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Commercial Legal Innovation

AI and Litigation Finance Growth Forecast

Digital Journal has released a new research report that forecasts an uptick in growth for the artificial intelligence (AI) market, specific to litigation finance. Digital Journal outlines that a worldwide exchange of business intelligence is beginning to formulate new ways to engage litigation finance tools, products and services. Meanwhile, Digital Journal floats new concepts on possible strains AI may place on litigation investors, as the dog-eat-dog battle continues for market share.  The report, titled Global Artificial Intelligence in Litigation Funding Markets, offers further insight into a multiyear span, forecasting sales volume(s) between 2020 and 2026. The report provides an in-depth outlook of historical metrics relating to the current market environment. Digital Journal notes a special caveat to the report’s nature specific to artificial intelligence and litigation finance.   Those seeking a preview of the report can find one here.
Commercial Fundraising

Burford Capital Promulgates New $360M Advantage Master Fund

Burford Capital proudly announced a new $360M Advantage Master Fund. A move that is expected to mitigate risk reward potential for the litigation finance juggernaut. Burford’s CEO Christopher Bogart says that the new fund will serve as a structural stopgap facility. Bogart highlights Burford’s uptick in demand for litigation facilities in the middle range.  UK Investor Magazine reports that Burford Capital plans to utilize Average Master Fund proceeds to expand investment in pre-settlement litigation products and services. Burford anticipates the new fund’s internal rate of return (IRR) to range between 12-20%.  The structure of the new fund is an advancement from previous arrangements, according to Burford. Meaning that the fund's investors will receive a flat 10% annual return, with Buford capitalizing on any additional proceeds.   Buford’s CEO says his commensurate fee structure exceeds a factor of 13%.
Commercial

2021: Burford Capital Posts $72M Loss and $1.1B in Commitments

Burford Capital’s group-wide commitments scored $1.1B in 2021 allocations. Meanwhile, net losses came to $72M for the year, a rather significant drop from 2020’s profit of $165M. Burford forecasted a 2021 loss range of $70-80M. The final figures are well in-line with industry expectations. The Law Society Gazette reports that even with 2021 global pandemic disruption(s), Burford managed $152M in total turnover, while 2020 saw $359M turnover.  Meanwhile, the firm calls attention to the ultimate legacy worth of its litigation portfolio, which is expected to generate robust value and shareholder return(s).  Burford’s 2021 operational revenue was $6M. Burford Chairman Hugh Wilson says with $239M in 2020 revenue, 2021’s data may read lower. However, with over $1.1B of ligation agreements booked in 2021, the firm is bullish on a bright future. Chairman Wilson went on to say that Burford generated ample cash flow(s) that exceeded expenditures during the term.   Buford announced an annual June dividend of 12.5c a share, subject to shareholder vote.    
Commercial

The UK’s Rise of ‘No Win No Fee’ Payment Schemes

A poll of 200 law firm partners by third party investor Harbour reveals 90% are under pressure to cut costs and offer clients expanded billing agreements. The poll also shows that 80% of those surveyed are planning to employ no win no fee payment schemes, with 89% expected to engage litigation finance products as a solution.    CityAM.com reports that 40% of those surveyed expect to cut firm expenses, with 37% planning to do so through legal technology. As with any business, driving down costs to maintain revenue generation is smart. CityAM cites the creativity of litigation finance to help lower case investment costs on the balance sheet, with greater opportunity to increase revenues as portfolio assets mature.   CityAM also notes that law firms are tracking a near 2x increase in time to collect receivables. March 2020 figures show a 23-day payment window, which has now increased in 2022 to a payment window of 39 days.
Commercial Regulatory Issues

Paris Court of Appeal on Third Party Funder Precedent

Tricky case law can creep in when least expected. With funders serving as members of the litigation team of advisors, some aim to include litigation investors as co-claimants. The Paris Court of Appeals approached one such instance citing the precedent that third party funders are subject to “exceptional circumstances” before being considered party to arbitration proceedings.  Paris’ Court of Appeals cites that just because a third party investor is involved in a case, this does not constitute exceptional circumstances.   Deminor Recovery Services (USA) Inc. profiles Senior Legal Counsel Mehdi Mellah’s take on the Paris Court of Appeals ruling. The argument is that if a third party funder is a co-claimant in arbitration, that does not necessarily translate to a ‘no’... However, it would take an exceptional scenario for the court to consider a circumstantial ‘yes’. Given the prevalence of third party funding in arbitration proceedings, those on the other side of the case are resorting to clever interpretations of case law as a defense mechanism.  With the fast pace and evolution of litigation finance, international arbitral organizations are updating arbitration rules and regulations. The guiding principle in altering arbitration rules appears to support greater transparency into litigation investor identities.  
Case Developments Commercial

