Delta Capital Partners Management, a global private equity firm specializing in litigation and legal finance, is pleased to announce that David Temporal has joined the company as its Chief Marketing Officer.  Temporal also will be a member of the firm’s Management Committee and its Investment Committee. Temporal will oversee Delta’s worldwide marketing and communication responsibilities; work closely with Delta’s President and the firm’s existing team in London as they continue to expand the firm’s offerings across the UK and Europe; and work closely with Delta’s CEO on various key marketing and business development initiatives. Temporal has held various senior positions in the legal and marketing industries over his 30+ year professional history, including advising Magic Circle, Silver Circle, and AmLaw 100 firms with respect to attorney and practice group acquisitions, M&A, and other strategic activities. Temporal is also an entrepreneur having founded and led his own successful strategic consulting firm, Lexington Strategic Advisors. “I am thrilled to have David join the Delta team, where he will leverage his considerable marketing prowess and creativity to materially enhance our worldwide marketing and communication strategies.  As we have continued to expand globally, we had been searching for someone of David’s caliber to augment our existing team in London and also to assist with the execution of various important business development initiatives that we will be launching in the coming months.  David is perfect in these roles and I could not be more excited,” said Christopher DeLise, Delta’s Founder, CEO, and Co-CIO. “Joining the team at Delta provides me with a perfect opportunity to bring my experience-based, market insights about the legal sector and work to progress the development of Delta’s innovative funding solutions, which I believe to be a hugely valuable resource for law firms and businesses,” said Temporal. About Delta Delta Capital Partners Management LLC is a US-based, global private equity firm specializing exclusively in litigation and legal finance, judgment and award enforcement, and asset recovery.  Delta creates bespoke financing solutions for professional service firms, businesses, governments, financial institutions, investment firms, and individual claimants to enable them to investigate claims, pursue litigation or arbitration, recover assets, enforce judgments or awards, and more effectively manage their risks, cash flow, and capital expenditures.

The following is a contributed piece by Ed Truant, founder of Slingshot Capital, Part 1 of this 2-part series can be found here.  Executive Summary

• EDLC Investing is a relatively new, niche market requiring highly specialized skills
• EDLC has many advantages over CLF investing, although it is not a directly comparable investment strategy due to its application to publicly traded markets
• EDLC investing requires investors to have more of a buy/hold mentality than a ‘trader’ mentality due to the ‘fundamental’ risk being assumed
• Despite EDLC ‘events’ being non-correlated, the publicly listed security aspects of their portfolios add some level of correlation which will impact fund performance, both positively and negatively

Slingshot Insights:

• There are many benefits and few drawbacks to EDLC investing as compared to CLF
• The scalability of EDLC investing is only limited to the number of dispute events
• The ability to control and take advantage of risks, including the ability to influence litigation, in EDLC investing makes this an overall superior asset class in my opinion
• The tools open to EDLC managers to mitigate risk or enhance returns (hedging, changing position sizes, trading during the investment period, liquidity) provide a number of benefits to securing better risk adjusted outcomes and allows them to avoid complete losses, although they come with a cost
• EDLC investors may also have the ability to undertake CLF investing within their mandates

