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Commercial Deals

Litigation Funding Could Play a Key Role in Securing Scottish Business Resilience 

The UK remains one of the premier jurisdictions for litigation funding, with an array of funders based in the country and a regulatory structure that largely allows for the industry to self-regulate. However, within the UK, there is a natural bias towards funding opportunities in London, both in terms of value and volume, leading some industry figures to highlight the need for expansion to the UK’s regional markets. Writing in The Scotsman, Nicola Ross, a partner at Morton Fraser, argues that litigation funding could be the key to providing added resilience for Scottish businesses in this difficult economic climate. However, the article also suggests that due to the often lower value of disputes in Scottish courts, traditional funders based in London have not taken an interest in these cases. Ross does highlight that with the Scottish legal system now allowing class actions in the form of group proceedings, there should be more opportunities of interest to these funders. However, the speed at which this evolution can happen is of key importance, she argues, as Scottish businesses struggling under the instability of the financial markets will not be able to continue accessing legal redress without support from the third-party funding sector.
Commercial Regulatory Issues

New Research Suggests UK Public are Skeptical About Funder Involvement in Class Actions

Litigation funders in the UK have been increasingly vocal about the potential for a surge in mass class actions, paralleling the rise in large-scale class actions in other prominent jurisdictions. New research demonstrates that whilst funders and law firms may be optimistic about these opportunities, the general public remain largely skeptical towards the practice, although certain signs point to increasing acceptance in some areas. Reporting by The Law Society Gazette highlights forthcoming research by Portland Communications, which shows that majorities of respondents would support class actions where they were directly affected, especially where businesses have allegedly committed environmental harm. This was reflected by the fact that energy and finance were the two top industries where the public would favour class actions taking place. However, a major stumbling block for class actions in the UK is that less than half of respondents felt class actions were likely to actually secure compensation or even had the capability to force companies or institutions to take accountability. More worryingly for the litigation finance industry, nearly a quarter of those surveyed said they would not join a class action where funders received a ‘large percentage’ of the award. The survey suggests that a major hurdle for both lawyers and funders is the need to dispel the assumption that it is they who are the ones benefiting from class actions, rather than individual claimants.
Announcements Commercial People Moves

Deminor further develops its litigation funding activities in Germany

Deminor further develops its litigation funding activities in Germany with the addition of Patrick Rode in Dusseldorf. Patrick Rode will bring experience and expertise in commercial, securities and antitrust litigation to further increase Deminor’s footing in the German litigation funding market. Deminor is pleased to announce the appointment of Patrick Rode as Senior Legal Counsel. He will strengthen the team dedicated to the German litigation funding market already consisting of Felix von Zwehl, Dr. Malte Stübinger and Jasna Jarmuschke. Patrick will be based in Dusseldorf and strengthens the German team in Brussels and Hamburg in Deminor’s continued approach to expand within the German market. Erik Bomans, CEO of Deminor: “After the opening of Deminor’s German office in Hamburg in 2021, the demand for Deminor’s litigation funding services in Germany continues to increase. We very much welcome the opportunity to bring Patrick on board and to now also have a presence in the western region of Germany known as the Rhineland.” Patrick is an experienced commercial litigator who is admitted to the bar in Germany and who has worked on a broad range of domestic and multi-national disputes. His focus lies on cross-border post M&A-litigation and antitrust damages disputes, which are becoming increasingly relevant for Deminor’s business. Patrick comes with experience working for several renowned national and international law firms, most recently as an Associate with Latham & Watkins in the firm’s Litigation & Trial practice and as a Litigation & Disputes Partner with a medium-sized German law firm. Patrick was recognised by the US publishing house Best Lawyers in the category „Ones to Watch 2023” in Litigation. On joining Deminor, Patrick comments: “I am absolutely delighted to be joining a firm with such a great track record and growth rate. Litigation funding is still at a very early stage in Germany, and I look forward to promoting the benefits of third-party funding and especially the opportunities Deminor has to offer.”
Commercial Deals

