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Commercial People Moves

Stephanie Southwick Joins Law Finance Group as Senior Investment Counselor

Law Finance Group (LFG) has announced that Stephanie Southwick has joined the San Francisco-based funder in the role of Senior Investment Counselor. Southwick joins LFG, having spent four years at Omni Bridgeway as an investment manager and legal counsel, alongside a position at the Santa Clara University School of Law as an Adjunct Professor of Law. Southwick brings an additional 15 years’ experience in the legal sector, including a decade as the managing partner of Greenfield Southwick LLP. Kevin McCaffrey, president and CEO of LFG, described Southwick as “a key addition for LFG” and highlighting her “stellar reputation among leading law firms as both a litigation finance professional and litigator.” McCaffrey emphasised the experience and expertise that Southwick brings to the LFG team, saying that the appointment “signals our continued commitment to growing our portfolio of early stage case investments and law firm portfolios.” Southwick expressed her excitement to join LFG, stating that she was looking forward to working with the LFG team to “provide funding opportunities spanning the life cycle of a case from the early days of litigation through final resolution.” Commenting on why she chose LFG, Southwick explained that “LFG’s ability to offer personalized service while having ready capital on the balance sheet is exactly what plaintiffs and their law firms need.”
Commercial

SpectraLegal Facing Compulsory Strike-Off

As we approach the final months of 2023, a year that was perhaps expected to be one of unparalleled growth for the litigation funding industry, we are seeing signs that the increase in market competition is putting several funders in precarious positions. This challenging environment has been emphasised by new reporting which suggests that another UK funder is set to close up shop before the year is done. Investigative reporting by The Law Society Gazette reveals that UK litigation funder SpectraLegal appears to have ceased operations, and is in the process of shutting its doors for good. The Gazette’s deputy news editor, John Hyde, discovered that the funder’s Companies House’ page now includes a ‘notice for compulsory strike-off’. A compulsory strike-off is usually issued where a company has failed to meet its legal requirements to continue operating or has ceased trading. The notice published on September 26th reads as follows: “The Registrar of Companies gives notice that, unless cause is shown to the contrary, the Company will be struck off the register and dissolved not less than 2 months from the date shown above. Upon the Company’s dissolution, all property and rights vested in, or held in trust for, the Company are deemed to be bona vacantia, and will belong to the Crown.” The Gazette’s article goes on to explain that SpectraLegal has not been operating for many months, having ceased all lending operations, and laid off its employees. The London-based funder was founded back in 2014 and according to the still active company website, focused on three primary service areas: specialised funding schemes, equity release, and disbursement funding.  SpectraLegal does not appear to have made any public statements regarding its apparent winding down of operations, with the company’s LinkedIn page having remained inactive for the past nine months.
Commercial Deals

How Funders Assess Prospective Cases

As many leaders in the litigation finance space have noted in interviews and at industry conferences, one of the most important ways to increase market growth is by providing education to potential clients about how third-party funding operates. A core aspect of this education strategy is ensuring that those considering the use of outside funding understand what information funders are looking for when assessing a case. A new post from Harbour Litigation Funding seeks to provide a simplified and straightforward guide for potential customers, offering four key factors that funders will focus on when analysing the merits of a funding opportunity. Firstly, the article points out that whilst the merits of a case are very important, funders will not pursue those cases where there is not a clear path to recoverability for any potential award or damages. Included within this first assessment area are issues such as the defendant’s financial capability to pay an award, the jurisdiction-specific conditions for any potential enforcement, and the expected duration of any recovery process. Alongside the issue of recoverability, the realistic value of any potential claim is equally key, with funders being naturally hesitant about overly inflated claim values given the extended duration of cases and rising legal costs. As a result, funders are looking to understand how these values have been calculated before seeing whether a case might meet their requirements. As a follow-on from this factor, funders are equally concerned with making sure that a realistic budget has been worked out. As Harbour emphasises, a smaller budget is not necessarily more attractive than a larger proposed budget, especially if the latter has accurately accounted for the various ways in which costs can inflate over time. Finally, even where all these conditions are met, funders will still want to scrutinise and establish whether there is genuine merit to the legal argument being pursued. As part of this assessment, funders are keen to understand the risks associated with the claim and the ways in which those risks can be managed.
Announcements Commercial

LCM Announces Share Buyback Programme

Litigation Capital Management Limited (AIM:LIT), an alternative asset manager specialising in dispute financing solutions internationally, today announces that it intends to commence a share buyback programme in respect of its ordinary shares up to a maximum consideration of A$10.0 million from the date of this announcement (the "Share Buyback Programme"). The purpose of the Share Buyback Programme is to reduce the share capital of the Company in order to return value to shareholders. The Share Buyback Programme was first announced in the full year audited results for the year ended 30 June 2023 released on 19 September 2023. LCM has entered into an irrevocable non-discretionary instruction with Canaccord Genuity Limited ("Canaccord") in relation to the purchase by Canaccord, acting as principal during the period commencing on 5th October 2023 and ending upon the publication of the full year audited results of the Company for the year ended 30th June 2024, of Ordinary Shares for an aggregate consideration (excluding expenses) of no greater than A$10.0 million and the simultaneous on-sale of such Ordinary Shares by Canaccord to LCM, where they will be held in treasury. Canaccord will make its trading decisions concerning the timing of the purchases of Ordinary Shares independently of, and uninfluenced by, the Company. The Share Buyback Programme will be conducted within certain pre-set parameters, and in accordance with Chapter 12 of the UK Listing Rules and the provisions of the Market Abuse Regulation 596/2014/EU as amended by the Market Abuse (Amendment) (EU Exit) Regulations 2019 ("UK MAR") and the Commission Delegated Regulation 2016/1052/EU as amended by Technical Standards (Market Abuse Regulation) (EU Exit) Instrument 2019 which both form part of the law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018. Notwithstanding the average daily volume restrictions set out in Article 3(3) (b) of the Commission Delegated Regulation (EU) 2016/1052, the Company may make purchases in excess of these volume restrictions, subject to prevailing market conditions and liquidity.
Commercial Special Features

Member Spotlight: Joshua Masia

Co-founder & Chief Executive Officer at DealBridge.ai. Prior to founding DealBridge.ai, he led various data, technology, and product initiatives at some of the largest financial institutions and a category-defining FinTech: JPMorgan Chase, BlackRock, and iCapital. He has spent the past 15 years devising technical & business solutions across manufacturing, life sciences, and financial services. He holds a BS in Electrical Engineering from the Pennsylvania State University.

Company Name & Description: DealBridge.ai is the first Deal Relationship Management (DRM) platform, revolutionizing the way private market deals are handled. Harnessing the power of Generative AI and other advanced algorithms, DealBridge.ai automates the complexities and non-linearity of deal-making. The platform streamlines origination, due diligence, and distribution of private assets, eliminating traditional, labor-intensive processes. DealBridge.ai empowers sellers and buyers of alternative products to connect effortlessly at the deal level, enhancing the overall human experience and allowing users to focus on building and nurturing valuable relationships. With automation at its core, DealBridge.ai maximizes revenue potential and elevates deal-making capabilities in private markets.

Company Website: https://dealbridge.ai

Year Founded: 2021

Headquarters: New York

Area of Focus: Building solutions for the litigation finance community. He aims to solve core issues that have plagued the space for years, facilitating more efficient and effective deal management for all stakeholders.

