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Commercial People Moves

Mark Sands to Head Apex’s Insolvency Practice 

With over 35 years as a respected insolvency practitioner, Mark Sands will now head Apex Litigation’s insolvency business. Prior to Apex, Mr. Sands, a former Insolvency Practitioners Association President, worked at Tenon and KPMG.  FinancialIT.net reports that Apex’s CEO Maurice Power is happy to recruit Mr. Sands to the firm, saying his, “...experience and expertise are perfect for the role, and we know that he will add huge value to our business and our clients.” Mr. Power went on to say that Mr. Sands’ “...proven investigative ability and diligence can only strengthen our capability in ensuring positive outcomes for our clients and supporting access to justice.” Sands echoed the excitement of joining Apex, where we will lead innovative insolvency technologies.  Sands shared, “I am confident that my experience in investigation services will prove to be a great benefit. I will also be able to draw on my wide network of IPs, litigators and other professionals to grow Apex’s position in the insolvency sector.”
Case Developments Commercial

Apple Rejected U.K. Litigation Insurance Details 

Cupertino, California based Apple Inc. is facing a $2.3B litigation battle in the United Kingdom, as nearly 20 million iPhone and iPad users claim Apple abused application payment ethics rules. Dr. Rachel Kent of King’s College London is the proposed class representative custodian.   Law Gazette reports that Dr. Kent has submitted a proposal of litigation trajectory and corresponding budget to finance the claim to trial. Attorney’s for Apple petitioned the court for details of Dr. Kent’s litigation budget, pressing for detail on ‘after the market’ (ATE) insurance premiums. Dr. Kent is said to have $20M+ in liability protection covering litigation against Apple.   Apple challenged that Dr. Kent’s litigation budget and ATE premiums are not subject to confidentiality. However, the U.K. tribunal hearing the case rejected Apple’s logic. Presiding justices cautioned that ATE premium details could motivate Apple to tactically forecast the insurers' anticipated claim risk. While refusing to disclose details of Mr. Kent’s litigation budget and ATE premium agreements, the court did not grant privilege to details of the insurance premium agreements. As such, Apple may engage alternative market research avenues to obtain the information. The court expressed concern that Apple may seek to increase pressure on Dr. Kent’s legal team by driving up litigation costs during the dispute.   
Case Developments Commercial

U.S. Attorney Reviews Advanced Legal Fee Agreement  

The U.S. Attorney's Office in New York’s Eastern District is set to review potential conflicts of interests in an advance fee agreement related to alleged agents of a foreign government.  Law.com reports that U.S. District Judge Brian Cogan will entertain deliberations as to whether Trump’s inaugural committee chairman Thomas Barrack was in conflict with a written agreement to advance Matthew Grimes’ legal fees.  Both men were arrested in July 2021, under suspicion of being unlawful foreign agents of the United Arab Emirates in the United States. Both men are accused of failing to properly register with the attorney general’s office in a now botched enrichment scheme.   Attorneys representing the accused are quick to submit that no fee advancements have yet occurred. The three week trial is expected for September 2022.  
Commercial Regulatory Issues

Turkey’s Litigation Finance Future 

Turkey's economy has been targeted by aggressive international profiteers, according to officials in Ankara. The Capital Market’s Board fined a group of United States banks who signaled clear hawkish intentions with surprise illegal short selling of Turkey’s stock market in 2021. The banks included marquee firms such as Goldman Sachs International, Credit Suisse Securities Europe and Barclays Capital Securities.  Imrquits.com recently profiled Mondaq’s contemporary Overview of Turkish Litigation Practice. Litigation finance is a bright new concept in Turkey, and many are hopeful of its usage as a potential international diplomacy tool. The volatile Turkish Lira and global inflation pressures continue to prompt Turkish officials’ call for international diplomacy rather than targeted economic conflict. Litigation finance may be useful in closing regulatory arbitrage loopholes that have the potential to snowball into crimes against humanity. For example, Turkey is covered by New York Human Rights provisions to certain acts committed outside the state of New York (§ 298-a.). If a New York bank willfully intends to target Turkey’s vulnerable economy by violating human rights laws, claims based on such aggression can be financed without armed conflict.  Savvy international litigation funders may look for unique opportunities to finance profitability diplomatic solutions, rather than exacerbate Turkey’s economic vulnerabilities. 
Commercial Regulatory Issues