Bench Walk to Fund Environmental Claim at UK Competition Appeal Tribunal

Following the COP 27 summit earlier this month, there has been much discussion about the role litigation funders can play in financing claims against companies that fail to meet ESG standards, or act with disregard towards the environment. A new case brought against UK utilities companies demonstrates this very potential, as a major industry funder has stepped in to finance the claim. Announced in a release by UK law firm, Leigh Day, a new competition damages claim being brought against water and sewage management companies is being funded by Bench Walk. The opt-out claim, brought on behalf of UK households, alleges that these companies unlawfully disposed of untreated sewage and wastewater into public waterways. Zoë Mernick-Levene, partner at Leigh Day, noted that this is a landmark case, as it is the first environmentally-focused claim being brought before the Competition Appeal Tribunal (CAT). The funding agreement and additional ATE insurance for the case were brokered by Factor Risk Management, whilst AlixPartners are attached to the case in the role of economic experts.
Consumer

Funder Agrees to $1 Settlement with CFPB over 9/11 Fund Litigation

As the litigation finance industry has matured, the possibility of funders running afoul of legal oversight grows. This was the case in a recent settlement between RD Legal Funding LLC and the U.S. Consumer Financial Protection Bureau. Reporting in Reuters covers the announced settlement, which highlighted the funder’s alleged predatory lending practices with 9/11 first responders, where it allegedly charged 250% interest on loans to these clients. While RD Legal did not admit any wrongdoing, the settlement required the funder to pay a whopping $1 for breaking New York’s state law concerning high-interest loans. RD Legal had argued that the financial assistance it provided to the first responders were not loans, but instead ‘sales of legal receivables’ as part of its funding agreements. The CFPB and the New York Attorney General’s Office had originally sought higher damages outlined under the state’s consumer protection law. However, the CFPB stated that this settlement provides the first responders access to the victim relief fund, totalling $482 million–hence the miniscule agreement.
Announcements Commercial People Moves

Omni Bridgeway APAC team expands and announces senior appointments

Omni Bridgeway is delighted to announce new arrivals to its growing team in Asia, reinforcing the company’s leading position as the largest and most recognised dispute finance team in the market. We also congratulate senior colleagues on their promotions. We welcome Eloise Matsui as Investment Manager. Eloise joins us from Stephenson Harwood where she was a partner in the restructuring and insolvency team in Hong Kong, and previously King & Wood Mallesons where she was a member of the litigation and regulatory team. Eloise brings a wealth of expertise in restructuring, insolvency and cross-border litigation and has acted for foreign, listed and private companies, creditors and insolvency practitioners across the breadth of restructuring, insolvency, enforcement and associated litigation scenarios. Mitch Dearness joins our team as Investment Manager, bringing expertise in arbitration and cross-border litigation, with particular experience in the infrastructure, mining and energy sectors. Mitchell joins us from Herbert Smith Freehills where he was a Senior Associate in the Singapore disputes team. Kristen Smith (Melbourne) and Ewen McNee (Sydney) have been promoted to Senior Investment Managers, and Niall Watson-Dunne’s role as Investment Manager (Sydney) expands in recognition of his case management responsibilities. We acknowledge their combined extensive experience in legal finance and valuable role in the company’s development. Cheng-Yee Khong (Hong Kong) has been appointed Senior Relationship Manager, responsible for new case origination and relationship management across jurisdictions. “Our expansion is in direct response to the market’s flourishing demand for our financial solutions, and reflects our ability to attract leading talent. We are thrilled to welcome Eloise and Mitch to our wonderful team and further expand our services to clients.” Tom Glasgow, Managing Director and Co-Chief Investment Officer (APAC), Portfolio Manager – Global International Arbitration “Congratulations to colleagues on well-deserved promotions. It is the talent and hard work of our people that results in Omni Bridgeway being consistently recognised as the leading legal finance team.” Oliver Gayner, Managing Director and Co-Chief Investment Officer (APAC).
ABOUT OMNI BRIDGEWAY
Omni Bridgeway is the global leader in legal finance and risk management, offering dispute finance from case inception through to post-judgment enforcement and recovery. Omni Bridgeway is listed on the ASX and has operations around the world.
Commercial People Moves