In Part 1 of this article, I introduced the concept of Event Driven Litigation Centric (EDLC) investing and started exploring some of the ways in which it differs from Commercial Litigation Finance (CLF) investing.  In this article we will dive deeper into some case studies and discuss some of the relative benefits and the return attributes of the asset class. Case Studies In order to make the concept more tangible, I reached out to a successful and influential investor in the EDLC market to provide some case studies of events in which they had invested along with some insight into how these investments were structured and the returns they produced. Case Study #1 – Indivior PLC (Ticker: INDV.L) Indivior touches on many of the themes at the center of EDLC investing.  Indivior Plc (“Indivior”) pioneered the use of buprenorphine for the treatment of opioid use disorder (“OUD”), including for the abuse of heroin and oxycontin.  For the past two decades, Indivior has dominated the OUD treatment market by virtue of its strong patent portfolio and continued improvements and refinement of its drugs.  However, in 2018, the company was hit with a criminal indictment in Virginia by the Department of Justice (the “DOJ”) for its aggressive marketing activities.  This led to a massive drop in the company’s public securities (bonds and equity), driving a once £3.6 billion market cap company to the point where the equities were trading down to the average of 41 pence during the first quarter of 2020, effectively liquidation levels.  It was at that point that the EDLC manager began its analysis, starting with researching the DOJ’s legal allegations.  This was supplemented with FOIA requests to the FDA, CDC and DEA, agencies that supervise and regulate Indivior.  Finally, the EDLC manager attended hearings in an obscure courthouse in Abington, Virginia where they were the only observer in the courtroom.  These due diligence steps, amongst others, led to the strong conclusion Indivior would settle the DOJ case for a fraction of the damages sought after and once resolved, the strength of the underlying business would be appreciated by the market.  These conclusions led the EDLC manager to make a significant investment at the then depressed stock price levels.  In July 2020, the DOJ and Indivior settled and the equity securities materially appreciated, trading at 120 pence at the time of the settlement.  Notably, this opportunity existed only for EDLC investors as there was no opportunity for investment by CLF investors. Indivior’s stock price currently trades around 1,800 pence, which translates to 360 pence prior to the reverse stock split as a comparison to the 120 pence price at time of settlement and the 41 pence price when the investment was made or 9 times appreciation in value from trough to current market values. This is a notable example because not only did value get created through the valuation dislocation related to the event, but the underlying thesis of the strength of Indivior’s business provided further upside as the company continued to capitalize on their product pipeline and expand market share. Case Study #2 – Hertz Global Holdings Inc. (formerly Hertz Corporation) (New Ticker: HTZ) Where Indivior presented a mispriced security arising from a claim against a company, Hertz equity was mispriced based on the market believing that the Hertz bankruptcy process would extinguish pre-emergence equity holders.  The EDLC manager had prior experience in bankruptcy equity situations and believed Hertz equity holders were entitled to a recovery in the bankruptcy case, a view no one in the market believed as reflected by Hertz equity trading as low as $0.50.  Based on prior experience in bankruptcy equity situations, the manager assembled the appropriate advisors and like-minded hedge funds, the Hertz Ad Hoc Equity Steerco (the “Steerco”), to litigate in the bankruptcy case for a recovery.   The Steerco, partnering with a private equity team consisting of Apollo, Knighthead and Certares (the “AKC Team”), succeeded in convincing the court to hold an auction to bid for the assets of Hertz, as opposed to allowing the creditors to take control.  The AKC Team succeeded in winning the auction and, as a result of their involvement, the manager had the opportunity to invest an outsized proportion of capital in what was one of the most successful restructurings in 2021.  As an EDLC investor, it was able to increase and decrease its position throughout the bankruptcy case as new facts arose, an option most CLF investors do not have.  Equally important was the manager’s ability to drive the litigation (unlike CLF investors who are passive) to enhance recoveries for their specific Ad Hoc Equity group.  And finally, due to their deep involvement in the process and partnership with the private equity sponsors (Apollo and Certares), the Manager developed a deep appreciation of the underlying business which provided a competitive advantage well after Hertz’s emergence from bankruptcy.  In the month following Hertz’ emergence from bankruptcy on July 1, 2021, the average value of the assets received per share of pre-reorganized equity was $8.95, and further increased in the months to follow.  From trough to peak an EDLC investor could have stood to earn 18X their investment. Investment Scale One of the drawbacks of the CLF market is a lack of scale.  The average single case funding contract is $4.3MM, according to Westfleet’s 2022 Litigation Finance Market Report. There are larger single case and portfolio financing investments available, but fewer in numbers. So, if you are an investment manager that is looking to achieve economies of scale for your own fund and manage significant amounts of money for large institutional investors, scale is a critical success factor that is not inherent in the CLF market (while portfolio financings do allow you to increase scale they are also limited in number and the large single case investments are few and far between which is why Burford, the world’s largest litigation finance company, mainly focuses on portfolio financings). Conversely, EDLC investing is only limited by the size of the publicly listed entities that are impacted by the event. In the context of the public markets, this is a massive potential marketplace estimated at $119 trillion and $46 trillion for the Global and American bond markets, respectively. Global and American equity markets add another $100 trillion and $40 trillion, respectively. Accordingly, the scale for EDLC is only limited by the number and size of companies that are impacted by a litigation or similar event at any given point in time. EDLC investors can take as large or as small a position in the debt and equity of companies as they want based on what is appropriate in the context of the risk inherent in the transaction and their portfolio construction parameters as well as any limitations therein. Further, EDLC investors are not only limited to investing long, they can also take short positions, where available. We will discuss more about short sales when we review the benefits of hedging. Another benefit of scale is that the transaction costs related to EDLC investments can be amortized over a much larger investment and so they are relatively less meaningful to the outcome of the investment as compared to the single case CLF market where the average case size is much lower and therefore the transaction costs (funding contracts, diligence, expert opinions, etc.) have a much more significant negative impact (or ‘drag’) to the net return on investment. Return Timelines Most independent EDLC investors are structured in the form of a hedge fund. Hedge funds typically get compensated annually for their performance, making them a relatively short-term type of investment strategy. While the EDLC manager has the option to invest in longer-duration investments, they know full well how they will be measured by their investors. Conversely, CLF managers have no choice but to invest in and get judged on longer-term performance, similar to many private equity (“PE”) managers.  However, unlike PE managers I would content it is impossible to value single case investments whereas it is easier to value enterprise value of operating companies (less so for earlier stage ventures) and so the CLF manager loses the ability to mark-to-market their investments the way PE does. Therefore, it is not uncommon for CLF managers to run negative returns in their funds (in part due to the J-curve effect and in part due to the fact that investments are held at cost until a write-down or realization event) for the first few years of the fund’s life as they deploy their commitments and their early investments start to progress (although invariably CLF managers will have some strong early unexpected wins). So, if you are an investor in these strategies you will naturally favour the manager that can produce positive short-term returns over one that may ultimately produce good returns but only after a significant portion of the portfolio (think > 75%, depending on fund concentration) of the portfolio has been realized (which is not to say this is the appropriate way in which to measure performance, it’s just a reflection of investor bias). Suffice it to say, comparing the two strategies in terms of short-term performance will yield dramatically different results and you may only find out your CLF investor is good after 5, 6, or 7 years, which is too long for most investors. For foundations, endowments and pension plans that have longer-term investment horizons they are more apt to give the CLF manager the benefit of the doubt. For most other investors, they will want to see performance manifest fairly quickly and so EDLC investment will probably be more in alignment with their expectations. Liquidity & Duration While investors typically speak of duration and liquidity as two separate and distinct concepts, for commercial litigation finance investors the two are intertwined. For a CLF investor, their ability to obtain liquidity on their investment is typically limited to obtaining co-investors or attracting a secondary purchaser if they can find one, potentially assisted with the application of insurance.  For EDLC investors, they are inherently investing (although not exclusively) in the public markets which means their investments are as liquid as it gets (perhaps less so for Rule 144 Debt, which is a less liquid market). The availability of liquidity has a direct consequence for duration.  For example, if a litigation funder enters into a funding contract their main avenue for liquidity stems from the proceeds (or not) that result from the outcome of the case and the collection of the proceeds, which can take anywhere from a few months to a few years.  In certain circumstances and typically for very large cases there exists a ‘secondary’ market that will allow a funder to sell all or a portion of their interests in the case as the case becomes de-risked through the litigation process. A prime example of this are the secondary sales Burford Capital had arranged for its interest in the ‘Peterson’ claims, which allowed them to book significant gains and obtain cashflow even though the litigation had not been decided. Although, for litigation funders, this source of liquidity is a bit of an anomaly and mainly available to the largest of the cases. EDLC investors on the other hand, because they are typically investing in liquid markets to begin with, have the ultimate power over when to liquidate their positions, how much to liquidate (it doesn’t have to be all or nothing as it is with most litigation funding contracts), and how much to hedge their gains (or losses) if they are in a gain (or loss) position.  In essence, the EDLC investor is, subject to the vagaries of the markets, in control of their duration.  Although one could argue that the EDLC investor does require the event to occur in order to maximize their investment and so the ideal duration may be governed by the timing of the event.  The significant benefit associated with liquidity cannot be understated.  Other than binary risk, the single biggest risk inherent in financing litigation is duration and generally the longer the duration inherent in an investment, the lower the internal rates of return that investment can create because there is typically a limit to the quantum of proceeds or multiples of capital they can charge. A related point Is that CLF requires continued funding for appeals and remands.  Litigation duration is unpredictable and CLF managers may be forced to fund until final resolution/settlement.  EDLC Investors often realize the appreciation in their investment upon a positive decision, allowing the EDLC fund to exit without the risk of getting over-turned on appeal. Taxation There has been much written about the taxation of litigation funding contracts and the use of prepaid forward contracts as a method to ensure capital gains treatment for US tax purposes.  