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Commercial Regulatory Issues

Proposed Reforms to PTAB Include Third-Party Funding Disclosure

As intellectual property and patent litigation remain among the most active areas of interest for litigation funders, industry leaders will be watching carefully to see how the regulatory and oversight system continues to develop. Last week, the US Patent and Trademark Office (USPTO) announced an Advance Notice of Proposed Rulemaking (ANPRM), and is looking for public input across an array of proposed changes to proceedings taking place at the Patent Trial and Appeal Board (PTAB). Outlined in an article by Bloomberg Law, one of the key reforms put forward in the proposals includes changes to the “inter partes” review process, such as specifying who can request such a review and under what circumstances the PTAB will deny those reviews. Importantly for funders, another proposal looks to implement mandatory disclosure of any ownership interest or third-party litigation funding related to a patent, mirroring similar efforts to enhance funding disclosure in patent litigation. The USPTO’s director, Kathi Vidal stated in the April 20 press release: “Our goal is to better ensure our practices align with the USPTO’s mission to promote and protect innovation and investment, and with the congressional intent behind the AIA (America Invents Act) to provide a less expensive alternative to district court litigation to resolve certain patentability issues while also protecting against patentee harassment.”
Commercial Deals

Deminor Announces Global Strategic Partnership with the Grimaldi Alliance

The growth and maturation of the litigation finance industry has seen funders increasingly focused on building strategic partnerships with law firms and clients, rather than simply looking to grow the business through individual case investments. A tangible example of this shift in approach comes from leading funder Deminor, which has announced a strategic partnership with the Grimaldi Alliance. Detailed in an announcement by Deminor, the partnership will position the funder as the ‘partner of choice’ for the Italian law firm and its global network of partners. Deminor’s CEO, Erik Bomans praised the new partnership and stated: “Our complementary international footprint, combined with multi-jurisdictional client requirements, have led to a natural fit with the Grimaldi Alliance, both strategically and culturally.” Speaking for the Grimaldi Alliance, Francesco Sciaudone, managing partner at Grimaldi, also highlighted the synergy between Deminor’s global strategy and his law firm’s multi-jurisdictional reach. Sciaudone highlighted the scope of the Grimaldi Alliance’s presence, which includes “the Italian market (with more than 9 offices throughout the peninsula) and in the European and international markets, where Grimaldi Alliance is present with well-qualified and integrated teams, in addition to offices in Brussels, Paris, London, worldwide with more than 60 jurisdictions.”
Announcements Commercial Deals

Three Quarters of Law Firms Would Consider External Ownership

Three quarters of law firms would consider selling a percentage of their business to an external buyer, new research has revealed.

A survey of 200 law firm partners commissioned by Harbour, the world’s largest independent litigation funder and law firm lender, showed that 149 of the 200 partners surveyed said their firm would consider external ownership.

The most willing to sell a percentage were the firms with a turnover of between £5m and £10m with all those questioned saying their firm would consider it.

The next most willing to consider external ownership were firms with a turnover of between £50m - £100m (89%), £30m - £50m (86%) and £10m - £30m (79%).

Those least likely to sell were those with turnovers of £400m - £500m (22%) and £100m - £400m (48%).

Of those who said they would not consider external ownership, loss of control was most cited (51%) as the key issue that would need to be resolved before they would consider selling. Other factors included future partner compensation (47%), obtaining partner consensus (37%) loss of employees (33%) and loss of culture or ethos (31%).

The survey revealed that the vast majority of law firms are willing to consider using alternative funding in the next year to 18 months, though 83% of firms said they would consider using cash reserves or asking for increased investment from partners.

Popular forms of alternative funding included bank loans (82%), greater use of contingency fee or damages based agreements (DBA) (79%), credit or lending facilities from litigation funders (78%) and stock market listing/non-lawyer shareholders (77%).

Ellora MacPherson, Managing Director and Chief Investment Officer at Harbour, said: “These results show that the legal sector is well and truly open for investment from external sources. With 75% of law firms considering external ownership, it is a fascinating time in the market with the trend for mergers and acquisitions set to continue. Our survey shows this isn’t just the smaller firms, but also those with substantial turnovers.

“In addition, with law firms and their partners having weathered turbulent economic times during the pandemic, it is clear that many are looking at alternative forms of investment. At a time of high interest rates, specialist lenders to the legal sector, who understand lawyers and law firms, are well-placed to provide attractive finance options.”

Survey methodology

200 law firm partners were interviewed online by Censuswide between 05.07.2022 - 20.07.2022.

About Harbour Litigation Funding

Harbour Litigation Funding is the world’s largest independently owned litigation funder. Since launching in 2007, the business has been at the forefront of the growth and development of the global funding market.

Headquartered in London, the business funds cases across the globe ranging from one-off disputes valued from circa. £1m to portfolios of multi-million-pound cases. It also funds the growth of law firms by offering credit facilities and through equity investments.

Harbour is a founder member of the Association of Litigation Funders (ALF), a member of the International Legal Finance Association (ILFA) and the Commercial Litigators’ Forum.

Ellora Macpherson is managing director and chief investment officer.

Announcements Consumer

Gain Brand Launches, Commits to Leveling the Insurance Playing Field

Gain, a comprehensive medical lien servicing and legal funding company with an artificial intelligence-powered platform, launched today. Previously, the company had been doing business as a variety of operating companies, including Cherokee Legal Holdings, Cherokee Funding and Gain Servicing. The rebrand is meant to streamline the companies and build efficiencies in order to serve as a centralized, AI-powered hub to those with medical lien servicing and legal funding needs. “Since 2011, we have provided legal and medical funding services. Over the years, we have added new companies, new divisions and expanded offerings. Our exceptional growth has led us to today. An exciting time has come in the evolution of our organization and that is the need to streamline all of our services and capabilities under one go-to-market brand,” said Gain Founder and CEO Reid Zeising in a recent letter to clients. “Under our new company name, we aspire to provide solutions and services that are undeniably Gain.” With two-year revenue growth of 251%, Gain recently ranked no. 83 on Inc. magazine’s list of the Southeast Region’s Fastest-Growing Private Companies. Between 2005 and 2022, Gain, doing business as Cherokee Legal Holdings, Cherokee Funding and Gain Servicing, has provided $250 million in medical care and serviced $800 million in medical liens. Honored with three Inc. 5000 designations, 15,000 law firm partners, and over 3,000 health care clients, Gain is well-positioned for continued growth. The new brand identity and company consolidation was launched initially on an updated website, www.gainservicing.com. The company headquarters are and will remain in Atlanta, Ga. About Gain Gain is the fastest growing medical lien servicing and legal funding company in the United States. Gain’s innovative artificial intelligence-enabled servicing platform and its collective services and solutions come together to meaningfully serve the personal injury ecosystem and create better outcomes. Gain is the critical hub connecting medical providers, lawyers and personal injury plaintiffs. Gain’s industry-leading platform serves as the source of truth, providing both needed transparency and efficiency for all of those supporting personal injury cases and plaintiffs. Gain is committed to leveling the insurance playing field for those injured through no fault of their own. To learn more, go to gainservicing.com. Contact: Kris Altiere (470) 713-6621 kris@gainservicing.com
Commercial Deals

