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Commercial

Survey: Evolution of Litigation Finance 

Pioneers in the Litigation Finance industry have constructed some of the most advanced portfolio cases in the history of third party funding. A new survey polls global leaders and mines insights into the evolution of litigation finance.  Above the Law is tracking the survey submissions, offering free tickets (at, 'Stay Tuned with Preet'), to a live event at New York’s Town Hall on March 31, 2022. In the six years since the inception of the survey “Tracking the Evolution of Litigation Finance” … Above the Law has partnered with Lake Whillans to forecast more and more investment dollars earmarked for greater access to justice across the globe.  Take the survey, and LitigationFinanceJournal.com will report on the findings when the survey is published.
Commercial Fundraising

Houston’s Armadillo Litigation Funding Banks $750M Investment 

Armadillo Litigation Funding proudly announced the realization of a $750M funding round. The Houston-based third party funder highlights that the investment is its largest series to date. Proceeds will be used to distribute loans to commercial enterprises, with a focus on mass tort portfolio investment. Armadillo’s preferred loan target is $10M - $100M, secured by future claim awards, settlements and miscellaneous contingencies.  Armadillo’s announcement shares insights from the firm’s Chairman and CEO, Nick Johnson. Mr. Johnson notes that Armadillo’s success in raising $750M is further indication of his team’s leadership position in the litigation finance industry. Johnson goes on to say that Armadillo has capitalized on carving out an exclusive niche in mass tort litigation, offering borrowers and investors alike exclusive access to the firm’s wealth of expertise. Over the last decade, industry metrics indicate the impressive growth of mass tort litigation. The last two years have seen the largest mass tort litigation awards in history. Armadillo’s new $750M investment signals further leadership in the sector, according to Mr. Johnson. 
Commercial

Gaston Kroub’s Inaugural LITFINCON Takeaways

Earlier this month, Houston hosted the inaugural LITFINCON conference. The gathering billed itself as the preeminent conference for the global litigation finance industry. Houston is an interesting location for the conference, as the success of hosting LITFINCON in Texas illustrates that litigation finance also thrives outside of New York and London.  AbovetheLaw.com published a LITFINCON debrief op-ed by Gaston Kroub of Kroub, Silbersher & Kolmykov PLLC.  Kroub offered a very positive review of LITFINCON’s organizational makeup and curated content lineup.  Kroub asserts the success of the inaugural conference is a humble achievement, for if the litigation finance space is to be successful, it will require investment in public awareness campaigns over the near and long terms. Kroub offered three takeaways from the conference, summarized below: 
  • Harnessing the power of human capital can be attributed to an ‘amazing’ pool of talent leading innovation in the litigation finance industry. Thought leaders in the space are not limited to intelligent lawyers, according to Kroub. From legal support staff to imaginative financial architects, the industry is powered by the quality of talented individuals. 
  • Relationship incubation will be the cornerstone of driving innovative efficiencies. Given the industry is expected to grow and evolve over time, creating relationships with key stakeholders will pay dividends down the road. 
  • Public awareness of litigation finance at the attorney and client levels are currently at the   embryonic stage. The successful litigation finance investor will be one who is able to lead public awareness in the space, which is why so many funders are attending conferences such as LitFinCon, and producing content online. 
Commercial Deals

Westfleet: 488% Litigation Portfolio Activity Increase 

Major activity in litigation finance investments, as various portfolio deals at $50M+ were recorded in 2021. The largest 200 law firms in the United States appear to be earmarking portfolio funds to take advantage of patent litigation matters, according to a new report. Patent litigation finance budgets increased 61% in 2021, with a total of 64% of capital associated with patent portfolio litigation.  The Westfleet Insider was recently published, offering the ‘2021 Litigation Finance Market Report,’ which notes a substantial increase in litigation investment deals sponsored by the largest law firms in the United States. AmLaw 200 firms saw a near 50% increase in litigation investments in 2021, compared to 2020’s figures. The average deal size in 2021 was $6.5M, encompassing an average single deal of $3.5M, and an average portfolio deal of $8.5M.  As an added bonus, we have made 15 highlights to Wesfleet’s report for your general reference.
Commercial Regulatory Issues

Podcast and Deck: Tax Aspects of Litigation Finance

Cadwalader, Wickersham and Taft LLP, sports a rich 225 year history, and is widely recognized as one of the pioneers in legal innovation. For example, Cadwalader won recognition for leading New York State in LIBOR regulatory contract legislation, receiving acknowledgement from the Financial Times North America in 2021. The Financial Times cited Cadwalader as one of the most innovative law firms in the category of “Creating new standards.”  Recently, Cadwalader’s Mark Howe sat down with Phil Balzafiore to discuss tax implications associated with litigation finance and what tax structures attorneys should consider whilst engaging litigation investment facilities. Howe and Balzafiore also discussed various third party funding products popular in the industry, highlighting potential tax consequences and considerations for risk mitigation.  A slide deck has also been published as a companion to the podcast. You can access the deck by clicking here.   
Commercial

The Attorney’s Guide to Mastering Litigation Finance

The worldwide litigation finance industry is experiencing a renaissance of sorts. With $12B+ in litigation assets under management in the United States, many experts forecast double digit growth in various third party litigation products and services. Mastering a working conceptualization of the evolving litigation finance ecosystem first requires a solid foundational understanding of the industry's architecture.  Lake Whillans’ new white paper aims to provide a contextual guide for legal professionals looking to ‘master’ litigation finance. The white paper explores various litigation investment scenarios, helping indicate the industry's flexibility in organizing a wide variety of product structures to meet various client needs. One key guiding principle to mastering litigation finance, according to Lake Whillans’ insights, is developing strong, robust and innovative litigation portfolio instruments. As an added bonus, we have made 67 highlights to the white paper for your added reference.    
Commercial Regulatory Issues

World Bank Group on Third Party Funding 

The World Bank hosted member states of the International Center for Settlement of Investment Disputes (ICSID), which approved a landmark set of rules meant to guide dispute resolution between international investors and State parties. David Malpass, President of the World Bank Group and Chair of the ICSID Administrative Council, signaled an appetite for streamlined systems that radically innovate international arbitration disputes. The World Bank hopes a new, evolved approach to litigation will cultivate international economic growth by expanding investment architectures.   The World Bank, for the first time in history, has issued guidance for third party funding as part of ICSID Conciliation Rules. We have organized the complete text concerning ICSID Conciliation Rule 12 titled “Notice of Third Party Funding” below:  Notice of Third-Party Funding  
  • A party shall file a written notice disclosing the name and address of any non-party from which the party, directly or indirectly, has received funds for the conciliation through a donation or grant, or in return for remuneration dependent on the outcome of the conciliation (“third-party funding”). If the non-party providing funding is a juridical person, the notice shall include the names of the persons and entities that own and control that juridical person.
  • A party shall file the notice referred to in paragraph (1) with the Secretary-General upon registration of the Request for conciliation, or immediately upon concluding a third-party funding arrangement after registration. The party shall immediately notify the Secretary-General of any changes to the information in the notice.
  • The Secretary-General shall transmit a notice of third-party funding and any notification of changes to the information in such notice to the parties, and to any conciliator proposed for appointment or appointed in a proceeding for purposes of completing the conciliator declaration required by Rule 16(3)(b).
 
