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Commercial

Assessing Adequate ATE Insurance Cover

After the Event (ATE) insurance is a crucial tool for those pursuing litigation who are looking to reduce their risk of financial exposure, whether it is the litigants themselves or the funders who are backing the legal action. However, as one industry expert has highlighted, it is not simply a matter of securing ATE insurance when engaging in litigation, but also ensuring that there is a sufficient level of cover to protect against those scenarios where a case is unsuccessful. In a new insights piece by Rocco Pirozzolo, managing director at Harbour Underwriting, the issue of quantifying the right level of protection needed is addressed. Mr Pirozzolo points out that attempting to make an accurate assessment for costs exposure is never ‘a precise science’, but lays out several factors that can be used to make a reasonable determination, such as the claimant’s budget and the number of defendants. The article highlights that the best practice for assessing the level of cover required is to ‘assume the worst-case scenario’, to ensure that both the claimant and litigation funder are protected from any punitive orders. Pirozzolo emphasizes that the initial purchase of insurance is not the end of the story, and that litigants should continuously review the position, especially when an action proceeds to trial and therefore increases the financial risk that needs to be covered.
Commercial Regulatory Issues

Hybrid Patent Database / Law Firm Approved Under Arizona’s ABS Rules

As LFJ recently reported, despite the gradual relaxation of rules around Alternative Business Structures (ABS) for law firm ownerships in some states, we have yet to see a wider adoption of the practice across the U.S. However, one investment company is already taking advantage of the new rules in Arizona to form a business that acts as both a patent database and a law firm designed to offer an end-to-end service for new tech startups. Reporting in Bloomberg Law details how MDB Capital Holdings, a Dallas-based investment company with a focus on intellectual property, secured approval from Arizona’s ABS committee to launch PatentVest as an approved law firm. MDB’s chief executive, Chris Marlett, described how PatentVest is designed to provide inventors with all the services they need to nurture their technology, protect those inventions with strong patents, and provide an opportunity for some of these startups to go public. Marlett notes that by combining the investment facility and legal services in one business, this will allow clients to reduce the cost of legal services whilst also unifying the entire technology development and patent strategy process in one place. Whilst some critics of outside ownership of law firms have pointed to potential conflicts of interest between the investment incentive and the legal process, Marlett suggests that traditional law firms are incentivized by generating a high volume of billable hours, whilst PatentVest is focused on developing successful technology leaders.
Case Developments Commercial

Austrian Court Rules Sony Breached Gambling Laws with ‘Loot Box’ Sales 

Litigation funding is perhaps most powerful when it is deployed to support consumer claims against large corporations, leveling the balance of power in a way that was previously impossible. One industry that may be ripe for such legal actions is the videogame industry, which includes a massive consumer market and has been the site of repeated allegations of exploitative business practices. An ongoing series of class action lawsuits in Austria highlights this potential, as reporting from GamesWirtschaft covers a series of cases brought against Sony Interactive for its selling of ‘loot boxes’, which the claims allege should be considered as gambling. Five lawsuits were brought on behalf of consumers by the law firm Salburg Rechtsanwalts and financed by Vienna-based funder, Padronus. The class action cases alleged that the value of these digital items is based on chance, and therefore would fall under the Austrian Gaming Act. A ruling from the District Court of Hermagor on February 26 stated that the sale of these loot boxes constitutes ‘illegal gambling’ due to the fact that Sony Interactive does not have a gaming license. The court ordered that without this license, any contracts with consumers are void and Sony must refund the consumer for the loot box purchases. Padronus’ managing director, Richard Eibl, highlighted the significance of the case and said that “the verdict is a bang for the entire video game industry”, as it will have implications for other videogame companies that sell these in-game loot boxes. Whilst the ruling may still be appealed by Sony Interactive, Eibl stressed the importance of these claims in shedding light on how companies are allegedly exploiting the addictive nature of these loot boxes to target consumers.
Commercial Regulatory Issues

An Argument for Scrutiny and Vetting of Mass Tort Litigation

The development of technology and media channels the support law firms connecting with potential plaintiffs has made it easier than ever to launch mass torts. In combination with the growing availability of litigation funding, this has created an environment that one industry commentator fears is encouraging ‘questionable claims’ and burying defendant companies under massive settlements. In an op-ed for Bloomberg Law, Philip Goldberg, managing partner of Shook Hardy & Bacon, argues that the tremendous volume of these mass tort claims is creating an atmosphere where courts are more likely to give the benefit of the doubt to these claims, rather than diligently assessing their merits. Simultaneously, the large sums of outside investment through third-party legal funding is also driving up the value of settlements, as the emphasis for funders and law firms is on maximizing the financial return. Goldberg also highlights that this litigation is becoming increasingly dominated by multi-district litigation (MDL), with the number of MDLs rising from 73 active cases in 2013 to over 300 at present, with mass torts comprising 90% of those active cases. Goldberg argues that companies turning to bankruptcy procedures, such as in the J&J talcum powder litigation that LFJ covered, is not being done for cynical reasons, but instead as a last resort to resolve these claims. It should be noted that the Appeals Court denied J&J’s attempt to use bankruptcy protections in this case. In closing, Goldberg argues that MDL judges must take a thorough approach to this wave of mass tort litigation, and diligently assess the merits of each of these claims as a starting point, to ensure that the system is not abused.
Case Developments Commercial

Lawsuit Ventures Achieves Successful Outcome in Funded International Dispute

Coverage of litigation funding often focuses on activity in major Western markets, but there continues to be a growing ecosystem of third-party financing in other jurisdictions around the world. This is especially true in the world of international dispute resolution, where complex cross-border disputes often necessitate outside financing in order to bring cases against foreign entities. In a post on LinkedIn, Indian litigation finance provider Lawsuit Ventures, revealed that it had reached a successful resolution for an international dispute brought by an Indian claimant against a Saudi Arabian entity. Lawsuit Ventures had provided funding for the claim, which focused on a breach of contract by the Saudi Arabian respondent, who had allegedly failed to meet its payment obligations under the contract. Hiren Thadeshwar, founder of Lawsuit Ventures, stated that this case highlighted the value of litigation funding for Indian claimants and that the funding had removed “the significant financial and legal barriers that would have made this otherwise impossible.”
Commercial