Member Quote: "Litigation funding democratizes the legal system, leveling the playing field for those seeking justice. Generative AI and DRM technology are pivotal in expanding and driving greater adoption in the litigation finance market. They enable us to revolutionize how legal deals are managed, making the process more accessible and efficient for all parties involved."

Commercial Special Features

Highlights from the 6th Annual LF Dealmakers Conference

From September 26th-28th, LF Dealmakers hosted its sixth annual event in New York City. The three-day conference kicked off with a workshop on navigating the Mass Torts landscape, and an opening reception at the James Hotel. Days two and three featured panel discussions and networking opportunities between key stakeholders in the litigation finance space. Wendy Chou, founder of LF Dealmakers, was extremely pleased with the outcome of the event: "For six consecutive years, LF Dealmakers has sold out, a testament to the growing interest and importance of litigation finance in today's legal landscape. We are immensely proud to have created a platform where the best minds in the litigation finance and legal sectors can come together for powerful connections and productive discussions.” Day two began with a pair of panels on the overall state of the industry and an insider’s approach to getting the best deal. The latter included a panel of experts, including Fred Fabricant, Managing Partner of Fabricant LLP, Molly Pease, Managing Director of Curiam Capital, and Boris Ziser, Partner at Schulte Roth and Zabel. The discussion revolved around the following topics:
  • Getting up to speed on funding & insurance products
  • How to fast track diligence and deal with exclusivity
  • Negotiating key terms and spotting red flags
  • Benchmarking numbers & making the waterfall work for you
One interesting point arose on the issue of judgement preservation in the IP space, where Fred Fabricant explained that he hasn’t seen a lot of insurance products in the pre-judgement section. “There are too many uncertainties, and it is very hard to assess the risk in this phase of the case.”  Fabricant is looking forward to insurance products in this phase. “In post-judgement, much easier for insurance to assess the risk, because you’ve eliminated lots of uncertainties.” Click here for the full recap of this panel discussion. The featured panel of Day 2 was titled: “The Great Debate: Trust and Transparency in Litigation Finance.” The panel consisted of Nathan Morris, SVP of Legal Reform Advocacy at the U.S. Chamber of Legal Reform, Charles Schmerler, Head of Litigation Finance at Pretium Partners, and Maya Steinitz, Professor of Law at Boston University. The panel was moderated by Michael Kelley, Partner at Parker Poe. This unique panel was structured as a pair of debates (back-to-back), followed by an open forum involving panelists and audience questions. On the topic of ‘what is a litigation funder?’ what perhaps seems like an obvious question sparked a passionate back-and-forth between moderator Michael Kelley and Charles Schmerler over whether entities such as legal defense funds and the Chamber of Commerce should technically be classified as litigation funders. After all, the Chamber accepts donations and then uses its capital to file claims—so would donors to the Chamber be considered litigation funders? One interesting point came from Schmerler, who noted that causal litigation is different from commercial litigation—especially from a public policy perspective. So conflating them under the semantic of ‘litigation funding’ isn’t as useful, even if they can each be technically classified as litigation funding. Click here for a full recap of this panel discussion. Day three offered four panels and three roundtable discussions, followed by a closing reception. One panel focused on opportunities in Mass Torts and ABS, and consisted of Jacob Malherbe, CEO of X Social Media, Sara Papantonio, Partner at Levin Papantonio Rafferty, and Ryan Stephen, Managing Partner of Pine Valley Capital Partners. The panel was moderated by Steve Nober, CEO of Consumer Attorney Marketing Group (CAMG). The wide-ranging discussion covered the following topics:
  • Who’s doing what in mass torts? How about funding?
  • How funders are evaluating and working with firms
  • Examples of the ABS framework in action & challenges
  • Pre- and post-settlement funding and time to disbursement
One key point for funders to consider, is that as more funders enter the mass torts space, they need to be cognizant of ethical considerations around marketing, PR, claimant communications—all aspects of a case that are unique to class actions and mass torts. Congress is now taking a look at how law firms market to prospective claimants, and should any lawsuits arise, funders will no doubt be corralled into the mix. Given that, it is critical for funders to mitigate the inherent risks by asking more questions at the outset of case diligence: What kind of advertising is being used, where are the clients coming from, how do I know that the clients are real (ad tracking)?  Funders need to be proactive about managing risk, rather than getting caught on the wrong side of a PR headache. Click here for a full recap of this panel discussion. Additional panel discussions covered topics such as successful models of cost and risk sharing, managing IP risk, and a CIO roundtable featuring investors in the space. In addition to the knowledge-sharing, attendees were able to network with founders, CEOs, C-suite officers, thought leaders and other key stakeholders in the litigation finance space. All of which makes the LF Dealmakers event the ongoing success that it is. Founder Wendy Chou spoke to the core ethos of the event: "At Dealmakers, we believe that connections and conversations are the keys to progress. At this year’s LF Dealmakers Forum, we were honored to host a number of critical conversations, including a thought-provoking debate on trust and transparency. It was a historic moment as we welcomed a representative from the US Chamber of Commerce to our stage, marking their first-ever appearance at a litigation finance industry event. It speaks to our commitment to open dialogue and advancing important discussions within our community.”
Commercial Deals

The Common Ground Between Big Business, Insurance, and Litigation Funding

Among those critical of the litigation finance industry, large corporations and insurers are often cast as two of the chief opponents of third-party funding. However, as a recent article has pointed out, the opposition to litigation funding from these types of organisations is neither unanimous nor consistent in its criticisms. In an opinion piece for the New York Law Journal, G. Andrew Lundberg, managing director at Burford Capital, provides an alternative look at litigation funding’s detractors, questioning whether there is perhaps more common ground than is usually acknowledged. Lundberg first highlights that while entities such as the U.S. Chamber of Commerce and the Insurance Information Institute may vocally oppose third-party funding, the businesses they represent do not have such a one-sided relationship with funders. As Lundberg points out, large corporations are increasingly taking advantage of litigation funding to relieve financial and legal risk, allowing their legal departments to pursue meritorious legal actions without putting additional strain on departmental budgets. Similarly, while there are of course insurers who are concerned about the effects of outside funding on rising legal costs and the size of awards, there are plenty of insurers who are also benefiting from a booming market for litigation risk insurance. Focusing in on the insurers’ perspective, Lundberg uses both judgement preservation insurance (JPI) and after-the-event insurance, as two products that insurance companies offer that have a mutually beneficial relationship with the work of litigation funders. He also highlights that there is so much overlap between the two areas, that even Burford Capital has dedicated resources to its own in-house provider of ATE insurance: Burford Worldwide Insurance. Concluding his analysis, Lundberg argues that the intersection between big business, insurance, and legal finance, demonstrates that “the line between good capital and bad capital isn’t as clear and as fine” as critics would suggest.
Commercial Regulatory Issues