LCM Strengthens Global Leadership with New Hire

Litigation Capital Management (LCM) has announced that it is bolstering its senior leadership with the appointment of Danny Kinnear as Head of Corporate Origination. Announced via LinkedIn, LCM’s appointment of Mr. Kinnear will draw on his vast experience across risk management and finance, building on previous accomplishments including leading Deutsche Bank’s European Structured FX Sales, and previously serving as the Head of EMEA Corporate FX Sales for Nomura. Speaking about joining the LCM team, Mr. Kinnear highlighted his desire to help “clients access innovative solutions” in all areas of financial services, and noted the synergy between his own approach and LCM’s solutions, which have positioned the firm as a “global leader in litigation funding.”
Commercial Deals

Law Firms Face Price Pressure from Clients Looking to Lower Legal Costs

Faced with global economic uncertainty, litigation funding has been classified as an investment market insulated from broader recessionary pressures. However, law firms are not seeing the same level of protection, and are facing increased competition from competitors who can offer lower prices to meet their clients’ restricted budgets. Reporting by Legal Futures highlights the results of a survey conducted by Harbour Litigation Funding, which found that 44% of law firm partners are negotiating with clients who are seeking lower legal fees, leading to 46% of those surveyed reporting clients moving business to firms with less expensive rates. This was further compounded by respondents highlighting the fact that their clients were increasingly depending on their in-house legal counsel to handle matters. Harbour’s Chief Investment Officer, Ellora MacPherson, stated that she expects these compounding factors to lead to an increased strain on law firms’ own balance sheets. MacPherson suggests that outside of lowering their prices, law firms will need to innovate through technology to reduce internal costs, whilst seeking more creative, low-cost methods of supporting clients.
Announcements Case Developments Commercial

Legal claim launched against Great Northern, Southern and Thameslink after millions double-pay for fares in London

A hearing has been set by the Competition Appeal Tribunal (“CAT”) to take place on the first available date after 20 February 2023 (the “CPO Hearing”).

The CPO Hearing is in respect of a claim launched on 24 November 2021 by Justin Gutmann, formerly of Citizens Advice, on behalf of millions of passengers who have allegedly paid twice for part of their journeys whilst travelling with Govia Thameslink Railway (“GTR”), (the “Proposed Claim”).

The Proposed Claim is against GTR (and its parent companies) which operates the following franchises:

i.                     Thameslink

ii.                   Southern

iii.                 Great Northern

Following a case management conference which took place on 15 November 2022, the CAT has confirmed a further hearing should take place so that the CAT can consider the following:

i.                     if Mr Gutmann (the person proposing to be the class representative) is suitable to act on behalf of the proposed class and should be certified to bring the claim; and

ii.                   if the Proposed Claim itself is suitable to be brought as a collective action and whether it should proceed to a full trial.

The CPO Hearing is to take place on the first available date after 20 February 2023.

Background to the Proposed Claim

Mr Gutmann alleges that GTR, as the operator of the Great Northern, Southern and Thameslink franchises has breached competition laws by charging TfL Travelcard holders too much for travel  on their routes.

Travelcard holders have already paid for their travel within the relevant TfL zones, so a Travelcard holder would only need to purchase a (cheaper) ‘boundary’ fare or ‘extension’ fare for the remainder of their route, to get to their destination. Mr Gutmann alleges that GTR does not make boundary fares sufficiently available for purchase. The claim is estimated to be worth around £73.3 million in damages.

Who is eligible?

Passengers who owned a Travelcard at any time from 24 November 2015 and also purchased a rail fare from a station within the zones of their Travelcard to a destination outside of those zones may be eligible for compensation.