The In-House Counsel Perspective on Litigation Funding 

As the litigation funding industry continues to mature, there has been a lot of discussion about how funders can build relationships with in-house counsel and legal teams within companies of all sizes. With funders stressing the benefits of legal departments taking advantage of third-party funding, a new report provides insights into the current state of the relationship between funders and in-house legal teams in the UK. Crafty Counsel and Exton Advisors have released their white paper on ‘Dispute management and litigation funding - an in-house perspective’, which provides an overview of the challenges facing legal departments, as well as the opportunities available to improve their litigation management strategies. Most notably, the report found that “less than 7% of legal teams have used litigation funding”, demonstrating both a lack of awareness with the availability and differing use cases for outside funding. However, the report also highlighted that those legal departments who had experience working with litigation funders came away with a positive impression, as 86% of those who had accessed third-party financing expressed interest in using it again. In one particularly interesting insight, 64% of legal teams noted a desire for law firms to provide additional support and education for in-house counsel around options for litigation funding and alternative fee structures.
Commercial Legal Innovation

Broadridge Class Actions Report Finds Massive Growth In Securities Litigation

Class actions remain a popular target for litigation funders as 2023 progresses, driven by developments in countries’ regulatory framework for these actions, as well as particularly active sectors such as securities litigation. A new report by Broadridge Financial Solutions has found that not only is the volume of securities class actions on the rise, but the value of settlements resulting from these cases has experienced an even more dramatic increase. An article by The Global Legal Post provides an overview of Broadridge’s Global Class Actions Report for 2022, which highlights the factors powering this continued growth in class action activity. Broadridge identified that whilst new securities class action filings have yet to reach their pre-pandemic levels, 2022 saw an increase of 22% for a total of 160 individual filings, and the total value of settlements increasing by 142% to reach over $7.4 billion. Broadridge put the spotlight on both cryptocurrency and ESG-related litigation as drivers for growth, as well as the evolution of legislation around the process for opt-in class actions, such as the EU’s Representative Action Directive. This has also been supplemented by countries looking to develop new regulatory structures for the involvement of litigation funders in class action litigation, including New Zealand and Singapore, where the involvement of funders has been a key consideration.
Commercial

Mondaq Launches Litigation Funding Comparative Guide 

Given the rapid pace of innovation and expansion in the global litigation funding space, it is helpful to engage reference tools to separate the wheat from the chaff. Mondaq's new Litigation Funding Comparative Guide guide spans 12 chapters, serving as an interactive tool for worldwide litigation franchise comparisons.  Mondaq's new guide includes a bevy of options, including 12 global jurisdictions with subgroups, such as ethical considerations, legal framework, tips and traps. From there, additional information allows for comparative analysis by including a list of 60 subjects that are key to litigation finance business systems and processes for each jurisdiction.  The guide aims to engage internationally recognized litigation finance professionals as subject matter experts to provide responses for comparative research. Mondaq claims that over time, the guide will expand to offer more detailed analysis of the litigation investment landscape globally.
Case Developments Commercial

LCM Granted Partial Award in Arbitral Dispute at the ICC

International arbitration is a target sector for many funders, with a wide variety of cases that could yield significant rewards. Litigation Capital Management (LCM) has recently achieved success in one such dispute, having won a partial award in a case before the International Criminal Court (ICC). An article in Morningstar covered LCM’s announcement that it had been granted a partial award on liability and quantum in a case before the ICC’s International Court of Arbitration tribunal. With the claim having been successful, LCM must now await the determination of a costs award, although the funder maintained that such an award would not affect its return on investment. LCM had reportedly invested around $2 million in this claim, with the financial return from the award apparently being “in line with management expectations. Whilst the award can still be challenged, LCM expressed confidence that the judgement and award would be upheld. LCM’s chief executive, Patrick Moloney stated that the positive result continued “to demonstrate the non-cyclical and uncorrelated nature of the returns from litigation funding."
Announcements Commercial Deals

Emerging Litigation and Corporate Boutiques Create Powerhouse Alliance

American litigation boutique Invenio LLP and emerging global legal consultancy Biztech Lawyers today announced the launch of their cross-border partnership that will now provide an even broader range of legal and strategic business advice to clients who are facing moments of emergence, crisis, or transformation, either as an organization or in navigating new asset classes or markets. With this partnership, current and future clients alike will be able to leverage Invenio LLP's legal and advisory work in complex dispute resolution, litigation finance, and alternative assets  – just as Biztech Lawyers' expertise in international business, technology transactions, and aviation issues will drive these key broader capabilities. This partnership offers clients nimble and highly experienced teams that are rate-sensitive and can operate globally from operational bases throughout the United States, Australia, and the United Kingdom. The alliance creates a 'firm of General Counsels' in that it features founders who have each served as highly-regarded General Counsel of leading companies. Invenio leader Ed Gehres held the role for Miami-based investment platform 777 Partners, while counterpart Blake Trueblood served as General Counsel of litigation finance companies Justice Funds and Signal Funding. Meanwhile, Biztech Lawyers Co-Founders Anthony Bekker and Chris Spillman held the same roles at Australian-based technology unicorn Rokt and buy-now pay-later leader QuadPay. Together, the founders now offer clients the benefits of dozens of years of collective experience as advocates and business leaders in some of the most dynamic high growth industries and emerging asset classes.  The announcement also comes on the heels of Biztech's expansion into the United Kingdom, and the partnership will enable both firms to leverage each other's strengths. "We are excited to partner with Biztech Lawyers," Ed Gehres, Managing Partner of Invenio LLP, said. "Their international network and bench strength in the USA, UK, and Australia will be a valuable asset for our clients, and we look forward to working together to provide them with the best possible legal services. Indeed, we believe this alliance will be one of a small handful of legal advisors to offer litigation finance transactional capabilities in the major markets of the US, UK, and Australia." "Ed Gehres and Blake Trueblood are highly respected operators with a long history of success across an array of legal service categories," said Chris Spillman, Managing Director, Americas of Biztech Lawyers. "Their expertise in counseling growth companies in plaintiff-side litigation and litigation defense will be a huge asset for our clients when they need it most, and we look forward to working together to provide our mutual clients with the best possible legal services." The partnership between Invenio and Biztech Lawyers is expected to be a long-term and mutually beneficial one. The firms will work closely together to ensure that their clients receive the best possible legal services, and they will continue to explore opportunities for growth and expansion in the future.
Commercial Deals