Funders File Petition in Louisiana Disciplinary Case for MM&A

Investments by litigation funders into claims not only represent their belief in the validity of the legal case, but also their belief in the lawyers who will be representing the claimants. When those law firms are revealed to have acted improperly or misused that capital, funders can find themselves having to fight to recoup their investment, as is the case in an ongoing disciplinary matter in Louisiana. An article in the Insurance Journal provides insight into a petition lodged in the Western District of Louisiana by two funders, the Equal Access Justice Fund and EAJF ESQ Fund, over US District Judge James D. Cain’s sanctioning of law firm McClenny Moseley & Associates (MM&A). In August, the judge had ruled that MM&A was not entitled to any legal fees from clients involved in over 200 hurricane-damage claims related to Hurricanes Laura, Delta, and Ida. The funders argued in their petition that they have been prevented from recouping their investments in MM&A, which amount to around $30 million. Judge Cain had sanctioned the law firm after hearings revealed that MM&A had improperly filed claims, by falsely stating they were representing property owners, as well as duplicating pre-existing claims and making false statements to insurers. Judge Cain’s order, barring MM&A from collecting on fees and expenses for the claims, was preceded by a $2 million fine from the Louisiana Department of Insurance, as well as the state’s Bar’s Office of Disciplinary Counsel suspending the law license of R. William Huye III, manager of MMA’s New Orleans office. In their petition to Judge Cain, the funders’ attorneys argued that “neither the lenders nor any other party received notice or an opportunity to be heard regarding the law firm’s interest in case proceeds before the court adjudicated that issue.” They stated that the judge should have consulted the lenders who had a financial interest in these claims and therefore filed the petition “to voice their concerns and defend their interests before this court and/or before a reviewing court.”
Commercial

Dispelling Myths About Litigation Funding

As the litigation finance industry continues to mature and we see more widespread adoption across a range of jurisdictions, common misconceptions about third-party funding are still present. Although funders can eloquently dispel these myths themselves, it is equally useful when these misguided assumptions are questioned by law firms who can offer their own perspective on the benefits of litigation funding. In an insights piece from Weightmans, Damien Carter and Jessica Kraja provide some illumination on four of the most common myths surrounding litigation funding, analysing how these concerns are often based on faulty premises. Firstly, Carter and Kraja tackle the idea that “litigation funding is only useful if you can’t afford to fund litigation”, pointing out that it is equally useful for litigants who are keen to offset risk and preserve their own capital rather than devoting it to a lawsuit. As a further example of this, they highlight that third-party funding can be useful for companies who wish to pursue more than one claim, but are limited by legal budget constraints. Secondly, the lawyers dispel the notion that “claimants lack control in their own litigation when using litigation funding”, stating that control over the litigation process will remain, as usual, with the claimant and their legal counsel. Whilst funders will be kept informed of developments during the case, funders are rarely involved in decision-making outside of situations that are specified in funding agreements. Addressing the claim that “litigation funding fails to cover all costs and disbursements involved in litigation”, Carter and Kraja emphasise that all funding arrangements can be tailored to meet the client’s individual needs. Outside of direct funding, clients are still able to work with their lawyers to utilise additional services such as litigation risk insurance. Finally, the article addresses the misconception that “litigation funding is only available for commercial litigation cases”, as the authors explain that funders engage with a wide variety of disputes. They note that funders will primarily assess cases based on several factors, including the merits of the claim and the ability of the defendant to pay any damages, rather than being solely limited to purely commercial litigation matters.
Case Developments Commercial

Judge Orders Permanent Stay in Crypto Class Action Targeting Meta and Google

There are many examples of litigation funders offering essential support to class action cases, providing group members with the capital needed to seek justice from companies or institutions that have harmed them. However, issues can arise where the line between funder and claimant becomes blurred, as we have seen in an Australian class action that was permanently stayed by a federal judge due to potential conflicts of interest. In a judgement from the Federal Court of Australia last week, Justice Elizabeth Cheeseman granted a permanent stay on proceedings in the case of Hamilton v Meta Platforms, Inc. The ruling stated that there was “the very real potential for conflicts of interests to arise and influence Mr Hamilton’ conduct of the proceedings in ways that are to the detriment of Group Members.” Justice Cheeseman concluded that as Andrew Hamilton was both the representative applicant and the CEO of JPB Liberty, the litigation funder supporting the case, this situation could create a “myriad of conflicts.” Hamilton’s class action had represented around 650 group members in the case brought against Meta and Google, alleging that the companies had broken Australian competition law by banning the advertisement of cryptocurrencies. Hamilton had argued that this ban had led to a substantial decline in the value of cryptocurrencies, including a currency called STEEM that he had an interest in through his ownership of Green Freedom Limited. Hamilton had then entered into a litigation funding agreement with the group members through JPB Liberty, having partially funded the litigation “by issuing crypto tokens known as “Sue Facebook Tokens” (SUFB Tokens).” Justice Cheeseman explained in her judgement that she was “not satisfied that the conflicts inherent in Mr Hamilton’s multifaceted interests in the proceeding are capable of being appropriately managed.” Whilst she acknowledged that a permanent stay was “a tool of last resort”, the judge explained that given the conflicts of interest, “there are real concerns about how Mr Hamilton would address them in circumstances where he frames his claim as being primary and those of Group Members as being secondary.”
Case Developments Commercial

NorthWall Sees €210m Profit Following Grammercy Investment in Pogust Goodhead

Beyond the traditional funding of individual cases, one of the biggest growth areas for litigation finance continues to be direct financing of law firms. Following on from this weekend’s announcement of a huge investment partnership for a UK law firm, we are seeing the benefits for funders who engage in the practice of lending to law firms. Reporting from Bloomberg reveals that NorthWall Capital has achieved significant returns on its investment in Pogust Goodhead, after the latter received a landmark $552.5 million secured loan from Grammercy Funds Management. According to the investor letter seen by Bloomberg, NorthWall Capital garnered a €210 million profit as a result of Grammercy’s loan, which refinanced the €178 million that NorthWall had previously provided to the law firm.  The final total profit from NorthWall’s investment into Pogust Goodhead may still increase, depending on the outcome of ongoing claims led by the law firm. The article also explained that the €210 million profit has bolstered a number of NorthWall’s funds, including the GCF II legal assets fund, which has now achieved a 100% net internal rate of return. Bloomberg’s reporting on the investor letter highlights a comment from Fabian Chrobog, Founder and Chief Investment Officer of NorthWall, who stated that the company was “incredibly pleased to generate outsized returns for our investors from a project set to deliver justice to millions of individuals affected by environmental disasters.”  NorthWall’s capital growth does not appear to be slowing down, as it is in the middle of raising funds for another European Opportunities Fund, with €300 million in committed capital to date. Bloomberg also highlighted that the investor letter revealed NorthWall’s plans to announce a third legal assets fund in the near future.
Commercial Regulatory Issues

Analyzing the Impact of the PACCAR Ruling on Insolvency Practitioners

As the industry continues to monitor the fallout from the Supreme Court’s ruling on the classification of litigation funding agreements (LFAs) as damages-based agreements (DBAs), it is important to note that the effects will not be felt equally across all areas of legal funding. One sub-sector that may have a unique path forward is insolvency litigation, where the differing arrangements between funders and insolvency practitioners could minimize the impact of the PACCAR decision. In a recent post on Lexology’s Dispute Resolution Law Blog, Marieta van Straaten and Chantelle Tang, from Kingsley Napley, explore the potential impact of the Supreme Court’s judgement on insolvency practitioners.  One of the key points highlighted is that it is quite commonplace to see these practitioners assign or sell their legal claims to third-party funders, rather than engage in more traditional funding agreements to support them as they pursue a claim. As a result of this trend, van Straaten and Tang suggest that many insolvency practitioners will not see significant effects from the PACCAR ruling, as these agreements “are constructed differently to LFAs and are believed to fall outside the definition of ‘claims management services’.”  However, they also highlight that there are many situations where an insolvency practitioner will seek funding rather than assignment for a claim, including those situations where the practitioner is “appointed as a trustee in bankruptcy office holder claims”. In this example, under the rules of Section 246ZD of the Insolvency Act 1986, the insolvency practitioner is not permitted to assign claims and therefore may seek outside funding to support the legal action. In these situations, as with all other parties involved in LFAs, insolvency practitioners will need to work with funders to ensure that any new or ongoing LFAs are compliant with the DBA regulations.
Commercial Regulatory Issues