What next?

The CAT will now determine whether or not Mr Gutmann’s claim is allowed to proceed to trial. If the claim is permitted to go forward, then those affected will not have to pay any legal fees, nor contact lawyers. 

Affected passengers who live in the UK will automatically be included in the claim, although they can choose to opt-out in due course.

Affected passengers who do not live in the UK will also be eligible to join the claim but must proactively opt-in.

As the case progresses, we will provide more detail as to what rail users will be required to do to either opt-in or opt-out. 

Further information 

The claim’s website and social media channels are available from the day of launch at BoundaryFares.com,  where affected passengers can sign up to receive further information regarding the legal proceedings. Justin Gutmann is also available for interview.

Commercial Legal Innovation

Litigation at the Forefront of Future Climate Activism

As we have already seen so far this year, litigation funders are keen to target capital towards ESG cases, and have even gone so far as to fund individual law firms to pursue such litigation, as was the case with North Wall Capital’s financing of PGMBM. On the back of the COP 27 summit, some industry commentators are looking to the future of such litigation, focused on holding entities that disregard their climate impact to account. In an article for Sentry Funding, Rachel Rothwell provides an overview of the current state of litigation targeting environmental issues, as well as looking ahead to how this space will evolve. Citing a study by Columbia Law School, Rothwell highlights that there are over 2,000 cases involving issues related to climate change. Furthermore, the article notes that this type of litigation has progressed from being primarily focused on misdeeds by nation states to now include corporations. Rothwell also uses the examples of cases brought against companies like Vedanta Resources and Royal Dutch Shell to demonstrate the successful impact climate activists have had in courts. The article suggests that ‘shareholder activism’ is likely to be at the forefront of future climate-related litigation, and will expand to include a broader range of companies that have less immediate impact on the environment.
Case Developments Commercial

Brown Rudnick Announces 2023 Litigation Funding Conference

As the European funding market continues to grow, the demand for industry gatherings and exchanges of ideas between thought leaders is also on the rise, giving way to another industry conference in the coming year. Building on the success of its 2022 event, Brown Rudnick announced its European Litigation Funding Conference 2023, set to be held in London on Thursday 16 March 2023. The one-day conference will feature the firm’s own partners alongside industry leaders from other leading UK and European funders, insurers and service providers. Brown Rudnick’s inaugural conference held in May of this year included speakers from Bench Walk Advisors, Therium, Burford and Deminor. Whilst the agenda for the 2023 event has not yet been released, the 2022 conference saw discussion topics ranging from ‘the rise of class actions’, to the interplay of ‘litigation funding and ESG’.
Commercial

Nimitz Appeals Litigation Funding Disclosure Order in Patent Dispute

In the evolving back-and-forth between disclosure and non-disclosure of third-party funding, it continues to be demonstrated that individual court decisions are the driving force for momentum in either direction. An ongoing patent dispute case in Delaware has reinforced this narrative, as the plaintiff seeks to appeal a court ordered disclosure of any litigation funding arrangements. Reporting by Reuters reveals that Nimitz Technologies has appealed Judge Colm Connolly’s order to reveal the specifics of its relationship with Maxevar, arguing that such information is irrelevant to its lawsuits and should remain confidential. Nimitz maintained its position that Maxevar has acted only as a consultant for the litigation and that it has not received any funding from Maxevar that would fall under Judge Connolly’s standing order to disclose such arrangements. In response to the appeal, the U.S. Court of Appeals has issued a temporary pause on the order, which will also provide the opportunity for the defendants to respond. This case also bears similarity to another of Judge Connolly’s proceedings, VLSI Technology’s patent dispute with Intel Corp, where he ordered a pause to that litigation after stating that VLSI did not sufficiently disclose details around its financial backing. Whilst the outcome of both these disclosure orders is not yet apparent, it is clear that courts will continue to engage in close scrutiny of third-party funding arrangements.
Case Developments Commercial