Commercial Fundraising

Bloomberg Reports Litigation Finance Assets Reach $12.4B

Investments in litigation finance continue their forward momentum, according to a new report. Total third party funder assets under management reached $12.4B in 2021, up 10% from 2020. Additionally in 2021, 28% of litigation funding investment went to the top 200 law firms in the United States.     Bloomberg Law’s recent statistical data focusing on the litigation finance industry notes an investment of $2.8B in new litigation finance contracts in 2021. According to Bloomberg’s report, the largest law firm helped drive an 11% increase in third party finance industry growth, as compared to 2020’s metrics. Similarly, Bloomberg highlights that Big Law 200 firms gobbled up 41% of litigation finance investment in 2021. That is up 46% from 2020, according to Bloomberg.  Experts signal that a recessionary climate is the best climate for litigation funding to prosper over the near future. Bloomberg’s survey data captured self-reported facts and figures from 47 of the United State’s litigation finance investors and hedge funds, who are leaders in the space.
Commercial Regulatory Issues

Chief Justice of Ireland Discusses Litigation Investment Access 

Ireland’s population has experienced a long history of affordability challenges when accessing the Irish court system. The Chief Justice of Ireland’s Supreme Court has issued new guidance that hints at an open-minded approach to innovating third party funding facilities as tools in accessing the rule of law. This new perspective is a product of a conference held last year by the Chief Justice’s Working Group on Access to Justice.  Independent.ie reports that Chief Justice Mr. Donal O’Donnell has suggested that reforming access to third party funding and litigation investment is a top priority for Ireland’s regulatory innovation. Chief Justice O’Donnell appeared to signal a fresh approach to implementing improvements in facilitating access to justice. The Chief Justice urged a mindful approach to evolution in the industry, calling for careful inspection of regulatory innovation systems and processes now in place.   Scholars in Ireland also support broader access to litigation funding instruments in business, including insurance firms, bankruptcy managers, liquidators and trustees who seek innovative ways of boosting asset liquidity and the general bandwidth available to creditors.  
Case Developments Commercial

Canada’s Supreme Court Considers Advancing Award Costs 

Canada’s Supreme Court (SCC) issued historic guidance for First Nation Indian tribes, ruling that the Beaver Lake Nation’s “pressing needs” may include not having adequate capital for litigation. SCC’s ruling further includes a provision for Beaver Lake to qualify for advance costs to finance litigation fees as necessary. The SCC decision signals pathways to reconciliation between tribes and governments who potentially may stand to navigate complicated, lengthy negotiations and millions of dollars in litigation investment.  BLG.com reports that Beaver Lake questioned if the government of Canada along with the province of Alberta compromised the tribe's capacity to enjoy their traditional way of life. Various government factions of Canada are accused of pillaging Beaver Lake tribal lands with industrial resource projects that forever tarnished hunting and fishing ecosystems. Having already spent $3M on litigation fees, SCC estimates that Beaver Lake will need to invest $5M more in litigation costs for the trial.  The contentious question of whether Beaver Lake had adequate capital to fund litigation was first approached by a case management judge, who ruled the impoverished First Nation lacked adequate funds for quality litigation. Alberta’s Court of Appeal overruled the trial judge’s assessment. The SCC effectively ruled in favor of the case management judge’s assessment.   
Commercial Fundraising

Tracking Third Party Funding Partnerships 

Big Law litigation fees have a solid tradition of generating sticker shock for clients and spectators alike. To help mitigate such surprise, Fortune 100 firms have started to consider bundling litigation assets into portfolios with the hope of leveraging third party investment as a finance vehicle that generates profitable returns. Meanwhile, modern entrepreneurial strategy has begun to embrace third party funding partnerships as a tool beyond fear and the financial burden(s) associated with litigation.  Attorney at Law Magazine (AALM) reports that investment in the United States litigation finance marketplace totals more than $11B. AALM’s insights unpack statistical Bloomberg Law data to track a positive outlook for third party funding market sentiments. AALM suggests that Big Law is starting to track third party funding as an innovative business development exercise, allowing for greater firm successes over the near and long terms.  Furthermore, AALM signals that third party funding powers greater associate and partner success stories, which provides ancillary talent retention benefits for Big Law associates and partners alike.  
Commercial

Key Takeaways from the LITFINCON Event

LITFINCON’s inaugural conference kicked off last week at the Post Oak Hotel in Houston, Texas, with attendees flying in from all over the globe. Guests had a front-row seat to several thought-provoking conversations about the growing asset class from a variety of industry experts.

The LITFINCON event featured a variety of timely and insightful panel discussions. Below are some key takeaways from the two-day conference:

Day 1 highlighted current trends, the state of the industry, best strategies when seeking litigation finance, and the relationship between corporate legal departments and litigation finance.

The day kicked off with the “Views From The Judiciary On All Things Litigation Finance” panel, which was certainly a crowd favorite. Three distinguished judges shared their insights: The Honorable Charles R. Eskridge, III, of the United States District Court for the Southern District Court of Texas, The Honorable Andrew M. Edison, of the United States District Court for the Southern District of Texas, and The Honorable Lauren Reeder of the 234th Judicial District, Harris County. They offered their unique views, as only active judges can, on a variety of issues affecting litigators, funders, and plaintiffs.

Day 2 highlighted what investors should know about this asset class, when and how to use a broker when looking for funding, technology trends in the legal field, and expert insights on fund formation. Day 2's lunch break was something special, as it featured Chief Comedic Officer of Making Lawyers Laugh, LLC Sheng Weng, who most recently was seen touring with Ali Wong and was a featured stand-up on HBO’s “2 Dope Queens” special. Sheng also wrote for the ABC show “Fresh Off the Boat.” He kept guests entertained and roaring with laughter - a unique addition to the conference agenda.