Unfortunately, there is very little in terms of precedent that exists to give CLF investors comfort that the outcome of funding contracts will in fact be taxed as capital gains for US tax purposes. The same uncertainty exists in many other jurisdictions. One of the benefits of EDLC investing is that it mainly involved investing in “securities” and it has been well established that gains/loss on securities are capital in nature. In the US there are differences in taxation between long-term and short-term capital gains but there is 100% certainty that gains and losses on securities are capital in nature. Accordingly, the certainty inherent in the taxation of EDLC gains is a significant benefit for investors that can save time and money as compared to assuming tax risk associated with CLF investing. Enough about theory, what about returns? Having been involved in the litigation finance market and being privy to a variety of fund managers’ results, the vast majority of which are for funds that have not been completely realized (an inherent limitation in assessing performance), I can tell you that from my perspective the industry in general is likely under-performing investors’ expectations, on average. However, I would also tell you that the experience is very manager specific with some investors content with their returns and others ecstatic.  In other words, as with many asset classes manager selection is critical to performance. On average, the CLF industry wins cases about 70% of the time and hence loses the remaining 30% (whether via outright loss, partial loss or withdrawals of financing commitments).  That 30% loss ratio places a lot of pressure on the remaining winning cases to perform, which would be fine if managers could control duration. But they can’t!  The combination of binary risk and duration risk makes this a very challenging asset class.  In addition, I am finding many managers do not understand how to build properly diversified portfolios and hence many of the portfolios I see are far too concentrated which makes it difficult to manage the inherent volatility of a portfolio with binary risk characteristics, especially when you marry that volatility with duration risk. When I look at the performance of EDLC investing, it is difficult to draw conclusions on performance simply because there are so few managers that pursue this strategy in a way that dominates their portfolios and even then much of this information is private.  What I can say is that the EDLC Manager with whom I have invested has produced approximately 52.84% returns since inception (29 months), but the returns are somewhat a mixture of realized and unrealized returns (i.e. they have yet to exit their investment but the underlying investments have gone up or down in value due to the volatility inherent in the public markets).  As I have referenced in the section below, the issue with an EDLC manager’s performance is that it combines realized and unrealized returns in any given period and so while you have invested in the manager to produce returns through their investment hold periods, the mark-to-market that occurs within the portfolio during the interim tends to muddy the return profile.  In ‘bull markets’, it will make the results look better than they actually are and in ‘bear markets’, such as those we are currently in right now, it can tend to make the results appear worse. Ironically, it is the current markets that make the best buying opportunities for EDLC managers as it is times of stress that contribute to more litigation and regulatory events and hence more and better opportunities as stock prices are also generally depressed, but such periods may add some duration risk. If you strip out the unrealized returns and focus on the realized returns, then the picture will more closely reflect the reality of the strategy.  One way to do this is to look at Special Purpose Vehicles (“SPVs”) that may be set up for specific investments where the size of the investment opportunity exceeds the fund’s concentration limits and review the performance of these SPVs which focus on a single investment thesis. On this metric, the EDLC Manager in which I have invested has had some exceptional returns across a number of investments which have exceeded 50% IRRs.  Of course, not every investment is successful, but I do like the fact that there are very few circumstances where the EDLC investor suffers a complete loss which is a meaningful statistical difference between the two strategies’ risk/reward profiles. In addition, you need to be very careful in extrapolating the outcomes of a handful of investments as statistically they will not be representative of the performance of a broader portfolio over a longer period of time. It is not uncommon and some might say it is necessary for CLF managers to book high IRR realizations early on in the life of the portfolio, but these early wins typically have low MOICs and are ultimately necessary to offset the losses that statistically occur in most portfolios. Having said that, the EDLC manager with whom I have invested produced +11.04% return in 2022, a year in which S&P 500, Dow Jones Industrial Average and the Russell 2000 returned -18.01%, -8.78% and -21.56%, respectively.  Accordingly, the EDLC investor produced strong non-correlated returns despite the portfolio being exposed to correlation, which I believe speaks volumes of the ability of this asset class to produce significant alpha.  The alpha is essentially driven through material public information, but one needs to be aware that the information is available and know where to look to find it and interpret it, which is the ‘secret sauce’ to exceptional returns in the EDLC space. Too Good to be True? If you are a CLF manager or investor, this is probably sounding almost too good to be true, right? Well, there are some downsides to EDLC investing. One of them is that EDLC returns are ultimately subject to the volatility of the markets as their investments are typically valued daily by the markets, which may, but more than likely do not, possess the same level of material public information as the EDLC investor. So, while an EDLC investor may be right, the stock market may decide otherwise at least until the date of the event that is causing the mis-pricing is reached and the resulting event information is disseminated through the public markets. Now, if we look at the larger publicly-listed litigation finance firms (Burford, Omni Bridgeway and LCM), we will also see that their stock prices are somewhat correlated despite investing in an otherwise non-correlated asset class.  So, they suffer some of the same correlation risks as an EDLC investor might although I suspect if one did the technical analysis they might find that EDLC portfolios are probably more highly correlated to the markets than the publicly listed litigation finance managers, in part because their investment positions are poorly understood by the market which is the reason for the investment to begin with and in part because their portfolios are almost entirely publicly listed companies with price transparency.  In the case of a pure play CLF fund their returns will be as uncorrelated as one can find in financial markets, which is a strong benefit for investors looking to offset their correlation exposures. However, I think what is important is to have the right perspective and time horizon when making any such investments involving “events”, be they litigation or anything else.  In the case of both EDLC and CLF, your investment thesis is based on the intended outcome that the manager is underwriting and not the variability inherent in the positions taken to affect those investments.  The following theoretical stock chart illustrates the point that you need to be invested for the right period of time to allow the outcome underlying the investment to realize or you may suffer as a consequence.  If your hold period is too short, you may suffer from the volatility of the markets and what would otherwise be a great investment if you held from A to B, the point of the realization of the underlying event (i.e. a 35% gain), becomes a poor investment because you decided to exit the fund at C (i.e. a 55.5% loss). As an investor, you really need to provide the EDLC manager with adequate time to prove out their thesis and judge their performance on the sum total of the outcomes (i.e. when they close their positions) of their various investments as opposed to the market’s view of their value in the periods in between when the investment is made and the event occurs and even then it may take another quarter or two before the market fully understands and properly values the impact of the event’s economic impact on the security.  And to a certain extent EDLC is perhaps best invested in through a private equity fund type structure where the investor does not have the option to obtain liquidity for a fixed period of time so that they don’t make the same mistake that many public market investors do, which is to let emotion overtake rational thought and sell out of their investment at the worst possible time.  Interestingly, the volatility illustrated in the chart above also presents an opportunity for the EDLC manager to take advantage of this volatility by increasing their position as the stock price moves toward C and decrease their position to lock in gains as the stock price heads toward B.  In other words, they can double down on their strong conviction investments if the market continues to get it wrong. All this to say whereas CLF is about as non-correlated an investment strategy as you can get, there is an element of correlation that EDLC investors have to contend with during the manager’s hold period.  Conversely, CLF managers don’t have the same price transparency for their investments as they derive their value from the contractual terms of the funding contract, which are ultimately driven by the outcome of the litigation, and hence it is virtually impossible to value litigation (although IFRS is going to make the publicly-listed entities attempt to do just that - it may work in the context of valuing a portfolio, but likely not in the context of a single case).  Although, I would contend that this is a small price to pay for all of the inherent benefits accorded the EDLC investing strategy relative to CLF investing and is no worse than the illiquidity afforded CLF investing. Fundamental Risk The other significant difference between the two strategies is the fact that an EDLC investor is assuming “fundamental” or company risk when they invest directly in debt or equity securities, whereas CLF investing is investing in a financial contract tied to litigation outcome.  Accordingly, an EDLC investor could be 100% correct about the undervalued nature of a given security in light of the litigation, yet their returns may suffer either due to correlation, as discussed above, or due to the fundamental risk inherent in the positions they acquire as they are direct investors in the company and a derivative investor in the claim. If a company wins its litigation event, but has to take a write-down in its operations or misses its revenue expectations then the EDLC investor may still lose overall.  However, it is very unlikely they will lose their entire investment which is a real risk in CLF investing. Of course, the opposite is also true and one could argue that the fundamental risk can also serve as a hedge for the litigation.  For example, the other scenario that could arise is that the manager was wrong on the outcome of the litigation but right on the fundamentals of the business which would allow the losses of one to offset the gains of the other, acting as an imperfect hedge. So, the inherent assumption of fundamental risk associated with EDLC investing can serve as an amplifier of returns, positive or negative, or it can serve as a hedge against the outcome of the litigation event. So, why isn’t EDLC investing a massive market? Simply put, it’s not an easy discipline to master and it does come with some uncontrollable variables. Understanding litigation and the potential outcomes thereof is very difficult to master. Understanding financial valuation is difficult as well as being complex, uncertain and varying with the markets. Understanding commercial operations of an operating business and its industry dynamics takes managers a lifetime to master. Finding all of those specialties in one place, is very rare.  To be fair, no one can be an expert in all of those areas effectively and so there is an element of EDLC investing which involves leveraging other experts and effectively operating as a ‘quarter-back’ to make the ‘plays’ happen. But as we all know, finding a Tom Brady or Peyton Manning doesn’t happen very often! Slingshot Insights As you will see from my disclosure below, I like the strategy so much I became an investor and this strategy now represents my largest investment in legal finance related strategies. In my opinion it provides all of the same exposures as those of litigation finance, but does so in a way that mitigates downside risk and maximizes upside potential. It adds an element of flexibility for the manager that can’t be found in CLF investing, in my experience.  The clear taxation treatment removes an area of lingering concern for me as it relates to the CLF marketplace. As long as you have an appropriate investing horizon and are prepared to deal with some mark correlation while the investment thesis plays out, this appears to me to be a significantly better approach to obtaining exposure to idiosyncratic risks to create a portfolio of uncorrelated outcomes. As always, I welcome your comments and counterpoints to those raised in this article.  Edward Truant is the founder of Slingshot Capital Inc. and an investor in the consumer and commercial litigation finance industry.  Slingshot Capital inc. is involved in the origination and design of unique opportunities in legal finance markets, globally, advising and investing with and alongside institutional investors. Disclosure: An entity controlled by the author is an investor in investing vehicles managed by the EDLC Manager referred to herein.