Malaysian Government Minister Calls for Review of Arbitrators and Litigation Funders

The dispute between the Malaysian government and the Sulu heirs has been one of the most high profile international arbitration cases in recent times, raising issues around state sovereignty and the role of third-party funders in international arbitration. At a recent industry gathering, one of Malaysia’s top government ministers spoke about the country’s ongoing efforts to have the multi-billion dollar award annulled, as well as the need for reform of the international arbitration system. Reporting by The Edge Malaysia provides an overview of recent comments made by Datuk Seri Azalina Othman Said, the minister for Law and Institutional Reform in the Prime Minister’s Department, at the London International Arbitration Colloquium 2023. In her keynote address at last week’s event, Azalina called for “a review of the conduct of arbitrators and for oversight of third-party litigation funders, including exploring transparency and disclosure obligations by the relevant parties.” The minister’s comments come at the same time as Malaysia continues to seek the annulment of the $14.9 billion award, which was issued to the Sulu heir claimants by a Spanish arbitrator. These efforts follow Malaysia's successes in securing favourable rulings from both the Paris Court of Appeal and from The Hague Court of Appeal in June of this year, which respectively upheld Malaysia’s challenge to the award and refused the Sulu heirs’ attempt to have the award enforced. During the speech, Azalina also highlighted that the Kuala Lumpur-based Asian International Arbitration Centre (AIAC) had entered into a memorandum of understanding with the Arbitration and Dispute Resolution Centre at SOAS, “to foster teaching and research activities related to alternative dispute resolution in alignment with international best practices.” Citing the Malaysian government’s experience in the Sulu case, she emphasized that “the sanctity of the arbitration process must always be upheld” from abuses such as forum shopping or frivolous claims.
Announcements Commercial Legal Innovation

Finitive Selects DealBridge.ai to Power its Litigation Finance Marketplace

DealBridge.ai, the inventor of the modern Deal Relationship Management (DRM) platform, is delighted to announce its strategic partnership with Finitive. Finitive, a leading marketplace that excels in facilitating deal-making within the private credit space, has selected DealBridge.ai's cutting-edge technology to help power its litigation finance business. DealBridge.ai's DRM solution revolutionizes the way you handle origination, due diligence, and distribution of private assets. With its user-friendly interface, you can effortlessly set up your own customized instance and unlock the future of seamless deal management. Say goodbye to the cumbersome barriers of traditional, labor-intensive processes. DealBridge.ai enables sellers and buyers of alternative products to effortlessly connect at the deal level, eliminating unnecessary hurdles. This streamlined approach enhances the overall human experience, allowing you to focus on building and nurturing valuable relationships. Finitive's founder & CEO, Jon Barlow, shared their perspective on this exciting partnership, stating, "Our decision to select DealBridge.ai as the technology partner in the litigation finance sector was driven by a shared commitment to innovation and efficiency. This collaboration will empower us to provide borrowers and institutional investors with a faster, more seamless transaction experience." Joshua Masia/Jon Burlinson, Co-founders & CEOs of DealBridge.ai, expressed their excitement about the partnership, saying, "We are thrilled to collaborate with Finitive on this ground breaking project. Our technology will enable Finitive to streamline operations, reduce time-to-market, and offer a world-class platform to institutional investors interested in litigation finance. Together, we aim to redefine the industry." Maximize your revenue potential by automating the tedious tasks involved in deal-making with the industry's first DRM. With DealBridge.ai, you can free up your time and resources, enabling you to focus on what truly matters – growing your relationships and boosting your bottomline. Experience the power of automation and elevate your deal-making capabilities with DealBridge.ai, the ultimate DRM solution for private markets. ABOUT DEALBRIDGE.AI DealBridge.ai is a cutting-edge SaaS Deal Relationship Management (DRM) platform that revolutionizes the way private assets are originated, due diligenced, and distributed. With a user-friendly interface and powerful automation capabilities, DealBridge.ai  empowers market participants to streamline deal management processes and unlock new revenue potential. By removing traditional barriers and focusing on building valuable relationships, DealBridge.ai transforms the private markets industry. For additional information, please visit DealBridge.ai's website at https://dealbridge.ai. ABOUT FINITIVE Finitive is the leading data-driven private credit marketplace. Through its tech-enabled platform, institutional investors access a multi-trillion-dollar market of private credit opportunities across multiple asset classes and structures, including specialty finance, online lending, marketplace lending, and private credit funds. Borrowers gain efficient access to capital via a global network of investors who are actively allocating to private credit. All regulated activities are conducted through Private Brokers LLC, a registered broker-dealer and member FINRA/SIPC. For additional information, please visit Finitive's website at https://finitive.com.
Case Developments Commercial

Fox Steps Up Efforts to Identify Role of Outside Investors in Smartmatic Lawsuit

Critics of the litigation finance industry often point to the lack of transparency around funders’ involvement in litigation as a key issue. However, this contention can also lead to defendants claiming that outside funders must be involved in their case even when there is seemingly no evidence to support the allegation. An example of this comes from one of the most contentious and high-profile pieces of ongoing litigation: Smartmatic USA Corp. Vs. Fox Corporation.  An article from Reuters provides an update on efforts by Fox Corp to identify and expose the identities of alleged investors in the lawsuit being brought against the media company by Smartmatic. Despite Fox successfully persuading Judge David B. Cohen to compel Smartmatic to identify any litigation funding arrangements related to the lawsuit, no evidence has been uncovered that proves funding has been received from outside investors with malicious intent towards Fox. In its latest move, Fox is asking for further documents and testimony from Smartmatic’s advisers in the UK, to support Fox’s allegations that Smartmatic’s lawsuit was brought with the intention of garnering new investment to increase the valuation of the company. As part of these allegations, Fox asserts that Portman Global Partners, a UK investment firm, has been seeking “investors in Smartmatic based on Smartmatic’s litigation against Fox.” In a move that aligns with Fox’s repeated claims about the involvement of left-wing ‘activist investors’, the company is also seeking information around any communication between Smartmatic and Mark Malloch-Brown, former chair of Smartmatic’s parent company and the president of George Soros' Open Society Foundations. In a statement to Reuters responding to Fox’s latest allegations, Erik Connolly, partner at Benesch Friedlander Coplan & Aronoff LLP, denied that his client’s lawsuit was motivated by a desire to seek outside investment. Connolly ridiculed the idea and asserted that “Fox’s suggestion that Smartmatic has used Portman to entice investors based on the value of the litigation is as factually inaccurate as its claim that Smartmatic rigged the 2020 election.”
Announcements Commercial Deals