Flaws in Credit Agreements and Their Impact on ATE Insurance 

As the third party funding ecosystem matures, businesses' organizational systems and processes are sure to evolve. A credit agreement has traditionally served as a loan vehicle to fund litigation. The loan earns interests while an “after the event” (ATE) policy is secured to insure the loan. If litigation is successful, credit agreement facilities traditionally can be helpful. 

However, Andrew Mckie’s new essay on LinkedIn points out flaws in credit agreements, many with too many moving parts that are convoluted. Mckie argues that legacy credit agreements are prone to misselling and misrepresentation. When credit agreements are mis-sold, Mckie points out that many ATE policies are rendered void, a commonly undesirable consequence for parties of failed litigation. 

When a credit agreement gets to the stage of ATE policy cancellation, Mckie prompts the disadvantaged to evaluate the capacity of professional negligence as a culprit. Depending on the severity of the matter, negligence can be career-ending malpractice.  Mckie’s thematic point concludes that modern litigation funding agreements have dynamism that credit agreements simply lack in design.  Read the entire essay to learn more. 
Commercial Deals

The Future of Banking and Litigation Finance

An obvious question is how will innovation in the banking and litigation finance sectors evolve together? Litigation funding is serving as a de-risking mechanism that doubles as a conduit to justice.  Oonbazul.com recently hosted a discussion titled, “Third Party Funding Executive Roundtable: A Perspective for Banks.” The panel brought together experts from Hereford Litigation, including Mr. Dakis Hagen QC, Mr. Edward Grundy, Managing Partner, Mr. Ben Mays, Managing Director, and the Managing Director from Kroll, Mr. Jason Kardachi.
  • According to the panel, banks are exploring litigation finance tools for asset recovery. Benefits include risk being absorbed by funders who are motivated to see a return on their investment. 
  • While funders do not control third party litigation, many in-house bank collection operations lack such motivation to innovate. 
  • As such, experienced funders have partnered with leading banks to engage in litigation finance as a risk mitigation strategy. 
Looking at the international horizon, forecasts suggest that high profile cross-border banks will broadly explore litigation finance facilities. Similarly, investors will look to leverage sophisticated  banking relationships that service a new generation of global litigation funding business. A symbiotic relationship that stands to increase overall bank profitability.
Commercial Special Features