The following is a contributed piece by Ed Truant, founder of Slingshot Capital, Executive Summary

• EDLC Investing is a relatively new, niche market requiring highly specialized skills
• EDLC has many advantages over CLF investing, although it is not a directly comparable investment strategy due to its application to publicly traded markets
• EDLC investing requires investors to have more of a buy/hold mentality than a ‘trader’ mentality due to the ‘fundamental’ risk being assumed
• Despite EDLC ‘events’ being non-correlated, the publicly listed security aspects of their portfolios add some level of correlation which will impact fund performance, both positively and negatively

Slingshot Insights:

• There are many benefits and few drawbacks to EDLC investing as compared to CLF
• The scalability of EDLC investing is only limited to the number of dispute events
• The ability to control and take advantage of risks, including the ability to influence litigation, in EDLC investing makes this an overall superior asset class in my opinion
• The tools open to EDLC managers to mitigate risk or enhance returns (hedging, changing position sizes, trading during the investment period, liquidity) provide a number of benefits to securing better risk adjusted outcomes and allows them to avoid complete losses, although they come with a cost
• EDLC investors may also have the ability to undertake CLF investing within their mandates

As I interface with investors and fund managers in the legal finance market, I am constantly on the lookout for new investing strategies that can either provide a better risk-reward outcome than traditional legal finance investments, or add an element of ‘edge’. Edge is a word used in asset management circles to describe a unique point of differentiation that results in a better risk-reward outcome, which could either result in lower risk or higher returns or a balance of both, as compared to another manager executing the same strategy. In the commercial litigation finance market, many of the fund offerings are generally homogenous with ‘edge’ being provided by an area of specialization where the team has a data or insight advantage in comparison to their peer group, which in turn, allows them to outperform their competitors. Sometimes the manager has decided to focus on a particular case type (consumer, mass tort, bulk claims, etc.) and their portfolio consists entirely of that single case type, where they have created a point of differentiation around their ability to identify good cases and perhaps some efficiency associated with originating and administering claims to settlement. Sometimes, the manager will have a particular expertise in a particular claim type, Intellectual Property (“IP”) for example, and their portfolio consists entirely of IP claims. Another way to differentiate yourself is to apply an existing model to a different market.  In commercial litigation finance, many of the funding contracts are private, illiquid and are generally providing financial support to small private companies with limited financial resources.  However, there is another model that applies many of the same litigation finance attributes, but to the much larger public markets, and this may be referred to as the “Event Driven Litigation Centric” (“EDLC”) Investing market. Perhaps a more appropriate moniker is Event Driven Dispute Centric investing, as the strategy stretches beyond litigation and could involve any dispute (i.e. regulatory, customer, employee, etc.) that gives rise to a pricing dislocation. “Event Driven” investing is nothing new. It has been practiced by hedge funds and professional investors for decades. Investopedia does a great job of describing event driven investing, which follows: An event-driven strategy is a type of investment strategy that attempts to take advantage of temporary stock mis-pricing, which can occur before or after a corporate event takes place. It is most often used by private equity or hedge funds because it requires necessary expertise to analyze corporate events for successful execution. Examples of corporate events include restructurings, mergers/acquisitions, bankruptcy, spinoffs, takeovers, and others. An event-driven strategy exploits the tendency of a company's stock price to suffer during a period of change. However, if you do a search for Event Driven Litigation Centric investing, your browser may come back with few results, if any. If it does, it may reference situations involving securities litigation, which is but one application of this strategy. EDLC is not for the faint of heart, but there are many attributes that merit discussion and contemplation, because in comparison to commercial litigation finance, I believe it has many advantages and few disadvantages. First, let’s define what it is.  Event Driven Litigation Centric Investing Defined EDLC is a form of investing where the event involves litigation either for or against a publicly listed entity, where the investment is typically in the form of debt, equity, or both. EDLC investors look for investment opportunities where a piece of litigation (or similar event like a regulatory breach or other issue) arose for or against a corporation, and the market has either misinterpreted the risk or the reward such that the debt or equity of the corporation in question is either lower or higher than its intrinsic value when you adjust for the potential effect of the litigation (or other similar) event. It is often the case that the public markets are not rational (despite efficient financial market theories), and they consistently under or over react to an event, especially a litigation event where the potential outcomes and timing are inherently uncertain and almost impossible to accurately value.  To be fair to the public investor, including institutional investors, they simply have neither the information nor the skill to properly and accurately value the financial impact of such an event. Accordingly, in the absence of that information and insight, they indiscriminately ‘dump’ the stock and repatriate the proceeds elsewhere, or they mistakenly believe the event is less impactful than it is in actuality, and hold on to a stock that is overvalued (which indicates that perhaps a short position is warranted).  This is the exact point in time when EDLC investors start to roll up their sleeves and do a deep dive into the event to determine whether the impact on the company’s debt/equity is justified, over-estimated or under-estimated and react accordingly. In addition to the legal event causing the stock to drop or get mis-priced, there are also situations where the company has a claim that the market under-appreciates or is unaware of.  A strong example is the Hertz equity story (see Case Studies section in part 2 of this series) where no investor believed equity was entitled to a recovery in the bankruptcy.  The EDLC investors’ efforts to form an ad hoc committee, convince the court to give equity its ‘day in court’, bring in other funds believing in the equity story, and partnering with one of the private equity firms bidding for Hertz were activities an EDLC manager employed to reach a positive result In Hertz.  It was the involvement of an EDLC investor that prevented Hertz equity investors from getting ‘wiped out’, which was the only plan under consideration just two months before its emergence from bankruptcy. Once the EDLC investor validates their thesis regarding the potential impact on the subject company by combing over publicly available information, including data obtained through Freedom of Information Act (“FOIA”) requests or attending court hearings concerning the litigation and gaining a deep understanding of how these events may resolve, they then create a thesis to support an investment approach.  Once an investment approach is approved by the investment committee, the team starts to acquire an appropriately sized position in the stock or debt (or derivatives thereof) of the company with the idea that once the litigation that has given rise to the market reaction is either settled or there is sufficient information in the market for the market to value the impact, the debt or equity will then become appropriately priced by the market and the investment manager may choose to sell the securities at that time to lock in their gain and move on to the next opportunity, all else being equal. With EDLC now defined, let’s now look at how it differs from Commercial Litigation Finance (“CLF”). Comparison of EDLC to CLF Public Markets vs. Private Markets As mentioned, EDLC is essentially the application of legal finance to the public markets.  However, in order to appreciate what that means we must look at the differences inherent in the two markets. The size of the public and private markets in the US are relatively comparable with the private markets larger than the public markets based on capital raised ($2.9 trillion for private and $1.5 trillion for public based on a 2019 study), depending on how you approach the valuation of each. However, the liquidity of public markets at $33 trillion dwarf the private markets at $0.10 trillion in annual trades. These factors make the public markets much more attractive as there are many more options available to fund managers to mitigate risk and enhance returns. The public markets are also closely regulated (although some would argue not enough) and in the US financial markets this is the purview of the Securities and Exchange Commission (“SEC”).  The private markets are also regulated by the SEC, but much less so than the public markets due to the sophisticated nature of the investors in the private markets.  