Funding for Patent Disputes Remains Attractive Despite Criticism Around Disclosure

Patent disputes remain a top target area for litigation funders, and continue to attract a significant portion of all third-party litigation funding. Whilst this has not come without fierce critiques of the practice surrounding disclosure and frivolous lawsuits, industry insiders maintain that the future for patent litigation funding remains bright in the face of this increasing scrutiny. In an article by World IP Review, leaders from both commercial funders and law firms voiced their confidence over the current state of litigation finance for intellectual property lawsuits. Validity Finance’s director of patent investments, Michelle Eber, emphasized that Validity is dedicating around a quarter of its investments to patent litigation, and with demand for funding being so high, “we're seeing more competition, and more funders, coming into the space.” Richard Rochford, partner at Haynes Boone, sees the use of third-party funding growing in popularity and suggested that it is a particularly useful tool for midsize businesses that are suffering from patent infringement, but lack the resources to pursue claims. Whilst disclosure remains a hot button topic for third-party funding in these disputes, Rochford argues that disclosure can be beneficial for certain plaintiffs who can demonstrate they have the resources to take on the case and “are determined to try and have their rights vindicated.” Eber offers the more sceptical position that disclosure can be used as an unwarranted distraction from the merits of the case, but acknowledges that if increased disclosure requirements are mandated, then funders will simply have to adapt their approach to the practice. Regarding the accusations of funders investing in ‘troll’ patent lawsuits, Eber argues that funders are not interested in frivolous claims and with their focus on gaining a return on investment, what really matters is “a strong invention story, and that means strong patents.”
Commercial Deals

Rise in Interest Rates Poses Challenges for Litigation Funders

While many industry observers have noted that the current state of the market (inflation, rising interest rates) may result in higher levels of litigation and associated funding activity, there will no doubt be difficulties for funders who struggle to raise capital in this environment. Speaking in an article for Law 360, Edwin Coe’s head of class action and financial litigation, David Greene, discussed the potential impact of the challenging economic circumstances and rise in interest rates on litigation funders. Greene acknowledged that certain funders have come under increasing pressure from the lack of available capital, without which they cannot make new investments to fuel future returns. Greene highlighted that with interest rates on the rise, alternative investments such as litigation finance may not be perceived in such a favourable light, resulting in funders needing to achieve higher levels of returns on investments to accommodate the increased risk. As a result, Greene suggests that we will continue to see funders take a more selective approach to the cases they invest in, as those with a lower ROI will simply not be able to provide adequate returns to justify the risk of lost capital.
Case Developments Commercial

LCM Funds Panthera Resources’ Claim Against Indian Government

Litigation funding remains a uniquely powerful tool within international arbitration and cross-border disputes, allowing entities to bring claims in situations that otherwise might have resulted in overly burdensome costs. A gold exploration and development company’s claim against the Indian government illustrates this ‘access to justice’ benefit. Originally reported by Proactive Investors, Panthera Resources announced that it has entered into a funding agreement with Litigation Capital Management’s subsidiary, LCM Funding SG Pty Ltd. The arbitration funding agreement will see LCM Funding provide $10.5 million in capital to finance Panthera’s claim against the Indian government, alleging that India had breached the Australia-India Bilateral Investment Treaty. Panthera’s managing director, Mark Bolton, stated that the funding agreement with LCM is a “tremendous vote of confidence” for the merits of the company’s claim, whilst providing Panthera with the capital to see its claim through to a conclusion. Panthera have also secured the services of Fasken Martineau LLP to lead the claim, drawing on their experience with disputes in the mining, energy and infrastructure sectors.
Commercial Regulatory Issues Special Features

