fund IV LP (the “Funds”) with approximately $220 million in investor subscriptions and commitments. Previously, EJF Capital and funds affiliated with Barings LLC, one of the world’s leading investment managers, formed a joint venture specialty finance company, Rocade LLC (“Rocade”), with $250 million of committed capital designed to invest alongside the Funds. The combined capital commitments raised across Rocade and the Funds totals approximately $470 million.

Headquartered in the Washington, D.C. area, Rocade provides flexible law firm financing solutions, with facilities ranging in size from $10 million to over $100 million secured by contingent fees receivable or other litigation assets. Since the strategy’s inception in 2014, Rocade and its predecessor have funded over $1 billion of loans to leading law firms within mass tort and other complex litigation, unlocking potential for dozens of growing law firms.

Brian Roth, Chief Executive Officer and Chief Investment Officer of Rocade, said, “We are grateful to our investors for their strong support and are pleased to welcome new institutional investors to the Rocade platform. We believe Rocade is well-positioned to leverage the team’s deep sector expertise, flexible structuring capabilities, and long-term investment approach to best serve our law firm clients.”

Emanuel Friedman, Co-Founder and Co-CEO of EJF Capital, added, “We are pleased to support Rocade’s continued growth. This expanded capital base will allow Rocade to quickly scale its platform and enable EJF to offer investors access to what we believe is an uncorrelated asset class with a credit-focused approach that offers attractive risk-adjusted returns.”

About EJF Capital

EJF Capital LLC is a global alternative asset management firm headquartered outside of Washington, D.C. with offices in London, England and Shanghai, China. As of March 31, 2023, EJF manages approximately $6.9 billion across a diverse group of alternative asset strategies. EJF has 50 employees, including a seasoned investment team of 20 professionals. The firm was founded in 2005 by Manny Friedman and Neal Wilson. To learn more, please visit http://ejfcap.com and please read additional Risks and Limitations located here.

About Rocade

Rocade LLC is a private credit firm which provides flexible growth capital for plaintiff law firms in order to finance case acquisition, manage working capital or realize settled cases. Its flexibility, industry expertise, track record and long-term focus position it to be a leading credit provider in the litigation finance space. Rocade has an experienced team of professionals, located in the Washington, D.C. area and Houston, TX, which includes both finance industry veterans as well as litigation experts. For more information, please visit https://rocadecapital.com/.

About Barings

Barings is a $362+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment.

*Assets under management as of March 31, 2023.

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Case Developments Commercial

In-Principle Settlement Agreement Reached in Colonial First State Class Action

The combination of class actions and litigation funding has proven to be an incredibly powerful tool in holding large corporations to account, providing the needed capital to balance the scales between consumers and companies. This can be important for those lawsuits that must go all the way to completion to succeed, and proves that the power of third-party funding often lies in its ability to bring the defendant to the negotiating table to agree to a settlement. Reporting by Insurance News covers the latest development in the class action brought against Colonial First State Investments, which alleged that the wealth manager charged its customers excessive fees to pay commissions to financial advisers, without those advisers providing services to those customers. Following a court-ordered mediation on June 16, Colonial First State and Slater & Gordon, who have been leading the class action on behalf of consumers, agreed to a $100 million settlement which will now need to be approved by the court. Following the initial agreement of the settlement, Colonial First State said that if approved, the settlement will be distributed to “eligible group members” of the class action following any deductions to cover legal fees and commission to the third-party funder. Whilst the article does not name the specific litigation funder who has been financing this class action, Slater & Gordon’s website already confirmed that the lawsuit has been fully funded by a third-party, and none of the class action members would be required to cover the litigation costs. Even though Colonial First State has agreed to resolve the litigation through a settlement, the company made clear that it “continues to deny the allegations and makes no admissions of liability or wrongdoing.”
Commercial Regulatory Issues