Alan Dershowitz Ordered to Disclose Identity of Funders in CNN Lawsuit

One of the biggest topics of discussion around litigation funding at present is the issue of transparency, and the extent to which the presence of third-party funding in cases should be disclosed. Whilst this discussion is nothing new within the industry, an ongoing high-profile case has pushed the issue into the spotlight of mainstream commentary. Analysis by the Freedom of the Press Foundation, highlights the ongoing matter of a defamation lawsuit being brought against CNN by the famous lawyer and professor, Alan Dershowitz. The defendant's request that the identity of Mr Dershowitz’s funders be disclosed has now been granted by a federal district court judge.  Magistrate Judge Patrick M. Hunt explained his decision by noting that it is relevant for the court to know whether the plaintiff’s funders are seeking to advance their own agenda, rather than simply supporting Mr Dershowitz’s attempt to seek damages. Mr Dershowitz had previously revealed the existence of third-party funding, the “Alan Dershowitz Legal Defense Fund”, but did not identify which individuals or groups actually contributed to this fund.  Whilst this case differs from the majority of commercially funded litigation, both in its participants and the nature of the case, it does stand out as another data point in the trend of courts growing increasingly active in mandating disclosure of the presence of third-party funders.
Commercial Regulatory Issues

Chamber of Commerce Poll Finds Majority of US Voters Support Disclosure of Litigation Funding

With the issue of disclosure at the forefront of industry commentary, those who seek to limit the influence of third-party funding are ramping up pressure to have legislation enacted which would mandate disclosure of funding agreements. Following on from a recent study, which argued that third-party funding posed a risk to America’s national security, the Chamber of Commerce recently conducted public opinion research to take the pulse of voters on the issue. The Chamber’s Institute for Legal Reform released the results of a poll conducted on the day of the midterm elections, asking 800 voters whether they supported the idea of mandatory disclosure for third-party funding agreements. The poll found that a majority of voters, 69%, supported such a proposal, with broad support from voters across the political spectrum. The poll also reported that an even greater majority of voters, 82%, opposed the idea of allowing foreign governments to invest in litigation targeting American companies. Whilst the Chamber’s position on litigation funding is well-established, industry leaders will need to bear in mind that a wide swathe of voters are in favour of greater disclosure, especially when framed as an issue of foreign interference in domestic legal proceedings involving American businesses.
Consumer

Guilty Plea in New York Slip and Fall Fraud

New York attorney Marc Elefant has reversed his previous non-guilty plea, now pleading guilty to one count of conspiracy to commit wire fraud in the organization of a lucrative slip and fall scheme. Elefant is accused of coordinating the trip and fall scam with fellow attorney, George Constantine, and physicians Andrew Dowd and Sandy Riberio, between 2013 and 2018. According to Reuters, Elefant worked with co-conspirators to recruit victims to stage slip and fall accidents. The victims would undergo unnecessary surgeries that would be paid for by litigation funders. As part of the conspiracy, litigation investor Adrian Alexander was also charged with a role in the slip and fall fraud run by Elefant.  Prosecutors claim that the trip and fall scheme was organized to fake personal injuries. Allegedly, surgeries were required if victims wanted to proceed with a slip and fall claim to maximize the fraud's potential returns. According to Reuters, individuals saw little-to-no recovery from their claims with most of the monies distributed between the co-conspirators. 
Commercial Fundraising

Omni Bridgeway Explores Ukraine ‘War-Time’ Compensation Fund 

Many have predicted Russia's inevitable economic fallout stemming from its war in Ukraine. Omni Bridgeway has announced the formulation of a task force dedicated to monitoring the war in Ukraine with a mandate to explore various ways of retrieving compensation from damages and other losses caused by Russia's invasion.   On LinkedIn, Mr. Mikolaj (Miko) Burzec says that Omni Bridgeway is working with various stakeholders to carve out ways forward for the Ukraine Compensation Fund. Omni Bridgeway is looking to work with individuals or organizations who are victims of direct economic losses from Russia's war with Ukraine. The firm will consider claims over 1 million euro for actions taken by Russia from 27 February 2014 to present.  Furthermore, Omni Bridgeway says that the Ukraine Compensation Fund will operate on a contingency "no success, no fee" basis. All upfront legal fees and other costs will be covered by Omni Bridgeway, with success agreements arranged with clients beforehand.  To learn more, email: ukraine@omnibridgeway.com.
Commercial Deals