Singaporean Bondholders Seeking Funding for Class Action over Credit Suisse Rescue

Last month saw the dramatic collapse of a trio of mid-size U.S. banks including Silicon Valley Bank, and in the aftermath, Credit Suisse found itself in dire need of rescue via its sale to UBS. However, the emergency deal to save Credit Suisse did not come without negative consequences, and in the ensuing weeks, it has appeared increasingly likely that bondholders will be pursuing several lawsuits across various jurisdictions. Reporting in Reuters covers the potential scope of the upcoming litigation, which has been prompted by the $3.4 billion rescue plan’s arrangement to write down around 16 billion Swiss francs of Additional Tier 1 (AT1) Credit Suisse debt. Bondholders in the United States, Switzerland, and Singapore are all reportedly exploring claims, with law firms including Quinn Emanuel Urquhart & Sullivan, Pallas Partners and Korein Tillery, all seeking to represent the claimants. Additionally, there are a number of class actions being proposed in the U.S. that would be brought on behalf of Credit Suisse shareholders. Additional reporting by Business Times zooms in on the bondholder litigation in Singapore, with lawyers representing Singaporean Credit Suisse AT1 bondholders looking to bring a class action lawsuit against the Swiss Government. Jonathan Lim, partner at WilmerHale, stated that the class action was seeking outside litigation funding to support a claim which alleges the bond write-down violated rules against ‘unfair state actions’ codified under the 2003 Singapore-European Free Trade Association.
Commercial

Providing Budgetary Certainty to In-House Counsel Through Litigation Funding

It has become increasingly clear that as the commercial litigation funding market continues to grow more competitive, funders are looking to broaden their client base with a focus on offering services to in-house counsel. Among the advantages that outside capital can provide to legal departments, one funder is stressing the value of providing budget certainty amidst the always unpredictable timing of litigation spending. In a feature in Legal Dive, Burford Capital’s co-COO, Aviva Will, highlights the common issue faced by general counsel that whilst they have a set quarterly budget to account for, outside law firms cannot always make those litigation costs reliably fit within quarterly constraints. As a result, Burford is looking to support GCs where possible by covering legal costs that would exceed the department’s litigation budget, allowing clients to have ‘certainty around when they [are] going to spend their capital’. Another solution which Burford Capital provides to CFOs and general counsel is a form of factoring, where a company expects to receive an award, and Burford will pay a portion of that award in advance, in return for being first in line for any payment if the award is granted.  Will also points to the value Burford can offer clients from a strategic perspective, arguing that it’s not simply about providing lump sums of capital in one go, but instead finding out what the pain points are for the legal department, and then Burford can ‘think creatively about how we can support the company.’
Commercial Regulatory Issues

Is Litigation Funding Responsible for Rising Insurance Settlements?

Many insurers claim that litigation funding is a major contributor to so-called ‘nuclear settlements’, which are large settlements and damages awards that are based on intangible factors. However, a new article interviewing industry experts suggests that there is less consensus on the topic than might be expected. An article by PropertyCasualty360, looks at the issue of rising insurance settlements and the associated rising cost of civil litigation, known as social inflation. Examining litigation funding’s ties to these increases, the author found that there were those who do see a link, such as John C.S Pierce who investigated a social inflation task force at the Defense Research Institute. Pierce argues that the presence of third-party funders and the huge amount of capital they bring, naturally increases costs overall, stating that as the funding industry grows ‘we will see more of these big verdicts and […] more big settlements.’ However, there are experts who disagree with this assessment, including Tom Baker, professor of law at the University of Pennsylvania, who argues that even if social inflation is real, ‘there is no solid evidence, and certainly no published, peer reviewed research, showing that litigation funding is the cause.’ Baker also criticized a publication by insurer Swiss Re, which claimed third-party funding had increased costs in commercial trucking litigation, but failed to note that lawyers in this area do not regularly engage litigation funders. Anthony Sebok, professor at Cardozo School of Law, goes even further and suggests that when looking at litigation funding and social inflation, ‘there are so many reasons to think that the two have nothing to do with each other’. Instead, Sebok argues that industry leaders should look to the wider socio-political conditions at play here, namely the rise in populism that will naturally lead to an environment which is increasingly hostile to corporate defendants. 
Case Developments Commercial

Funder Files Lawsuit Against Another Funder, Alleging Fraud in Law Firm Financing Dispute

As LFJ recently covered, there is growing enthusiasm among litigation funders to invest capital in portfolio and law firm financing, in addition to the single case funding that is a staple of the industry. However, such engagements do not come without their own risks, as has been demonstrated by a dispute where one funder is suing both a law firm and another funder over allegations of fraud. An article by Bloomberg Law provides an overview of the lawsuit in the Supreme Court of the State of New York, where Contingency Capital has brought a complaint against ACAP Litigation Fund. Contingency’s lawsuit alleges that ACAP and the Houston-based Dunken Law Firm defrauded the funder, by using an $8.8 million loan provided to pay off Dunken’s entire existing debts to ACAP. Contingency claims that ACAP lied that this loan would cover the debt, only for ACAP to claim that Dunken was ‘in default of a new loan that it had agreed not to extend’. Whilst Dunken is not the target of Contingency’s lawsuit, they are simultaneously facing another lawsuit from ACAP in Texas, and Bloomberg Law’s reporting found that Dunken has been the target of multiple lawsuits, including allegations of ‘fraud and breach of contract over its handling of transvaginal mesh and talcum powder cases.’  Rebecca Berrebi, CEO of Avenue 33 and a litigation funding broker, stated that the case demonstrates that due diligence cannot always prevent these situations, and that in every litigation funding agreement ‘you presume good faith and fair dealing and that people aren’t lying.’
Case Developments Commercial

District Judge Denies Sysco’s Request to Bundle Burford Dispute with Antitrust Claim