Ireland Approves Third Party Rules for International Arbitration Funding 

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

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

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

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

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

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

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

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

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

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

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

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

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

LionFish Announces Acquisition by Funds Managed by Foresight Group

Funds managed by Foresight Group (“Foresight”), a leading, listed, sustainability-led alternative asset investment manager with £12 billion* of assets under management, have completed the acquisition of LionFish Litigation Finance Limited (“LionFish”) from AIM-listed professional services firm RBG Holdings Plc (“RBG”). LionFish was launched in May 2020 as a subsidiary of RBG. Built on strong principles and a solid operating infrastructure, LionFish quickly established its presence in the market and experienced rapid growth. To accommodate its growth, LionFish entered a co-investment arrangement with Foresight in February 2022. Intended to be the first of many, this coinvestment afforded LionFish the ability to expand its capital investment base and reduce its reliance on RBG’s balance sheet. In December 2022, RBG announced intentions to refocus on professional services and received several bids to acquire the LionFish business. Foresight’s bid was unique and stood out given its patient capital base, long-term commitment and alignment with LionFish’s ambitions and investment thesis. Foresight’s acquisition will provide LionFish with the stability and support to leverage its team, its principal investment model, and its operational efficiency. Operationally, LionFish will remain an independent company run by management team Tets Ishikawa and Tanya Lansky, with general oversight from a soon to be announced and newly appointed board. Its existing transactions will continue to be honoured and capital for new investments made available immediately. Tets Ishikawa, Managing Director of LionFish, said: “We would like to thank RBG Holdings Plc for their support in launching LionFish. Although we had originally envisaged the partnership to last for many years, the lessons we learnt together and RBG’s decision to refocus on professional services has given us the opportunity to find a more suitable, long-term and exciting partner. Tanya and I would like to thank both RBG and Foresight for making this transaction possible.” Oliver Bates, Senior Private Debt Manager at Foresight, added: “We have followed the litigation finance market for several years and we have always been impressed by LionFish’s model and commercial approach. Having followed it closely over the last couple of years, it was always clear to us that Foresight could provide a stronger platform on which LionFish could fulfil its true potential. We are therefore delighted with this acquisition and are excited and confident that under our ownership, Tets, Tanya and the LionFish team will achieve their business ambitions.” Tanya Lansky, Managing Director of LionFish, comments: “Foresight’s deep and patient capital base, long-term commitment, and its understanding and support of our model made it stand out. Tets and I would like to thank Foresight for their faith and commitment in us and in our business. Notwithstanding the situation since last year, we have maintained a strong pipeline which we look forward to leveraging and continuing to grow in this exciting next chapter.”

ABOUT FORESIGHT GROUP

Foresight Group was founded in 1984 and is a leading listed infrastructure and private equity investment manager. With a long-established focus on ESG and sustainability-led strategies, it aims to provide attractive returns to its institutional and private investors from hard-to-access private markets. Foresight manages over 400 infrastructure assets with a focus on solar and onshore wind assets, bioenergy and waste, as well as renewable energy enabling projects, energy efficiency management solutions, social and core infrastructure projects and sustainable forestry assets. Its private equity team manages eleven regionally focused investment funds across the UK and an SME impact fund supporting Irish SMEs. This team reviews over 2,500 business plans each year and currently supports more than 250 investments in SMEs. Foresight Capital Management manages four strategies across seven investment vehicles. Foresight operates in eight countries across Europe, Australia and United States with AUM of £12 billion*. Foresight Group Holdings Limited listed on the Main Market of the London Stock Exchange in February 2021. https://www.foresightgroup.eu/shareholders

ABOUT LIONFISH LITIGATION FINANCE LIMITED

LionFish is a market-leading litigation funder, providing efficient, effective financing solutions to high value dispute assets. www.lflf.co.uk
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Announcements Commercial Fundraising

Aristata Capital Completes Final Closing of Impact Litigation Fund Dedicated to Driving Positive Social and Environmental Change