Immunity from Lawyer Malpractice – Uniquely Australian

The following article was contributed by Valerie Blacker, a commercial litigator focusing on funded litigation, and John Speer, a lawyer in the Dispute Resolution and Litigation Team at Piper Alderman. While large class actions receive the lion’s share of media attention, litigation financiers also regularly fund litigation involving a single plaintiff. Given that solicitors are required to maintain professional indemnity insurance, they can be, in instances of negligence, an attractive prospect for financiers: they are well-resourced and have the capacity to satisfy any judgment awarded against them. The Brisbane Litigation team at Piper Alderman have brought successful professional negligence claims against our clients’ former solicitors involving both funded and unfunded arrangements.[1] This article discusses a common defense raised in these types of proceedings – the advocates’ immunity. The immunity in brief In Australia, the advocacy function is immune from a negligence claim.  The immunity applies to a lawyer’s work in the court room. The immunity is rooted in the public policy principle that there should be finality in litigation. It prevents unsuccessful parties from seeking to re-litigate disputes by way of a collateral attack on their lawyers’ performance in court. A barrister mainly appears in court, and a solicitor mainly performs legal work outside of court.[2] But why does it matter? If a lawyer has been negligent, shouldn’t the client be able to seek relief? Apparently not – in some jurisdictions. Despite having been abolished in the United Kingdom and even in New Zealand, advocates’ immunity remains firmly in place in Australia. Indeed, there were at least eighteen court actions in 2022 that have made reference to the immunity as a defense. Avenues for redress The immunity is often called upon by solicitors performing ‘out-of-court’ work, but which (so the argument goes) is so ‘intimately connected to the conduct of the case in court’. In two recent examples, the immunity applied to shield a solicitor for failing to present evidence that should have been presented (Golden v Koffel [2022] NSWCA 8), and was extended to protect a solicitor who had given faulty advice (Jimenez v Watson [2021] NSWCA 55). If a solicitor’s negligent work was actually done in court in the course of a hearing or was done out of court but which led to a decision affecting the conduct of the case in court, the alternative options for an aggrieved client are frankly inadequate. For example, (1) an unsuccessful party may apply for an order that his or her solicitor be made personally liable for the successful party’s costs in the litigation; (2) an aggrieved client can challenge a solicitor’s bills through an application to the court for a costs assessment; and (3) disciplinary action can be taken which can result in a fine, a reprimand or in a solicitor being disqualified from practice. At best these alternative options may reduce a client’s costs but none of them will truly compensate a client for the wrongs caused by a lousy solicitor. Narrowing the scope of the immunity In a more positive move, the Courts have now made it clear that the immunity does not extend to a solicitor’s work in bringing about a settlement agreement (as an agreement between parties to settle is not an exercise of judicial power).[3] It is also now possible to be compensated for the expense of engaging new lawyers.[4] NT Pubco Pty Ltd v Strazdins is also notable. The Court there held that a failure to advise clients to seek independent legal advice was held to be likely outside the immunity.[5] The relevant wrong in that case concerned a failure by solicitors to relay to their client comments made by the court at several interlocutory hearings that the client should have been pursuing a particular kind of relief in its litigation. That would be akin to failing to commence proceedings in time. That too should fall outside of the immunity as the aggrieved client’s cause of action was complete and whole before the proceedings were started and the negligent conduct was completely separate from the litigation. The primary justification for retaining the advocates’ immunity is to ensure the finality of judicial determinations. However, if a client brings a negligence suit against a former solicitor is that not also a separate proceeding that deals with a different issue? As Kirby J warned, upholding the immunity not only reduces equality before the courts, but is capable of breeding contempt for the law. His Honour questioned ‘why an anomalous immunity is not only preserved in Australia but now actually enlarged by a binding legal rule that will include out-of-court advice and extend to protect solicitors as well as barristers’.[6] In these circumstances, can the reasons traditionally given for the immunity still persuade, particularly when the rest of common law world has abolished it? At the risk of offending the doctrine and re-litigating this issue, perhaps we should continue the debate. About the Authors: Valerie Blacker is a commercial litigator focusing on funded litigation. Valerie has been with Piper Alderman for over 12 years. With a background in class actions, Valerie also prosecutes funded commercial litigation claims. John Speer is a lawyer in the Dispute Resolution and Litigation Team located in Brisbane, Prior to joining Piper Alderman John was an associate to the Honourable Justice B J Collier in the Federal Court of Australia, as well as to Deputy President B J McCabe in the Administrative Appeals Tribunal. John has also worked as a ministerial adviser and chief of staff in the Parliament of Australia.   For queries or comments in relation to this article please contact John Speer | T: +61 7 3220 7765 | E:  jspeer@piperalderman.com.au [1] These matters resulted in a confidential settlement. [2] New South Wales and Queensland have a ‘split’ profession, meaning that the roles of barrister and solicitor are separated. [3] Attwells v Jackson Lalic Lawyers Pty Ltd (2016) 259 CLR 1,  [5], [38], [39], [45], [46], [53]. [4] Legal Services Commissioner v Rowell [2013] QCAT OCR207-12. [5] [2014] NTSC 8 at [134] and [137]. [6] D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1, 109 [346].
Announcements Case Developments Commercial

Dutch class action progressing against Airbus relating to large-scale corruption and bribery

For many years, Airbus allegedly facilitated large-scale bribery and corruption in its aviation business. Airbus did not adequately inform the investing public about its wrongful conduct. Investigations by various authorities subsequently resulted in Airbus having to pay a fine of approximately € 3.6 billion (US$ 4 billion). When this information became publicly known, the price of Airbus shares fell sharply, causing huge loss to investors. They are entitled to be compensated by Airbus. The class action is open to all institutional investors and retail investors in Airbus who purchased and held its ordinary shares through the Paris, Frankfurt or Spanish stock exchanges during the period 1 January 2008 to 31 July 2020. No cure, no pay: Investors who have suffered loss can join the class action by registering with Airbus Investors Recovery Stichting (AIRS) at no upfront cost. AIRS is represented by leading law firm Scott+Scott, and has obtained funding from Woodsford, a specialist in environmental, social and corporate governance related engagement and a leading litigation funder. For more information visit www.airbusinvestorsrecoverystichting.com/register
Commercial Special Features