Whilst public conflicts between funders and clients are a rare sight, when a major dispute erupts between the two parties it is sure to be a drawn-out affair. The dispute between Burford Capital and Sysco Corporation is proving to be just such a conflict, as Sysco has failed to bundle its motion to vacate Burford’s existing injunction with one of the antitrust lawsuits at the heart of this dispute. Reporting in the Cook County Record gives us another update on this dispute, highlighting the decision by U.S. District Judge Thomas Durkin to deny Sysco’s reassignment motion. Sysco had argued in its request that resolving its primary dispute with Burford would allow it to settle its ‘Broiler Case’ chicken pricing lawsuit, but Judge Durkin refuted this argument and stated that ‘the two cases are as different as night and day.’ He went on to explain that as Sysco’s dispute with Burford was wholly concerned with the financing agreement, whilst the antitrust litigation still contains ‘unresolved questions of law and fact’, there was no relation between the two cases. Judge Durkin also refuted the idea that bundling the disputes together would create no efficiencies, as he was not even familiar with the details of the litigation finance agreement and its related dispute in the first place. Judge Durkin’s decision included a strong rebuke of the assumptions made in Sysco’s request, stating: ‘While district judges sometimes mediate settlement, it is never appropriate to presume settlement. And it is certainly inappropriate to decide whether Case 1451 should be reassigned on the assumption that Sysco’s claim in that case is meritorious.’
Commercial Regulatory Issues

European Union Explores Regulation of Third Party Funding and International Arbitration 

As litigation finance continues to expand worldwide, political factions look to regulate the sector. New guidance from the European Parliament aims to foster "responsible private funding of litigation."  Mondaq reports that the European Union aims to create an independent supervision body to regulate third party funding activities, creating universal terms and conditions for litigation finance in Europe.  The overarching premise is that EU funders who sponsor agreements may be on the hook for adverse effects related to the litigation. The directive also looks to ensure that litigation investors have enough liquidity available to support both their enterprise and their litigation finance agreements, proven on an annual basis. Transparency is central to the EU directive, along with capping potential litigation funder awards at 40%. If litigation funders look to meddle in the decision of a case, the directive's oversight body may elect to terminate the litigation funding agreement. The European Commission is debating the incorporation of these rules. Further scrutiny will be applied by the European Parliament and European Council. Ultimately, each member state of Europe will need to ratify the rules before they can be enforced.
Announcements Commercial

Burford Capital releases latest issue of its Burford Quarterly journal of legal finance

Burford Capital, the leading global finance and asset management firm focused on law, today releases its latest Burford Quarterly, a journal of legal finance exploring the practical applications of legal finance across a broad spectrum of businesses. The latest issue of the Burford Quarterly 2 2023 includes: The ACC's DEI Maturity Model: Veta T. Richardson speaks with David Perla ACC President and CEO Veta T. Richardson discusses key challenges facing in-house lawyers, diversity in the legal profession and her new book "Take Six" with Burford Co-COO David Perla. How health insurance companies used legal finance to manage risk: A case study Burford Director Andrew Cohen highlights a case study demonstrating how legal finance enabled several health insurers to continue to serve their customers and to manage their balance sheet risk by monetizing their claims in the risk corridors litigation. Key takeaways from securities litigation symposium In-house counsel from some of the world's largest asset managers and partners from leading global law firms participated in Burford's 2022 Securities Litigation Symposium, and Burford Director Michael Sternhell shares key takeaways. Speakers included representatives from Franklin Templeton, Norges Bank Investment Management, Charles Schwab & Co., The Vanguard Group, Stradley Ronon Stevens & Young, LLP, Pallas Partners, Scott + Scott LLP, Quinn Emanuel Urquhart & Sullivan, LLP, Bartlit Beck LLP and Financial Technologies. Legal finance helps a medical device company protect its patent rights A recent publicly disclosed Burford funded matter illustrates the importance of legal finance as a tool to help companies protect their patent rights, in a case study by Senior Vice President Joshua Harris. For law firms, legal finance can help offset a downturn Burford's Co-COO Aviva Will explains how funded litigation practices offer law firms a better alternative to offset the loss of transactional work than layoffs as the economy slows. Perspectives from leading APAC insolvency practitioners and lawyers Insolvency experts from Singapore, Hong Kong and Australia share their insights on the latest trends and developments within the field of insolvency law. Roundtable: Expert insights on enforcing non-performing loans Non-performing loans (NPLs) consume bank capital, decrease profitability and require time and attention that divert from core activities. A panel of legal experts explain how banks can enforce or otherwise monetize their NPL portfolios.
Announcements Commercial Legal Innovation

LegalPay launches Contract Defense, a free service protecting businesses from disputes arising through BNPL

LegalPay, India’s first and largest litigation funder and interim financier, has launched a feature that protects businesses against disputes arising from contracts paid for using its BNPL product. Recognizing the increase in contract disputes, LegalPay has introduced Contract Defense, a free-of-cost service that covers the legal costs associated with contract-related disputes. This applies to all contracts paid for using LegalPay Max. This development means that LegalPay now offers full-stack financing for all types of legal expenses, and has further strengthened its position as the dominant player in the legal financing industry. Kundan Shahi, CEO & Founder of LegalPay, said, “Contract Defense is designed to assist businesses with obtaining legal guidance and expertise in disputes arising from contracts that have been paid using LegalPay Max. By onboarding on LegalPay Max, founders, and CEOs can rest easy and not worry about their legal expenses. Attorneys and lawyers will review the situation & relevant documents and provide support with enforcing the contract, allowing businesses to focus on their work.” By utilizing Contract Defense, businesses gain an additional layer of security for their contracts, which provides peace of mind and allows them to focus on their core operations without worrying about the costs associated with legal disputes. For instance, companies facing a dispute arising with a contract that was paid for using LegalPay Max can review the situation with one of LegalPay’s partnered law firms without any additional charges. With LegalPay Max, businesses can avail of a credit line of upto Rs 50 lakh for all types of legal and professional expenses such as transaction, regulatory, advisory, arbitration, and other legal costs, and the same can be spread over a tenure of up to three to six months with no extra charge.
Announcements Commercial People Moves