Partnership between Sentry Funding and Verify 365 aims to Streamline Compliance Process

As the litigation funding industry continues to mature, the focus of industry leaders will naturally shift from providing the core service of capital provision, to finding ways to innovate and modernize the practice. A new partnership between the UK’s largest panel of litigation funders and a software company demonstrates this drive to optimize the customer experience. This week’s announcement of a partnership between Sentry Funding and Verify 365 looks to set the industry benchmark for anti-money laundering (AML) and client verification practices in the litigation funding industry. The partnership will allow Sentry to utilize Verify 365’s Digital Onboarding Platform, to optimize the process of onboarding new clients in terms of AML/KYC verification. Sentry Funding’s commercial director, Tom Webster, stated that the primary benefits for the company will be increasing both the speed and transparency of compliance checks when working with new law firms and clients. Rudi Kesic, CEO of Verify 365, highlighted that his firm’s platform will allow funders to reduce any fears or hesitation from clients that working with litigation funders could lead to potential issues around fraud or money laundering.
Commercial Legal Innovation

ME Litigation Funding Recognised as Tech Trailblazer

Litigation funders face similar challenges as big banks and traditional lenders, needing to both fulfill their core financial role to customers while also competing within the rapidly evolving marketplace driven by technology. Therefore, it is no surprise that funders who are able to demonstrate the agility of a fintech are being recognized for their digital capabilities. Featured in an article by WIRED, Manchester-based ME Litigation Funding has been highlighted as a ‘Tech Trailblazer’ in the Northwest of England. The collaboration between WIRED Consulting and HSBC UK has sought to identify companies across the UK who are standouts in their respective industries, for their innovation and fast-growth. ME Litigation Funding was recognized by the initiative for its underwriting platform, which automates the entire process of underwriting claims and seeks to maximize the speed and efficiency of the process for clients. Rob Cooper, CEO of ME Litigation Funding, highlighted the importance of talent attraction and retention for a fintech company that relies on having skilled employees with technical expertise.
Announcements Commercial Legal Innovation

GLS Capital Recognized in 2022 Global IP Strategist List

GLS Capital, one of the world's largest private investment firms focused on litigation finance, is honored to have (3) IP Strategists named to IAM's Global IP Leaders List in 2022, including Adam Gill, Jamison Lynch and Joel Merkin all receiving recognition. Intellectual Asset Management ("IAM") is the trusted source of worldwide news, analysis and data regarding intellectual property. IAM publishes its annual IAM Strategy 300, which showcases the top experts throughout the global IP industry, acknowledging leaders from in-house, private practice and service provider roles. The rankings are based on qualitative analysis from leading market experts, across the major IP markets in North America, Europe and Asia. Upon the recognition, Adam Gill, Managing Director of GLS Capital, shared the following statement: "On behalf of GLS Capital, I, along with my colleagues Jamie Lynch and Joel Merkin, are thrilled to be named to IAM's Strategy 300 List for 2022. We value this recognition as GLS was built on helping patent owners protect their IP and supporting partnerships with transparency, integrity, and responsiveness. We're humbled that IAM has included GLS every year since our inception." GLS Capital provides litigants and law firms with capital they need to pursue their cases or to manage risk; this approach enables clients to focus on what is important: growing their business, cultivating relationships, and keeping the lights on.  For more information about GLS Capital, please visit the corporate website, or call 312-900-0169; to learn more about IAM and their 2022 Strategy 300 Global Leaders Guide, click here.  
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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