Funder Spotlight: Hedonova

Hedonova is a hedge fund that was established in 2020, and it specializes in alternative investments. The company has offices located in various parts of the world, making it accessible to investors from different regions. Alternative investments are unique investment opportunities that do not conform to the standard categories of investments such as stocks and bonds. Hedonova's portfolio of alternative investments encompasses a diverse range of assets, including startups, real estate, fine art, wine, and cryptocurrencies. The fund structure of Hedonova is based on a single fund structure that provides an excellent investment option for shareholders who wish to invest without the burden of managing the day-to-day distribution of their investments. This structure provides an added advantage to investors who have limited knowledge or experience in managing investments. Hedonova's focus on alternative investments means that its portfolio diversifies risk, offering investors an excellent hedge against the volatility of conventional investment categories. The unique combination of alternative investment and the single fund structure makes Hedonova an attractive investment option for savvy investors looking for high-yield, low-risk investments. Website: https://www.hedonova.io/ Founded: 2019 Headquarters: Los Angeles, CA USA About Hedonova At Hedonova, our mission is to provide high-yield, low-risk investment opportunities to investors who are looking to diversify their portfolios beyond traditional investment categories. We specialize in alternative investments, which are unique and offer an excellent hedge against the volatility of conventional investment categories. We believe that by offering a diverse range of alternative investments, we can create a portfolio that will protect investors from market fluctuations and generate consistent returns over the long term. Our single fund structure is designed to make investing in alternative assets accessible and hassle-free for all types of investors. We are committed to building long-lasting relationships with our investors based on trust, transparency, and open communication. We believe that by fostering a strong partnership with our clients, we can better understand their unique needs and investment goals, and provide tailored investment solutions that meet their expectations. Our team of seasoned professionals has extensive experience in alternative investments and a deep understanding of market dynamics. We are dedicated to utilizing our expertise to identify and pursue investment opportunities that deliver optimal returns while minimizing risk. Our ultimate goal at Hedonova is to generate consistent and sustainable returns for our investors over the long term. We believe that by combining our expertise, ethical values, and active portfolio management, we can provide our clients with a superior investment experience that empowers them to achieve their financial goals. Points of Differentiation: Alternative Investment Expertise: Hedonova specializes in alternative investments, which are unique investment opportunities that offer high returns and diversify risk. Our portfolio includes a range of assets, such as startups, real estate, fine art, wine, and cryptocurrencies, to provide our investors with a diverse range of investment opportunities. Global Accessibility: Hedonova has offices located in various parts of the world, making it accessible to investors from different regions. We believe that by having a global presence, we can offer unique investment opportunities that are not available in local markets. Single Fund Structure: Our single fund structure provides an excellent investment option for shareholders who wish to invest without the burden of managing the day-to-day distribution of their investments. This structure provides an added advantage to investors who have limited knowledge or experience in managing investments. High-Yield, Low-Risk Investments: At Hedonova, we are committed to providing our investors with high-yield, low-risk investment opportunities. Our focus on alternative investments means that our portfolio diversifies risk, offering investors an excellent hedge against the volatility of conventional investment categories. Active Portfolio Management: Hedonova's experienced investment team actively manages our portfolio of alternative investments, staying up to date with market trends and seeking out new opportunities to optimize returns for our investors. This approach ensures that our portfolio is well-positioned to adapt to changing market conditions. Ethical Investing: At Hedonova, we believe in investing ethically and sustainably. We carefully evaluate each investment opportunity to ensure that it aligns with our values and standards. By investing in socially responsible assets, we aim to generate returns that not only benefit our investors but also contribute to the betterment of society and the environment.  Key Stakeholders  Suman Bannerjee Chief Investment Officer  Suman Bannerjee is a highly accomplished Chief Investment Officer (CIO) with over 20 years of experience in the financial industry. He currently serves as the CIO at Hedonova, a global alternative investment management firm, where he is responsible for managing the firm's investment strategies and ensuring the performance of its portfolios. Before joining Hedonova, Suman held senior roles at several leading financial institutions, including Millennium and Société Générale Equipment Finance (SGEF). At Millennium, he served as the Global Portfolio Manager. In this role, he was responsible for designing and implementing investment strategies, managing the firm's risk exposures, and generating returns for investors. At SGEF, he was the Vice President of Equipment Finance and Supply Chain Finance, where he oversaw the origination, underwriting, and management of equipment and supply chain finance transactions, and was responsible for ensuring the profitability and growth of the business. Suman earned his Bachelor's degree in Philosophy from the University of Cambridge, where he was a recipient of the prestigious Gates Cambridge Scholarship. He is also a Chartered Alternative Investment Analyst (CAIA) charter holder and a member of the CAIA Association, which is the leading professional association for alternative investment professionals. Throughout his career, Suman has demonstrated deep expertise in investments, risk management, and portfolio management. He is highly regarded for his analytical skills, strategic thinking, and ability to identify and execute profitable investment opportunities. He has a track record of generating significant returns and has a reputation for being a trusted advisor to his clients. Jurisdictions and Sectors Served At Hedonova, we pride ourselves on being a truly global organization with a presence in some of the world's most prominent financial centers. We have strategically chosen our office locations in Los Angeles, Delaware, Tallinn, and Paris to ensure that we can offer our investors unique investment opportunities that are not available in local markets. Our team members are spread across every continent, and we believe that diversity is our strength. They come from various backgrounds and bring different perspectives, experiences, and expertise to the table. We believe that this diversity enables us to evaluate investment opportunities from multiple angles and make informed decisions that are in the best interest of our clients. At Hedonova, we are open to everyone. We believe that everyone should have access to alternative investment opportunities, regardless of their location, background, or level of investment expertise. Our mission is to make investing in alternative assets accessible, hassle-free, and rewarding for all types of investors. Whether you are a seasoned investor or just starting, we are here to help you achieve your investment goals. We are committed to fostering a culture of inclusivity, respect, and open communication. We believe that by listening to our client's feedback, we can continuously improve our services and better serve their unique needs. We are dedicated to building strong, long-lasting relationships with our clients based on trust, transparency, and mutual respect. Key Metrics Our investment strategy has generated a return of 32% in 2022, which significantly outperformed the market average for conventional investment categories such as stocks and bonds. This metric reflects our ability to identify and invest in alternative assets that deliver high returns while minimizing risk. We believe that this level of performance is a testament to our active portfolio management, ethical investing principles, and commitment to delivering exceptional value to our clients. Quotes from Key Stakeholders “If you want to be wealthy, spend your time earning, learning, or relaxing. Outsource or ignore everything else.” “Investing because you are scared to miss out on gains will leave you with larger losses.” “Wealth is created by leverage. Leverage has different forms. Labor leverage is when you use someone else's time, capital leverage is when you use someone else's money. In the last two decades, code was leverage used to automate service delivery to billions. Now there's another form of leverage - audience. “Code, content, and capital is the new land, labor, and capital.” “The best way to think about asset allocation between stocks and alternatives is timing. It's best to invest in stocks when markets are at historical lows, and it's best to invest in alternatives when inflation is high. “
Commercial Deals

Funder of Public Interest Litigation Looks to Partner with Commercial Funders and Law Firms

A new British funder is looking to provide capital to cases that not only are meritorious in nature, but also retain a societal value, where the legal action is in the public interest. Detailed in an article by Legal Futures, next month will see the official launch of Law for Change, which is seeking to provide financing for cases that are in the public interest and that could not receive the capital needed through general crowdfunding. Law for Change is classified as a community interest company (CIC), as it is not aiming to raise funds from the wider public, and therefore will not be considered a charity. Stephen Kinsella, specialist partner at Flint Global, is one of the founders of Law for Change and stated that they will only pursue “cases that clarify the law”, regardless of whether there is compensation to be secured or not. Law for Change has already provided funding for nine cases, including a claim focusing on the government’s failure to respond adequately to the Grenfell Tower inquiry, and a legal challenge to the government’s policy to send asylum seekers to Rwanda. Kinsella stated that he has already reached out to commercial litigation finance companies to see if they would contribute funds to Law for Change, and if they would also be interested in partnering with commercial law firms where cases require the resources that only large firms can provide.
Commercial