Omni Bridgeway launches in Italy, welcomes Giacomo Serra Zanetti 

Omni Bridgeway is pleased to announce the company's continued European expansion with the addition of permanent operations in Milan, Italy, and welcomes Giacomo Serra Zanetti who joins as Investment Manager and Senior Legal Counsel. Based in Milan, Giacomo will leverage his background in finance and law to deliver non-recourse legal financing and legal recovery solutions to clients with an emphasis on the Italian market. Giacomo brings two decades of legal experience in structuring and executing cross-border transactions, with specific expertise in restructuring, insolvency and the acquisition of litigious and distressed claims gained while working for leading Italian law firms Grimaldi SL LLP, BonelliErede, and most recently, Advant – NCTM where he was an Equity Partner, as well as direct experience with an investor in insolvency actions and claims against distressed debtors. He is both admitted to the Italian bar and a solicitor of the courts of England and Wales.   "Omni Bridgeway has been successfully funding and supporting clients with legal proceedings in Italy for more than a decade," notes Raymond van Hulst, Executive Director, Managing Director and Co-Chief Investment Officer EMEA. "With our expansion into Italy, following France and Spain recently, we now have permanent operations in seven European jurisdictions and are funding proceedings in more than 15 European jurisdictions. Omni Bridgeway is now even better positioned to provide on-the-ground resources and expertise for corporations, law firms and claimants across Europe. Giacomo brings a stellar track record and is an excellent addition to the Omni Bridgeway team." Managing Director and Co-Chief Investment Officer EMEA, Hannah van Roessel, added, "I look forward to working with Giacomo and am thrilled to launch our permanent operations in Italy. Giacomo's unique expertise, coupled with his deep knowledge of the Italian market allows Omni Bridgeway to provide a comprehensive offering to clients to address their legal finance, enforcement, and recovery needs within Italy and Europe, as well as internationally." Giacomo Serra Zanetti commented, "I am truly excited to join Omni Bridgeway, a world leader in the legal finance industry. Italy's legal market, with its high level of complexity and sophistication, represents a compelling market for legal finance and risk management. With operations based in Milan, Omni Bridgeway is perfectly situated to deliver innovative litigation financing and recovery solutions for a broad range of business and legal matters, including the most complex local and cross-border situations. With its truly diversified, global team, Omni Bridgeway adds value for stakeholders in a broad range of situations with underlying legal complexity (in both solvent and insolvent scenarios). I look forward to playing an instrumental role delivering capital and expertise in such circumstances."
Case Developments Commercial

BCLP and Erso Capital Discuss Truck Cartel Judgement

Complex competition litigation remains a venue for high-profile cases targeting major corporations, with some claims receiving the attention of funders eager to capitalise on potentially lucrative judgements. However, even those claims that are not funded by third-parties may provide important lessons that apply to a wide variety of competition and antitrust litigation. In a podcast published by Bryan Cave Leighton Paisner (BCLP), Sarah Breckenridge of Erso Capital and BCLP’s own Andrew Leitch discussed the possible learnings from the recent truck cartel follow-on claims for Royal Mail and BT in the Competition Appeal Tribunal (CAT).  Among the takeaways highlighted were the importance of expert witnesses for all parties, and the overarching importance of bringing ‘complex expert evidence’ to these claims, even if the final judgement is made on the basis of the ‘broad axe’. Leitch also emphasised the learning that defendants must be cautious about how they use expert witnesses in order to ensure their independence is recognised by the court. Looking at the wider trends, Leitch suggested that with the collective actions regime in the UK continuing to become more established, he expects ‘the competition litigation sector to increasingly move towards opt-out actions as the main form of redress against competition infringers.’ He also pointed out that in the near future ‘the UK competition litigation landscape will look ever more like the US antitrust litigation landscape’, and as a result, there will be plentiful opportunities for funders looking to pursue cases.
Case Developments Commercial

J&J Subsidiary Makes Second Bid for Bankruptcy Settlement in Cancer Lawsuits

As LFJ reported in January, Johnson & Johnson had previously sought and failed to limit class actions brought against it by placing its subsidiary, LTL Management, into Chapter 11 bankruptcy. However, after a federal appeals court in Philadelphia blocked LTL’s requests earlier this year, the business is once again seeking to put a hold on these class actions whilst it negotiated a settlement through its bankruptcy. Reporting in Reuters provides the details on this latest development in the ongoing class actions, which are focused on allegations that J&J’s talc-based baby powder has resulted in cancer diagnoses for the victims represented. At the hearing in New Jersey, LTL’s lawyers argued that it would have the support of over 70,000 claimants for this action, which would reach the ‘75% voting threshold required for a bankruptcy court to approve the settlement’. However, Michael Winograd of Brown Rudnick, who is representing a number of the claimants, refuted this argument and stated that the defendants have only received agreement from lawyers representing claimants and not the claimants themselves. Winograd suggested that this latest appeal from LTL’s attorneys was merely a distraction from the appeals court’s ruling that the move for bankruptcy was not permitted, stating ‘Like anyone trying to pull off a magic trick, you have to have a diversion.’ Whilst the lawsuits being brought against J&J were paused by U.S. Bankruptcy Judge Michael Kaplan, he will now have to decide whether LTL will be granted a similar halt to allow them to reach a bankruptcy settlement for a second time.
Commercial Deals

Funders Show Enthusiasm for Law Firm Financing

Litigation funders are most commonly known for single case funding, providing access to justice through individual acts of financing litigation and seeking returns on those individual investments. However, funders are making active efforts to pursue broader financing of law firms, both supporting the launch of start-ups and offering flexible financing options to established law firms to either fund further litigation or support capital expenditures for growth. A new article by The Lawyer features insights from a number of leading funders who offer their perspectives on what opportunities exist for law firm financing, what their own priorities are and where the future of these endeavours might lead.  Maurice MacSweeney, director of legal finance at Harbour, summarised his firm’s approach as positioning itself as ‘funders for the business of law, and not just litigation’. Harbour’s chief investment officer, Ellora MacPherson, reinforced the fact that whilst funders’ capital will not be as cheap as traditional lending from banks, Harbour can help law firms access capital with a more flexible approach.  Adrian Chopin, managing director of Bench Walk Advisors, suggested that recent examples of funders providing this type of financing to law firms demonstrates that industry leaders ‘are beginning to think about more interesting ways to structure their businesses than the traditional partnership-funded model’. Therium Capital’s Neil Purslow also highlighted the potential tax benefits from moving away from the partnership model, stating that ‘it may be more attractive for a firm to use financing, which then reduces taxable profits.’ Looking at it from a third-party perspective, Mike Estill from Kindleworth, a provider of managed services to the legal sector, argues that this kind of funding fills an important gap in the market left by banks who ‘can't get comfortable with the risk profile’ of funding the launch of new law firms. Burford Capital’s managing director, Mike Redman, emphasises that litigation funders can provide capital that solves ‘an obvious cash gap that needs to be filled if a firm wants to try and grow not just from cashflow.’
Commercial Special Features

Could UK Class Actions Put a Stop to Ticketmaster’s Price-Gouging?