Guests enjoyed rare in-person networking opportunities, and the opportunity to establish new business relationships. The attendee list included industry-leading firms, such as: Omni Bridgeway, Yieldstreet, Liti Capital, Law Finance Group, Polsinelli, Schulte Roth & Zabel, CAC Speciality, Parker Poe, 4 Rivers Legal, Critchfield, Critchfield & Johnston, Roche Freedman, Women of Litigation Finance (WOLF), Global Litigation Consultants, D. E. Shaw & Co., Arran Capital, Law Office of Philip A. Reale, Dunning Rievman, and Kerberos Capital Management.

Overall, attendees were delighted by how the event turned out. We received some sparkling reviews, a smattering of which is offered for you here:

“LITFINCON was a very positive experience. The range of speakers and panelists was impressive and a great deal of ground relating to the current trends in the industry was covered. The attendees were a good representation of the main industry players, namely funders, attorneys and advisors/brokers. Texas is still a relatively nascent third-party funding market and there are without doubt some exciting opportunities there, particularly in the energy and IP sectors. Siltstone did a great job in setting this up and I am already looking forward to the 2023 renewal!”

  • Peter Petyt (CEO and Co‑Founder, 4 Rivers)

“It was a pleasure to discuss how corporate legal departments can utilize litigation funding at the inaugural LITFINCON. The diversity of viewpoints and experiences of my distinguished co-panelists really contributed to a candid, free-flowing discussion of what more can be done to acclimate corporate legal departments to the exciting possibilities offered by litigation finance.”

  • Gaston Kroub (Partner, Markman Advisors)

"The litigation finance industry is growing rapidly, which makes networking at events like LITFINCON both important and exciting. We are building something together. It is particularly important that we share best practices and that we find ways to communicate those to stakeholders who may not be knowledgeable about them, such as litigation clients and members of the judiciary. LITFINCON did a great job of convening a diverse group and sharing that information.

I particularly enjoyed the “Crypto” panel, “How Will Blockchain, Cryptocurrency, And Other Technological Innovations Impact Litigation and the Legal Field.” It is nice to attend a conference that offers new information and perspectives."

  • Lauren Harrison (Vice President/Investment Counselor, Law Finance Group)
According to Siltstone Capital, the organizer of the event, LITFINCON was such a rousing success that the second installation is already being planned.

“Our entire Siltstone Capital team was humbled to host industry leaders at our inaugural LITFINCON. LITFINCON attracted a global array of speakers and attendees to help promote best practices for the growing and still malleable field of legal private credit. Hosting the conference in Houston, Texas also helped advance the legal private credit field to one of the biggest legal markets in the country. We can’t wait to host LITFINCON II in March 2023.”

  • Mani Walia (Managing Director & General Counsel, Siltstone Capital)

“The inaugural LITFINCON was a tremendous success. It received rave reviews. I want to thank all the sponsors, panelists, and attendees, who came in from all over the world – London, Geneva, New York, Miami, San Francisco, and Austin. LITFINCON highlighted the growing field of litigation finance and the importance of Texas as a hub that unites all participants in the legal field. Siltstone Capital is excited about continuing the momentum and advancing the litigation finance field by hosting LITFINCON II in March 2023. We expect the event to be two to three times bigger!”

  • Robert Le (Founder & Managing Partner, Siltstone Capital)
We are equally excited for the 2023 version, and look forward to bringing you a recap of that event next year as well!
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Commercial People Moves

Burford Capital Welcomes Patrick Dempsey as Director

Patrick Dempsey has joined Burford Capital’s New York office as a Director, with a focus on growing new business with law firms and corporations across the United States.   Burford Capital notes that prior to joining the funder, Dempsey served as Therium Capital Management's United States Chief Investment Officer, where he also served as a Board Member. At Therium, Dempsey developed single case financial structures while also architecting portfolio compositions for a range of clientele. Dempsey also served as a litigator at Proskauer Rose LLP and Hogan Lovells.  Mr. Dempsey graduated with a bachelor’s degree from the University of New Orleans, and earned his law degree from Tulane University Law School.
Commercial

Key Takeaways From LFJ’s Podcast With Tony Webster 

On the latest episode of the LFJ Podcast, Tony Webster, CEO of UK-based litigation funding and ATE insurance portal, Sentry Funding, discussed his personal access-to-justice story which led him into the litigation funding industry. Webster outlined how Sentry’s portal works, and the advantages it provides both funders and solicitors in need of funding.  LFJ: Why don't you explain to us how the Sentry portal works? It is pretty unique. How does the whole thing operate?  TW: Because of our background in lending, we thought we could introduce technology to speed up the process. We started initially to be a funder, and then we started to build the software. In 2015, the growth in the UK hit hundreds of millions, if not close to a billion in assets under management in litigation funding.  We do a lot of research, with over 100 law firms. It was through those conversations and the growth in the market that we thought the benefit of just another funder coming in was not good enough. We thought we could adapt our technology and rather than be a funder, why don't we offer a portal where we could have lots of funders and insurers.  LFJ: There is a value in a portal that links to a variety of funders. You mentioned a speedy, quick response time. Is that your Rapid Raise, Fast Track product?  TW: We used to call it Fast Track, we brought that across from our banking backgrounds. It had nothing to do with the court system in the UK. It was a Fast Track to money.  We have now rebranded that to Rapid Raise, because there was some confusion with the different tracks you have with the UK courts.  With Rapid Raise, there are three products. The first is for one off commercials for those who need funding between 50,000 and 500,000. Then you have Rapid Rase Two, scheme funding where there is established case law and that is between 5,000 and 20,000 of funding. And then you have Rapid Raise Three for things like housing disrepair that comes in at less than 5,000 in funding. Because of the tech we can process the volume. We can provide a proper value under 500,000.  LFJ: Can you explain the reason you chose to focus on this end of the market?  TW: The vast majority of funders do not want to do less than £500,000 cases. That is why we came up with Rapid Raise. I think the issue that a funder has, is they treat a case they are underwriting for £2,000,000 or £200,000 exactly the same. It is not exactly the same, the risk is different. If you are putting £2,000,000 in a case, you are going to take a long time looking at it. But if you put in £200,000 in a case and can do 10 of them, then you are aggregating your risk across a group of cases. You have to expect you will lose a couple, but on the whole you will win. But, you need technology to do it.  LFJ: I want to ask about regulation. This has become an industry hot topic. But, it has recently kicked off with Australia passing some large impactful regulation. I wonder if you are concerned about impending regulation in the UK? What is on the horizon there?   TW: I come from a regulation background. We are not scared of regulation. When we built the portal, we built it for regulation. So, everything is dated and timestamped. Everything is transparent, every document fits into an encrypted file. It is all there for everybody to see. What I think regulation brings to the industry is just the process. You have to do things at certain times and disclose certain documents. So we are not scared of regulation.  Now, I don’t think regulation will come into litigation funding, because it falls under the banner of consumer lending. Consumer lending UK is not regulated. Personally, I think it should be. If you are touching money or investment, it should be regulated. Lawyers are regulated, but funders are not. I think we should close that gap. I don't think anyone should be scared of it. I think it is a good thing.  LFJ: What are your expansion plans? How do you plan to scale this business? Are you looking at any global jurisdictions? Could you move into the EU or US?  TW: We want to get much bigger in the UK. The market in the UK is big, right now, it is about a £2B market. We want to be the go-to place for the smaller cases. If you have under a 500,000 pound funding requirement, come to us. We have processed over 2,500 cases in the last two years. And that is increasing month over month. Canada and New Zealand are our next jurisdictions we want to go into. And then ultimately go into the States, because it is such a big market.    Click here to listen to the entire episode.
Commercial Regulatory Issues