Systemic Issues May Slow Growth of Litigation Funding in India

Outside of the main established markets for litigation finance, there has been much discussion around which jurisdiction will be the next to see a dramatic uptick in the adoption of third-party funding. Whilst the Indian market is often regarded as one with a high probability for expansion due to the size and potential scope for legal funding, industry experts within the country have highlighted barriers that could slow or limit the market’s growth. An article by Financial Express lays out some of the chief obstacles facing the litigation finance industry in India, focusing on the country’s often delayed system of processing claims, as well as an understanding that the outcome of disputes is often unpredictable. LegalPay’s chief executive, Kundan Shahi, emphasized that the protracted timeline for cases in India means that prospective funders would need to be incredibly patient to see returns on investment, and that this is a limiting factor for industry growth. Sumit Rai, an arbitration expert from Mumbai, also points to the sluggish pace of the Indian legal system and notes that even after securing an award, plaintiffs and their funders may still have a long wait ahead to see the financial return. Rai also suggests that the unpredictable nature of court judgements in the country will make it harder for funders to accurately predict risk levels for each case, stating that the sheer burden of cases and pressure on judges makes it very hard to find universally consistent approaches to similar cases.
Case Developments Commercial

Harcus Parker and Bench Walk Advisors Bringing Claim Against Mastercard and Visa

Within the UK, lawsuits focusing on anti-competitive behaviour by corporations have become some of the most sought-after claims for litigation funders and law firms alike. New reporting suggests that we will soon see another claim filed at the Competition Appeal Tribunal (CAT) against two of the world’s largest payments companies, Mastercard and Visa. An article by Sky News reveals that the litigation firm, Harcus Parker, will be filing claims against Mastercard and Visa, with one source revealing that the value of the action will exceed £7.5 billion, and may reach a significantly higher total amount. The lawsuit will focus on the claim that these two payment processing companies “overcharged businesses for so-called multilateral interchange fees (MIFs)”, and that the value of these fees are imposed unilaterally by Mastercard and Visa on banks who engage in their card schemes. Whilst Harcus Parker did not confirm the potential value of the claim, it did state that the case will be funded by BenchWalk Advisers. The claim will seek to represent businesses with “an average annual pre-pandemic turnover of at least £100m” on an opt-in basis, whilst registered businesses with less revenue will be represented on an opt out basis. Thomas Ross, partner at Harcus Parker, said that the MIFs enforced by Mastercard and Visa are “unlawful and should be abolished”, whilst neither of the two targeted companies provided a comment to Sky News.
Announcements Commercial Deals

AIR Asset Management Partners with Kerberos Capital Management to Add Legal Finance Allocation to its Multi-Strategy Product

AIR Asset Management ("AIRAM"), a Chicago-based hedge fund management firm focused on investing in life settlements, annuities, and private credit, today announced its strategic partnership with Kerberos Capital Management ("Kerberos"), a leading private credit asset management firm that specializes in direct lending to law firms. The partnership enables AIRAM to enhance and further diversify its multi-strategy investment product through adding a legal finance asset allocation focused on law firm lending.  "We are excited to partner with Kerberos to offer investors this highly complementary allocation, which aligns with AIRAM's mission to deliver attractive risk-adjusted returns through resilient, non-correlated investment products," said Stephen Luongo, Chief Investment Officer of AIR Asset Management. "The loans Kerberos underwrites to law firms provide AIRAM an attractive value proposition, including reliable interest income that not only contributes to overall returns, but also supports liquidity and risk management. We look forward to leveraging Kerberos' track record, leadership, and deep expertise in law firm lending to expand our private credit mandate." The Kerberos investment team is led by Joe Siprut, who was a nationally recognized attorney prior to founding Kerberos. Kerberos boasts an extensive roster of relationships in the plaintiff's bar and law firm lending space, making it one of the few litigation funders with underwriters that have significant experience from their former capacities as trial lawyers and senior litigators. Its strategy focuses on originating and underwriting loans to law firms that generate success-fee-based revenue by litigating mass tort, class action, and personal injury claims. "I have long admired what AIR Asset Management's CEO Rich Beletuz and his team have built, and we are thrilled to be supporting their expansion into legal finance," said Joe Siprut, Founder, Chief Executive Officer, and Chief Investment Officer of Kerberos. "A clear benefit of our strategy is our uniquely diversified approach, which allows for cross-collateralization, low default rates, and a steady return profile, from which AIRAM's impressive suite of non-correlated offerings is well positioned to benefit. I'm excited to work with AIRAM's talented team of investment professionals as we execute on our shared goal to deliver for our respective investors."*   About AIR Asset Management AIRAM is a rapidly growing SEC-registered hedge fund management firm with $600M in AUM in life settlements, annuities, and private credit investments. The firm has specialized in longevity-linked investing since 2014 and has offered qualified investors the opportunity to access attractive risk-adjusted returns that are largely uncorrelated to traditional asset classes. AIRAM's experienced team of professionals from diverse backgrounds serves an investor base of institutional, registered investment advisers (RIAs), single and multi-family offices, and high net worth investors. About Kerberos Capital Management Kerberos Capital Management is a boutique alternative asset manager that seeks to provide our clients excess return at every point along the risk-reward spectrum with an emphasis on yield, opportunistic, and hybrid strategies. Kerberos' flagship strategy is providing innovative capital solutions to law firms. The depth of our private credit and direct lending platform has enabled us to generate differentiated absolute and risk-adjusted returns in litigation finance markets, regardless of the business cycle or economic environment.
Commercial People Moves

Omni Bridgeway CEO to Retire in October

One of the world’s leading litigation funders has announced a change in leadership, as Omni Bridgeway’s CEO and managing director Andrew Saker stated that he will be retiring and leaving his position on October 26. Mr Saker will end his tenure as chief executive after the company’s annual general meeting, and will continue to support Omni Bridgeway as a non-executive advisor for a further year. The news was detailed by an article in The Market Herald, with Omni Bridgeway announcing that Raymond van Hulst, currently managing director and co-chief investment officer EMEA, will be taking over as CEO following Mr Saker’s departure. Mr van Hulst stated that he was enthusiastic about the “significant opportunities” for the company’s future, and would be looking to continue Mr Saker's “vision of globalization.” Speaking about Mr Saker’s tenure as CEO, Omni Bridgeway’s chairman Michael Kay said that “Andrew and his team have built a truly global platform”, and that Omni “has transformed from a balance sheet funder to a co-investor and manager of non-recourse funds investing in legal assets in eight funds managing approximately $3 billion.”
Announcements Commercial

Litigation Capital Management: Progress on direct balance sheet investment

Litigation Capital Management Limited (AIM:LIT), an alternative asset manager specializing in dispute financing solutions internationally, announces positive progress on an investment forming part of its portfolio of direct investments.