How Our Top-5 Articles of 2021 Foretell What’s Coming in 2022

Litigation Finance has enjoyed another year of growth and innovation, as we enter a shocking third year of the COVID pandemic. New funds have arisen, affording more potential claimants an opportunity to experience their day in court. New entrants are emerging in the funding space, innovative investment opportunities are popping up in the form of ILOs on the blockchain, and prominent examples of the benefits of legal funding are arising with increasing frequency. Each of our top-5 most popular articles in the last year illustrate an industry trend we think is worth keeping an eye on. These trends also offer clues as to what we can expect in the coming year. Below are the top-5 articles from 2021:  #5) Litigation Finance and Patent Litigation—Fast Friends 2021 Trend: One thing we’ve learned about third-party litigation funding is that once clients and plaintiffs get a taste of it, they recommend it highly. This leads to explosive growth in specific sectors. In this contributed post, Slingshot Capital founder Ed Truant explains that in 2021, Patent and IP litigation went from a relatively uncommon investment to one that is highly sought out. Some of this can be attributed to the pandemic and the investor rush toward uncorrelated assets. But some of the popularity of IP litigation investment stems from the possibility of awards in the multi-millions. As funders sharpen their due diligence skills and use new tech to predict case outcomes, the likelihood of sourcing meritorious patent cases grows. From the article: “It used to be the case that patent litigation was viewed negatively by the litigation funding community...Then about two years ago, I noticed an increase in the number of patent cases being brought to the attention of funders, and in the number of funders marketing that they are interested in providing financing to patent cases.” What does this mean for 2022? If/when COVID restrictions are lifted and life slowly returns to normal, we’ll likely see similar growth in other sectors. We know that when law firms and clients have a good experience with funders, word gets around. The expectation is that Litigation Finance will improve in recognition and accessibility. As a largely self-regulating industry, third-party legal funding continues to position itself as a public good. We have every reason to believe that will continue in 2022 #4) Litigation Finance Basics 2021 Trend: The popularity of this article, originally published in 2017, reveals interesting things about the business of legal funding. Legal professionals and many types of investors are taking an increased interest in litigation funding. It also underscores that this widespread curiosity about the industry is leading people to investigate it from its humble beginnings to its current role as a public good. From the article: “We don’t all have the same access to the legal system. Those with money have more access than those without. Litigation finance allows claimants without money to have the kind of access to justice that those with money currently enjoy. Obviously, that threatens some, but for the rest of us, litigation finance should be celebrated as a means of achieving equality of opportunity when it comes to preserving our legal rights.” What does this mean for 2022? We predict more of the same, probably on an even grander scale. As regulations become more welcoming to funders, investors are taking greater notice of the practice. Now that regulations are relaxing around non-lawyer ownership of legal firms, the potential for lawyer/funder co-ownership of firms has earned the interest of many prominent investment firms. Jurisdictions around the world are relaxing champerty and maintenance restrictions and creating an environment more welcoming to third-party funding for an array of legal matters. This includes arbitration, patent and IP litigation, and claims enforcement. The popularity of a back-to-basics piece like this one, demonstrates that more people in more industries are curious about what litigation funding can do for them. #3) The Impressive Growth of Commercial Litigation Finance 2021 Trend: Our third entry is another Ed Truant piece illustrating an interest in Litigation Finance from people outside the legal field. In this piece, however, emphasis is placed on the addressable market for litigation funding. This tells us that financial experts are looking toward third-party funding as a future investment. From the article: “I think it is important for all stakeholders to understand the size of an industry, so investors can determine whether it has the scale and growth attributes necessary to justify a long-term approach to investing in the sector.” What does this mean for 2022? We predict that hedge funds and private equity firms will continue to flock to the litigation funding sector. This may happen at an even faster clip, as certain types of litigation rise to prominence in the coming year. Breach of contract, insurance litigation, and issues of employer responsibility as related to COVID precautions are expected to flood court dockets in 2022. This amid an effort to catch up on the backlog of cases caused by court delays and closures.  More litigation means more opportunity for investors to avail themselves of the benefits of TPLF as an uncorrelated asset. #2) Investor Caveats in the Commercial LitFin Asset Class 2021 Trend: As an increasing number of investors seek out litigation funding, the pitfalls associated with this type of investment aren’t as well known. Ed Truant of Slingshot Capital, shows up again on our list, as he explains how investors can better understand this asset class. Matters of tail risk, gross vs net returns, portfolio valuation, and deployment risks are all areas investors will want to be familiar with. After all, just because an asset is uncorrelated, does not mean it is free from risk. From the article: “The asset class presents a unique opportunity to add an asset that has true non-correlation, along with inherent ESG attributes. This makes litigation finance a very attractive asset class. However, an investor needs to do their homework prior to executing an investment.”  What does this mean for 2022? The emphasis on ESG investing bodes well for the future. Litigation Finance’s commitment to investing in environmental, social justice, and governance litigation shines a light on the fact that LitFin investments can be simultaneously lucrative, and a net gain for society. #1) Bank Cartel Claims Europe Announces $12 Million Funding Round 2021 Trend: The popularity of this article is an affirmation of the growth and expansion of Litigation Finance in the EU market. The piece details three antitrust cases in which the fund will deploy cash. The banks are accused of engaging in cartel behavior—one of the most serious types of antitrust charges. This type of piece serves to illustrate how litigation funding helps fight corruption and works toward the public good. It also shows us that fundraising capital is out there for experienced funders with proven track records. From the article: “In these three cases, for example, the pension and hedge funds that lost millions of dollars...can effectively claim their damages through actions before a national court. ...in most cases, the remaining question to be decided is the amount of damages. This makes antitrust litigation very attractive for investors.” What does this mean for 2022? We think this means even greater global expansion for Litigation Finance. While funding still has its naysayers, the global mood toward third-party legal funding is largely positive. As the practice casts a progressively wider net—most of those who have used litigation funding to pursue their litigation report being satisfied with the results. Legal funding is already growing in India, Singapore, Germany, South Africa, and China. There’s no reason to think expansion of the industry will not continue in 2022.
Case Developments Commercial

