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Commercial Deals

Manolete Partners Targets UK Companies who Misappropriated Covid Loans

Governments across the world responded to the Covid pandemic with varying levels of economic support for domestic businesses, with the UK government providing loans to companies to improve their financial recovery. However, one UK funder is now funding claims against business owners accused of misusing these loans. Detailed by reporting in The Law Society Gazette, Manolete Partners is already working with Barclays Bank on a pilot programme to recoup the funds that were misappropriated during the Bounce Back Loan Scheme (BBLS). Manolete is pursuing 102 cases as part of this initial partnership with Barclays, through which the funder will take a fixed return on any recoveries made by the bank. Manolete’s CEO, Steven Cooklin, has stated that the funder is looking to work with other banks and lenders who also have claims against loan recipients. He also implied that these efforts may not be limited to the BBLS, with Manolete seeing promising opportunities to fund other recovery claims against those who abused any of the government’s financial support programmes during the pandemic.
Commercial Legal Innovation

Bloomberg Research Indicates Litigation Finance Industry Set to Grow in 2023

Despite global economic instability, litigation finance has been touted by industry leaders as a resilient industry that remains insulated from market fluctuations, and stands out as a lucrative alternative investment. New research from Bloomberg indicates that the industry is still in a period of growth with further room to expand, but in doing so, will have to tackle ongoing concerns around disclosure and transparency. A new article by Bloomberg Law analyzes the results of its 2022 Litigation Finance Survey, which found that while a minority (10%) of lawyers have used or considered litigation finance, a third of these legal professionals indicated they are more likely to utilize third-party funding than they were in 2021. The survey’s results also indicated future growth on the horizon, with three-quarters of respondents who had previously accessed outside funding saying they would likely do so again. Funders remain confident that in spite of ongoing economic turbulence, three-quarters of the funders surveyed expected their deal volume to rise even if there was a further economic downturn in 2023. This expected appetite for litigation funding during a potential recession was also reflected in the fact that a third of funders believed they would raise additional capital if the economic situation continues to deteriorate. However, Bloomberg identified increasing calls for disclosure as a key issue in the litigation funding industry. According to the survey, industry participants are divided on the necessity of mandatory disclosure for funding agreements, with 50% of lawyers agreeing that this should be mandated, whilst over 75% of funders opposed such a requirement. Despite this opposition, the survey found that funders are coming to terms with this reality, as the number of firms who said they have never disclosed a funding agreement dropped from 30% to 10% in the last year.
Case Developments Commercial

Nigeria Loses Funded Claim Against Shell and Eni

While the majority of lawsuits between corporates and national governments tend to see litigation funders working with the corporate party, there are examples of states seeking third-party funding to finance their own claims. However, gaining the backing of a funder is no guarantee of success, as was recently the case with a claim by the Nigerian government failing to secure damages. Outlined in an article by Energy Voice, an Italian appeals court in Milan denied the Nigerian government’s request for over $1 billion in damages against Shell and Eni. The dispute with these energy companies concerned the OPL 245 scandal, in which the two companies were accused of bribing senior government officials to secure drilling rights to the OPL 245 block of water. The Nigerian government’s case was funded by US litigation funder, Drumcliffe Partners, who according to reporting, could have received in excess of $350 million return on its investment. Nigerian officials have said that they will appeal the ruling to Italy’s administrative court, whilst Eni is engaged in arbitration at the International Centre for Settlement of Investment Disputes (ICSID) to secure rights to the OPL 245 area.
Commercial Regulatory Issues

New Zealand Funders Call for Changes to Method of Awarding Costs

The primary benefit of litigation funding for plaintiffs is the ability to seek justice where they lack the capital to cover the costs involved in the process. However, the current system of awarding costs in New Zealand has come under criticism from a leading funder, who argues that the current method of costs being awarded on a scaled basis incentivizes delaying tactics from defendants and fails to deliver adequate restitution to successful litigants. In a press release, LPF Group argued that unlike the UK and Australia where costs are awarded on an indemnity basis, New Zealand’s current model negatively impacts both plaintiffs and the overall court system, which is being bogged down by defendants looking to draw out the process for as long as possible. If full recovery of costs was adopted, LPF said, then defendants would be discouraged from utilizing delay tactics and plaintiffs would receive proper compensation when their cases are successful. LPF’s CEO, Phil Newland, stated that this would not be a one-sided solution, as it would also benefit defendants who are cleared of wrongdoing in court and would represent another disincentive for parties who would bring frivolous or baseless lawsuits. While the courts should still retain the authority to award lesser costs, Newland argued that everyone in the legal industry, including insurers, should support this change that would continue the process of widening access to justice.
Commercial Deals