The following piece was contributed by Tom Davey, Co-Founder and Director at Factor Risk Management. News of another class-action lawsuit against Ticketmaster comes as little surprise, given the company’s long history of legal disputes both in the UK and North America. Described by US senator Richard Blumenthal as a “monopolistic mess”, the company has been beset with criticism and legal action ever since merging with events promoter and venue operator Live Nation in 2010. The combined entity controls around 70% of the live venue and ticketing marketplace, a situation which many believe it exploits at the expense of its customers. The latest class-action suit, filed by a Canadian law firm, centres on the alleged price-gouging of ticket sales for an upcoming concert by rap superstar Drake. A Montreal man purchased two “Official Platinum” tickets for Drake’s show on 14th July, believing it was the only date he would be performing at the Bell Centre. Having paid $789.54 for each ticket, he then discovered the next day that a second show had been added, with the same tickets each costing $350 less than what he had paid. The suit claims that Ticketmaster had been deceptive in not announcing both dates at the same time and had intentionally withheld the information about a second show to manipulate fans into overpaying. Further, the suit alleges that the tickets sold as “Official Platinum” were simply ordinary tickets relabelled as premium in bad faith. As such, compensation of the difference between the prices paid and the cheaper-priced identical tickets is being sought, as well as punitive damages of $300 for each affected customer. While collective actions are not easy to mount in North America, plaintiffs are bolstered by the fact that juries there tend to be more claimant-friendly than in other jurisdictions, including by awarding significant damages when finding in their favour. Beneficial costs rules also make such legal actions easier to bring, making the conditions sufficiently clement for group claims to proceed to trial. By contrast, the system in the UK remains more austere, operating under an unclear, unpredictable and complex regime, whether in the High Court or in the Competition Appeal Tribunal (CAT). However, there is an increasing trend of lawyers at North American firms with a UK presence, or vice versa, noticing the direction of travel set by their colleagues in the US and exploring similar actions, subject to the limitations of their respective jurisdiction. As such, Ticketmaster’s various legal issues in North America may well prove a precursor for similar UK-based claims. The current class-action facing Ticketmaster is just the latest in a series of lawsuits brought against the company for claims including price fixing and anti-competitive behaviour. The company also faced severe criticism after introducing a “dynamic pricing” model in the UK last year. Already in use in its US sales operations, the system replaces fixed-price tickets with tickets that fluctuate in price based on demand, with critics seeing the model as yet another example of Ticketmaster abusing its dominance of the market to extract even more profit from a captive consumer base. The company’s legal woes are not limited to issues over the pricing of its tickets. Following a data breach affecting 1.5m UK customers in 2018, Ticketmaster settled out of court in relation to a 40,000-strong group claim. However, the £1.25m penalty notice issued by the ICO did not confer compensation to the affected individuals, nor was it binding by the court. In any event, given the seriousness of the breach, in which personal and banking information was stolen and misused, resulting in over 60,000 bank cards being fraudulently used, such a small fine would have had little effect as a deterrent. With global revenues of over $9 billion, it is evident that large companies like Ticketmaster are able to flout the rules with limited financial impact. With little meaningful regulatory or court enforcement against the firm, Ticketmaster continues to operate with impunity, safe in the knowledge that its ballooning profits will exceed any financial penalties imposed for any wrongdoing it carries out. There are clouds on the company’s horizon, however, with US Senators earlier this year calling on the Justice Department to investigate what they called “anticompetitive conduct” by Ticketmaster in relation to its sales. Their call to arms followed a Senate Judiciary Committee hearing in February, which had convened to investigate the lack of competition in the ticketing industry and what they saw as the unfair dominance of Ticketmaster in the sector. The Senate inquiry had been prompted in part by the well-publicized fiasco surrounding ticket sales for Taylor Swift’s upcoming five-month tour. Ticketmaster’s website crashed during the sales process, stranding customers in line for “presale” tickets for hours, and eventually leading to the cancellation of the public sale. Instead, the only tickets available for purchase were listed on resale sites at sky-high prices, despite Ticketmaster’s promises to weed out scalpers, bots and resale firms from its original sales process.  A class action lawsuit duly followed the debacle, as well as reports that the Justice Department had already opened an antitrust investigation into the firm. Politicians were quick to echo the concerns of affected customers, while Tennessee’s attorney general announced a consumer protection investigation into the company after being deluged with complaints from residents of the state. Should the claims of antitrust practices be confirmed by the Justice Department, there is a high likelihood that legal teams in the UK would then explore a potential claim against the company via the CAT. This would be a lengthy, expensive and high-risk process, with any cases brought via such route needing third-party funding in order to see their way to fruition. While group actions such as the Canadian lawsuit currently facing Ticketmaster can be complex processes to negotiate, court-awarded compensation is a far more effective tool in curbing corporate malpractice when compared with the modest fines which regulators can levy. If UK law firms are to follow the lead of their North American counterparts, Ticketmaster may finally pay the price for price-gouging.
Case Developments Consumer

LinkedIn Co-founder, Reid Hoffman, Funding Lawsuit Against Former President Trump

Whilst the litigation industry has continued to grow in both the scale and volume of activity in recent years, it remains a sector that the wider public is largely unaware of, and most cases proceed unnoticed by mainstream media. However, a notable exception to this trend appeared last week when it was revealed that a lawsuit being brought against former President Donald J. Trump is being partly financed by Reid Hoffman, the co-founder of LinkedIn. An article in The New York Times provides an overview of this development in the rape lawsuit being brought against Mr. Trump by E. Jean Carrol, an American journalist and author. Mr. Hoffman’s involvement in funding the litigation was only revealed after it was ‘disclosed in a letter to a judge’ by Mr. Trump’s lawyers, who had been informed about this third-party funding by Ms. Carroll’s lawyers earlier in the week.  According to Dmitri Mehlhorn, an adviser to Mr. Hoffman, the funding for this lawsuit originated through a grant made by Hoffman’s non-profit to Kaplan Hecker & Fink, the law firm handling Ms. Carroll’s case. Whilst not originally intended to fund this specific lawsuit, Ms. Carroll’s lawyer, Roberta A. Kaplan, requested that the money be used to fund this litigation in September 2020. Notably, Mr. Hoffman is also part of the ‘PayPal Mafia’ group of business leaders and investors, whose ranks include fellow billionaire Peter Thiel, who famously financed Hulk Hogan’s lawsuit against Gawker Media that led to the company’s bankruptcy. Mr. Trump’s lawyers argued in the letter sent to the court that the trial should be postponed for one month, in order to allow their team to investigate the funding. The judge, Lewis A. Kaplan, refused the requested postponement, but stated that he would permit Mr. Trump’s lawyers to pursue a ‘narrow inquiry into the funding issue’. It may be notable for other similar cases which have received third-party funding, that the disclosure of the financing did not create an opportunity for the defendant to further delay the trial.
Case Developments Commercial

$50 Million Settlement in ‘Stolen Generations’ Class Action Approved by NSW Supreme Court