The $300B Shock Verdict and Social Inflation  

A $300B damage award is serving as an example of shock verdicts driving the notion of social inflation. Preserving the ecosystem of litigation finance from shock verdicts is a priority for some in the industry.  Best Review’s monthly insurance magazine highlights the general trepidation of insurers being ‘on the hook’ for high dollar claims that are funded by third party litigation investors. There are those that argue obscene, high-dollar awards are a threat to the judicial system and therefore have the ability to diminish access to justice. Furthermore, litigation finance is blamed for insurance premium spikes–in some cases premiums have increased 25%.  The $300B shock verdict referenced above relates to trucking insurance. The award could potentially be the largest damages verdict in United States history. This, as the insurance industry has worked to clamp down on trucker insurance coverage. Best Review notes that insurance contracts for trucking operations previously allowed for $50M in coverage. Today, insurers have reduced many trucking insurance contracts down to only $1M coverage options.  Best Review references that savvy insurers continue to approach the problem of social inflation with a barrage of solutions, including lobbying dollars on tort reform. Overall, it would appear that insurers are targeting sophisticated third party investors who likely hold a variety of portfolios that include insurance claims.  
Commercial

Elite Litigation Finance Firms 

Pretentious as it may sound, not all litigation finance institutions are created equal. A myriad of common denominators between individual litigation investors tell a story of winners and losers upon close inspection. Just like every other industry, when choosing a litigation funder, quality can be found in industry rankings. That said, there are rankings for top litigation finance firms and also rankings for elite litigation finance firms. The differences between the two terms commonly relate to size rather than overall quality.   Case Works has collated a list of respected litigation funders with exceptional track records with a drive to lead regional rankings. When facing unique legal challenges, oftentimes it can be advantageous to select a boutique third party investor to organize a unique and innovative litigation funding agreement. Clever companies will recognize that the cost of capital in funding meritorious yet profitable legal action is a risk worth taking.  Check out Case Works’ list of seven elite litigation investment companies to learn more.
Commercial Regulatory Issues

Omni Bridgeway Research on Antitrust Law and Litigation Finance 

Trade restraints, fixing prices and monopolistic tendencies often breed the essence of unfair competition. Complicating the picture, cross-border litigation requires an increasingly sophisticated, techno-scientific approach to win potential multi-district damages. Omni Bridgeway published new antitrust research on litigation investment, defining the asset class as a meaningful financial instrument.   Omni Bridgeway’s insights outline four key research categories:   
  • Complexity: Antitrust lawsuits are commonly associated with governmental interpretation of jurisdictional mandates. Considering aspects concerning regulatory arbitrage, antitrust definitions may vary with respect to a multi-district approach. The complexities of antitrust litigation are real, and litigation funders are becoming a resource tool for clients looking to hire the best legal team to win a claim. 
  • Duration: Globally, antitrust matters are a multi year effort. Litigation investor blueprints are mindfully designed, keeping in mind realistic success timelines. 
  • Budget: Funding a winning antitrust litigation agreement is a high dollar phenomenon.
  • Award: Pursuing antitrust litigation incorporates the prospect of securing substantial awards. Omni Bridgeway’s research studies 60 cases with an average settlement of $500M.  
Omni’s concluding analysis begs judgmental scrutiny when selecting a third party investor to fund meritorious antitrust wins. 
Announcements Commercial Fundraising

BURFORD CAPITAL CLOSES NEW $360 MILLION PRIVATE INVESTMENT FUND

Burford Capital Limited, the leading global finance and asset management firm focused on law, today announces that it has raised a new $360 million private investment fund, the Burford Advantage Master Fund LP (“Advantage Fund”). The Advantage Fund focuses on lower risk, lower return pre-settlement litigation investments than we include in our core legal finance portfolio, targeting matters expected to produce returns in the 12-20% IRR range. The Advantage Fund fills the gap between the Burford Alternative Income Fund, which focuses on lower return post-settlement investments, and Burford’s core business. The Advantage Fund has a structure that rewards Burford more than traditional fund models for producing good performance: the fund does not have a traditional management and performance fee structure, but instead provides the first 10% of annual simple returns to the fund investors while Burford retains any excess return. Based on our internal modeling, Burford does better with this approach than a traditional “2 and 20” fee structure once its returns exceed approximately 13%. (If the fund produces super-normal returns for this level of risk, which is not expected, a level of sharing with fund investors would kick in.) A range of institutional investors made commitments in the aggregate amount of $300 million. Burford has made a 20%commitment, or a further $60million. The Advantage Fund’s investment period runs until December 24, 2024, with a multi-year harvest period thereafter under an American waterfall. Christopher Bogart, Burford Capital’s chief executive officer, commented: “Burford is still scratching the surface of the legal finance market. As we continue to respond to our clients’ needs, we have found unmet demand for products in the middle range where litigation risk remains but where the risk is anticipated to be lower for structural or other reasons. In response to this demand, we have created the Advantage Fund to match client demand with institutional investors seeking exposure to the uncorrelated cash flows of legal finance at a lower risk of loss with commensurate returns.” About Burford Capital Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on theNew York Stock Exchange (NYSE: BUR)and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its principal offices in New York, London, Chicago, Washington, DC, Singapore, Sydney and Hong Kong. For more information, please visit www.burfordcapital.com.
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Announcements Commercial Deals