Hong Kong and Singapore Litigation Investment Forecast  

International arbitration has experienced an uptick in activity over the past decade, with litigation finance driving increased accessibility to quality arbitration outcomes. Hong Kong and Singapore have both passed regulations to authorize third party funding in each jurisdiction.  New research sponsored by the Chinese University of Hong Kong, led by faculty of law professor Can Eken profiles Hong Kong and Singapore’s regulatory environment in granular detail. Eken compares and contrasts nuances between both markets, while asking what innovations Hong Kong and Singapore may embrace to further expand third party funding engagement across the international arbitration spectrum. Governments in Hong Kong and Singapore overwhelmingly embrace a ‘soft touch’ approach to litigation finance regulation. Forecasting the region’s growth prospects signal both Hong Kong and Singapore are in competition to be Asia’s arbitration capital, supported by friendly third party funding regulation.  Eken suggests that with the high cost associated with international arbitration, viability is often framed by financial capacity. With such need, Hong Kong and Singapore are recognized as having pioneered international arbitration regulation, legalizing the use of third party funding agreements.  As an added bonus, we have included 36 highlights to Eken’s 23 page essay for your general reference. 
Commercial Legal Innovation

The Future of Litigation Finance Tokenization 

Blockchain software technology and cryptocurrency innovation continues to evolve with intriguing potential to modernize legacy legal systems and processes. The potential for tokenizing legal assets continues to be a focus in building next generation litigation finance solutions.  KluwerArbitration.com recently profiled New York based Ryval’s mission to design a stock market for litigation finance. Traditionally, the litigation investment community has been tough to break into. Future endeavors in expanding access to litigation investment aim to apply tokenization of litigation claims as a crowdfunding exercise.  Ryval’s goal is to offer a platform to buy, sell and trade crypto tokens that represent partial ownership of litigation assets. Ryval’s tokenization concept for litigation investment aims to provide non-accredited investors the ability to access third party funding investment opportunities. Ryval’s funding agreements are still evolving, given various factors specific to jurisdictional regulations, but the firm’s vision seems to support an extremely fluid and highly liquid token ecosystem.   Blockchain software technology is being engaged by many in the industry to support tokenization of litigation assets. Firms like Ryval employ blockchain as a tool to efficiently scale platform operations and facilitate investor diversification, while mitigating risk. Ryval suggests thousands of individuals could invest in shares of claims. If the claim is successful, blockchain technology offers seamless access to payouts. 
Commercial Deals

Insurance Firms Engage Dispute Funding Solutions 

Traditionally, insurance firms have made an effort to forgo dispute funding as a finance tool, operating under the assumption that claim investment would increase case risk. With greater public awareness of third party investment solutions, many insurance firms are beginning to broaden their approach to dispute funding agreements, engaging solutions to finance claim recovery.  OmniBridgeway.com recently published research on the value of litigation finance tools specific to the insurance industry. According to Omni’s insights, insurers are beginning to realize the benefits of working with funders to structure portfolio architectures, allowing for risk mitigation. Ultimately, the most innovative insurance companies are now building dispute portfolios that serve as legacy cash generating assets. Many insurers welcome the comfort of working with a large funder who has deep expertise in claim success. Furthermore, insurance companies are engaging various products to fit individual needs, such as recovery claims associated with warranty and indemnity policies.    Omni’s team of experts are successful portfolio builders, according to the report. As such, some insurers are selling whole portfolios to funders when regulation permits. Omni has prompted some insurance firms to conduct internal audits to unlock potential assets to be funded for a hopeful recovery.  
Commercial

There’s More Than One Way for a Funded Claim to End

Modeling various endgame trajectories is a worthwhile exercise in maximizing client/funder relationships, while mitigating financial risk. Likewise, relationships often evolve over time, and circumstances may call for exploring alternative endgame models. Successful funders often detail a variety of recovery scenarios after winning a claim, offering clients the opportunity to explore and execute the most beneficial strategy for their needs.  ValidityFinance.com recently featured considerations for claimants and funders alike to debate the planning and preparation of various endgame strategies. In particular, funders maintain unique opportunities to strategically position each litigation asset inside of a multifunctional portfolio arrangement; keen portfolio planning can have a significant impact on overall returns.  Recovery of judgment awards may be delayed by appeals or other post trial motions. Depending on the scenario, clients may opt for a discounted agreement with their funder for quicker access to capital. Insurance opportunities for funders are growing in popularity and have the opportunity to overlap with recovery of claim awards. Banks and private lenders typically do not lend capital against unpaid judgements. However, lenders do offer loan options that leverage a case’s insurance policy. Market rates for such loans on claim insurance policies range from upwards of 5%, lending up to 80% of the policy value.    
Commercial

Construction Litigation Finance is Undervalued

Given the granular complexities comprising construction blueprints, some firms organize their profit centers by navigating the margins of enterprise construction mismanagement. Construction claim conversion is currently undervalued, according to a new report published by Augusta Ventures and FTI Consulting.  The joint report details a significant public awareness divide between the construction industry and broader litigation finance industry. According to the report’s insights, leaders large and small in construction have heard about third party funding solutions that have resolved cases in construction, however, many firms in the construction industry have yet to embrace how litigation finance can impact their bottom line for the better. What’s more, customers who have been defrauded by the proverbial bad construction contractor are remarkably undervalued in terms of leveraging ligation finance tools to claw back losses from crooked construction companies.  Check out the complete Augusta Ventures - FTI Consulting report on construction, to learn more.
Commercial Consumer Special Features

The 6th Anniversary of the Peter Thiel / Hulk Hogan / Gawker Case: What Have We Learned?