US Magistrate Judge Denies Facebook Request for Litigation Funding Info

It appears that Facebook will not receive discovery information from an AI startup after all. In the case of Neural Magic Inc vs Facebook Inc, US Magistrate Judge Marianne Bowler struck down Facebook’s motion for discovery. Reuters reports that Facebook’s motion sought information on the litigation funders backing Neural Magic in their case against the social media giant, including the funder’s identity and specifics about the funding agreement. The judge in this case, as in many similar cases, ruled that the information requested was irrelevant to the case. Facebook has advanced the theory that it wants funder information to dispel the perception of a ‘David v Goliath’ conflict, which the company fears will prejudice a jury.
Commercial Regulatory Issues

The Unpredictable Nature of Case Times

Even with new technology available to funders, solid estimates for the amount of time it might take for a class action to reach completion remain elusive. One way to shorten the start-to-finish length of a class action, is to follow an opt-out plan rather than one that requires book building. Law Gazette details that collective proceedings may require a long wait to reach an award or settlement. Sometimes, several resolutions can drop in rapid succession. Three collective proceedings orders have been approved in rapid succession after a six year wait. In Merricks vs Mastercard, the court pointed to opt-out CPOs as a means for consumers to get justice when anti-competitive conduct harms consumers en masse. In fact, the court’s reasoning included the idea that it makes no financial sense for individual consumers to seek justice one by one. The outcome in Merricks vs Mastercard is considered a landmark verdict, one that may pave the way for opt-out proceedings. That’s good news for legal funders and claimant legal teams, who prefer opt-out proceedings that do not require a lengthy and complicated book build. Two subsequent cases, Gutmann vs First MTR South Western Trains & Others, (class members backed by Woodsford Litigation Funding) and Justin le Patourel vs BT Group plc (class backed by Harbour Litigation Funding), affirmed that a trend is growing in favor of opt-out CPOs as an efficient and suitable method for customers to seek redress. Perhaps those who suggested that Merricks vs Mastercard would open the floodgates to widespread use of CPOs are correct. According to third-party litigation funders, claimant lawyers, and consumers who have been taken advantage of by anti-competitive actions, that’s just fine. At the same time, Lloyd vs Google suggests that some situations are not appropriate for opt-out proceedings. The ruling denying an opt-out model implies that further clarification is on the horizon.
Commercial People Moves

Philip Holden Joins Asertis

Asertis, said to be the United Kingdom’s fastest growing litigation funding firm, is proud to announce that Philip Holden is joining the group.  Mr. Holden is a respected attorney who will support the Asertis team in negotiating new litigation finance deals.  Asertis is proud to announce that Mr. Holden is, “A Fellow of the Association of Business Recovery Professionals, Philip was an equity partner with a major law firm (DLA) before moving to become Head of Financial Recovery at the insurance market Lloyd’s, subsequently establishing his own independent business specialising in litigation management, advisory and insurance run off which was sold to a listed PLC in London in 2005”
Announcements Consumer