US Funder Makes the Argument for Financing Law Firms  

With recent developments in a small number of states in the US, namely in Arizona and Utah, the possibility for non-legal entities to own or found law firms is becoming a more tangible possibility for those with the capital to do so. When paired with the explosive growth of litigation funding, one leading US funder suggests that the industry should look for investment opportunities that go beyond cases, and instead fund law firms themselves. Writing in the New York Law Journal, Joshua Libling, director of risk analytics at Validity Finance, argues that ‘financing the business of law itself’ is the next step in the natural evolution of third-party funding. Just like traditional litigation funding, this type of investment would seek returns from fees earned pursuing successful litigation cases, but in this scenario, the collateral could include contingency and hourly fees. Libling argues that whilst case-led litigation financing is a great method for supporting plaintiffs and seeking returns, by supporting law firms with broader investment, funders can enable growing firms to improve and innovate on a larger scale. Whilst the risks are more varied in this scenario, Libling notes that this kind of action is not an equity investment, but a broader partnership between a funder and the law firm. In alignment with the wider goal of widening access to justice for individuals and entities who lack the necessary capital, Libling points out that this kind of funding would do the same for lawyers who might otherwise struggle to access the necessary levels of investment to launch their practice.
Commercial Deals

Woodsford Discusses Approach to IP Litigation Funding

There has been much commentary in recent months on the role of litigation finance for intellectual property disputes, as it continues to represent a large share of all third-party funding commitments. In a new podcast, Woodsford shared its perspective on this area of funding, breaking down why litigation funding is so sought after in this industry, and what types of cases funders will pursue. In the latest episode of the On Intellectual Property podcast, Jeff Harty interviewed Robin Davis, chief investment officer, and Bob Koneck, director of litigation finance at Woodsford. Davis explained that the ‘basic but unfortunate truth’ is that IP litigation is extremely expensive because of the need for expert witnesses, technical analysis and even the fees for IP specialist lawyers, due to their own technical expertise and training. As a result, litigation funding has emerged as a unique solution to solve the capital needs of potential plaintiffs. Discussing how Woodford evaluates and selects IP cases, Davis highlighted that the main criteria for the funder is that the expected damages from a successful outcome must have a 10:1 ratio over the commitment required. She noted that when looking at the whole array of actions, patent and trade secrets litigation tend to meet this bar more often than trademark disputes, and that cases with multiple patent infringements are often the best opportunities. Responding to the oft-stated criticism that litigation funding encourages patent troll litigation, Davis argued that Woodsford’s ESG and access to justice priorities align with inventors and small companies who have been infringed by large corporates. However, the funder also works with larger private and public companies who have had their IP infringed, as third-party funding can alleviate cost pressures for legal departments at these businesses.
Commercial Regulatory Issues

Omni Bridgeway Analyzes Potential Pathways for Irish Legislative Reform

As reported by LFJ in September, the Irish government announced plans to introduce legislation permitting litigation funding for international arbitrations and disputes. However, the exact roadmap for what kind of regulatory system will be adopted is yet to be defined, as we wait to see which other jurisdiction Ireland will emulate. A recent piece of analysis by Camilla Godman, Investment Manager at Omni Bridgeway, outlined the various factors that may be at play in the formation of Ireland’s new regulatory regime. Godman suggests that beyond any initial legislation passed to define this new structure, it will be up to the Irish courts themselves to further refine and interpret how it is to be applied and which cases could benefit from the new rules. One significant question that Godman explores is to what extent the new legislation will detail requirements around third-party funding agreements and the operations of funders within the country. Godman contrasts the system in the UK where funders are mostly self-regulated, versus that of Singapore, which has specific guidelines for the types of organisations that can fund cases.  Finally, this analysis raises the added influence of the European Union, which may lead to Ireland legalising the use of litigation funding in a broader range of cases, but will also be affected by the ongoing regulatory developments since the approval of the Voss Report proposals, earlier this year.
Announcements Commercial Deals

M&A Dispute Volume Is Rising in Climate of Economic Uncertainty and Geopolitical Upheaval, BRG’s 2022 M&A Disputes Report Finds

Mergers and acquisitions disputes accelerated in 2022 even as deal activity slowed, with the darkening economic outlook expected to fuel further disagreements over deals in the coming year, according to the 2022 M&A Disputes Report from Berkeley Research Group (BRG) released today.

Now in its third year, the report examines the global M&A disputes landscape and features qualitative and quantitative research from some of the world’s leading deal and disputes experts. The latest survey found that macroeconomic concerns are surpassing COVID-19 disruptions as primary dispute catalysts, a trend that dealmakers, lawyers and private equity executives expect to extend into 2023.

Continuing last year’s global scope, the 2022 report examines M&A dispute activity and insights from the Europe, Middle East and Africa (EMEA), North America and Asia–Pacific (APAC) regions, investigating recurring themes while posing additional questions and revealing new trends as the pandemic’s effects begin to subside.

The report draws from a quantitative survey of 181 lawyers, private equity professionals and corporate finance advisors, with additional perspectives from more than 20 of the world's top lawyers and experts working in M&A, disputes and private equity. Outside contributors come from leading firms including Quinn Emanuel Urquhart & Sullivan, Jones Day, Hogan Lovells and Linklaters.