This week marks the sixth anniversary of Terry Bollea (AKA professional wrestler Hulk Hogan) suing Gawker media for publishing a sex tape of him with a married woman. The suit made national news not just for its salacious nature—but because of the questions it raised regarding privacy versus journalistic freedom. Once news emerged that billionaire and PayPal co-founder Peter Thiel was funding Hogan’s claim, the case became even more sensational. In this piece, we’ll take a look at exactly what happened in the case, and how it impacted (or hasn’t impacted) Litigation Finance. The Facts of the Case In 2007, Gawker, a website known for celebrity scandals and salacious content, published a piece with the headline: “Peter Thiel is totally gay, people.” Was this newsworthy? Did the piece have journalistic integrity? Reasonable people can disagree. Peter Thiel is in fact gay, which means the truth of the article protected Gawker from a libel suit. In 2009, an outed Thiel gave an interview in which he called Gawker ‘destructive,’ even as he acknowledged that the site wasn’t focused on ruining him personally. Thiel also speculated that Gawker maintained a disdainful attitude toward Big Tech, and may be focusing on punishing industry leaders as a result. Fast forward to 2012, when Gawker published a lewd video featuring wrestler Hulk Hogan (AKA Terry Bollea) having sex with Heather Clem—wife of radio personality “Bubba the Love Sponge.” This led to Bollea suing the media outlet for infringement of rights of publicity, invasion of privacy, and intentional infliction of emotional distress. Bollea was represented by famed Los Angeles attorney Charles Harder. The published video, which Bollea claims was recorded without his knowledge or consent, contained a 2-minute section of a 30+ minute video—ten seconds of which included explicit sex acts. In 2016, Forbes magazine revealed that it was indeed Peter Thiel who was bankrolling Bollea’s case against Gawker. Speculation soared over what was viewed by many as Thiel’s revenge against Gawker for outing him. Did he want to ruin the media company, or purchase it, or simply malign the company that caused him personal and professional anguish? Thiel maintained that his involvement was philanthropic at heart, and meant to protect people from being bullied by unscrupulous media outlets. If anything, the lawsuit was meant to deter Gawker from intentionally releasing damaging content that lacked legitimate news value. Gawker founder Nick Denton, who was named personally in Bollea’s claim, made a statement about Thiel’s involvement in the case: “Just because Peter Thiel is a Silicon Valley Billionaire, his opinion does not trump our millions of readers who know us for routinely driving big news stories.” Also in 2016, a jury awarded Bollea compensatory damages of $115 million, plus punitive damages of $25 million—finding Gawker liable. A few months later, Gawker filed Chapter 11 bankruptcy, and began looking for a buyer. Several media outlets owned by Gawker were sold. By November 2016, Gawker and Bollea reached a settlement of $31 million. Today, Gawker’s flagship gossip site is still active. Gawker media sold off several of its prominent sites including Gizmodo, Jezebel, Deadspin, and io9. The LF Connection The case itself was of particular interest in and around the Litigation Finance community. Opponents of third-party legal funding asserted that Thiel’s actions in the case laid out an effective blueprint for the very wealthy to bankroll frivolous, but eye-catching cases. Billionaires could, some posited, use their wealth and legal connections to target specific companies, forcing them into bankruptcy. This speculation took place alongside the typical accusations that third-party litigation funding could clog court dockets with meritless actions meant to be quick paydays for funders and their clients. For example, Peter Sheer, a First Amendment expert, suggested that Thiel and others might abuse the power of third-party legal funding to intimidate media outlets. According to Sheer: “Winning is the ultimate chilling effect, but if you can’t win the case, you at least want the editors to think twice before writing another critical story about you.” To the keen-eyed observer though, it’s clear that Peter Thiel neither incited this case, nor had any real control over its outcome. Bollea initiated the case before Thiel’s involvement. At the time the case was decided, the jury was unaware that Bollea had a benefactor. And since the jury ruled in favor of Bollea, not Gawker, it’s clear that the case had merit. Thiel was always adamant that funding Bollea’s case (to the tune of $10 million) was about deterrence, not revenge. He explains that he wanted to “fight back” against Gawker’s practice of damaging reputations and bullying those with no means to pursue a claim to conclusion. As Thiel explains, “...even someone like Terry Bollea, who is a millionaire and famous and a successful person didn’t quite have the resources to do this alone.” While one could view Thiel’s actions as being contradictory to the principles of free speech—he disagrees. In fact, Thiel has donated to free speech defenders like the Committee to Protect Journalists. Thiel maintains that there is a profound difference between journalism in the public interest, and the type of media Gawker traffics in. That’s why he decided to take action. Thiel told the New York Times, “It’s less about revenge and more about specific deterrence. I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest.” Now, six years after the case has concluded—what have we learned? We haven’t seen a rash of billionaires funding cases, frivolous or not, with the intention of bringing down specific companies. That’s not to say billionaires aren’t financing claims the way Thiel did, only that they aren’t doing so publicly. Unlike traditional litigation funders, Thiel did not stand to make any money from Bollea’s lawsuit. Technically, Thiel should still be considered the litigation funder, though his term sheet wouldn’t be one most funders would want to imitate. The Gawker case has not led to a slew of frivolous, funded claim. Among other reasons, it simply doesn’t make financial sense to invest in a case lacking in merit. Bollea’s accusations against Gawker were affirmed by the jury, which resulted in a large award. So this claim was meritorious, even if Thiel’s motivation for funding the claim were not ROI-based. Media outlets are not cowering en masse over fears of punitive lawsuits from billionaires. That was much ado about nothing. Holding media outlets accountable for what they print (and occasionally, their motivations for doing so) is a vital and essential part of the free press. Free speech is not freedom to print anything—even something as personal as a sex tape—merely as an attention-getting device. Final Takeaways Can a lawsuit fall under the purview of Free Speech? Thiel believes so, and many others agree. This case addressed questions of privacy, free speech, and litigation funding. The end results demonstrated that we are all entitled to some element of privacy—even the celebrities among us. The Gawker case also affirmed that litigation funding still serves the interests of justice by enhancing the ability of claimants to bring lawsuits when they are wronged. The takeaway here should be that Peter Thiel afforded Hulk Hogan access to justice. Of course, when a billionaire backs a professional wrestler against a media company, sometimes the moral of the story can get lost beneath the headlines.
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Commercial Deals