The public markets need to be more highly regulated as they are accessible by retail investors and therefore more susceptible to unscrupulous actors. In theory, the public markets are efficient and the prices therein reflect all information about the public company.  Private markets, on the other hand, are not transparent and therefore are considered to be inefficient in terms of information available to the markets (although any leveraged buy-out private equity fund may beg to differ), which many believe make them better investments. Given that the private markets lack transparency, investors are dependent on specialists to understand the value of these assets, whether those are private equity firms or litigation assets.  The quantification of value of litigation assets is that much more difficult due to the lack of information on the defendant’s position and due to the inherent idiosyncratic risk accorded every litigation in addition to the unknown position the defendant will take in terms of resolving the litigation. While the public markets are considered to reflect perfect information, it is rarely the case.  Further, in the case of an event like a dispute, the public market investors are generally ill equipped to understand the nuances of the dispute and the potential outcomes. All this to say, both markets rely on experts to guide decision making and in this respect the two markets are similar although the skill sets of the managers are very different. Asymmetric Returns Hedge fund managers love opportunities where their downside is limited, but their upside is not similarly constrained. In these types of opportunities, the downside risk pales in comparison to the upside potential, hence the outcomes are referred to as “asymmetric”. To a certain degree, this applies to CLF investing. For a given $1 investment, the CLF investor may lose the $1, but can stand to earn $3, $4, $5 or more if the investment is successful. However, in many funding contracts, for competitive reasons, the upside is limited and the limits are tied to duration. For example, a funder may be limited to a three times multiple on their investment if the investment pays out within three years, and that may increase to five times if it pays out in five years, but beyond that any additional duration is the risk of the investor as few are prepared to guarantee or compensate for duration risk.  Sometimes funding contract proceeds are contracted as a percentage of the case proceeds, and in such cases, the proceeds are only limited to the quantum of proceeds collected, thereby providing less constraints on the upside of the investment (but those claims generally have higher risks of downside loss). In contrast, EDLC investors can make their investments in equities and the very nature of equities is that their upside is unlimited.  And the consequence of this is not only can they benefit from the mispricing of the security in the market related to the litigation or regulatory event, they can also benefit (or potentially suffer) from the successful (or unsuccessful) operations of the company in which they are investing.  Accordingly, this puts the onus on the manager to not only analyze the event in the context of the value of the business, but they must also analyze the operations of the business in the context of the market(s) in which it competes. If an EDLC manager were to invest in the equity of a business on the basis of solely the litigation event that is impairing their value of the equity, then if that same business is performing poorly any gains that may result from the resolution of the event may be completely offset by the company’s operational performance, which is where hedging may come in to play. Another tool EDLC investors have at their disposal is to vary the size of the investment to take Into account the risk of movements in fundamental value.  For example, while an EDLC investor may be positively inclined to Sonos' intellectual property claim against Google, they may decide to size their Sonos position to a small percent of their portfolio and then wait until closer to the trial to increase the size to their more typical hold size.  This is unlike CLF investors who typically cannot modulate their Investment to take account of market conditions. Hedging When a CLF investor enters into an investment, they are typically limited in terms of their ability to hedge themselves, as their options to limit risk are constrained since many of the plaintiffs are private enterprises. Sometimes, the borrower might be a publicly-listed company that has other financial options to offer in terms of derivatives that could serve to limit downside risk to accentuate upside returns, but this more the exception than the norm. More recently, insurance products have been developed for the CLF market to effectively share the risk that CLF investors assume and while these have been generally helpful to offset loss, they can come at a steep price which significantly affects the economics of the CLF investing (although the same can be said for the cost of hedging in EDLC investing). It also remains to be seen whether these insurance products will ultimately pay off in the event of a loss as there hasn’t been a lot of empirical evidence of this given the nascency of the CLF insurance market (the same counter-party risk does not generally apply to derivatives). Conversely, in the world of EDLC investing the investor can typically use derivatives to structure their investment from the outset, which could potentially serve as a hedge (e.g. put options) to limit their downside risk if they are investing long the equity or an equity sweetener (e.g. call options) to potentially enhance the benefits inherent in a positive outcome.  Credit default swaps may be helpful to limit downside risk if the EDLC investor is investing in publicly-listed debt. Of course, as with any financial instrument the use of options comes with a cost.  The other challenge associated with derivatives is that they are generally time sensitive products, and since litigation is inherently difficult to judge in terms of timing, the use of derivatives comes with duration risk in addition to the binary risk associated with the litigation inherent in the EDLC investment. In this sense, options would be considered an imperfect hedge. EDLC Investors may also seek to Isolate the litigation claim.  Some empirical examples Include: (i) long Buenos Aires bonds (the only Argentinian province that has not restructured) and short Argentina sovereign bonds (which has high correlation to Buenos Aires debt), (ii) long Hertz equity and short Avis equity, and (iii) long Mallinckrodt first liens that have a make-whole claim (claim for call-protection) and short pari passu first lien debt that has no make-whole claim, thereby taking out company and market risk.  These are all tools that CLF investors typically don’t have in their funding contracts, mainly because many of their clients are privately held. Active vs. Passive Investing In the context of CLF investing, once the funding contract has been negotiated, the funder is prohibited by law, in most jurisdictions, from interfering in the case or influencing the lawyer or the plaintiff in their decision-making process.  Some funders will actively try to assist the plaintiff and counsel by organizing and participating in mock trials or they may bring data analysis to the attention of their partners to make for better decision making but by and large they are passive investors. EDLC investors on the other hand are typically active investors. They may sit on credit committee boards if they are owners of the debt and are actively trying to represent the best interests of the debt holders to maximize their return. They may also interact with management teams and provide their insight on the litigation event as it would not be uncommon for them to be in attendance at court events in an effort to ascertain whether the outcome of the event is likely to result in a manner consistent with their thesis, or perhaps inform them as to whether they should reduce their exposure or exit altogether. Other examples of activism include recommending supplemental strategic counsel to companies to enhance litigation strategies, sharing legal due diligence material with the company to improve litigation knowledge (i.e. sharing FOIA materials to improve knowledge about its competitors), and joining ad hoc bondholder groups. In addition, the EDLC investor can also provide the company financing to monetize litigation trust units other unsecured investors have no interest in. Lender vs. Owner They say “ownership has its privileges” and it is no less applicable to EDLC investing. Litigation Funders are non-recourse investors that ultimately obtain their rights through their funding contracts and as such their rights are limited to the terms and conditions of those very funding contracts and they cannot influence the outcome of the case.  Once they make their investment, there is not much they can do other than provide their opinions, provide value added services and watch the investment play out, which also makes them dependent on legal counsel and subject to the plaintiff’s wishes.  On the odd occasion and on the assumption the litigation has been de-risked and is of a decent size, the manager may be able to engage in a secondary market transaction to monetize part of their investment, similar to what Burford did with its “Peterson” investment. EDLC investors on the other hand are either unsecured or secured creditors in the case of debt investments and shareholders in the case of equity investments. As a creditor, EDLC investors have a number of protections afforded them either through their contractual documents or through rights established in common law or bankruptcy law to protect their investments.  