Key takeaways include:

  • The dispute pace likely will pick up in the coming year amid continued market volatility due to concerns over inflation and a possible recession, as well as geopolitical uncertainty and lingering effects of COVID-19.
  • Financial Technology (FinTech), Energy & Climate and Traditional Financial Services are the top-ranked sectors for increased dispute activity in 2022. Respondents expect the Construction & Real Estate sector to take the lead in 2023.
  • Environmental, social and governance (ESG) disputes are brewing as regulations take shape and businesses strive to meet evolving, multifaceted ESG criteria.
  • EMEA is the region expected to drive dispute activity in the coming year, with strict regulatory regimes and political strife seen as significant disruptive factors.

The report examines how rising concerns around the volatility of markets and political upheaval are influencing M&A deals and dispute behavior. BRG’s research found that the dramatic events of the past year—including the energy crisis in Europe and elsewhere, falling stock prices and real-estate market disruptions—have shifted the sectors experiencing the most disputes compared to 2021, when COVID-19’s effects heavily impacted hospitality, life sciences and technology. The report also tracks steps that lawyers and advisors are recommending to reduce the likelihood of disputes, such as a greater emphasis on conducting enhanced due diligence while deemphasizing material adverse change and material adverse effect clauses for sellers.

"With geopolitical tensions, macroeconomic concerns and lingering COVID-19 disruptions impacting increasingly complex M&A deals, this report emphasizes the need for a clear understanding of the fundamental issues driving disputes. A multidisciplinary approach will be required to address these challenges effectively," said BRG Managing Director Mustafa Hadi. “The data and expert analysis collected within the 2022 report offer deep insights on the volatility and uncertainty that will drive disputes in the months ahead.”

Download a copy of the 2022 BRG M&A Disputes Report.

About BRG Berkeley Research Group, LLC is a global consulting firm that helps leading organizations advance in three key areas: disputes and investigations, corporate finance, and performance improvement and advisory. Headquartered in California with offices around the world, we are an integrated group of experts, industry leaders, academics, data scientists and professionals working across borders and disciplines. We harness our collective expertise to deliver the inspired insights and practical strategies our clients need to stay ahead of what's next. Visit thinkbrg.com to learn more.

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Commercial

Woodsford Outlines the Benefits of Litigation Finance for Corporates

An increasingly common talking point among litigation funders is that in-house counsels and CFOs are growing more open to using third-party funding when pursuing legal action. However, as LFJ recently reported, one of the biggest hurdles for funders to overcome when persuading corporates to consider outside financing is the difficulty in demonstrating what the tangible benefits are for these businesses beyond shifting legal costs off the balance books. In an article for Reuters, Bob Koneck and Alex Lempiner of Woodsford, outline what they see as the key advantages for corporates utilising third-party funding. Firstly, the authors highlight the ability to lower the risk of pursuing costly litigation in a time of financial strain, referencing a survey from Burford Capital that showed nearly 50% of companies avoided pursuing legal judgments in 2022 as a result of cost. Additionally, funders are often experienced in facilitating alternative fee arrangements with a company’s outside law firm, going beyond simply reducing flat costs as a reason for pursuing litigation. This reduction in costs is also beneficial as it frees up an in-house legal department’s budget to be spent on important operational modernisation, and in onboarding technological advancements.  Woodsford also raises the value of expertise a funder can bring when evaluating whether a claim is even worth bringing in the first place. Whilst litigation finance primarily assists by providing capital, this argument reinforces the idea that in order to demonstrate value to corporates, funders must move beyond their most direct value proposition.
Announcements Consumer

MedResolve Offers Unique and Innovative Personal Injury Legal and Medical Funding Products

Harrison, New York based Altuitive Partners LLC (Altuitive), an investment management company led by alternative investment veteran, Robert Cannon CFF, MBA, AIFA, announces the launch of MedResolve, a litigation financing company dedicated to providing funding solutions to personal injury plaintiffs, healthcare professionals and attorneys. The company was founded by a group of dedicated professionals with decades of experience in finance, law and health care services, resulting in an unrivaled offering of services. Spearheading the day to day operations of the Company is Richard Berman, who brings more than 15 years of experience, both in the legal field, and since 2016, as an underwriter and originator of nearly $100 million in personal injury litigation fundings on thousands of underlying cases. Being injured in an accident can be a life altering experience, causing disruptions such as lost time from work, long-term disability and the need for specialized medical care. MedResolve helps alleviate this burden and allows personal injury plaintiffs to turn a portion of their future settlement into cash by offering non-recourse advances for life needs, expenses and true to the company’s name, surgical advances to help uninsured patients fund the cost of surgery that is related to the ongoing case. Unlike traditional loans, these fundings are structured as purchases of the plaintiff’s future settlement or award. MedResolve also helps medical professionals who treat injured plaintiffs and the attorneys who represent such injured plaintiffs accelerate the collection of a portion of their medical bill or legal fee receivables by offering practice-specific factoring and revenue cycle management solutions to normalize income streams and help these professionals grow their business. To learn more about MedResolve and its personal injury funding solutions for plaintiffs, doctors and lawyers, please call (866) 744-5242 to speak with a funding representative. Or visit www.med-resolve.com.
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Commercial Regulatory Issues

Chamber of Commerce Claims Litigation Funding Represents Threat to National Security