Pogust Goodhead and Gramercy Funds Management LLC Announce $552.5 Million Investment Partnership

Pogust Goodhead, a global law firm, and Gramercy Funds Management LLC (“Gramercy”), today announced that they have entered into a $552.5 million investment partnership in the form of a secured loan by Gramercy to Pogust Goodhead. This loan is the largest of its kind in a U.K. based law firm. The loan transaction strengthens the firm’s financial power, ensuring Pogust Goodhead has ample funds to continue its litigation across the world and on behalf of environmental victims of corporate giants such as: BHP Group (BHP.AX), BMW (BMWG.DE), Fiat Chrysler (STLAM.MI), Ford (F), Honda (7267.T), Hyundai (005380.KS), Jaguar/Land Rover (JLR), Mazda (7261.T), Mercedes-Benz (MBGn.DE), Peugeot/Citroen (PEUG.PA), Renault Nissan (RENA.PA), Toyota (7203.T), Vauxhall (STLAM.MI), Volkswagen AG (VOWG.DE), and Volvo AB (VOLVb.ST). The loan proceeds will fund the largest action of its kind against two of the biggest mining companies in the world – BHP Group (BHP.AX) and Vale (VALE3.SA) – for their part in the Mariana dam disaster in Brazil. Pogust Goodhead is representing over 720,000 victims of Brazil’s worst ever environmental disaster, with a trial date set for October 2024 in London. The loan proceeds will also support Pogust Goodhead’s litigation against 14 major automobile manufacturers over the Dieselgate scandal, on behalf of approximately one million U.K. consumers. Tom Goodhead, Global Managing Partner and CEO of Pogust Goodhead, said: “We are delighted to secure this major investment that will transform our business and give us the financial power to take on some of the largest companies in the world on behalf of millions of people. This landmark deal shows that global investors have good faith in the outcome of our cases. This investment will not only ensure that we bring our existing cases home, but we are putting global corporate giants on notice that we have the financial muscle to take them on for their wrongdoing. We are taking on some of the largest companies in the world. These companies have access to infinite resources to litigate against these cases. This deal levels the playing field and gives us the ability to go toe-to-toe with them. We are not trying to destroy these companies. We are taking them on for corporate misconduct, anti-competitive behaviour, corporate harm and misuse of the environment. The cases we are taking will set the bar for how serious we are, as a global society, about ensuring that big business is held accountable and upholds its obligations and responsibilities to the communities in which it operates.” Harris Pogust, Chairman of Pogust Goodhead, said: “Our mission is to defend the rights of those who have been wronged by some of the world’s largest multinational companies. In just the past two years we have secured historic settlements against British Airways and Volkswagen. We currently represent over one million individuals regarding the Dieselgate scandal. Additionally, we are handling the largest mass action in English history against the world’s two biggest mining companies. We are just beginning the journey to bring justice to those who most deserve it no matter where they reside and regardless of the size and perceived power of the corporate wrongdoer. This transaction with Gramercy, a firm with deep expertise in litigation finance and patient capital, gives us the ability to bring the fight to any wrongdoer. They are now on notice that it is in their financial interests and those of their shareholders to settle or face a firm with both the financial resources and litigation skills to obtain the justice our clients rightly deserve. We are extremely excited to have Gramercy as an investor and as a partner as we seek global justice for the millions of clients we currently represent and the millions yet to come.” Robert Koenigsberger, Managing Partner and CIO of Gramercy Funds Management, said: “We are pleased to be partnering with Pogust Goodhead. The firm has an exceptional track record and we have been impressed by the team and their approach to complex litigation. Allocating to this transaction is clearly consistent with Gramercy’s mission to positively impact the well-being of our clients, portfolio companies, and their communities. The investment materially aligns with our ESG and impact investing objectives. We are proud to play a part in helping Pogust Goodhead seek justice for some of the worst environmental actions over the past few decades.”
Commercial People Moves

Five Augusta Ventures’ Employees Set to Depart for Omni Bridgeway

It is a common refrain that the litigation finance industry has never been in a better situation, with investors seeing it as a valuable alternative asset class and funders experiencing increasing demand for their services around the world. However, a booming market leads to fierce competition between funders, with employees more frequently seeing opportunities at rival firms that are pulling ahead of their competitors. An article by Bloomberg Law, which LFJ has independently verified, reveals that five members of the Augusta Ventures team are leaving the funder to move to Omni Bridgeway. LFJ has separately confirmed that one of Augusta’s senior executives is among those employees departing to the rival funder, with the moves expected to be announced in the coming days. Bloomberg’s reporting also suggests that this latest exodus of Augusta employees follows some internal turbulence at the funder, with former employees confirming that the company laid several staff off earlier this year. The departure of these staff has significantly reduced the number of employees at the funder, with Bloomberg noting that the company's website now lists 15 employees, compared to the 38 team members present in December 2022. Commenting on the instability present in the funding industry, Marc Carmel, co-head of litigation finance at McDonald Hopkins, explained that “the market for really good cases is certainly finite.” Carmel highlighted that the last six months have seen unusually high levels of personnel movement between funders, reflecting the increasing levels of competition between companies seeking to stay at the front of the pack.
Commercial Deals

LFJ Dealmakers Panel: Opportunities at the Intersection of Funding, Mass Torts & ABS

The panel discussion consisted of Jacob Malherbe, CEO of X Social Media, Sara Papantonio, Partner at Levin Papantonio Rafferty, and Ryan Stephen, Managing Partner of Pine Valley Capital Partners. The panel was moderated by Steve Nober, CEO of Consumer Attorney Marketing Group (CAMG), The discussion spanned the following topics:
  • Who’s doing what in mass torts? How about funding?
  • How funders are evaluating and working with firms
  • Examples of the ABS framework in action & challenges
  • Pre- and post-settlement funding and time to disbursement
The conversation began around the integration of litigation funders into the mass torts sector. There are a lot of variables to consider around mass torts which typically don’t exist in other case types. These include marketing ethics, use of proceeds, claimant access and relationship building, where the call center is located, firm operations at an administrative level, etc. These are all aspects of a law firm that litigation funders need to understand if they are going to partner with a mass torts law firm. The degree of diligence is vast, and will require a years-long commitment. What’s more, there is now a focus on unethical marketing practices, with Congress taking a look at the tactics being used. The question for funders is, how can you protect yourself from unethical marketing efforts (funders might be named in a suit against the law firm). Funders need to mitigate these risks by asking more questions at the outset: What kind of advertising is being used, where are the clients coming from, how do I know that the clients are real (ad tracking)? Too many funders are pouring money into this lucrative space, and run the risk of encountering scammers who set up a business looking to raise money for a mass torts claim, when they have no ability to secure claimants or conduct the proper marketing outreach. What this comes down to at its core is relationships—understanding and knowing who you’re working with. Funders need to feel that the law firm they partner with us trustworthy, but of course should still conduct their own diligence to verify that all activities are on the up and up. On this last point, the panel recommends creating more nuanced tracking—not just ‘cost per case.’ Track advertising costs, medical records, other marketing materials. Really understand how money is moving at a granular level. The discussion then pivoted over to the Camp Lejeune case. Sara Papantonio feels that there will be one more opportunity to make a push for cases when payouts start happening. The question is, will there be enough time to advertise and file a claim before the statute of limitations runs out? Papantonio also noted that many clients won’t qualify for the elective option, and those that do probably won’t take it because of how undervalued it is. So likely, we will see more cases move into litigation. Values are starting to be presented for Tier 1 and Tier 2 injuries, which will help push this into litigation as well. She believes around May of 2024 will be an opportunity to advertise, but the statute of limitations runs out in August. Papantonio explained that Tier 1 injuries are far less risk for funders and litigators. Tier 2s and Tier 3s will have to move through a process, and some won’t be approved, so there is more risk there. Papantonio also believes the fees will be capped at 20-25%, which was the DOJs recommendation. So funders and law firms should plan for that. One final point Papantonio made, was that these mega mass torts are sucking up all the oxygen in the space, but there are plenty of smaller torts that are very meritorious and present opportunities for funders and law firms. The panel concurred, given that $1 billion has spent on Camp Lejeune already, so any new entrants into that claim are coming in late stage. Panelists Ryan Stephen and Jacob Malherbe added that torts such as Tylenol, Roundup part two, paraquat, PFAS claim (which the panel believes might become the biggest case ever), anti-terrorism cases, and others. Malherbe even recommended ‘The Devil We Know,’ a documentary on Netflix about the PFAS claim—so anyone interested can follow up with some binge watching!
Announcements Commercial People Moves