Class actions that are backed by third-party litigation funding can be an incredibly powerful tool to support marginalized communities seeking legal redress, but these situations can attract criticism if it appears that funders are taking the lion’s share of any financial reward. However, the resolution of the Northern Territory ‘stolen generations’ lawsuit has demonstrated that this is not always the case, as the victims will be receiving the vast majority of the now-approved settlement.  Reporting by The Guardian details the ruling by the New South Wales supreme court, which approved a $50 million settlement in the class action after Shine Lawyers and Litigation Lending Services, stated that they would only receive 20% of the total settlement amount. Justice Robert Beech-Jones declared in his judgement that he believed it was in the best interest of all parties to approve the settlement, and that given how small the law firm and funder’s deductions were, he ‘wouldn’t even hesitate about approving it at a macro level’.  Of the 20% that will be deducted, Shine will receive $1.9 million to cover its costs, whilst Litigation Lending Services will receive $5.5 million as a commission and $1 million for its after-the-event insurance coverage. Shine’s joint head of class actions Vicky Antzoulatos praised the award and stated that ‘This settlement marks an important step towards acknowledging the extreme harm caused by past segregation policies and practices to First Nations peoples.’
Announcements Commercial Fundraising

Litigation Funder LegalPay Launches Super-Senior Bonds for HNIs Worth ₹ 50 crores

LegalPay, India’s first tech-based interim financier and litigation funder for commercial litigations and arbitrations, has launched Super Senior investment-grade rated bonds worth ₹ 50 Crores for High Net-worth Individuals (HNIs). Investment-grade bonds have a lower risk of default and receive higher ratings from credit rating agencies. This new investment opportunity offers HNIs a chance to diversify their portfolio by investing as little as ₹ 10,000 and earning returns up to 14 % while enjoying super senior status. These bonds have over 300x asset cover and have undergone stringent regulatory and assessment processes through LegalPay’s proprietary AI-backed cutting-edge technology. Once subscribed, these bonds will get credited to the investors’ Demat account and can be tracked in a real-time manner. LegalPay intends to handpick investment opportunities worth ₹ 250 crores for its investors during the calendar year. “We have observed a significant demand for such investment opportunities and have gained the confidence of more than 15,000 investors on our platform. We are proud to create such an exciting and lucrative investment opportunity that is available to all kinds of investors through our AI technology-enabled platform. We believe such investments will help companies retain their maximum value of assets whereas investors will reap great rewards transparently and efficiently,” said Kundan Shahi, Founder, and CEO, LegalPay. Attributing to LegalPay’s exemplary record and sector expertise, HNIs, family offices, and wealth managers are exploring this investment opportunity for a secure and reliable addition to their portfolios. LegalPay’s last opportunity, which was offered on their platform was fully subscribed in just three days. LegalPay is on a mission to mitigate the problem of financing legal expenses in India. At present, the company manages over ₹ 2,500 crores in claims under management through its AI and technology-enabled platform and expects to raise it to ₹ 5,000 crores in CY 2023. About Legalpay:  LegalPay is India’s first tech-driven fintech that specializes in legal and debt financing. It has played a pivotal role in the revival of various companies which were undergoing CIRP. LegalPay provides funds to corporate debtors who need Interim Finance that ranges from Rs. 30 Lakhs to 50 Crores. LegalPay is backed by a strong team comprising Company Secretaries, Lawyers (Alumni of India’s top-ranking college), MBA, Economists, and Charted Accountants.
Announcements Commercial Deals

BridgePoint Financial closes $10 million funding to advance Indigenous legal claims

Canadian legal funding specialist BridgePoint Financial Services Inc. ("BridgePoint") is pleased to announce the closing of a $10 million financing with Calgary-based Maurice Law, Canada's first and only Indigenous-owned national law firm. The transaction is part of a broader financing program established by BridgePoint in association with Maurice Law to promote access to justice and to expedite the fair and just settlement of First Nations' legal claims against Canada based on outstanding treaty obligations and other historic grievances.  "Maurice Law has achieved a solid track record of success in advocating on behalf of our First Nations clients. Notwithstanding government promises for a more streamlined legal resolution process over the past decade, the wheels of justice continue to turn at a glacial pace for many First Nations communities who simply can't afford to pursue these cases independently," says Ron Maurice, Founder and Senior Partner at Maurice Law. "This funding commitment from BridgePoint follows a model of third-party financing for First Nations litigation that Maurice Law pioneered. It will be an invaluable resource to assist us in leveling the playing field for First Nations and pursuing fair compensation for our clients who have suffered enormous economic hardship and social injustice as a result of the myriad breaches of the Indian Act, treaties, and fiduciary duties of the Crown in administering reserve lands and other assets for First Nations."  Key to the program is a bespoke legal expense insurance policy that offers added security to provide Maurice Law with the funding it requires to advance claims for First Nations on a "no win, no pay" arrangement. This is critical to promoting access to justice because the costs of researching and litigating these historical claims on behalf of First Nations can be prohibitive. This tailored approach to litigation financing significantly reduces risk to lenders and provides peace of mind for Maurice Law and its clients. "We are very pleased to extend our financial support to Maurice Law and its clients through this $10 million financing, which is modelled on various case-specific funding transactions we have provided to date. BridgePoint has enjoyed a long, supportive relationship with the firm, and our increased commitment to this program reflects our belief in their experience and leadership in the enormously impactful arena of Indigenous law," says Stephen Pauwels, Co-founder and Principal at BridgePoint. "We view ourselves as innovators in the legal finance market, and this was a sophisticated deal involving highly specialized legal expense insurance coverage.  We are very pleased with the result and the opportunity to further our support of Maurice Law and their clients. We hope the program will make a significant, positive impact for First Nations in their pursuit of justice for their meritorious claims," concludes Pauwels. About BridgePoint Financial BridgePoint Financial has been the leader in Canada's legal finance market since 2005, offering innovative and strategic funding solutions for lawyers and their clients. We have trusted relationships with over 1,500 law firms across the country, gained through our funding participation in over 60,000 cases to date. We continually develop our industry-leading products and services, providing an exceptional experience and favourable outcomes for our clients in the personal injury, wills & estates, family law, expropriation, and other legal practice areas. To learn more, please visit bridgepointfinancial.ca
Announcements Special Features

Funding Opportunity: Partnerships in Social and Environmental Disputes in the Amazon