TRIBECA LAWSUIT LOANS NOW OFFERS LITIGATION FUNDING TO WRONGFULLY FIRED WORKERS

Victims of wrongful termination often suffer a one-two punch. Explains Rory Donadio, founder of Tribeca Lawsuit Loans, "Not only do they face a confusing maze of government claim procedures and lengthy court cases, but their financial security is also compromised." Anecdotal evidence suggests that many unlawfully fired employees fail to pursue claims because they have to invest their energy into simply providing for themselves and their families.
A readily available resource to help alleviate that uncertainty is presettlement funding from Tribeca Lawsuit Loans.
Wrongful termination, also called wrongful discharge or wrongful dismissal, occurs when an employer unlawfully discriminates against an employee, when it violates public policy, or when it fails to follow its own established procedures. Common allegations include
  • many forms of discrimination: racial, color, national origin, age, gender, sexual orientation, religion, and disability
  • retaliation for seeking worker's compensation after being hurt on the job
  • violation of the Family and Medical Leave Act
  • violation of wage and hour laws
  • retaliation for exposing an employer's illegal activity
No one knows how many terminated employees file lawsuits that allege wrongful termination. We can surmise that the number is substantial because we know that many begin as a claim, called a charge, filed with the Equal Employment Opportunity Commission. Federal law requires that people with discrimination or retaliation claims file EEOC claims. Some 67,448 of those claims were filed in 2020. If the parties cannot resolve their differences through the EEOC charge process, the claimant can bring a lawsuit. But that number only hints at the total number of wrongful terminations in this country. Like those for wage and hour violations, many other claims can bypass the EEOC altogether. The patchwork of procedures and remedies available under state law further obscures the extent of the problem. In most cases, the only adequate remedy is a monetary award, which can include back and future pay, the value of lost benefits, emotional pain and suffering, and punitive damages. According to Tribeca's Donadio, "When a plaintiff sues for money damages, Tribeca can help the victim to rally the resources to continue the good fight when times are tough. A Tribeca lawsuit loan allows a plaintiff to borrow against the expected recovery long before the parties reach a settlement. Furthermore, there is no risk to the claimant. Fired employees who fail to win their cases are never liable for repaying the lawsuit loan." If you have filed a lawsuit for money damages to compensate you for wrongful termination, or you have filed an EEOC charge that has not yet been resolved, let Tribeca help level the playing field. Contact Tribeca Lawsuit Loans at (866) 388-2288 or through our website at tribecalawsuitloans.com to apply for presettlement funding. If you have not yet filed a lawsuit, schedule a visit with an employment attorney who will evaluate your case, often for free. The sooner you act, the sooner Tribeca Lawsuit Loans can help. Contact: Rory Donadio CEO
Email: rory.donadio@tribecacapllc.com
Phone: (866)388-2288 SOURCE Tribeca Capital Group, LLC
Commercial