While litigation funding is seen by many as a vehicle for widening access to justice and changing the balance of power in favour of consumers and plaintiffs who lack the capital to seek legal redress, there are institutions who view it as a nefarious influence on the legal system. The U.S. Chamber of Commerce has recently reemphasised its opposition to third-party funding, with the release of a report questioning the national security risks of litigation finance. Outlined in an article by Reuters, the report produced by the Chamber’s Institute for Legal Reform, claims that the intrusion of third-party funding into American litigation could allow foreign adversaries to damage the United States through funded litigation. In particular, the report suggests that foreign funders could influence litigation designed to sow division in the country, or gain access to confidential corporate information through these lawsuits. The report, which was written by four attorneys at Skadden, Arps, Slate, Meagher & Flom, proposes that foreign funders be required to register under the Foreign Agents Registration Act (FARA). The Chamber also continues to seek wider regulation of the industry with a focus on increasing disclosure requirements for all funders.
Commercial Regulatory Issues

ICSID’s Secretary-General Reflects on Developments and Rule Changes for Third-Party Funding

International arbitration and dispute resolution remains one of the most complex and wide-ranging areas which litigation funders are involved in. The International Centre for Settlement of Investment Disputes (ICSID) sits at the heart of this activity, and its leadership is well-placed to observe the latest developments and trends, as demonstrated by a recent interview with ICSID’s secretary general. On the latest episode of D.C. Bar Communities’ The Tea on International Arbitration podcast, Meg Kinnear, secretary-general of ICSID, was interviewed by Nicole Silver, investment manager at Validity Finance, and Gaela Gehring Flores, partner at Allen & Overy. Looking back on her tenure over the last 13 years, Kinnear points out that ICSID’s membership has grown from 143 to 158 states in that time, which has also been reflected in the volume of caseloads. Reflecting on backlash against ICSID from political figures in the US, Kinnear stated that most of these perspectives are a result of misinformation or a simple lack of information, especially with common myths such as states always being on the losing end of this type of arbitration. However, in recent years Kinnear believes that there has been somewhat of a change in broader opinions, and that while the system is continually evolving and improving, state perspectives are becoming more favourable. Discussing ICSID’s new rules, especially in regard to transparency and disclosure of third-party funding, Kinnear highlighted that having last been amended in 2006, these rules were overdue for a change. Litigation funding was a key area of consideration, with Kinnear making it clear that it was not ICSID’s role to condemn or endorse third-party funding. Kinnear also reiterated that the main focus for this rule was to avoid conflicts of interest, not to enhance disclosure or discovery.
Commercial Deals

Leading Indian Funder Promotes Utility of Litigation Finance for Homebuyers

Recent regulatory developments by the Insolvency and Bankruptcy Board of India (IBBI) have altered the legal status of homebuyers, to now be counted as ‘financial creditors’. As a result, those purchasing homes can go to the National Company Law Tribunal (NCLT) to seek resolution of any disputes with sellers or builders, opening a new avenue for litigation funding to provide support to consumers. Writing for the Financial Express, Kundan Shahi, CEO of LegalPay, highlights that homebuyers in India have traditionally faced a litany of legal issues when purchasing, but previously have not had the legal status or the capital to seek redress. However, under these reformed rules, Shahi believes that homebuyers should take advantage of third-party funding to resolve such disputes without incurring further expenses or additional risk. In particular, Shahi notes that in situations where there are ongoing delays due to real estate developments being behind schedule or facing further complications, buyers can seek compensation. Additionally, he raises the key point that even where buyers had legal redress previously, their lack of funds meant any chance of seeing an expedited resolution in the court system was slim. Yet with the help of funders, consumers can achieve a faster resolution.
Commercial Deals

Litigation Funding as an Antidote to Fraudulent Insolvency Practices

The ongoing fallout from the pandemic has seen a rise in insolvencies, and with that rise, there have been numerous examples of companies unlawfully restructuring in order to avoid compensating creditors. Litigation funders can provide a valuable antidote to this kind of fraudulent behavior and enable creditors to seek justice. Speaking with the Financial Times, Gwilym Jones, director at Henderson & Jones, highlights that liquidators are often left powerless in these situations and lack the capital to dedicate to an investigation. However, by bringing the option of third-party funding to the table, creditors can provide a tool to balance the equation and identify what assets can potentially be recovered. Jones points out that some liquidators may lack the experience, or may be initially hesitant to approach a funder, therefore it may be up to creditors to either suggest this approach or to contact the funder to reach out to the liquidator. However, Jones argues that the communication between creditors and funders should not end there, as they may be able to provide valuable insight and information that could guide potential future litigation.
Commercial Regulatory Issues

Patent Counsel Argues Litigation Finance is Exploiting Weak Patent Approvals

There has been plenty of commentary in recent months arguing that litigation financing has revolutionized the patent dispute market, providing an invaluable asset to inventors and patent holders who have been unjustifiably exploited by corporations. However, this viewpoint is not unanimously held, and some industry figures believe that the presence of third-party funding is doing more harm than good. In an opinion piece for Bloomberg Law, Joshua Landau, patent counsel for the Computer & Communications Industry Association, argues that the vast number of low-quality patents granted every year has created a fertile market to be exploited by ‘non-practicing entities’ (NPEs). He claims that funders and investors are able to use these overly broad patents to sue businesses, with the primary aim of securing a return on investment rather than protecting intellectual property. In Landau’s opinion, another major issue with these funded lawsuits is the lack of transparency, something that has become a regular topic in patent disputes in the US where funders are involved. He claims that where funders are not visible to the courts, it allows litigants to represent themselves as small inventors taking on large corporations, rather than being backed by equally large financiers.
Commercial Deals