Daniel Cavalcante is an experienced Brazilian lawyer, and seeks partners to structure partnerships in disputes involving indigenous and socio-environmental rights against large global companies that have business activities in Brazil. Daniel Cavalcante has an excellent portfolio of opportunities already filed, and many cases to file against large global companies in Brazil and even abroad. With extensive experience in litigation related to the environment and indigenous rights, he is looking for financial partners to structure a partnership that aims to share fees in collective claims. Cavalcante believes that by joining forces with investors interested in financing litigation, he will be able to expand access to justice for vulnerable populations and protect the environment more efficiently, as collective demands are capable of causing impact at scale. In addition, Cavalcante points out that these processes have great potential for financial return. Companies that ignore environmental laws or indigenous rights can be fined and forced to compensate affected communities. When filed collectively, these claims can generate a significant amount of legal fees. If you are an investor looking for investment opportunities that bring social and environmental benefits, contact Daniel Cavalcante and be part of this justice and sustainability movement. Cavalcante maintains that a good structured partnership with his office can help ensure that companies comply with current legislation and protect the environment and the rights of indigenous populations. It is worth mentioning that Daniel Cavalcante is an experienced and renowned professional who has worked in several successful cases in Brazil. Among his most notable achievements are the millionaire lawsuits in defense of the indigenous peoples of the Brazilian Amazon, in which he successfully participated. Therefore, with his vast legal knowledge and his dedication mainly to the indigenous peoples of the Amazon, Daniel Cavalcante has stood out as one of the main socio-environmental lawyers in the country and sees an excellent opportunity for financial return for partners and investors who believe and invest in these demands. Watch Daniel Cavalcante's presentation on Youtube: https://youtu.be/1XHTL8R8Iq4 Attorney Daniel Cavalcante's email: danielcavalcant.adv@gmail.com
Commercial

Claim Language as a Determining Factor in Patent Infringement Litigation

Whilst patent litigation remains a priority target for many funders, there is no doubt that it is an area of heightened risk that often requires both extensive levels of due diligence and large capital commitments to reach a successful conclusion. Funders must evaluate a myriad of factors when assessing which patent infringement cases to pursue, and amongst those factors, one funder argues that the quality of the patent assets and the specific wording of claim language are the keys to success. A new piece by GLS Capital focuses on the challenges of underwriting patent litigation finance, exploring the ‘outsized role’ that patent claim language plays in determining the viability of any case. It is the quality and specificity of this claim language that is often used by funders to decide on whether or not a successful claim can be brought, with both the precise wording and scope of the patent claims playing a pivotal role.  The quality with which the language is constructed can either mitigate or exacerbate issues that can arise, such as whether a claim is ‘properly supported or enabled by the patent’s specification’ or if there are ‘non-infringing alternatives that may affect the damages analysis.’ GLS emphasize that because of the vital role the claim language will play in any patent infringement lawsuit, patent owners should ensure that they are retaining the services of a skilled and forward-thinking patent drafter who can anticipate what issues could determine a patent’s strength in court.
Commercial

The Role of Litigation Finance in ESG Initiatives

At its most basic level, litigation funding is an alternative asset class that provides an investment vehicle that can achieve a lucrative return on invested capital. However, the practice plays a much more important role when it is considered within the context of litigation finance’s power to widen access to justice, as well as push for meaningful change when tackling social and environmental abuses.  In a post by No Impunity, an impact litigation funding platform that focuses on human rights and environmental abuse, the role of litigation finance in leading the way to achieving social and environmental justice is explored. At the core of the argument is the fact that litigation funding is key to ‘leveling the playing field’ between large corporate entities with vast financial resources and smaller businesses, communities and individuals who have suffered harm from corporate malpractice. Beyond the base capital that is required to fight this type of ESG litigation, No Impunity also highlights the fact that funders can support litigants who might otherwise be powerless, such as marginalized communities or even whistleblowers who reveal such corporate and government wrongdoing. In supporting these kinds of legal action, litigation funding becomes a powerful tool for reasserting some level of accountability both in the private sector and where state or local governments fail to meet their obligations to citizens.
Case Developments Commercial

Review of Quinn Emanuel’s Fee in Obamacare Class Action Raises Questions for Litigation Insurance

Alongside the growth of the litigation funding market is the equally important role that litigation insurance plays in the industry, allowing all litigation participants to reduce their risk profile whilst still pursuing meritorious cases. However, an ongoing review of a law firm’s awarded fee could highlight the risk taken on by litigation insurers, specifically those providing judgement preservation insurance policies. An article by Bloomberg Law provides an overview of the issue which arose following a class action brought by Quinn Emanuel Urquhart & Sullivan, which in 2020, successfully secured $3.7 billion for health insurers who had not been paid by Congress for providing higher risk policies under Obamacare. However, whilst Quinn Emanuel received a $185 million fee for its work in 2021, this fee was endangered in January of this year when the Federal Circuit ‘ordered a district court judge to recalculate the award’. The role of litigation insurance enters the picture because Quinn Emanuel had taken out a judgement insurance policy that is designed to secure a portion of the award if it is appealed or overturned, which happened in the Obamacare class action after the health insurers objected to the size of the award. Charles Agee, CEO of Westfleet Advisors, suggests that if the litigation insurer incurs a significant loss in this case ‘it could really have a broader chilling effect’ on the practice. Whilst there is the question of whether insurers are ready to pay out such claims, Tom Baker, professor at the University of Pennsylvania Carey Law School, argues that insurers ‘are definitely going to pay in the beginning because otherwise the market will go away’.
Commercial

How Portfolio Financing Can Support Law Firm Growth Strategies

Whilst single case financing from third parties represents a useful tool for law firms, one funder argues that these businesses should also explore portfolio financing as part of a strategy to maintain growth in the face of market instability. In an article published in Lexology, Amy T. Geise and Sarah Jacobson, investment managers and legal counsel for Omni Bridgeway, argue that there are multiple uses for portfolio financing that law firms should look to take advantage of to fuel growth. Firstly, Geise and Jacobson suggest that utilising portfolio financing will allow these firms to remove the uncertainty of litigation costs from their balance sheets, which in turn will allow them to increase their market share. Portfolio funding provides law firms with the opportunity to offer increased fee flexibility to clients, thereby attracting clients who might otherwise have avoided pursuing litigation due to their own cost pressures. Secondly, the authors argue that this kind of financing can be used to invest in the law firm’s own growth plan by avoiding otherwise necessary austerity cuts, and instead cover expenses or investing in internal improvements for the firm. This could mean using funds to expand a firm’s footprint, attract new employees and possibly most importantly, retain existing talent. Finally, Geise and Jacobson point to the value of portfolio financing as a risk management tool, allowing law firms to mitigate the more substantial risk of pursuing a single large contingent fee case. Furthermore, this influx of capital counters the potential of waiting years to realize the financial return of unresolved litigation.
Commercial Regulatory Issues

ILFA Director Says GAO Report Recognized the Value of Litigation Funding

The Government Accountability Office’s (GAO) recent report into the litigation finance industry was viewed by some as a promising start to wider acknowledgement and acceptance of the practice, whilst others criticized it for a lack of tangible policy recommendations. However, the leader of one of the industry’s most prominent associations has stated that the GAO’s report in fact recognized the ‘value of commercial legal finance’ to improving access to justice. Writing in RealClearPolicy, the executive director of the International Legal Finance Association (ILFA), Gary Barnett, argues that the report demonstrated the viability and positive impact of the litigation funding industry. Barnett points out that the report highlighted third-party funding’s ability to widen access to legal redress, whilst also noting that the significant due diligence that funders conduct on prospective cases ensures a high quality of cases being brought before the courts. Barnett contrasts the GAO’s findings with the oft-repeated criticisms leveled by the U.S. Chamber of Commerce and other parties, who claim funders represent a threat to U.S. security and are allowed to control litigation with no regulation or oversight. Barnett highlights that it was in fact notable that the GAO did not recommend additional regulatory measures, nor did it seem to support critics’ calls for increased disclosure around funding.
Commercial Deals