BURFORD CAPITAL REPORTS FULL YEAR 2021 RESULTS; RECORD LEVELS OF BALANCE SHEET DEPLOYMENTS

Burford Capital Limited, the leading global finance and asset management firm focused on law, today announces its financial results for the year ended December 31, 2021.(1) The Burford Capital 2021 Annual Report, including financial statements (the “2021 Annual Report”), is available at the following link: http://www.rns-pdf.londonstockexchange.com/rns/4070G_1-2022-3-29.pdf or at Burford’s website www.burfordcapital.com/shareholders. In addition, a new financial data supplement, as well as Burford’s inaugural Sustainability Report for 2021, are available on our website at the same URL. Hugh Steven Wilson, Chairman of Burford Capital, commented: “Burford turned in an excellent 2021. This may seem odd to say as we report the first loss in our history, but that is a matter of timing. We wrote significant new core legal finance business in 2021. Even in an era of slower case progress,wegeneratedsignificantlymore cash thanneeded tocover allofour expenses. Burford ended the year with substantial liquidity and strong access to capital, and we recently announced our latest $360 million private fund.” Christopher Bogart, Chief Executive Officer of Burford Capital, commented: “We are delighted with our strong new business performance in 2021. To write more than $1 billion of new commitments during a pandemic is a significant achievement. We deployed more capital than ever before from our balance sheet into assets with the potential to generate our highest returns and profits, auguring favorably for future capital provision income. Though it was a slower year for realized gains, contributing toour 2021 loss, there were few adverse developments to causeeither realized or unrealized losses and the portfolio remains well positioned. The slow pace we are experiencing is a timing issue, not one affectingour viewofthe ultimaterealizable value of theportfolio andits potential tocreatesignificant shareholder value, and no client has discontinued a single matter due to these delays. We are optimistic about the portfolio’s future potential.” 2021 highlights New business
  • Record-breaking new business2, with Group-wide new commitments of $1.1 billion (2020: $758 million) and deployments of $841 million (2020: $595 million)
o Burford-only capital provision-direct new commitments of$649million(2020:$335million); the 2021 amount includes $63 million of new commitments warehoused for our funds; excluding those warehoused deals, new commitments were $586 million o Perhaps most significantly for potential future shareholder benefit, Burford-only capital provision-direct deployments, representing our assets capable of generating our highest balance sheet returns and profits, doubled to $447 million (2020: $225 million) Portfolio and balance sheet
  • Consolidated portfolio grew to $4.4 billion at December 31, 2021 (December 31, 2020: $3.8 billion)
o Group-wide portfolio grew to $5.1 billion (December 31, 2020: $4.5 billion), driven by new business growth
  • Cumulative return on invested capital from Burford-only capital provision-direct assets increased to 93% (December 31, 2020: 92%) with an IRR of 30% (December 31, 2020: 30%)
  • Internal model update at December 31, 2021 suggests core legal finance portfolio excluding YPF-related assets couldgenerate$3.8 billioninBurford-only realizations, $2.2billioninrealized gains and $400 million in asset management performance fee income (June 30, 2021: $3.4 billion in realizations, $2 billion in realized gains and $360 million in asset management performance fee income)3
  • Burford-only liquidity of $315 million at year end (December 31, 2020: $336 million)
Income
  • Total income of $152 million (2020: $359 million), including capital provision income of $128 million (2020: $340 million), reflecting slow case progress, in part due to Covid-linked disruption o Burford-only capital provision-direct net realized gains of $128 million (2020: $180 million) o Burford-only capital provision-direct realized losses of $9 million represented a loss rate of
0.8% (2020: $20 million; 2.2%)
  • Income from operations of $6 million (2020: $239 million), with decrease from 2020 due mainly to lower capital provision income and higher operating expenses, including legacy asset recovery charges
  • Net loss attributable to ordinary shares of $72 million (2020: net income attributable to ordinary share of $165 million), within previously disclosed expected range of $70 million to $80 million o Net loss per diluted share of $0.33 (2020: net income per diluted share of $0.75)
Capital
  • Total shareholders’ equity attributable to Burford Capital of $1.6 billion at December 31, 2021 (December 31, 2020: $1.7 billion)
o Burford-only total shareholders’ equity of $7.08 per share at December 31, 2021 (December 31, 2020: $7.59 per share) o Total tangible shareholders’ equity of $6.47 per share (December 31, 2020: $6.98 per share) • Declared final 2021 dividend of 6.25¢ per share payable on June 17, 2022, subject to shareholder approval at the annual general meeting to be held on May 18, 2022, to shareholders of record on May 27, 2022, with an ex-dividend date of May 26, 2022; total annual dividend of 12.5c per share -- (1) All figures in this announcement are audited and presented on a consolidated basis in accordance with the generally accepted accounting principles in the United States (“US GAAP”), unless otherwise stated. Definitions, reconciliations and information additional to those set forth in this announcement are available on the Burford Capital website and in the 2021 Annual Report. 2 Burford-only new commitments for 2021 include approximately $63 million of interests in assets that were warehoused for our funds at December 31, 2021, including a $13 million asset warehoused for Burford Opportunity Fund C LP and a $50 million asset warehoused for Burford Advantage Master Fund LP (the “Advantage Fund”), which will be reflected as a capital provision-indirect asset post-transfer. New commitments reflect the allocation in place at December 31, 2021, and does not reflect the intended transfer to other funds, which occurred or is expected to occur in early 2022. Excluding the warehoused commitments, Burford-only new commitments in 2021 for capital provision-direct were $586 million. Of the $50 million new commitment warehoused for the Advantage Fund, the Burford-only portion of this capital provision-indirect asset is expected to be $8 million. Total Burford-only new commitments to capital provision assets in 2021, post-intended transfers, were $594 million. 3 Data based on calculations derived from our internal modeling of individual matters and our portfolio as a whole. This data is not a forecast of future results, and past performance is not a guide to future performance. The inherent volatility and unpredictability of legal finance assets precludes forecasting and limits the predictive nature of our internal modeling. Further, the inherent nature of probabilistic modeling is that actual results will differ from the modeled results, and such differences could be material. The data based on calculations derived from our internal modeling is for informational purposes only and is not intended to be a profit forecast or be relied upon as a guide to future performance. See sections titled “Forward-looking statements” and “Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2021 filed with the US Securities and Exchange Commission on March 29, 2022.
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Commercial