£2m Football (Soccer) Litigation Investment Fund

A new £2m fund has been launched to help those in the football (soccer) industry fund litigation expenses when they have been wronged by the industry. The creators of the fund highlight the international talent pool associated with the business of football, which they claim is sometimes at the detriment of players’ best interests. Bankrolling a case all the way to FIFA’s Court of Arbitration for Sport seems to be the fund’s driving mission.  LawGazette.co.uk reports that Harbour Litigation has teamed up with Morgan Sports Law to fund a forecasted 60 football related litigations in the near future. Players or others represented by the fund will have no financial risk or responsibility associated with their case if unsuccessful in navigating the courts.  Morgan Sports Law has been credited with several high profile case wins in football litigation, one of which earned significant damages against the World Anti-Doping Agency that clearned France international Mamadou Sakho of anti-doping violations.  Harbour Litigation claims to be the world’s top private third party litigation investment firm, dedicated to litigation and arbitration support. Founded in 2007, Harbour has funded litigation in 14 jurisdictions worldwide representing over 130 individual cases.
Commercial Regulatory Issues

Regulating Litigation Finance to Manage Social Inflation

There is an ongoing argument against the global litigation finance community purporting that litigation investment is a key driver of social inflation. Many critics of the growing litigation finance ecosystem include lobbyists who aim to usher in strict regulation, possibly targeted at dampening innovation in the space. Keeping this in mind, the idea that litigation finance prompts social inflation is counter-intuitive, according to a new report.    CarrierManagement.com’s insights explore a multifaceted deep-dive look into litigation finance regulation as a social inflation mitigation tool. The logical premise contends that ligation investors must review the metrics of each case for funding. The business case for litigation finance hinges on third party investor’s high certainty of the claimant’s case success. Therefore, social inflation fails the logic test, at the most basic level.  CarrierManagement.com’s research does suggest that mindful regulation in the space is necessary for litigation finance to thrive well into the future. However, Carrier seems to suggest that litigation finance is an investment in social capital, rather than social inflation. 
Announcements Commercial Legal Innovation

Omni Bridgeway launches US Judgment Enforcement business, expands global enforcement team

Omni Bridgeway (formerly known in the US as Bentham IMF) is pleased to announce the launch of its US Judgment Enforcement business.
Omni Bridgeway, the most experienced multi-disciplinary foreign judgment enforcement provider in the world, launches its Judgment Enforcement services business in the US with three key appointments and further expansion pending, building on the company’s 35-plus year track record in global enforcement. We are delighted to welcome Hannah van Roessel as Senior Investment Manager, Director Enforcement - US in New York. Since 2013, Hannah has served as Director Enforcement & EMEA, Senior Legal Counsel in the Amsterdam office of Omni Bridgeway’s litigation and global enforcement funding business, with a notable record of managing active enforcement cases and securing recoveries in contested settings. Hannah brings significant hands-on experience with the cross-border recognition and enforcement of arbitral awards on the basis of the New York Convention in a large number of jurisdictions, especially against sovereigns and semi-sovereigns.
Jeff Newton joins Hannah in Omni Bridgeway’s New York office as Investment Manager and Legal Counsel responsible for expanding the company’s US judgment enforcement initiatives. Jeff was a litigator at Kobre & Kim LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP where he represented parties in a wide range of complex commercial cases across financial fraud, crypto, defaulted debt, technology, environmental, pharma, insurance, and reinsurance matters. He has represented clients on the plaintiff and defense side in civil and class action lawsuits and helped recover assets internationally.
Rounding out the team responsible for advancing the company’s US enforcement business is Gabe Bluestone, who also joins the team as Investment Manager and Legal Counsel in New York. Gabe was previously a Shareholder and litigator at Bluestone, P.C., a leading asset recovery law firm with offices in Washington D.C. and New York, where he also maintained a robust business litigation practice. While in private practice, Gabe represented a global roster of clients in commercial disputes and in enforcing judgments, often seeking injunction-predicated relief, striking down fraudulent conveyances, and unravelling fraudulent corporate schemes.
Andrew Saker, Managing Director & CEO and Chief Strategy Officer - US notes “Omni Bridgeway’s global leadership in judgment enforcement is unparalleled in terms of the results we deliver clients. We are excited to officially launch our enforcement business in the US with the arrivals of Hannah, Jeff, and Gabe. Our dedicated US team will serve as an on-the-ground resource for clients in devising, managing, and executing cross border enforcement strategies, working closely with colleagues in North America, and researchers and asset tracers worldwide.”
ABOUT OMNI BRIDGEWAY  Omni Bridgeway is the global leader in litigation financing and managing legal risk, with expertise in civil and common law legal and recovery systems. With international operations based in 20 locations, Omni Bridgeway offers dispute finance from case inception through to post-judgment enforcement and recovery.
Omni Bridgeway is listed on the Australian Securities Exchange (ASX:OBL) and includes dispute funders formerly known as IMF Bentham Limited, Bentham IMF and ROLAND ProzessFinanz, and a joint venture with IFC (part of the World Bank). For more information visit www.omnibridgeway.com.
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Commercial Special Features

Can defendants avoid or limit their liability through contractual provisions?