Indeed, EDLC Investors in restructuring investments have an array of bankruptcy code provisions at their disposal to further their litigation interests.  In Hertz, the ad hoc equity holders challenged the proposed terms of the bankruptcy plan pursuant to sections 105 and 363 amongst other provisions of the US Bankruptcy Act to require an auction for the sale of Hertz. As an equity investor, they also have rights as shareholders in the company and protections afforded through state and federal law.  A relevant example is RenRen, a Chinese company with U.S. American Depositary Receipts, where the company colluded with Softbank to transfer valuable assets at significantly below market value.  Shareholders in RenRen challenged these transactions In NY state court arguing shareholder protection laws precluded the company's actions.  Shareholders succeeded with RenRen resulting in a positive resolution in December 2022.  In other words, they have a seat at the table and are potentially highly influential to decision making (either through the company or through the courts if they are chairing a creditor committee) and perhaps more so than even the company’s own management, in part because they are so highly specialized in their field and in part because of the protections the law provides. Many tools, many options For the most part CLF investors have one tool at their disposal and that is in the form of a funding contract. As there are no limits to the imagination, there are occasions when CLF investors can get creative and design funding contracts to work like derivative agreements or add elements of optionality, but those opportunities are few and far between in the CLF market in part due to competitive pressures at the time when these funding contracts are being sought and in part due to the private ownership structure of many of the litigation funding clients.  In this sense, the CLF market is a bit limited in terms of the ‘tools’ it can bring to the table and the solutions it can provide. Although, there are new insurance products being developed daily and managers like Soryn IP Capital are bringing true innovation into the legal finance market which I expect we will continue to see as the market evolves. One of the benefits of EDLC is that the capital markets provide many potential ways to approach investing which can be utilized in concert or separately, many ‘tools’ if you will.  While EDLC investors are mainly involved in public debt and equity investments, they also have many more ways to access investing in derivative markets (puts, calls, credit default swaps, etc.) that can serve to reduce risk or enhance the asymmetric returns for which this form of investing allows. EDLC investors can also undertake private transactions with these entities to provide similar outcomes to CLF, but typically they will enhance their positions by combining that with some sort of equity position to ‘juice’ their returns thereby enhancing the upside of the asymmetric return profile.  In short, the EDLC investor has many more options at its disposal to create the right product for each situation to (i) enhance the risk/return profile of the investment, (ii) control duration, and (iii) avoid a complete loss scenario. In addition to having many different options to structure their exposure, depending on the nature of their investment they may have the added benefit of being able to apply margin/leverage to enhance returns, which is something not typically available to CLF funders given the inherent binary nature of their investments and a general aversion by LP investors in these funds to allow for the use of leverage. Of course, the ability to risk share is also something that publicly-listed companies have at their disposal.  So, the EDLC manager has to be fully aware of the existence and extent of insurance coverage their investee company has in place for the given litigation exposure as this will serve to mitigate risk for the company and potentially negate the affect the outcome the litigation event will have on the price of its debt and/or equity. Deployment Risk? What deployment risk? I have written in the past about a risk that is unique to litigation finance relative to other alternative asset classes which is its double deployment risk.  The first deployment risk stems from the fact that most funders are investing out of a ‘blind pool’ fund which requires investors to commit before investments have been identified, a very normal practice in private equity. The second deployment risk stems from the fact that commitments are deployed into cases over time as part of a risk mitigating strategy and a reflection of the fact that resolutions can happen at any given point in time in the litigation cycle. As such, monies are not drawn and put to work immediately in most claims, whereas management fees are charged on these monies regardless of whether the commitment to the investments are drawn.  With less ‘money at work’ the returns on committed capital (as distinct from drawn capital) are diluted, whereas the impact of management fees on returns are accentuated, which places pressure on the portfolio to generate strong net returns. With EDLC investing, while the first deployment risk is equally applicable, when the EDLC investor makes the decision to invest, their investment monies go to work immediately if the manager chooses to commit to a full position out of the gate.  So, EDLC investing does not have the second deployment risk inherent in CLF investing, and they can scale their investments accordingly.  They then have the further flexibility to either sell down their position or increase their position depending on how things are progressing, how the markets are reacting and how the investment fits into their portfolio.  It is not uncommon for EDLC investors to “trade” their positions during their hold periods based on new knowledge and market reactions thereto. The lack of the second deployment risk also has a direct impact on the extent to which the management fees can represent a ‘drag’ on returns, which are exacerbated in CLF investing.  Multiple “kicks at the can” In the discussion of asymmetric returns, I touched on the concept of benefiting from both the event and the performance of the business excluding the impact of the event. This is an important distinction vis-a-vis CLF investing as the outcome of the event in CLF investing is the only path to generating returns. Absent a positive outcome, the investment will have to be written off to its net realizable value (often zero in the event of a loss at court). One of the fundamental differences between EDLC and CLF is that EDLC invests in securities whereas CLF finances expenses that are used to pursue litigation which can be viewed as sunk costs.  Once the investment is made, there is no option for recovery other than the outcome of the litigation. Whereas with EDLC investing there could be multiple paths to returns and the investment is never likely to be zero the way it can be with CLF, unless the subject firm is pushed into bankruptcy as a result of the outcome of the case.  And even then, an EDLC investor may be able to extract some value for its investors through the bankruptcy process, as outlined in the Hertz case study. So, even if the litigation ultimately goes against the company and validates the market price of the debt or equity in the marketplace, the EDLC investor can then look to the underlying earnings of the company to potentially provide a return. For this reason, EDLC investors are less likely to invest in businesses where the fundamentals of the business are in question (Hertz was an exception given the prospects for the car rental business during Covid). Further, because the EDLC investor is involved deeply in the investment by virtue of their specialized due diligence and knowledge, they may have an informational advantage that allows them to sell their position to less informed parties and thereby minimize their losses. In the second part of this two part series we will examine some case studies, discuss additional attributes of the two investment strategies that investors should factor in to their decision-making process and answer an important question - “is this too good to be true”? Slingshot Insights As you will see from my disclosure below, I like the strategy so much I became an investor and this strategy now represents my largest investment in legal finance related strategies. In my opinion it provides all of the same exposures as those of litigation finance, but does so in a way that mitigates downside risk and maximizes upside potential. It adds an element of flexibility for the manager that can’t be found in CLF investing, in my experience.  The clear taxation treatment removes an area of lingering concern for me as it relates to the CLF marketplace. As long as you have an appropriate investing horizon and are prepared to deal with some mark correlation while the investment thesis plays out, this appears to me to be a significantly better approach to obtaining exposure to idiosyncratic risks to create a portfolio of uncorrelated outcomes. As always, I welcome your comments and counterpoints to those raised in this article.  Edward Truant is the founder of Slingshot Capital Inc. and an investor in the consumer and commercial litigation finance industry.  Slingshot Capital inc. is involved in the origination and design of unique opportunities in legal finance markets, globally, advising and investing with and alongside institutional investors. Disclosure: An entity controlled by the author is an investor in investing vehicles managed by the EDLC Manager referred to herein.