Leaders League Ranks Top US and UK Litigation Funders

With investment in litigation finance on the rise, the industry will naturally breed winners and losers in terms of funder rankings. As potential claimants research the best third party investors to evaluate their case, it may be helpful to consult industry rankings. Leaders League offers a unique online tool allowing users access to rankings of litigation funders worldwide.  Leaders League rankings for top litigation funders in the United States comprises a group of 12 industry leaders. Leaders League also ranks the 14 top litigation funders in the United Kingdom.  Founded in Paris, France in 1996, Leaders League prides itself on collating international rankings spanning law, private equity, innovation marketing and wealth management. 
Commercial Legal Innovation

€13B Slovakia Expropriation Yields GESI, World’s First Arbitration Token 

The World Economic Forum (WEF) ranks corruption as the Slovak Republic’s second most pervasive pitfall for the country’s businesses sector. Ranking first on the list is governmental bureaucracy leading to systematic public service inefficiencies, according to WEF.  The GESI Token White Paper explains that Central Slovakia is home to one of the world’s largest talc mines, Gemerska Poloma. EuroGas Inc. won an exporporation appeal ruling, arguing that the Slovak state authority illegally took mining rights (as property) from EuroGas Inc. for public use and benefit. General European Strategic Investments Inc. (GESI) has purchased an 80% stake in EuroGas’ potential arbitration award.  The GESI utility token has been created to fund arbitration costs, litigation expenses and case management costs.  GESI Holdings LLC has utilized Wyoming’s new crypto business organization framework that protects decentralized autonomous organizations (DAOs). GESI has set-up a foundation to recognize token holders, and a total of 100,000,000 GESI tokens will be issued.  The token offer is being listed under SEC Rule 506 (c) of Regulation D, which means residents of the United States must be officially accredited investors and will be required to prove their accreditation before subscribing to GESI’s token sale. 
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.