The following article was contributed by Valerie Blacker and Jon Na, of Piper Alderman. Applicants often confront the proposition, which respondents typically use in their defense, that terms in consumer contracts will effectively exclude or restrict the claims that have been brought. The High Court of Australia recently weighed in on this issue, deciding that a mortgage contained an enforceable promise by the borrowers not to raise a statutory limitation defense in relation to a claim by the lenders, which was commenced out of time. Price v Spoor [2021] HCA 20 In a slight twist to the typical scenario, the lenders were the plaintiffs who brought recovery proceedings after the expiry of the period stipulated in Queensland’s Limitation of Actions Act 1974. The borrowers argued no monies were owed because the claim was well and truly statute barred. Proceedings should have been brought by 2011, but the lender did not file a claim until 2017. In reply, the lender relied on this clause in the contract: “The Mortgagor covenants with the Mortgage[e] that the provisions of all statutes now or hereafter in force whereby or in consequence whereof any o[r] all of the powers rights and remedies of the Mortgagee and the obligations of the Mortgagor hereunder may be curtailed, suspended, postponed, defeated or extinguished shall not apply hereto and are expressly excluded insofar as this can lawfully be done.” The effect of which was said to be a promise not to take the limitation point. The lender’s argument failed at first instance (before Dalton J) but was overturned on appeal (by Gotterson JA on behalf of Sofronoff P and Morrison JA) and then ultimately vindicated by the High Court (Kiefel CJ and Edelman J, with whom Gageler, Gordon and Steward JJ agreed). The public policy principle Part of their Honours’ reasoning was that what is conferred by a limitations statute is a right on a defendant to plead as a defense the expiry of a limitation period. A party may contract for consideration not to exercise that right, or to waive it, as a defendant. That is not contrary to public policy. This, in our view, is akin to agreements frequently entered between prospective parties to a litigation to toll a limitation period (suspend time running) for an agreed amount of time. That can be contrasted with a clause in an agreement that imposes a three- year time limit instead of six, for bringing a claim for misleading and deceptive conduct under the Australian Consumer Law.[1] Clauses of that kind are unenforceable based on a well-established principle that such clauses impermissibly seek to restrict a party’s recourse to his or her statutory rights and remedies, contrary to law and public policy. The “public policy principle” was first identified by the Full Court of the Federal Court in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546. Henjo has been referred to and applied in numerous cases since, and cited with approval in the High Court.[2] This is not to say that contractual limitations can never be effective in limited circumstances - this much was shown in Price v Spoor. The question of whether commercial parties to a contract can negotiate and agree on temporal or monetary limits while not completely excluding the statutory remedies for misleading and deceptive conduct claims under section 18 of the ACL remains debatable[3]  - but those specific circumstances do not arise here. About the Authors: Valerie Blacker is a commercial litigator focusing on funded litigation. Valerie has been with Piper Alderman Lawyers for over 12 years. With a background in class actions, Valerie also prosecutes funded commercial litigation claims. She is responsible for a number of high value, multi-party disputes for the firm’s major clients. Jon Na is a litigation and dispute resolution lawyer at Piper Alderman with a primary focus on corporate and commercial disputes. Jon is involved in a number of large, complex matters in jurisdictions across Australia. For queries or comments in relation to this article please contact Kat Gieras | T: +61 7 3220 7765 | E:  kgieras@piperalderman.com.au -- [1] For example in Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd [2018] VSC 246 [2] For example in IOOF Australia Trustees (NSW) Ltd v Tantipech [1998] FCA 924 at 479-80; Scarborough v Klich [2001] NSWCA 436 at [74]; MBF Investments Pty Ltd v Nolan [2011] VSCA 114 at [217]; JJMR Pty Ltd v LG International Corp [2003] QCA 519 at [10]; JM & PM Holdings Pty Ltd v Snap-on Tools (Australia) Pty Ltd [2015] NSWCA 347 at [55]; Burke v LFOT Pty Ltd [2002] HCA 17 at [143]. [3] For example in G&S Engineering Services Pty Ltd v Mach Energy Australia Pty Ltd (No 3) [2020] NSWSC 1721.
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Announcements Commercial Fundraising

Litigation Capital Management Limited (“LCM” or the “Company”): Interim results for the half year ended 31 December 2021

Litigation Capital Management Limited (AIM:LIT), a leading international alternative asset manager of disputes financing solutions, is pleased to announce its unaudited interim results for the half year ended 31 December 2021, delivering a significant improvement on the prior year.

Operations

·US$150m Global Alternative Returns Fund (“GAR”), now fully committed and achieved within the two year mandated commitment period
·Completed US$200m first close of second Fund - Global Alternative Returns Fund II (“Fund II”) with targeted close of US$300m well progressed and expected to complete during FYH2
·Resolution of previously announced direct investment delivered strong returns with a ROIC of 261% and IRR of 199%1
·Portfolio of direct investments well progressed with three investments resolved and awaiting payment or resolution of appeals, four direct investments had final hearings and are awaiting judgment and four direct investments have or expect hearing dates scheduled before end of 2022

 KPIs

Total assets under management increased to A$343m at 31 December 2021 and A$386m by 8 March 2022
196 applications received during the period vs 266 in H121. A further 89 applications received in the two month period to 28 February 2022, demonstrates an acceleration in momentum and return to normal operating conditions
Investment commitments of A$25m during the period, down on the prior period commitment of A$67m which was skewed by a large construction portfolio investment which was consequently scaled down due to a sale and change in ownership of the funded party
Total invested capital during the period was A$31.5m vs A$39.7m in H121
Improved performance - cumulative 162% ROIC and IRR of 79% over the past 10 and a half years (inclusive of third party unless otherwise stated)

Financials

Gross profit of A$13.9m (H121: A$5.4m)
Adjusted profit before tax A$7.5m (H121: A$0.2m loss)
Statutory profit before tax of A$4.0m (H121: A$1.4m loss)
Cash of A$43.5m at 31 December 2021 (A$30.3m exclusive of third party interests)
Cash receipts from the completion of litigation investments of A$20.6m, up 94% on the prior year*
Total equity of A$94.3m*
 *exclusive of third party fund consolidation

Post period events and outlook

·Mary Gangemi, CFO, appointed to the Board bringing extensive and valuable experience
·LCM continues to build out the platform and extend both its own balance sheet commitments and fund management business.

metrics based on final AUD cashflows

Commenting on the results, Patrick Moloney, CEO of Litigation Capital Management, said:  “We have achieved great progress during the period despite disruption as a result of COVID-19 lockdowns and unprecedented restrictions in the areas we operate.

“I am pleased with the progress in our Fund Management business, which is now well established, with our first US$150m Fund now fully committed and the US$200m first close of Fund II with a final close target of US$300m by the period end. Equally, our portfolio of direct investments has performed well given the difficult external circumstances impacting our industry, with a number of ongoing investments resolved and awaiting payment, or awaiting judgment in the second half.

“As conditions normalise and with the core executive team now in place in our London office, LCM is now in a stronger position to grow both divisions, enabling us to access greater amounts of capital and facilitate the expansion of our portfolio of investments. The countercyclical nature of our industry suggests that economic and market conditions at present, represent a growing opportunity for the Company which will be realised over the long-term. We look to the second half and beyond with optimism and confidence.”

An overview of the interim results from Patrick Moloney, CEO is available to view on this link: https://bit.ly/LIT_H122_overview_video.