How the Time Value of Litigation Should Influence Investment Decisions

When considering the pros and cons of engaging in litigation, the issue of costs cannot be considered without also factoring in how long the process could take. As a result of systemic backlogs and inefficiencies, the ability to accurately assess the ‘time value of litigation’ is paramount when determining the appropriate quantum–an in turn, whether an investment in the claim is warranted.  In a new piece of analysis for Thomson Reuters’ Dispute Resolution Blog, LionFish’s managing director, Tets Ishikawa, provides an in-depth look at the mathematical breakdown of this concept. At the centre of the argument is the idea that the further prolonged the litigation process, the more the present day cost value is diminished.  Ishikawa argues that through this model, it is plain to see why defendants can and do seek to extend the duration of litigation processes, as they are in fact arbitraging the time value of litigation. In his view, it is symptomatic of a wider issue in the legal system, one which encourages parties to commit wrongdoings and pay for their misdeeds later at a lower value than if they were brought to justice more swiftly.
Consumer

Litigation Funding has Upended the Balance of Power in Medical Malpractice Cases

One area of litigation funding that receives less time in the spotlight but carries great importance is in the realm of medical malpractice and personal injury cases. According to industry insiders, the emergence of third-party funding for these types of claims has dramatically reoriented the balance of power away from medical insurers and into the hands of individual plaintiffs. Speaking with South Florida Hospital News and Healthcare Report, Matt Gracey, managing director of Danna-Gracey, points out that litigation finance allows claimants to fight cases they wouldn’t otherwise have the capital to sustain, and then avoid settling early where cases may have prolonged timeframes. He goes on to argue that this development should not only be a concern for doctors, but any other commercial entities that could be targeted with litigation funded by third-parties. Gracey highlights the important statistic that insurance companies were previously winning 85-90% of cases brought to trial, yet in instances where a plaintiff has the support of a litigation funder, plaintiffs are now winning by the same landslide ratio. He states that insurers must continue to analyse the types of cases that funders are having successful returns on in order to be better prepared, and must also realise that doctors must evaluate the financial capabilities of their insurers to make sure they can measure up against this new force of capital for plaintiffs.
Commercial Deals

Scotland Represents Potential Growth Jurisdiction for Class Actions

The rise in the volume of class actions in Europe has shown no sign of slowing down in recent years, with more and more cases demonstrating the possibility of success, especially for consumers bringing legal actions against multinational corporations. With this growth, litigators and funders alike are keen to pinpoint jurisdictions where this success can be built upon. Writing for Lawyer Monthly, Richard McMeeken, a partner at Morton Fraser Lawyers, argues that Scotland may be the next country to see an explosive rise in class action activity. He identifies the three key factors that could fuel this growth: the relatively low cost of bringing class action claims, the low adverse costs risk and the presence of a mature litigation funding industry. When it comes to the final factor, McMeeken states that Scotland benefits from the lack of legislative and regulatory restraints on the use of third-party funding in this type of litigation. This is further supplemented by the use of After The Event (ATE) insurance, which can provide additional security for claimants where there is the risk of adverse costs order. However, McMeeken explains that Scotland has not yet seen the kind of activity present in other jurisdictions, due to the fact that the Scottish legal system has only recently adopted procedures for these types of proceedings, and as of today, has been restricted to opt-in class actions. McMeeken expects that if courts are able to replicate this openness in regards to opt-out cases, and as the system becomes more familiar with a broader swathe of class actions, Scotland could see significant activity in the near future.
Announcements Commercial Legal Innovation

New research reveals growing business impact of in-house lawyers and legal departments as they increasingly generate cash recoveries

Burford Capital, the leading global finance and asset management firm focused on law, today releases new independent research based on a survey of 300 GCs and heads of litigation in the US and UK that demonstrates the transformative way that GCs view legal department impact. GCs seek to add value to the business, and affirmative litigation recoveries play an increasingly important role. GCs also see a role for their law firm partners and for legal finance, especially in relation to fostering innovation and providing support for affirmative recovery programs.

Christopher Bogart, CEO of Burford Capital, said: “Burford’s latest independent research shows that GCs are determined for the legal department to increase their business impact. Legal finance can help them, and the research shows that GCs are increasingly open to cost- and risk-sharing with third parties and that law firms need to be ready to talk to clients about this solution.”