Trends & Perspectives in Litigation Finance: Interview with Peter Petyt

Peter Petyt, Founder and CEO of litigation funding advisor 4 Rivers, discusses recent trends in the litigation funding space, including portfolio funding, due diligence efforts, and the attorney-client relationship. Below are some key highlights from Petyt's YouTube Q&A, hosted by the Beverly Hills Bar Association: Q: Can you tell us a bit about the difference between commercial litigation funding and consumer litigation funding? A: Actually, Litigation Finance can be applicable to both consumer and commercial cases. There’s a certain number of funders who will only do commercial case and some that will only do consumer cases. So there’s two different markets there that are equally served by the finance communities. I think the commercial finance community, which is what we spend most of our time on, are looking at the mainstream litigation cases, the international arbitrations, the domestic arbitrations—those sorts of cases. Whereas the consumer often is, as you say, PI focused and perhaps a higher volume of cases with a lower average value. Q: Litigation funding isn’t just for situations in which a litigant can’t afford fees of a firm, it’s also an important tool to have in the arsenal of of any law firm. Can you tell us why that is? A: Well, I think it’s very interesting, particularly in the current period where of course because of the pandemic, businesses in particular are facing challenges that they weren’t a year or two ago. It does mean that cash is very much at a premium and certainly we’re seeing a number of businesses now that are looking to finance their litigation externally whereas perhaps previously they would have funded it from their own resources. So I think cash is definitely a main driver. Most of the cases that we look at, the claimants are looking for a solution from a cashflow point of view. They either don’t have the cash to pay for the legal fees and expenses of running a case, or if they do have the cash, they’d rather use that cash for their core business. And I would say that’s the majority of requirement. However, sometimes a business may well decide that there are other reasons for bringing in a third-party funder. Such as accounting, so you can keep transactions off your balance sheet so the risk is not there. Q: You’ve mentioned the single versus the several case portfolio. Can you tell our viewers what the difference is? It’s probably self-explanatory but hearing it from an expert like you would be better. A: Yeah, well, single cases are difficult to finance. Let’s start off with that because the thing about a single cases is that you’re either going to get a win or a loss from the single case and you can’t diversify that. It is what it is. In a portfolio, you can spread the risk over a number of cases. And the great thing about that is that then the price of the finance is significantly reduced because if one case doesn’t go the right way then you can get the win from the second case or the third case or however many cases there are in the portfolio. So funding a portfolio is going to being the cost of the finance down. But it’s also quite challenging to get a portfolio funded because the portfolio needs to be structured in a certain way. It needs to be balanced, in some cases a mix of types of cases that are part of the portfolio. One of the things we are doing, that I’m personally doing, is some part-time doctoral research on how portfolios should be structured with regards to a law firm. Q: What can we as lawyers do with respect to the due diligence and the assessment process as well as funding and the post funding that they can make this go a lot more smoothly? A: Yeah, it’s a great question. I think that from the attorney’s point of view, where I would start is that your expertise is in running these cases. And using your great judgement to assess cases and to advise your clients on the best way forward. Certainly one of the things funders need is a proper legal assessment from you guys as to the merits of the case, what chances of successes does it have, what strengths, what weaknesses, are there that you perceive in the case. And that I think is the most important part that the attorney plays in the initial due diligence for a funder. Q: Sometimes a firm can lose out on a client altogether, if they’re not prepared to discuss, and don’t consider litigation funding as an option. Can you tell me a bit about that? A: Yeah, I think it’s very important that you as an attorney advise your clients as to what the options might be, because certainly sometimes there are clients out there who as we mentioned earlier might have the money to pay for legal fees and expenses for a case, but might prefer to keep their cash for other purposes. So if they’re not aware that litigation funding exists, if you as an attorney don’t advise them and they go and talk to some other attorneys that do advise them, then the chances are they may well end up with the other attorney. So I think it’s very important to make them aware that this option is available.
Commercial Legal Innovation

Hemp Grower Apothio Tokenizes Shares in Funded Case

Noted hemp producer Apothio recently raised $330,000 on the Republic funding platform. The funds are expected to go toward a lawsuit in Kern County, CA. Investors supporting the case will be issued AVAX (Avalanche) digital tokens located on the blockchain. Upcoming News reports that this Initial Litigation Offering is a first on the Republic platform—which was launched in 2016 as a path for equity fundraising. The case itself has Apothio seeking damages allegedly caused when California Fish and Wildlife destroyed 450 acres of hemp crops valued at about $1 billion. ILOs offer a way for cryptocurrency to have real-world impact by funding lawsuits in a way that increases access to justice. Kyle Roche, lawyer for Apothio, explains that while the justice system is effective, it’s costly to the point that not everyone can afford to have their day in court. With an ILO, investors receive digital tokens which then entitle funders to a portion of any damages received by plaintiffs. Typically, these tokens are frozen for 90 days, at which point they will become transferrable.
Announcements Commercial People Moves

Burford Capital hires arbitration expert and legal finance industry veteran Mick Smith for senior European role

Burford Capital, the leading global finance and asset management firm focused on law, today announces that arbitration expert and legal finance industry veteran Mick Smith has joined as Principal in its London office. He will join over 40 colleagues in London, and more than 140 globally. Smith will focus predominantly on the continued expansion of Burford’s business in Europe and especially its industry-leading role in global arbitration matters.