The accompanying results presentation is available on LCM's website:

https://www.lcmfinance.com/shareholders/investor-presentations-results/

The Interim Financial Report is available at:

https://www.lcmfinance.com/shareholders/annual-reports-financial-reports/

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Commercial Legal Innovation

Litigation Insurance Trends and Product Innovation

The litigation finance space is evolving at break-neck speed with new, innovative products to meet marketplace demands. Development of a new market segment includes the emergence of litigation risk insurance, aimed at mitigating threats arising from acknowledged claims.  InsuranceJournal.com explains that with historic investment in world-wide litigation finance, litigation insurance products offer a dynamic set of tools to help offset high-stake, high-dollar litigation awards. Even more exciting, mergers, acquisitions and leveraged buyout scenarios are finding litigation risk insurance an attractive solution to material litigation liablities.   There are two emerging categories of litigation risk insurance:  
  • Adverse Judgment Insurance: Facilitating coverage in unexpected scenarios, this solution provides various coverage options to potential adverse judgment awards. Policyholders usually are defendants offering rider coverage to consider assignees associated risk.
  • Judgment Preservation Insurance: The journey of contentious litigation can award significant claim values that stand a chance of being overturned in appeal proceedings. Judgment preservation insurance offers claimants various facilities to protect awarded judgements in the event of lesser recovery. 
  Litigation risk policy coverage is bound much like traditional insurance coverage. Policyholders pay corresponding premiums to gain agreed upon indemnification. Bespoke policy scenarios are widely becoming a risk mitigation technique out of design. It will be interesting to see how the litigation insurance industry continues to evolve alongside that of litigation finance. 
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Commercial Regulatory Issues

Corporations Act s596A Expanded by High Court of Australia

A recent decision by the High Court of Australia (HCA) expanded the scope of s596A of the Corporations Act 2001, regarding public examinations and who has standing to conduct them. In a majority decision, the HCA found that claims of corporate malfeasance reflect the public interest in enforcing laws and protecting creditors and investors. Omni Bridgeway, in its case study of Michael Thomas Walton & Anor v CAN 004 410 833 Lit, explains the various considerations of the court:
  • Because each case is unique, there’s no reason to create an exhaustive list of legitimate reasons to invoke s596A. Each case will be examined on its own merits and circumstances.
  • Amendments expand who may conduct public examinations, as well as expanding the underlying concerns and purpose of the same.
  • Rather than dismissing a summons for abuse of process, litigants would be better off ensuring the integrity of examinations by invoking control over which questions should be asked.
The case involves a potential class action by a shareholder group, a summons, and discovery of multiple documents—including Simon Gailbraith, former director of Arrium. Arrium tried to have the order set aside, claiming abuse of process. The court disagreed because:
  • Arrium did not suffer losses.
  • The class action claimants did not include all shareholders, therefore emphasizing the ‘private nature’ of the claim.
  • Shareholders failed to provide ASIC that recovery would include other potential claimants.
The Court of Appeal later determined that if the predominant purpose of the request was for a private claim, it was an abuse of process. How exactly is abuse of process defined?
  • Using courts for an illegitimate purpose.
  • Processes are used in a way that oppresses one party.
  • Violation of court integrity.
Ultimately, this decision is beneficial to legal funders as it expands the tools that can be used to pursue claims.
Case Developments Commercial

Liquidators Accuse Mainzeal Directors of Mishandling Crisis

A recent NZ court of appeal ruling found that the director of Mainzeal traded on his company, which was technically insolvent for nearly a decade—yet caused no material loss to creditors. Liquidators backed by LPF are appealing the ruling.  RNZ explains that the directors, which include former NZ prime minister Dame Jenny Shipley, argued through their lawyers that the lower court ruling was “profoundly wrong,” and that they continued running the company as usual—believing they could salvage it. The directors also asserted that its parent company, Richina, would pay back $44 million in loans to Mainzeal. When this was revealed to be untrue in 2013, Mainzeal was put into administration by its bankers. Despite this, the directors allowed trading and new contracts to be secured. This led liquidators to argue that the company had a “policy of insolvent trading,” putting creditors at profound risk.
Commercial

Augusta Ventures Lists Litigation Finance Benefits 

Augusta Ventures has been a pioneer in international litigation finance, putting to work over $770M of capital into litigation investment agreements since its founding in 2013, Augusta purports a pedigree of litigation finance innovation well into the future.  Augusta recently published a list of benefits of litigation investment scenarios for the savvy litigator. Below we provide you a synopsis of the findings:   
  • Litigation finance offers both attorneys and their clients access to greater liquidity. The utilization of litigation investment as a tool was born with the spirit of easing liquidity hurdles, while providing access to justice. 
  • Corporate profit and loss statements can be saddled with millions of dollars in legal expenses during multi-year litigation. With litigation agreements, profit and loss metrics are handled by the investor, not the firm under litigation. This can be of great benefit for many growing companies. 
  • Risk associated with litigation can be burdensome without keen organizational structures. Litigation funders normally make an investment accepting 100% of the risk associated with a claim. 
  • Claim experience is nice to have, as litigation investors’ entire operational success depends on the level of claim experience (aka claim wins) they have scored. 
  • The claim owner has the luxury of complete independence from a litigation investor’s meddling in the claim’s outcome, once a litigation agreement has been executed. 
Read Augusta’s complete article to learn more.
Case Developments Commercial

Amazon Web Services Denied Litigation Funding Agreement Disclosure 

Kove IO (KIO) is initiating a likely contentious patent infringement litigation against Amazon Web Services (AWS). KIO has sued AWS with a complaint that alleges abuse of patent infringement as a business model, with respect to KIO patents for large-scale cloud computing data storage technology. Meanwhile, KIO held various discussions with litigation funders. Even though KIO did not take litigation investment, AWS sought to require KIO to disclose litigation funder discussions as part of discovery proceedings.       Validity Finance recently published insights into the case discovery requests made by AWS, and how KIO responded. When KIO asked the judge for a protective order related to litigation investment, AWS petitioned the judge to deny the motion and demand KIO’s litigation investment disclosure(s).  KIO suggested that the litigation finance discussions were not materials that AWS should be privy to. AWS argued that the nature of KIO’s litigation finance discussions are of interest in determining the value of any potential AWS patent violations.      The theme of denying litigation funding agreements as part of discovery has been a hot topic of late, involving giants like Google, Apple, Facebook and now Amazon. With the deep pockets of publicly-traded companies, if a litigation funding agreement was required as part of discovery, it could be argued that the litigation budgets of these companies would be of interest as well. Discovery motions of this nature could be argued, given that they are fighting against the rule of international law and justice.  Meanwhile, it appears that such disclosures are not required on either side by the recent precedent.