Among the core findings of the research:

  • GCs are ambitious for the legal department’s impact in generating liquidity and transcending its traditional understanding as a cost center.
    • Over half (54%) say the legal department is understood to add value to the business by pursuing recoveries through litigation or arbitration.
    • An even larger majority (69%) say identifying new ways to add value to the business is the most important means by which in-house lawyers can contribute to the success of the company.
  • Still, many see opportunities to do more, specifically in adding value through meritorious affirmative recoveries.
    • Over half of those surveyed (51%) say they need to build infrastructure and process to add value through meritorious affirmative recoveries.
  • GCs expect law firms to be ready to provide guidance on value generation.
    • A solid majority (65%) say that receiving guidance from law firm partners about opportunities to innovate or add value to the business is one of the most important factors in individual GC success.
    • Six in ten say either that their panel litigation firms have spoken to them about legal finance in the last five years or that the firm’s doing so would have contributed to the company success.
  • Legal finance is poised to play an increasingly important role in GC success.
  • GCs see a role for legal finance, especially in relation to their affirmative recoveries.
  • Just under a third of GCs (27%) say their companies have used legal finance.
  • Similarly, almost six in ten say either that they reviewed legal finance partners in the last five years or that doing so would have contributed to the company’s success.

The 2022 GC Survey can be downloaded on Burford’s website, where full results are also available. The research report was conducted in June 2022 by GLG via an online survey, with responses from 300 US and UK GCs, heads of litigation and other senior in-house lawyers responsible for their companies’ commercial litigation.

About Burford Capital

Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its principal offices in New York, London, Chicago, Washington, DC, Singapore, Sydney and Hong Kong.

For more information, please visit www.burfordcapital.com.

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Commercial Deals

Patent Infringement Litigation Represents Major Growth Sector for LitFin

One of the largest areas of growth for litigation funding commitments is in the world of patent litigation, with patent infringement cases representing a lucrative world of disputes between patent holders, inventors and corporations. These funded lawsuits have become increasingly prevalent, yet with this activity has come an added layer of scrutiny as to the nature and origin of third-party funding. Reporting in Bloomberg Law details this trend, highlighting the recent case of VLSI Technology and Intel Corp., where Fortress Investment Group funded VLSI’s case and successfully secured a $2.18 billion verdict in its favour. Both parties are now set to appear before a federal district court, to examine whether VLSI sufficiently disclosed the financial backing it received. Regardless of the outcome of that case, it is expected that funders will continue to target similar cases, as Westfleet Advisors' managing partner, Charles Agee, points out that the costly and protracted timelines of these cases often could not go forward without third-party funding. Despite the expensive nature of patent infringement disputes, the possibilities of large payouts like the VLSI case make them an attractive proposition for funders. This viewpoint is reflected by other funders, with Burford Capital’s managing director, Katharine Wolanyk, stating that their firm receives more intellectual property-related requests for funding than any other area. Wolanyk also notes that this activity is now seeing patent owners exploring third-party financing much earlier in the process.
Commercial Regulatory Issues

Industry Leaders Discuss the Value of Disclosure

One of the hot topics of discussion for litigation finance leaders, regulators and commentators, is the extent to which disclosure of third-party funding needs to be mandated and enforced.  With numerous examples of judges highlighting this issue in ongoing cases, and legislators proposing reforms to disclosure rules, the debate appears to be growing in importance. Reporting by Law360 outlines recent comments from industry figures at a conference hosted by UC Hastings Law School in San Francisco. Speaking in favour of enhanced disclosure, Hausfeld’s global managing partner, Brent Landau, argued that requiring disclosure will actually benefit funders, as it will grant added legitimacy to the practice through transparency. Speaking from a funder’s perspective, Jiamie Chen, director of investor initiatives at Parabellum Capital, claimed that while funders are not opposed to certain disclosure, she believes that the idea of disclosure being used to unearth conflicts of interest is misguided, due to the fact that funders do not influence decisions during the litigation process or offer legal counsel. Bringing a different point of view, Judge Vaughn R. Walker, a retired US District Court Judge, pointed out that the existence of funding should not influence a court’s perspective, as any verdict or decision on awards should be made based on a case’s merit alone. This viewpoint was reinforced by Steve Weisbrot, the CEO of UK claims administrator Angeion Group, who argued that litigation funding has been a positive for the legal industry, as it has enabled lawyers without access to funds to fight cases that are ignored by larger firms.
Commercial Fundraising

North Wall Builds on Previous Successes with New €500 Opportunities Fund

With the ongoing economic instability and inflation pressures felt around the globe, investment firms are looking for alternative avenues to maintain returns and scale future growth. As a result, those firms willing to explore more niche opportunities including litigation finance are continuing to raise capital to take advantage. Reported by Bloomberg UK, North Wall Capital is a recent example of this trend, as it looks to raise €500 million to complete a second opportunities fund focused on the European market. North Wall’s chief investment officer, Fabian Chrobog, said that as opportunities in traditional markets remain restricted, the firm is looking for additional funding partnerships to exploit these alternative asset classes. The firm has already raised €250 million, with a significant portion committed by MLC, an Australian superannuation fund. On top of this second Europe opportunities fund, North Wall may soon look to build its third fund focused on litigation, having seen great success with its previous endeavours which included a £100 million commitment to the law firm PGMBM to fight high-profile ESG cases.
Commercial Deals

Pravati Capital’s CEO Discusses the Growth of Litigation Funding and ABS for Law Firms