Aristata Capital is pleased to announce that it has secured nearly £52 million of capital at final closing for its first impact litigation fund, Aristata Impact Litigation Fund I LP (AILF I). Aristata is a pioneer in the field of social and environmental litigation, bringing an impact investing lens to commercial litigation funding to seek attractive, uncorrelated financial returns while delivering positive, systemic social and environmental change. Aristata offers the first truly blended approach to litigation funding allowing investors to combine both the commercial rigour of traditional litigation funding methodologies and the success of public interest litigation strategies to drive social and environmental change. Aristata is building a global portfolio of claims covering areas including human rights, environmental protection, climate change, equality, indigenous rights, access to justice and a range of other critical cause areas. Aristata Capital’s first fund is anchored by Capricorn Investment Group’s Sustainable Investors Fund and The Soros Economic Development Fund. LPs include foundations, impact fund-of-funds, family offices in the US, UK, Europe, and Australia, as well as a number of high net worth individuals. “Aristata is proud to launch the first impact commercial litigation fund, and to have exceeded our fundraising target in a challenging market. The claims we are seeing and supporting demonstrate the need for funders focused on driving positive social and environmental impact - we want to close the justice gap in commercial litigation, where the system favours commercial strength and penalises those without.” said Rob Ryan, CEO of Aristata Capital. “We are proving that investors don’t have to choose between achieving financial returns and driving social and environmental impact”. “Since 2000, Capricorn has backed multiple new partnerships focused on specific areas of impact or sustainability, such as renewable energy infrastructure, clean technology, health and wellness, financial inclusion, and sustainable asset management.” Said Eric Techel, Partner at Capricorn. “Aristata is a great fit with this strategy, and we are excited to support the team as it builds the platform and establishes the funding of commercial litigation, with positive and measurable social impact, as an asset class.” Aristata seeks to create a safer and more equitable world by financing legal cases that empower historically marginalised voices, equalize unjust power dynamics and catalyse systemic change that protects the environment and communities. Aristata investments seek to secure compensation for individuals and communities and other entities affected by damaging commercial activity, to unlock the impact potential of similar cases to provide scalability and to generate successful legal outcomes that pressure corporations and industries to change behaviour. “We are delighted to partner with Aristata on this first of its kind impact litigation,” said Georgia Levenson Keohane, CEO of the Soros Economic Development Fund.  “This investment marries Open Society’s longstanding commitment to strategic litigation with innovative finance, as we test how private sector resources can enhance accountability on human rights and environmental protections.” Aristata operates in markets across the globe, sourcing claims from law firms and civil society wherever corporate activity causes harm. Aristata’s experienced litigation funding team is supported by an Investment Committee made up of experienced legal professionals and an Impact Advisory Board of international thought leaders across a diversified range of cause areas. About Our Investors: Capricorn Investment Group is one of the largest mission-aligned firms in the world and has since its inception in 2000 grown to manage more than $9 billion in multi-asset class portfolios for institutional investors through their range of impact-focused strategies. Their Sustainable Investors Fund (SIF) is a private equity partnership whose investment objective is to create significant value through ownership and early-stage investment in public and private asset managers who incorporate sustainability as a key driver of investment returns. The firm has offices in New York City and Palo Alto and was born from a belief that sustainable investment practices can enhance risk-adjusted returns. Underlying this investment approach is a deep desire to demonstrate the huge investment potential that resides in breakthrough commercial solutions to the world’s most pressing problems. The Soros Economic Development Fund (SEDF) is the impact investing arm of the Open Society Foundations (OSF).  Founded in 1997, SEDF has committed over $500 million to support Open Society’s commitments to democracy, human rights and social justice across the globe.
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Commercial Legal Innovation