Palisade Insurance Partners Expands Senior Leadership Team

Palisade Insurance Partners, LLC (“Palisade” or the “Company”), a specialty managing general underwriter (“MGU”), today announced the appointments of two seasoned industry executives across its business geography. Scott Stevenson has joined Palisade Insurance Partners LLC in New York as Head of US Risk, from Aon Special Opportunities Group where he served as Senior Vice President. Mark de la Haye has joined Palisade Risk Solutions Ltd in London as Head of UK and Europe Risk, from Augusta Ventures Limited, where he served as Head of Resolutions. Headquartered in New York, Palisade specializes in underwriting insurance for litigation and other contingent legal risks, and transaction insurance. John McNally, President and Head of Underwriting at Palisade, said, “We are pleased to welcome Scott and Mark, two highly regarded professionals with extensive experience within the legal, litigation finance and insurance industries. For the last three years, Scott has been a leading underwriter of contingent legal risks in the insurance market, after practicing at a premier US law firm. Mark has considerable experience managing litigation investment portfolios, including a focus on insurance requirements. Scott and Mark will broaden and strengthen Palisade’s capabilities to provide comprehensive risk transfer solutions and detailed litigation underwriting for our clients and partners.” Mr. Stevenson commented, “Palisade has an impressive capability to solve complex insurance issues. I look forward to combining my litigation and insurance underwriting experience to strengthen Palisade’s unique platform and pursue creative solutions for specialized insurance matters across the legal spectrum.” Mr. de la Haye added, “Palisade has created a strong platform to deliver innovative litigation and transactional insurance solutions for a wide variety of clients. I am excited to apply my legal background together with my litigation finance experience to further develop Palisade’s offering and strategic direction during this exciting period of growth.” Mr. McNally concluded, “Palisade is ideally positioned to serve the fast-growing demand for contingent legal risk insurance, including from corporate clients, law firms, asset management funds, and specialty finance vehicles. The addition of these executives will greatly enhance operations as we continue scaling Palisade’s growing network of insurance partners.” Scott Stevenson Biography Mr. Stevenson brings more than twelve years of experience from all sides of the legal industry. Before joining Palisade, he was Senior Vice President at Aon’s Special Opportunities Group, where he led a team specializing in underwriting contingent legal and related risks. Previously, Mr. Stevenson worked at Wachtell, Lipton, Rosen & Katz, where he handled complex transactions, and advised on strategic investments and corporate governance matters. Mr. Stevenson began his career as a Law Clerk, first at The United States District Court for the Middle District of Florida and then at The United States Court of Appeals for the Eleventh Circuit. Mr. Stevenson gained a B.A. from University of Pennsylvania, a B.S. at The Wharton School of Business, and a J.D. from Stetson University College of Law. Mark de la Haye Biography Mr. de la Haye boasts almost two decades of experience of dispute resolution and litigation fund and investment management. While at Augusta Ventures Limited, he helped oversee both underwriting and insurance requirements for a range of investments, and strategically collaborated with lawyers and clients to manage legal disputes. He was a permanent member of Augusta’s New Business Committee and its Investment Committee. Previously, Mr. de la Haye served in private practice, most recently as a Solicitor at Clyde & Co. During his time in private practice, Mr. de la Haye represented clients around the world in high value, complex and often multi-jurisdictional litigation and arbitration. Mr. de la Haye received an LLB from the University of Exeter and an LPC from The University of Law. About Palisade Insurance Partners Palisade Insurance Partners (“Palisade”) is an MGU that specializes in underwriting litigation-related insurance, transaction liability products, and contingent legal risk solutions. Palisade is dedicated to providing clients with access to specialty insurance while applying the highest standards of underwriting and upholding its core values of integrity and independence. To learn more, please visit https://palisadeinsurance.com/.
Commercial

MA Financial Group Joins The Association of Litigation Funders of Australia (ALFA)

In a post on LinkedIn, the Association of Litigation Funders of Australia (ALFA) announced that MA Financial Group Limited has become its newest Associate Member. MA Financial Group is a diversified financial services company operating across alternative asset management, legal funding, corporate advisory and equities. Its legal funding business includes disbursement funding, family law funding, settlement advance funding, and refinancing existing disbarment borrowings. According to the group’s website, their litigation funding team processes around 370 new files per week. MA Financial Group will bring ALFA’s total number of members to 21, sitting alongside funders like CASL and Litigation Lending, as well as other associate members such as FTI Consulting and Piper Alderman.
Commercial Regulatory Issues

PACCAR Ruling Creating Potential Rifts Between Funders and Clients

In the immediate aftermath of the Supreme Court’s PACCAR ruling, industry commentators recognized the impact that this judgement would have on future litigation funding agreements (LFAs), as well as on funded cases which are still ongoing. At an industry conference this week, one leading barrister acknowledged that they are already seeing the first signs of fault lines between funders and their clients. An article in The Law Society Gazette reports on comments by Ben Williams KC from 4 New Square, at the Costs Law Reports conference, where he explained that barristers were already being approached by parties involved “in those cases which are close to settlement.” Williams highlighted that regardless of how unseemly it might appear, the PACCAR ruling has allowed clients to question their funder’s entitlement to a percentage of the settlement. Emphasizing the financial value at stake for these clients, Williams pointed out that “you’re going to have to be on the angelic side of the spectrum not to at least try to get some concession from your funder on the basis that their agreement is unenforceable.” Whilst he raised these kinds of client-funder disputes as a very real possibility, Williams suggested that it is unlikely to become “a massive long-term problem.” Discussing the other issues that may continue to arise from the Supreme Court’s decision, Williams predicted that defendants will be exploring every angle possible to have LFAs framed as DBAs, “because they want to strangle these things in their crib.”
Commercial Deals