As the litigation finance industry continues to mature, established leaders within the industry are now able to trace recent developments to the history of this niche area of financing. One such long-established figure, Alexander Chucri, founder and CEO of Pravati Capital, recently shared his thoughts on the most significant changes in litigation funding and what the future of third-party funding holds. Speaking with Dealmakers’ LINE magazine, Mr Chucri spoke about the transformation of litigation finance from a boutique world of small investments, to law firms being open to and eager for financing from firms like Pravati.  In particular, Chucri honed in on recent developments in certain states in the US around Alternative Business Structures (ABS) for law firms, which allows non-lawyers to participate in law firm ownership. While he sees the benefits for law firms seeking capital, Mr Chucri maintains that for a funder like Pravati, it is far more advantageous to invest in a firm through existing methods rather than risk the complications and potential conflicts of interest that come by taking an equity position. As for the future of the litigation finance industry, Mr Chucri sees no slowdown on the horizon and expects growth to continue as law firms and corporates will utilise this tool in their litigation arsenal with increasing frequency. He also highlighted the benefits of working with a dedicated litigation funder over a hedge fund, as the former can handle all case underwriting needs and therefore reduce the complications of sharing confidential data with third-parties.
Commercial Regulatory Issues

Omni Bridgeway Weighs In on New Zealand’s Proposed Class Action Reforms

As regulation continues to be the subject of debate in the litigation funding industry, the differences in approach across jurisdictions has shed light on wider issues of legislation covering litigation. In New Zealand, this has most recently manifested through the government’s review of its class action regime and the impact of litigation funding. In an article for BusinessDesk, Omni Bridgeway’s Gracey Campbell offers a funder’s perspective on the Law Commission’s report on class actions, released in June of this year. Their analysis praised the Commission’s recommendations for courts to oversee concurrent class actions, but argued that where concurrent actions do not include members present in both actions, then they should not be classed as competing actions. Furthermore, Campbell suggested that any kind of certification test would only increase the time and cost burdens on proposed class actions, without providing significant benefits. With regard to the Commission’s proposals for third-party funding regulation, the article praised the report’s view of funding as primarily existing to provide access to justice, as well as the decision not to impose any kind of mandatory level of returns to class action members. However, Campbell argued against the proposal of a ‘rebuttable presumption’ that funders would provide for security costs, and instead argued in favour of giving the courts the power and discretion to order this based on a case’s individual circumstances.
Commercial Deals

General Counsels Share Views on Third-Party Litigation Funding

A common refrain from leaders and commentators in the litigation funding industry is that one of the biggest developments that has fuelled growth has been the uptake of third-party funding by corporates. However, the exact type of situation and motivation for these large companies to engage funders is not so clear, and some in-house counsels are still struggling to see the benefits over self-funding. Reporting from the International Legal Finance Association’s (IFLA) inaugural conference, Legal Newsline, highlighted comments by general counsels (GCs) at some of America’s leading companies that suggest widespread acceptance is still not a reality. Rishi Varma, general counsel for Hewlett Packard Enterprise, acknowledged that while the industry has momentum, GCs still have concerns around undue influence and control by funders over the litigation process and settlement decisions. Looking at the issue from a different perspective, Raytheon Technologies’ chief litigation counsel, Steven Greenspan, argued that a large obstacle is the imbalance in returns that a funder may receive. Greenspan stated that a situation where the funder’s own returns outweigh the client’s is a major issue, therefore funders may need to explore structure agreements which see a more equal distribution of financial return if companies are to be enticed. However, not all GCs shared the same concerns and objections. Sandy Grimm, chief legal officer at Southeastern Grocers, highlighted the benefits of being able to shift costs off the balance book and reduce impact on the company’s budget. Grimm pointed out that being in an industry that primarily values a company’s EBITDA, the value of moving those costs away from the budget and onto a third-party does represent a major benefit.
Commercial

Legal 500 Releases Funder Rankings and Shares Industry Insights from Litigators

Legal 500 has announced its litigation funding rankings for 2023. This year sees the rankings expand to cover not only the top UK funders, but also the leading funders in the US market. In its article announcing the 2023 rankings, Legal 500 provided an update on the state of the market with insights from industry leaders and litigators in both regions. Diane Sullivan, a partner in Weil’s New York office, described how the size and breadth of the industry had grown, with funders now engaged in a wide variety of cases from patent litigation to mass tort cases. Commentary from litigators also stressed the importance of the relationship between law firms and funders, with Jonathan Sachs, partner at BDB Pitmans in London, highlighting the need for funders to trust solicitors and to avoid trying to control the litigation process as a third-party. Meanwhile, Hausfeld’s Lucy Rigby pointed out that funders now exist in a competitive market, and to stand out from the crowd, they must go beyond just providing capital and excel in terms of speed and transparency Legal 500’s finalised rankings for this year included ten firms in its UK listings, whilst its inaugural US rankings included nine funders. Burford, Harbour and Therium were all listed as tier one funders in the UK, and Burford repeated that achievement in the US, alongside Omni Bridgeway. It is worth pointing out that Legal 500 has yet to disclose its methodology for assigning funders to its various tiers.
Commercial Regulatory Issues