The Secondary Market’s Role in the Future of Litigation Funding

The future growth and potential scope of the litigation finance market is often discussed in the context of specific sectors or geographic markets in which third-party funding could see increased adoption. However, an important dimension that is on the mind of many industry leaders is the potential for a strong secondary market to take shape, which could act as a catalyst for further growth. In an article for Sentry Funding, Rachel Rothwell examines how a secondary market could transform litigation funding into ‘a well-established asset class’, providing benefits for funders, law firms, and their clients. Rothwell points out that this development would be a key step for investors by offering an alternative exit route without waiting for litigation to reach a conclusion, whilst also improving the levels of liquidity available for funders to access. Rothwell also suggests that a mature secondary market would provide avenues for new types of investors to engage with litigation finance, as it could alleviate the concerns of those investors who recoil at the excessively long durations that initial investors in litigation must endure. This is also a benefit for those investors who are more hesitant about engaging in litigation funding before a case has begun, when despite the normal levels of due diligence being applied, there are significantly more unknowns about the outcome. Rothwell references comments from leading funders at ILFA’s European Conference who broadly expressed support and suggested that the foundations for a real secondary market are already emerging. However, Rothwell also highlighted concerns raised by Christopher Bogart, chief executive of Burford Capital, who emphasised the need for funders to ensure that legal privilege and confidentiality are maintained in any such secondary market where funders are discussing ongoing cases with secondary buyers or investors.
Commercial People Moves

Deminor Expands into Scandinavia with Appointment of Mats Geijer

2023 continues to be a strong growth year for the market’s leading litigation funders, as the established industry names continue to record impressive results and grow their footprints in target locations. Continuing this trend, Deminor has announced its expansion into the Nordic region, opening its first office in Stockholm and appointing Mats Geijer as Counsel Scandinavia, leading Deminor’s funding activities across Sweden, Norway, Denmark, and Finland. Geijer joins Deminor from Therium in Sweden, where he acted as Investment Manager from 2019, having previously served as Managing Director at Mainpro AB.  In the announcement, Deminor’s chief investment officer, Charles Demoulin highlighted the skills and experience that Geijer would bring to the funder’s Nordic operations: “Mats arrives at Deminor with the combined expertise of being both a Swedish legal expert and an experienced litigation funder. Having worked on a broad range of domestic and multi-national disputes with a particular focus on management liability, post-M&A-litigation and insurance disputes, we have confidence in his ability to strengthen our position as a leading litigation funder on the European market.” Geijer also expressed his enthusiasm on joining Deminor and continuing to expand the presence of litigation financing in the Nordic region: “I am happy to join one of the oldest and most recognised players in the field. Litigation funding is now at a mature state in Scandinavia, so it’s a perfect match. I look forward to promoting the benefits of third-party funding and especially the opportunities Deminor has to offer in the Swedish, Norwegian, Danish and Finnish markets.”
Commercial Legal Innovation

Using Litigation Funding to Create a Mutually Beneficial Relationship Between In-House and Outside Counsel

The benefits of litigation funding are often discussed in singular terms, such as how outside capital can benefit a corporate legal department or how it can act as a powerful tool for law firms. However, it is also important to consider how third-party funders can benefit multiple parties at once and create a more mutually beneficial relationship between client and law firm. An insights article by Ryan Schultz, vice president of business development at Woodsford, highlights a 2022 survey from the Association of Corporate Counsel that indicated legal departments have faced up to a 20% reduction in their budgets. Coupled with the lengthy timelines for litigation, Schultz argues for a more holistic approach which could allow litigation funders to bridge the gap between these two parties to support a strong litigation strategy. Schultz offers the example of a client with a limited budget bringing a matter to outside counsel, who feel pressured to either offer a painfully high discount on their services or refuse the matter. In such a situation, Schultz suggests that a funder’s provision of capital can both ensure that the in-house counsel are able to select their firm of choice, whilst allowing that outside counsel to still take on the matter without negatively impacting their own firm’s financials. Looking beyond the pure financial benefits, Schultz points out that by providing the capital required, a funder can preemptively dispel any tensions that may arise between in-house and outside counsel over the cost or discount of the legal services provided. For law firms, this has the added benefit of allowing their litigation teams to pursue clients that ordinarily wouldn’t be able to afford such high legal fees, thereby further buttressing the firm’s revenue streams.