A21-1338        Pamela Maslowski, Respondent, vs. Prospect Funding Partners LLC, et al., Appellants, vs. James Schwebel, Esq, et al., Respondents. Court of Appeals: 1.         A repurchase rate in a litigation financing agreement is not subject to Minnesota’s usury law, Minn. Stat. § 334.01 (2022), when repayment of the purchase price is contingent upon a recovery in the underlying litigation. 2.         Remand to the district court is appropriate to address plaintiff’s challenge to the repurchase rate under the common-law doctrine of unconscionability. 3.         The repurchase rate specified in the litigation financing agreement began to accrue after the agreement was signed, not after our abolition of the former common-law prohibition on champerty. Reversed and remanded. Justice Anne. K. McKeig. Concurring, Justice Gordon L. Moore, III, Justice Natalie E. Hudson, and Justice Margaret H. Chutich.

“We are very pleased that the Minnesota Supreme Court took its time in rendering a thoughtful decision in this matter and, once again, held that the consumer legal funding contract at issue was enforceable. The decision is consistent with what courts and legislatures have said across the country, that this product is not a loan and should not be treated as such,” stated Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding.

“Following the Court’s logic in its June 2020 opinion that the transaction did not violate the common law prohibition on champerty, the Court today correctly recognized that, “A repurchase rate in a litigation financing agreement is not subject to Minnesota’s usury law” This well-reasoned decision joins others across the country in the growing consensus that consumer legal funding transactions are not loans and should not be treated like loans.”

About ARC 

The Alliance for Responsible Consumer Legal Funding (ARC) is a coalition established to preserve legal funding as a choice for the many Americans who have suffered an unexpected economic loss due to an accident and have a pending legal claim. Legal funding can help families pay for immediate personal needs such as rent, mortgages, car repairs, utilities and groceries while they wait for their claims to settle fairly. ARC trade association promotes practices and regulations that lead to informed decisions between individuals and their attorneys, so families have more options—not fewer.

Eric Schuller

President

Omni Bridgeway Limited (ASX: OBL) (Omni Bridgeway, OBL, Group) has today released its results for the 12 months ended 30 June 2023 (FY23, Year). Managing Director and Chief Executive Officer, Andrew Saker, said “I am pleased to announce notable achievements during FY23 and report on a strong finish to the year, underpinned by gathering market momentum and the effectiveness of our diversified funds management strategy.” The Group reported a substantial ~200% turnaround in the second half compared to the first half and is backed by a strong capital position of over $360 million in cash and receivables,” added Mr Saker. Key highlights of FY23:

• Increased potential future income by achieving a record level of commitments amounting to $544.2m up 17%.
• The estimated portfolio value (EPV) grew by 12% to reach $30.5 billion, after completions, removal of impaired investments now completed, and disposals, and achieved a 34% CAGR (four years to 30 June 2023).
• Grew implied embedded value (IEV) by 9% to $3.9 billion, with $1.0 billion provisionally attributable to OBL, excluding estimated management fees and potential performance fees.
• Delivered a strong second half result with 203% NPAT turnaround of $61.1m from the first half, reflecting improved income, lower expenses and signalling momentum heading into FY24.
• We have delivered total gross income and revenue to a record level of $330.0 million, up 51% on last year, derived from diversified sources comprising both completions of investments and secondary market sales. 
• Increased litigation proceeds by 30% to $283.4m comprising $235.7m investment completions and $47.7m cash proceeds from the sale of a participation in Fund 1 assets.
• Achieved 9% cost savings in 2H23 reflecting non-recurring items and initial savings from expense optimisation with a continued focus on cost efficiencies into FY24.
• Upsizing of Funds 4 and 5 are progressing well with ~US$400m to US$600m first close from existing investors expected in 1H24, followed by a potential second close with new investors.
• Build out of platform is now substantially complete readying our business for anticipated future growth.
• Achieved geographic expansion in the northern hemisphere with new locations in the United States, France and Italy, maintaining both our competitive advantage and industry leadership.
• Made executive leadership appointments including a Global Chief Financial Officer, a Co-Chief Investment Officer of EMEA and a Global Head of People and Culture.