Funders and Shareholders Partner to Hold Companies to Account on ESG Targets

The pressure on companies to achieve tangible progress towards ESG goals has never been more pronounced, with stakeholders in the public and private sectors looking for corporations to make good on their promises. Investors are increasingly playing a key role in holding these businesses to account, with litigation funders becoming a key ally, allowing investors to apply new pressure through lawsuits. Reporting from Bloomberg and shared on Claims Journal, explores this evolving dynamic between shareholders and litigation funders, as companies’ turgid pace of progress on ESG targets is leading investors to see legal action as their most viable option. According to James Alexander, CEO of the UK Sustainable Investment and Finance Association, shareholder frustration across many sectors has created “a real appetite for litigation.” Speaking from the funder’s perspective, Woodsford’s head of business development, Mitesh Modha, explained that their approach works because it offers investors “an escalated and collective engagement with your investee company — to achieve compensation and to seek to deter future wrongdoing.” This impact agenda is further reflected in funders like Aristata Capital, who have been launched with a dedicated focus on driving positive social and environmental impact. Aristata’s CEO, Rob Ryan, highlighted that legal funding is becoming “an attractive and growing asset class.” Alexander noted that this trend does not appear to be a fringe focus for shareholders, stating that this kind of litigation appears to be a ““key part of the investor engagement process.” Sonali Siriwardena, head of ESG at Simmons & Simmons, also raised the point that these funded cases are not solely about achieving a successful resolution, as they also have a “very clear reputational impact and damage” on the target companies.
Commercial Regulatory Issues

LF Dealmakers Panel: The Great Debate: Trust and Transparency in Litigation Finance

The day’s featured panel included a discussion around ethical challenges and conflicts of interest, impacts on attorney-client relationships, developing a regulatory framework, and balancing the benefits vs. the risks of litigation funding. The panel consisted of Nathan Morris, SVP of Legal Reform Advocacy at the U.S. Chamber of Legal Reform, Charles Schmerler, Head of Litigation Finance at Pretium Partners, Lucian Pera, Partner at Adams and Reese, and Maya Steinitz, Professor of Law at Boston University. The panel was moderated by Michael Kelley, Partner at Parker,Poe, Adams and Bernstein, LLP. This unique panel was structured as a pair of debates (back-to-back), followed by an open forum involving panelists and audience questions. The first debate was centered around the question of ‘what is litigation finance?’ Essentially, what constitutes third-party financing, what are the key components that make up a litigation funder, and how should we define the practice? Some key takeaways from this part of the discussion:
  • Insurance carriers haven’t been classified as third-party funders, but essentially that is what they are doing
  • A secured bank loan to a law firm is not what we talk about when we talk about litigation funding. So, financing a litigator is not necessarily litigation finance. Litigation funders offer financing related to the litigation, making them an interested party in the litigation., in contrast to a disinterested bank
  • Law firms acting on the contingency model can indeed be classified as litigation funders
  • Litigation funding doesn’t even have to be for profit. Famously, Peter Thiel funded Hulk Hogan’s litigation against Gawker, and it is unclear if there was any profit participation on Thiel’s part, though his likely motivation was revenge (or perhaps justice) after Gawker previously outed him as gay
  • Context matters, especially when we consider how we define litigation finance for the purpose of regulation
The question then came: Is a legal defense fund a litigation funder? It files briefs, and somebody must pay to have those briefs filed. So should their donors be identified? This question led to a robust debate between moderator Michael Kelley and Charles Schmerler over whether the Chamber of Commerce should be classified as a litigation funder. After all, the Chamber accepts donations and then uses its capital to file claims—so would donors to the Chamber be considered litigation funders? Schmerler noted that causal litigation is different from commercial litigation—especially from a public policy perspective. So conflating them under the semantic of ‘litigation funding’ isn’t as useful, even if they can each be technically classified as litigation funding. That robust discussion gave way to the second debate, which focused on disclosure, and control and conflicts in litigation finance transactions. Kelley asked Nathan Morris why he supports disclosure in litigation funding matters. Morris feels that the purpose of disclosure is to understand the nature of the involvement of the funder, and such disclosures should be made, just as they are made in the case of insurance. It’s important to gauge a funder’s measure of influence, the structures and contours of their arrangement with the plaintiff, and how that might impact case decision. Maya Steinitz added that disclosure requires a nuanced analysis, in that impact litigation is different from commercial litigation, which is different from class actions. So identifying a clear line for disclosure leads to conflicting views, because people are responding to the idea of disclosure in different scenarios. Steinitz believes in a balancing test—what is in the best interests of the public, considering variables such as the type of litigation and motive of litigation? We shouldn’t draw a general rule on disclosure, but rather have a bespoke response based on several factors. Other panelists disagreed, believing that 'disclosure is a solution in search of a problem,' and that ultimately it will serve no benefit, as it is essentially impossible to determine how much control a litigation funder has over a claim, or whether the law firm in question is in dire need of capital and must therefore cede control to the funder. Morris' position remains that disclosure is necessary, and insists his views are not predicated on the desire to see the industry regulated out of existence, but rather to protect the public interest. The open forum portion led to some interesting discussion points, including:
  • Whether law firms in a funded claim have abdicated their independence to litigation funders
  • How ethics rules regulate litigation funders and funding agreements
  • Whether disclosure of the existence of funding can even identify any control issues in the case
  • The prospect of litigation being funded for purely financial (as opposed to meritorious) reasons
In the end, this was a very unique structure for a panel discussion, which led to a passionate and spirited debate by the panelists, as well as a thorough degree of engagement from the audience.
Announcements Commercial Legal Innovation

Community Fintech 11Onze Enters Litigation Funding for Housing Claims

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

LF Dealmakers Panel: Exploring Use Cases of Insurance Across the Litigation Landscape

A panel consisting of Rebecca Berrebi, Founder & CEO of Avenue 33, Daniel Bond, Senior VP of DUAL North America, Jarvis Buckman, Managing Partner at Leste, and Steven Penaro, Partner at Alston & Bird, discussed the intersection of insurance and litigation funding. The panel was moderated by Stephen Kyriacou, Managing Director & Senior Lawyer at Aon. Stephen Kyriacou opened by pointing out how litigation risk insurance began on the defense-side, yet plaintiff-side insurance solutions are now dominating the legal insurance space. Over 90% of Aon’s litigation policies are plaintiff side. He then began the discussion on the topic of judgment preservation insurance. Mr. Kyriacou introduced a hypothetical IP case where the funder and attorney each expect to earn $20MM, and the claimant will take home $60MM. The question was asked, why should funders or attorneys look to insure their award? Jarvis Buckman pointed out the risk mitigation strategy of protecting either part or all of his judgment, in order to take some chips off the table. Rebecca Berrebi added that having an insurance-backed return helps the company book those returns on the current books and not rely as heavily on the final outcome. So even when there is an expectation of collection, insurance can often make sense. Stephen Kyriacou then laid out the three components of a submission package (at least as far as Aon is concerned):
  • Case overview memorandum – Laying out counsel’s view of the strength of the judgment
  • The risk profile – What the risks of the claim are, and the likelihood of their outcomes
  • Aon’s perspective on the insurance – Explaining the motivations for seeking insurance, and the coverage being sought
Daniel Bond pointed out that there is alignment between how he approaches a claim with the process laid out by Stephen Kyriacou. He enjoys having that ‘new case feeling’ which you don’t often get as an attorney. The variability of outcomes provides multiple paths for underwriting, which is different than being an attorney and knowing that there is a binary outcome to your case. Mr. Bond noted that the process involves a lot of communication, to understand his counter-party and what their goals are, along with the business alignments and counter-party risks. Steven Penaro added that the matters have been heavily vetted by the time they get to his desk, as an underwriting counsel. So that implies that there is already a lot of clarification around where things stand. He studies the submission documents and develops an underwriting report and sets up an underwriting call, where the interested parties can discuss and ask questions. Typically, the process takes four to six weeks from when they get the first call until when the policy binds. Mr. Bond added that having people come in with a fresh set of eyes and ‘beat the hell out of the case’ at that juncture in its lifecycle is an extremely valuable process, even notwithstanding the insurance component. Just having experts evaluate the case is a powerful resource. The panel then covered how judgment preservation insurance might pay out, client interests around insuring legal claims, and how clients might pull proceeds from an insurance claim through insurance-backed judgment monetization. The panel offered a thorough deep dive into the insurance landscape—a topic that will no doubt be covered in future events, as these two industries continue to collaborate on mutually beneficial products and services.
Commercial Deals