Successful award in investment in arbitration

The Company is pleased to announce a positive development on one of LCM’s 100% direct balance sheet investments which was heard by an ICC International Court of Arbitration tribunal.  A partial award on liability and quantum was granted in favour of the funded party. This means that the funded party has succeeded in the claim and the only matter yet to be determined is the costs award. The Company expects the funded party to also be successful in an award of its costs, however, that costs award does not affect LCM’s interest or its potential returns.

The award is subject to challenge in the court by the respondent. That challenge is not in the nature of an appeal. LCM is confident that the award will be upheld. LCM has invested approximately AUD$ 2.9m (USD $2m) in this arbitral dispute.  The investment performance is protected by a compounding interest rate.

Patrick Moloney, CEO of LCM, commented: “We are pleased with the positive adjudication in this investment. Despite the Respondent challenging the award we are confident that the award will be maintained. In the current uncertain macro-economic environment our direct investments, as well as those made alongside our fund investments, continue to demonstrate the non-cyclical and uncorrelated nature of the returns from litigation funding.

This award is expected to generate a return in line with management expectations”.

Enquiries

Litigation Capital Managementc/o Tavistock PR
Patrick Moloney, Chief Executive Officer
  
Canaccord (Nomad and Joint Broker) Tel: 020 7523 8000
Bobbie Hilliam
  
Investec Bank plc (Joint Broker)Tel: 020 7597 5970
David Anderson 
  
Tavistock PRTel: 020 7920 3150
Tim Pearsonlcm@tavistock.co.uk
Katie Hopkins 

Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing solutions internationally, which operates two business models. The first is direct investments made from LCM's permanent balance sheet capital and the second is third party fund management. Under those two business models, LCM currently pursues three investment strategies: Single-case funding, Portfolio funding and Acquisitions of claims. LCM generates its revenue from both its direct investments and also performance fees through asset management.

LCM has an unparalleled track record driven by disciplined project selection and robust risk management. Currently headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT.

www.lcmfinance.com

Commercial Deals

Brazilian Lawyer Calls for Funders to Support Litigation for Indigenous Communities in the Amazon

Litigation funding is a powerful tool to redress the balance between powerful defendants with vast wealth and resources at their disposal, and claimants who lack the financial resources to fight back. This contrast is often most sharply seen in cases where indigenous communities are fighting for justice against government entities or corporations that have harmed them, who without third-party funding, would be unable to gain access to the legal system. In a new effort to bring justice on behalf of indigenous communities, Daniel Cavalcante, a lawyer from Brazil, is calling on law firms and litigation funders to support lawsuits against large international corporations harming the people and the environment of the Amazon. In a video published to his YouTube channel, Cavalcante describes how indigenous peoples in the region “suffer the most diverse types of violence, prejudice and oppression”. Cavalcante states that this oppression and harm is being conducted both by foreign companies and by state governments, who have perpetrated “a true ethnic-cultural genocide that decimated their habits, customs and traditions”.
Case Developments Commercial

LCM Announces £7MM in Profit from Carillion Litigation Against KPMG

Investments by litigation funders are always a delicate balance between the risk of a lost case against the potentially lucrative returns should the claim be successful. However, as a new announcement by Litigation Capital Management (LCM) demonstrates, backing the right case can lead to impressive financial gains for a funder. Reporting by City A.M. highlights LCM’s announcement early this week, which stated that the funder had achieved a £7 million return in profit from funding a claim by Carillion’s liquidator against KPMG. The claim that LCM had originally financed in 2021, involved the liquidator filing a lawsuit against KPMG for its failure to competently audit Carillion’s accounts, which had subsequently led to the collapse of the company in 2018.  KPMG had announced last week that it would be settling the case, without disclosing the settlement figure publicly. However, LCM had invested £5.2 million into the lawsuit and with an overall financial return of £12.5 million, resulting in the stated £7 million amount in profit.  LCM’s chief executive, Patrick Moloney, stated that the capital for the investment had been sourced from pension funds in Europe and the US, as well as investment banks and university endowments.
Case Developments Commercial

Harcus Parker Leading Group Litigation Against UK Energy Suppliers

As everyday consumers around the world struggle with rising prices and constrained income, it is no surprise that there is significant interest in litigation representing these consumers against corporations who abuse their power. In the UK, a new group litigation effort looks to take on Britain’s energy companies for their practice of paying brokers to attract new customers and then secretly passing on the cost of those broker fees to these customers. An article by Express & Star covers the news that Harcus Parker, a London-based litigation firm, is reaching out to companies, charities, schools and other organisations who may have been affected. The group litigation focuses on the allegation that energy firms paid ‘secret commissions’ to third-party brokers or introducers, who encouraged customers to sign up with these energy suppliers and then effectively forced the customer to cover these costs by increasing their energy bills. Harcus Parker’s senior partner, Damon Parker, stated that consumers have been unknowingly footing the bill for these practices, with energy suppliers and outside brokers having failed to disclose the existence or amount of these payments. Harcus Parker has stated that it has secured over £10 million in litigation funding to fight the case, and has estimated that the total compensation owed by these energy companies could exceed £2 billion. Potential claimants can contact Harcus Parker through its website.
Case Developments Commercial