The remainder of the FY23 Results Summary can be accessed here.

Legal-Bay, The Pre Settlement Funding Company, announced today that Johnson & Johnson's efforts to put a hold on the numerous lawsuits they are facing by filing bankruptcy have failed. Judge Kaplan ruled that the filing did not meet the requirements to qualify as a "good-faith" bankruptcy attempt, and was merely a way to seek protections against the billions of dollars the pharmaceutical giant will be expected to pay out in damages. The Johnson & Johnson cases are on track to rank among the largest mass tort settlements in U.S. history. Over 60,000 lawsuits have been brought by plaintiffs who allege that their talc-based baby powder is directly responsible for causing their ovarian cancer and/or mesothelioma, and point out that the company has long been aware of the health risks associated with their product. Several studies dating back to the 1970s concluded that talc particles increase a person's chances of developing serious medical issues, and evidence suggests that J&J has been intentionally concealing the results for decades. However, despite their $8.9 billion settlement offer, J&J continues to stand by the safety of their product.  Chris Janish, CEO of Legal-Bay, commented, "The Judge's ruling in respect to the bankruptcy strategy by J&J seems to be fair for the plaintiffs. However, now the parties need to come back to the drawing board to work on a realistic settlement framework. With the quantity of claims and seriousness of the injuries there is likely to be a large gap—which will only drag things well into 2024. We are hopeful that at some point, both sides will come to a reasonable resolution so the people suffering can receive some funds in near future."  If you require an immediate cash advance lawsuit loan from your anticipated Johnson & Johnson talc baby powder lawsuit settlement, please visit the company's website HERE or call 877.571.0405 Legal-Bay's sources close to the litigation believe that the parties will try to reach a global agreement by year's end. However, payments could be delayed for another two years due to the sheer number of claims to process. Legal-Bay is one of the few legal funding companies who are providing some financial relief to victims and their families with risk-free, non-recourse cash advance settlement loans.

Legal-Bay, the Pre-Settlement Funding Company, announced an uptick in applications for settlement funding now that back-to-school season has begun. Now that summer is over and kids are heading back to school, many parents of college-aged children are faced with the added costs of tuition payments, textbooks, and travel expenses to-and-from campus, not to mention meals and housing once they get there. Even parents of younger kids are dealing with extra expenses: New clothes, backpacks, school supplies, plus the rising costs of extracurricular activities. And parents of kids pre-K and under? Yikes. Daycare rates are out of control. Even before-care or after-care prices for elementary school-aged children are enough to put a dent in anyone's pocketbook. Thankfully, loans on lawsuit settlements are an option for people who need cash now. Legal-Bay understands that money is tight heading into this time of year, and encourages people to investigate what loans for settlements can do. They've helped plaintiffs in active lawsuits across the country with their settlement loan needs, from California to Florida and back again. Whether your kids need money for a box of crayons in their kindergarten classroom or textbooks for their university on the other side of the country, lawsuit loan funds can help. Chris Janish, CEO of Legal-Bay, says, "Although it's still summer for those in the northeast, warmer states in the south like Arizona, Louisiana, Georgia, and Texas are already heading back to school. Families need money for tuition and move-in costs, plus other items like back to school clothes and sports gear. Accessing funds from a pending lawsuit is always an option, and a main reason why applications for funding actually start to pick up in August for us."

Leading UK consumer law firm Slater and Gordon has agreed a £33 million committed facility with litigation funder and lender to law firms, Harbour, in what is believed to be one of the largest lending deals in the sector this year. Slater and Gordon firm will use Harbour’s capital to invest in developing its consumer legal services teams, and to fund a substantial book of clinical negligence and other personal injury claims, consistent with its strategy to be one of the UK’s leading provider of personal injury and related services. Harbour is the world’s largest privately owned litigation funder. Through its increasingly close strategic relationships with law firms, Harbour has broadened its investment appetite over the last 18 months to include the provision of lending and credit facilities to law firms, supporting them in the execution of their growth plans.  Unlike some traditional lenders, funds can be used for multiple purposes, which gives the leaders of multi-strategy law firms flexibility in executing projects involving multiple workstreams or multiple practice areas. Nils Stoesser, Chief Executive Officer of Slater and Gordon, said: “The ethos of the entire Slater and Gordon team is to support our clients by delivering an exceptional service across a whole range of consumer law issues.  We have been looking for a financial partner to help us capitalise on the next stages of the firm’s growth, and we are we are delighted to have Harbour’s support and confidence in our future.” Elizabeth Comley, Chief Operating Officer of Slater and Gordon, said: “The facility we have agreed with Harbour gives us access to stable capital over several years which we can use to make substantial investment in our core consumer legal services businesses.  We have big growth ambitions for our personal injury, clinical negligence, and other practice areas, where we know we have a competitive advantage. This new facility allows us to realise those ambitions, and in Harbour we’ve found a natural partner who really understand the needs and business of law firms.” Ellora MacPherson, Managing Director and Chief Investment Officer at Harbour, added: “Harbour is pleased to be supporting Slater and Gordon with this new credit facility. We are excited about their future growth plans as reflected by this significant investment.  We look forward to our partnership together.” Harbour has recently provided credit facilities to Bamboo Group and to Rothley Law.  A team from FRP Advisory led by Andrew Dimmock were instructed by Slater and Gordon to assist with sourcing a debt facility. Slater and Gordon’s previous working capital facility from VFS Legal is now replaced by this facility from Harbour. About Slater and Gordon Slater and Gordon is one of the UK’s largest law firms. With a team of highly skilled and experienced lawyers, paralegals, medical experts, rehabilitation co-ordinators and support staff, Slater and Gordon provide comprehensive legal services across a number of specialties. Headquartered in Manchester with 11 offices across the UK, Slater and Gordon specialises in consumer legal services, including serious injury, clinical negligence, abuse law, court of protection, employment and family law matters. Slater and Gordon has been recognised by multiple independent legal guides such as Chambers and Legal 500 and is highly specialised in representing individuals who’ve been affected by life-changing and serious injuries. About Harbour Harbour is the world’s largest privately owned litigation funder, which now also lends and provides credit facilities to law firms. Since launching in 2007, the business has been at the forefront of the growth and development of the global funding market. In the summer of 2023 it also announced facilities for Rothley Law and Bamboo Legal Services. 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, as well as loans and credit facilities for law firms with no upper limit. Harbour is a founder member of the Association of Litigation Funders (ALF), a member of the International Legal Finance Association (ILFA). Ellora MacPherson is Managing Director and Chief Investment officer.