LF Dealmakers Panel: Ask the Experts: An Insider’s Approach to Getting the Best Deal

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

Understanding the Intersection Between Litigation Funding and ATE Insurance

The combination of third-party litigation funding and After The Event (ATE) insurance can be a powerful tool for lawyers and clients, allowing them to pursue meritorious cases whilst lowering their overall litigation risk. However, in order for these partnerships to succeed, it is vitally important that each party understands the others’ priorities and concerns. A post from Harbour Underwriting provides a recap of a recent panel discussion on ‘The litigation funding and ATE insurance lifecycle: A roadmap to success for lawyers and clients’, hosted at Miller Insurance’s London office. The panel included Harbour’s own managing director and underwriting director Rocco Pirozzolo, joined by Nick Pontt, managing director at Locke Capital, and James Gowen-Smith, head of ATE insurance for Miller Insurance. Discussing the importance of commerciality when it comes to selecting cases, Pontt explained that funders are likely to reject an opportunity based on “enforcement, duration and an alignment between budget and quantum.” Gowen-Smith built on this point from the broker’s perspective and emphasized that “proportionality is the key word: the cost to quantum ratio”, meaning that smaller cases can create difficulties. Harbour’s Pirozzolo highlighted that an undervalued aspect is understanding the level of risk a client is willing to expect, noting that he finds it to be a “struggle when a lawyer says their client doesn’t need litigation insurance or funding.” In his view, this is one of the areas where utilising a broker’s services can be incredibly useful. Furthermore, Pirozzolo argued that there is a false assumption that clients only use outside funders when they lack capital, whereas it is often the case that “many clients have the money but are happier using someone else’s as it’s an efficient way to run their business.” The panel’s participants also discussed the importance of planning and preparation when it comes to the use of litigation funding and insurance, with each party needing to understand every aspect of the case before deciding whether it is the right opportunity to pursue. Pontt highlighted that this also works in reverse for lawyers when approaching funders and insurers, as they should have a solid understanding of their own priorities and processes.
Commercial Regulatory Issues

Law Professor and Funder Offer Response to House Hearing on Litigation Funding

Although calls for the regulation of third-party litigation funding are neither new nor uncommon, as LFJ reported earlier this month, a hearing in the US House of Representatives placed these familiar critiques within an explicitly political lens. In an op-ed for The Hill, Suneal Bedi, assistant professor of business law and ethics at Indiana University’s Kelley School of Business, and William C. Marra, director of litigation funding at Certum Group, provide a response to the recent Congressional committee hearing on litigation funding.  At its latest hearing, the House Committee on Oversight and Accountability’s leading members suggested that third-party funding posed a threat to the American legal system and encouraged frivolous lawsuits. However, Bedi and Marra suggest that litigation funding is actually “more likely to expedite case resolution, reduce litigation spend, lower the cost of legal services, and deter frivolous lawsuits.” The authors argue that this position is reinforced by the latest scholarship, citing a recent paper titled ‘Financing the litigation arms race’, which was published in the Journal of Financial Economics.  Bedi and Marra explain that the paper’s ‘game theoretic model’ found that the presence of third-party funding would discourage defendants from trying to prolong the litigation or pile up exorbitant costs, because the funder ensures that a plaintiff cannot be bullied into submission due to a lack of funds. Furthermore, they argue that increased competition from litigation funders should lead to an overall decrease in the cost of legal services.  Addressing the idea of funders backing frivolous lawsuits, Beddi and Marra highlight that the same paper backed up the natural conclusion that a funder who focused on frivolous cases would quickly go out of business.  In the conclusion to the op-ed, Beddi and Marra also reference their own paper in the Vanderbilt Law Review, which found that “litigation funding likely results in a net increase in welfare”. They argue that lawmakers should properly evaluate the existing research and scholarship into litigation funding, before enacting regulation that harms the very legal system they are looking to protect.
Commercial

Burford Co-COO Discusses the Evolution and Future of Litigation Funding

The frequent calls for more stringent oversight and regulation of litigation funding across various jurisdictions can be viewed as a recognition of the fact that the industry is increasingly becoming a staple feature of the legal market. This view has been reflected in a recent discussion with one of Burford Capital’s most senior leaders, emphasizing that legal finance is continuing to move towards ubiquity. In an interview with the ABA Journal, David Perla, co-chief operating officer at Burford Capital, discussed the evolution of the litigation finance industry over recent years, as well as Burford’s recent research into in-house counsels’ litigation strategy, and the recent victory for Burford in the YPF-Argentina case. Looking at the transformation of legal funding during his time at Burford, Perla noted that it has moved from being a niche part of legal services, to now “being more mainstream and part of the conversation in the broader legal market.” Even though litigation funding still retains many detractors and those who call for increased regulation of the practice, Perla argues that overall, it has become “significantly less controversial or contentious” Perla suggests that this broadly more mainstream view of third-party funding has also transformed the way clients look at Burford and other funders, seeing them not just as a source of capital, but providing clients with “a trusted partner, the same way they have bankers and financial advisors.” As a result of this wider understanding and adoption of litigation finance, Perla predicts that in the future we will see “legal finance moving into ubiquity, where CFOs, GCs and heads of litigation in any case that is complex and expensive will consider the use of financing.”
Case Developments Commercial

Burford Capital Moves to Secure $16 Billion Award from Argentina

The case of Petersen Energia Inversora SAU. v. Argentine Republic has already become one of the biggest stories in litigation finance this year, with Burford Capital’s financing of the lawsuit against Argentina leading to a $16 billion judgement from the US District Court. However, as many speculated at the time of the award, one of the biggest challenges in this case was yet to come, as Burford would be faced with the enormous difficulty of collecting on this massive award.  Reporting by Bloomberg Law reveals that Burford Capital is indeed moving quickly to secure the collection of its $16 billion judgement from the Argentine government. The article explains that just last week, Burford sent a letter to US District Judge Loretta Preska, asking the court’s permission to begin attaching Argentine assets and collect on the multi-billion-dollar award, starting from October 16th. In their explanation for this swift move to attach assets, Burford’s lawyer, Randy Mastro cited a recent interview with a government official to argue that Argentina has made it clear that it “has no intention of paying the judgement, and it would be spurious for Argentina to suggest otherwise.” In an interview conducted earlier this month with Bloomberg Television, Burford’s chief investment officer, Jonathan Molot claimed that they appreciated “the challenges that Argentina faces” in paying the $16 billion award.