Deminor’s CEO Argues the EU’s Proposed Fee Caps Would Harm the Industry

As Litigation Finance Journal has reported in recent weeks, the response to the EU Parliament’s approval of the Voss Report has been largely negative from industry leaders across the continent. Whilst funders and law firms alike recognise the need for regulation and oversight, the specific proposals in the report have been criticised for addressing problems that don’t exist, and for a lack of empirical basis. In an interview with The Law Society Gazette, Deminor’s CEO, Erik Bomans, specifically took aim at the proposal to cap litigation funders’ fees to 40% of any awarded damages. Bomans argued that a hard cap like this would result in cases not receiving much-needed financing, as any funder must weigh potential returns against the inherent risks of a case which includes the possibility of exorbitant costs driven up by a prolonged process. Bomans reiterated the criticism of many industry leaders that the proposed changes represent an incomplete understanding of the third-party funding industry, with Bomans further comparing it to the actions of the US Chamber of Commerce, which has always opposed and lobbied against the industry. Bomans argues that there is no more pressure placed on a client by a funder than any normal relationship between a claimant and their legal counsel, citing the existing oversight in place from the courts themselves.
Case Developments Commercial

LCM Funds £900 Million Class Action Against Amazon

Class actions alleging anti-competitive behavior by corporations have become a frequent sight in the UK litigation space, with the Competition Appeal Tribunal as venue for these high-stakes showdowns between consumers and businesses. Many of these actions would not be possible without third-party funding, and last week saw yet another example, as Litigation Capital Management (LCM) announced the financing of a new claim against Amazon. Detailed in reporting by The Guardian, the e-commerce industry leader is facing a class action suit alleging that its ‘Buy Box’ feature misinforms consumers by highlighting products and sellers beneficial to Amazon, rather than promoting the genuine best deals and prices. Julie Hunter, the class representative for the case, argues that by putting either Amazon’s own products or retailers who use Amazon’s logistics services at the top of their online store, the company is using its dominant position to deny consumers’ fair choice. The CEO of LCM, Patrick Moloney, said that this case was the latest in a series of competition-related cases that the firm has funded, and that the funder would continue to support consumers in disputes in the UK. The £900 million class action covers all UK consumers who purchased products through Amazon since October 2016, and is an opt-out claim. Amazon’s representative denied any wrongdoing by the business, and stated that there was no merit to the claim, as the company has always supported independent sellers and therefore allowed consumers to choose from the best prices.
Case Developments Commercial

Woodsford Funds $1 Billion Class Action Against Toyota Australia

The Volkswagen emissions scandal of 2015 stands out as one of the largest automobile industry scandals in history, and one of the most notable examples of a corporation facing repercussions for violating environmental standards. In what may be a successor to that, Toyota is facing a major class action suit in Australia, alleging that it produced hundreds of thousands of vehicles with so-called diesel defeat devices (DDD). An article by Sky News Australia illustrates the scale of this class-action, which alleges that up to 500,000 vehicles may have been affected, with the prospect of a settlement that could exceed $1 billion. Maddens Lawyers Australia, which is bringing the action against Toyota, argue that Toyota’s conduct was both ‘misleading and deceptive’ and violated Australian Consumer Law. Brendan Pendergast, special counsel at Maddens Lawyers, argues that if the allegation is proven, then this would represent one of the largest class action successes in Australian history. The class action is being funded by Woodsford, as part of an ongoing push by the funder to back cases targeting ESG violations and open avenues for consumers who otherwise would lack the capital to seek legal redress. Charlie Morris, chief investment officer at Woodsford, states that this action is about offering justice to consumers who were deceived, as well as holding corporations to account where they deliberately act in a way that harms the environment. In a statement, Toyota Australia denied any wrongdoing and stated that all of its processes meet emissions standards, and that they will strongly defend against this class action.
Commercial Deals

New Law Firm Brings Together Transatlantic Expertise to Target Group Litigation

As Litigation Finance Journal heard at IMN’s conference this week, group litigation continues to be a growing market and one of particular interest to litigation funders in the UK and around the world. Therefore, it is perhaps no surprise that a new law firm has launched in the UK, specifically targeting this area of litigation. As reported in The Law Society Gazette, the launch of Lanier, Longstaff, Hedar & Roberts LLP represents a transatlantic partnership between two English barristers and a US trial lawyer. Mark Lanier, founder of The Lanier Law Firm, along with its chief operating officer, Kevin Roberts, represent the American side of this partnership. While both the UK founding partners, Tom Longstaff and Ducan Hedar, hail from Manchester-based Exchange Chambers and have both previously worked as solicitors at Linklaters. Mr Lanier stated that he views the UK as an ‘emerging market’ for the same kind of group litigation that has flourished in the US, whilst Mr Longstaff agreed that there is a great opportunity for UK litigators to learn lessons from legal actions in the US that seek to represent groups of consumers seeking justice. Now that the firm has been granted its license by the Solicitors Regulation Authority, it expects to announce its first case in November, and will continue to recruit staff for its office in Manchester.