RPX Report Finds 36% Slowdown in Q1 NPE Litigation

One of the biggest topics in the world of patent litigation is the role of Non-Practicing Entities (NPEs) in driving a wave of patent infringement cases, often backed by funders eyeing lucrative investment opportunities. Whilst the role of NPEs in patent litigation is a divisive topic, with critics blaming NPEs for acting as ‘patent trolls’ and pursuing supposedly frivolous litigation, new research indicates that NPE litigation saw a downturn in the beginning of 2023. Research produced by RPX Patent Market Intelligence found that there was a 36% decrease in the volume of NPE litigation in the first quarter of 2023, which RPX attributes to two main reasons.  The first cause of this slowdown was the much-discussed conflict around funding disclosure in Delaware, that led IP Edge LLC, a leading NPE firm, to add zero new defendants to litigation in Q1 2023 (compared to 147 new defendants added in the first quarter of 2022). Secondly, RPX highlighted a 55% reduction in the number of defendants in the Waco Division of the Western District of Texas, which was caused by a standing order that no longer allowed plaintiffs to file in their preferred division. RPX’s full report includes insights into: changes to the Patent Trial and Appeal Board (PTAB), developments within the UK and Europe around SEP and FRAND litigation, and additional highlights from the litigation funding market. The full report can be found here. **Note: a previous version of this story stated that IP Edge filed zero new cases in Q1 2023. For accuracy's sake, we adjusted the statistic to read that IP Edge added zero new defendants.  We regret the error. 
Announcements Commercial Regulatory Issues

Validity Finance is First Commercial Litigation Funder to Achieve B Corp™ Certification

Validity Finance, one of the largest private commercial litigation funders in the United States, today announced that it has been awarded Certified B Corporation™ (B Corp) status. This recognition acknowledges Validity’s accountability to its stakeholders, including employees, investors, clients, and the communities in which it operates. Since its founding, Validity has been a purpose-driven organization focused on funding meritorious litigation as a corrective measure for an unbalanced legal system, and its new B Corp status reflects this commitment.

Validity’s B Corp certification, bestowed by the nonprofit B Lab, is an acknowledgement that the company is meeting high standards of verified performance, accountability, and transparency on factors ranging from environmental sustainability to employee benefits and corporate governance. Validity is the first U.S. commercial litigation funder to achieve B Corp status, a significant milestone in the maturation of the litigation finance sector, joining such prominent companies as Patagonia, Bomba, and Warby Parker.

“The B Corp evaluation process offered an excellent framework for Validity to review and improve our policies and practices, and to affirm our commitment to making a meaningful impact for our clients and the legal community,” said Ralph Sutton, Validity’s Founder & CEO. “Since our founding five years ago, we have been guided by a promise to not only help promote fairness in the legal system, but also to adhere to the strictest ethical standards in our business operations.”

There are currently only 6,000 Certified B Corporations across more than 80 countries and 150 industries. To become a Certified B Corporation, companies must undergo a comprehensive, multi-year assessment of the impact of their operations and business models on their workers, customers, communities, and environment, and must receive a minimum verified score on the B Impact Assessment. Certified B Corps are legally required to consider the impact of their decisions on all stakeholders.

“At a time when the U.S. Chamber of Commerce is attempting to leverage misinformation to unfairly stigmatize the litigation funding sector and to preserve the unfair advantage traditionally afforded deep-pocketed defendants in commercial litigation, we are proud to spotlight our corporate purpose,” said Julia Gewolb, Validity’s Chief Risk Officer.

Validity approaches every funding opportunity with a focus on trust, fairness, and transparency, enabling the company to build and sustain long-term client relationships by empowering clients with the resources they need to pursue and resolve meritorious litigation fairly and equitably. With decades of combined experience in funding, the Validity team of trial-tested attorneys has invested more than $400 million since 2018 across more than 70 matters.

“As commercial litigation funding expands in the U.S., it’s important to engage and educate people about the industry’s dedication to a more equitable legal system,” said Roman M. Silberfeld, National Trial Chair at Robins Kaplan. “I commend Ralph and Validity for being so forward-thinking and taking this significant step to solidify their commitment to responsible business practices.”

About Validity Finance

Validity is a leading commercial litigation finance company dedicated to fair and transparent funding practices that build trust. The first funder to become a certified B Corp, Validity’s mission is to make a meaningful difference in the legal system by helping clients bring good cases to trial with top counsel, while managing legal spend and risk. We believe every client has the right to a fair deal, clear term sheets, access to strategic advice, and timely responses. We invest in commercial, patent, bankruptcy, and breach of contract litigation, as well as international arbitration. Clients and law firms count on Validity for reliable capital, strategic resources, and risk mitigation that supports their litigation goals.

Commercial Regulatory Issues

Settlement CFOs in Australian Federal Court

The viability of third-party litigation funding relies on the ability of funders to ensure that if their funded case reaches a successful conclusion, they will be able to secure an adequate financial return to make their investment worthwhile. However, recent developments in the Australian courts have demonstrated the difficulties of this process as it relates to the practice of courts making common fund orders (CFOs). A recent piece of analysis by Herbert Smith Freehills examines the potential consequences of a ruling by Justice O’Callaghan in the Federal Court of Australia, in the case of Davaria Pty Ltd v 7-Eleven Stores Pty Ltd, which denied the litigation funder’s application for a settlement CFO. The analysis illustrates that this ruling built upon the High Court’s 2019 decision in BMW Australia Ltd v Brewster, which found that s 33V of the Federal Court Act 1976 does not allow the court to order a pre-settlement CFO. Justice O’Callaghan’s ruling went further, by stating that the Brewster ruling made it ‘clear enough’ that s 33ZF equally does not grant the court the power ‘s 33V of the Federal Court Act 1976’. This issue has since been referred to the Full Court of Australia, which is in the process of receiving submissions from Attorneys-General in Australia, and will likely then offer clarification as to the court’s power around making CFOs at later stages of litigation. Herbert Smith Freehills’ article offers additional analysis of the situation, suggesting that ‘this will not be the end of the debate regarding funding models and their permissibility’ and that ‘there will likely be continued innovation in funding markets’. Among other observations, the analysis also reinforces the fact that these developments do not affect the situation in the New South Wales Supreme Court, which ruled in 2022 that courts do have the power to make settlement CFOs.