Woodsford Funds Class Actions Against Hyundai and Kia in Australia

As class actions continue to gain interest and investment from the litigation funding industry, the automotive sector remains an area full of opportunities, with consumers empowered to bring claims against manufacturers accused of malpractice or deceptive behavior.   Reporting by WhichCar details that multiple class actions have been brought against Hyundai and Kia in the Federal Court of Australia, with the claims alleging that they sold vehicles to consumers that had defective engines with serious faults. The actions, which are being represented by Johnson Winter Slattery and funded by Woodsford Litigation Funding, cover sales of vehicles from 2011 to the present and includes over 20 separate models of car between the two carmakers, with a potential of almost 195,000 cars being affected by these issues. Charlie Morris, chief investment officer at Woodsford, stated that the class actions were designed to ensure these companies face accountability and that the consumers affected can receive adequate financial compensation. Robert Johnston, a partner at Johnson Winter Slattery, emphasised that Kia and Hyundai’s actions specifically harmed Australian consumers, as they were aware of the issues and even recalled vehicles with similar defects in other countries. Hyundai stated that it “stands by the integrity and reliability of its vehicles”, whilst Kia did not respond to WhichCar’s request for comment.
Commercial Regulatory Issues

DAF Appeal in UK Supreme Court Could Endanger Third-Party Funding

As the European Union considers proposals for enhanced regulation and oversight of third-party litigation funding on the continent, there has been much speculation that the UK’s litigation finance industry could benefit from representing a more welcoming market. However, an ongoing appeal by the defendant in two group claims has the potential to disrupt the status quo of litigation funding in the UK, and create major problems for funders operating in the country. An article by Reuters provides an update on the appeal by truck manufacturer DAF, which is now set to be decided by the UK’s Supreme Court. DAF’s has been appealing two lawsuits brought by two groups of truck owners at the Competition Appeal Tribunal (CAT), which allege that that company took part in a cartel that fixed prices and slowed the progress of engine technology that reduced harmful emissions. DAF’s appeal centers around the argument that the claimant groups engaged in funding agreements that fail to comply with regulations that outline the parameters of damages-based agreements. DAF’s lawyer, Bankim Thanki, argued that the Supreme Court should not consider any effects on the wider litigation finance industry, as they are irrelevant to the validity of the appeal. However, the Association of Litigation Funders (ALF) has argued that if the court upheld the appeal on these grounds, then it would put the UK litigation funding industry “in a state of disarray”. The Royal Haulage Association (RHA), which brought one of the original cases against DAF, has highlighted that by permitting the defendant’s appeal, the court would seriously endanger every single collective proceeding in the UK, which all involve funding agreements.
Commercial Deals

Westfleet Advisors Release 2022 Litigation Finance Market Report

As noted in the recent GAO report, there is a distinct lack of publicly available data about the litigation funding industry, which has contributed to the lack of awareness and understanding of the practice by policymakers and legal professionals outside of the industry. However, a new report by Westfleet Advisors provides new insights into the most recent state of the market, and offers some interesting takeaways as to the current direction of litigation finance in the U.S. Westfleet Advisors’ 2022 Litigation Finance Market Report provides an overview of the American third-party funding industry, highlighting that the market continues to demonstrate strong growth, as new capital commitments from funders grew by 16% last year, to reach a total of $3.2 billion. Not only has the scale of new commitments continued to grow, but the average size of these investments has also risen to $8.6 million per transaction. Interestingly, the percentage of client-directed deals has dropped down to 31%, as lawyer-directed deals have become the dominant deal type, reversing the trend of 2021 which saw a near 50/50 split between client and lawyer-directed deals. Given the regularity with which patent litigation dominates the headlines for litigation funding, 2022 actually saw a decline of that market share down from 29% in 2021 to 21% last year. Westfleet suggests that this outsized representation of patent litigation cases being funded in 2021 may have been the result of several portfolio funding deals for patent lawsuits. More insights into the U.S. litigation finance market can be found in the full report.
Commercial

Funding Industry Faces Challenges Ahead

With the two high-profile examples of Lionfish and Novitas Loans having recently made headlines for their struggles, industry analysts and leaders are offering a cautionary perspective on those who see the practice as a guaranteed path to success. A new article by The Times features senior leaders from law firms and funders discussing the potential pitfalls that the funding industry could face, as well as the measures existing funders can take to stay ahead.  Martyn Day, managing partner at Leigh Day, suggests that the determining factor for success will be whether funders can find the right level of risk versus reward, and that in order for a funder to have long-term viability, it needs to have a sufficient level of capital to absorb any losses whilst still backing future cases. David Mann, managing partner of Mann Roberts Solicitors, goes a step further and argues that the industry may be suffering from an oversupply of funders without an equal volume of both valuable and meritorious cases, although the current economic instability may spur an increase in suitable cases to support these service providers. Factor Risk Management’s co-founder, Mohsin Patel, suggests that some parties have incorrectly seen litigation funding as a “pot of gold”, but emphasizes that established funders will be able to continually develop a track record and grow their expertise to offer more favorable investment opportunities. Ellora MacPherson, chief investment officer at Harbour, also points to the fact that successful funders are engaging in broader partnerships with law firms and providing capital to support these firms’ growth, without having to exclusively rely on high-risk investments in individual cases.
Commercial Deals

Big Law in the U.S. Remains Hesitant to Engage in Litigation Funding Deals

Litigation funders and law firms have produced powerful partnerships by combining the legal resources and capital needed to provide access to justice for many plaintiffs. However, despite this often mutually beneficial relationship, data from Westfleet Advisors’ latest research on the industry suggests that many of the big U.S. law firms are still taking a cautious and wary approach to engaging with third-party funding arrangements. An article from Bloomberg Law highlights the findings of Westfleet Advisors’ 2022 industry report, which states that the proportion of cases involving America’s 200 largest law firms has dropped from 41% to 28% between 2021 and 2022. Westfleet’s CEO, Charles Agee, suggests that part of this hesitancy from the big legal players stems from these firms being uncomfortable with the “cross-collateralized” pricing in portfolio funding that can lead to law firms having to pay back the invested capital after only one or two successful cases. Agee goes on to point out that due to this reluctance from some law firms to engage in portfolio funding with traditional funders, some have turned to more standard loan deals with hedge funds and alternative asset managers that offer comparatively lower interest rates. However, Agee stresses that this is not replacing the majority of deals that funders would engage in, and that the usual funder-law firm relationship still remains attractive to those outfits who would rather avoid traditional loan structures.