Mick Smith co-founded Calunius Capital in 2006. Prior to this, he practiced law at Freshfields in both London and Madrid and was an investment banker at JPMorgan Chase, Credit Agricole Lazard and Dresdner Kleinwort. Smith earned a degree in Mathematics and Law at Cambridge University, followed by postgraduate study in Law. More recently, he has also completed MSc modules in Data Science and Mathematics.

Christopher Bogart, CEO of Burford Capital, said: “I’m delighted that Mick is joining Burford in a senior role to help with the continued growth of our European and arbitration businesses. Burford already has a $1.2 billion European portfolio and is the world’s largest arbitration funder, and we are excited about Mick growing those numbers further. I have known Mick for many years as a collaborator and friendly competitor and am very pleased that he has decided to join the world’s leading legal finance platform.”

John Lazar, Managing Director of Burford Capital in London, said: “We are truly excited to welcome Mick to Burford’s London office, and I am personally looking forward to being able to work with him side by side after spending many years collaborating on a number of opportunities. Mick will serve in the senior role of Principal, where he will be focused on all aspects of our UK and European business. Mick adds to our over 40 employees in London, in addition to those in the DACH region, as we continue our investment growth both geographically and in scope.”

Mick Smith, Principal of Burford Capital in London, said: “I am thrilled to be teaming up with Chris, John and other colleagues, many of whom I have known and worked with for years. The opportunity to join Burford, the leading global finance and asset management firm focused on law, was too good to forgo and I look forward to playing a role in its continued expansion in Europe.”

Smith’s start date is 5 January 2021.

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 the New 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, Singapore and Sydney.

For more information, please visit www.burfordcapital.com.

Case Developments Commercial

$1M+ Divorcee Litigation Funder Clawback

Litigation finance is a tool for justice, even in divorce. But, when a divorcee bypasses the funder, justice will follow the failed nuptials all the way to the bank.  Lawgazette.co.uk reports that a litigation funder lent capital to a spouse who needed help disposing of her $3M+ marriage. But, her husband countered, and the obligation of the court was to entertain the proceedings. Then, the husband submitted a last minute deal to absolve himself of the situation.  All the while, negotiations were structured to leave the soon-to-be ex-wife without access to liquidity to navigate the split. A funder helped her in her time of need, seemingly a successful venture given the ex-husband’s folding under pressure.  However, given the complexity of the matter, it would appear that the successful party to the claim is not returning the funder’s favor. Now, the court is taking another gander at the outcome, deliberating if the funder is due its fair share.  
Commercial Regulatory Issues

Truckers Cheer Highway Fairness Act 

Louisiana truckers pay the highest premiums, according to a new report on trucking litigation finance. The 2021 Highway Fairness Act is hailed by many long-haulers on America’s highways. ‘Justice driving litigation’ is the phrase everyone is talking about, in reference to the act.  Trucking.org profiles the act as a curb to third party litigation abuse, which is rampant across the industry. Primping the National supply chain pump is the key to keeping people happy across America. The act is sure to tip the balance of fairness in trucking litigation.  The aim is to squash hazards on the highway and protect trucking operators from the deliberation headaches of questionable claims. However, the litigation funding in support of North American trucking is not going to dry up anytime soon.  The Act prompts the trucking companies to consider the following:
  • Legitimate trucking litigation shall support accident victim compensation 
  • Federal courts shall embrace no regulatory arbitrage tricks for claims across state lines  
  • Supply chain harmony is key to keeping the trucking industry profitable, hence no funny business should be promoted leading to litigation finance fraud 
  • Litigation finance firms should champion transparency in trucking claims, setting a new standard for the industry
The Act is especially important to protect insurers from defending dubious claims resulting from staged incidents. Likewise, the Act is expected to protect law enforcement from the headache of rogue truckers gaming the system.
Commercial Regulatory Issues

 U.S. Supreme Court and Congress Assess Patent Law 

Just as Moderna faces a potential COVID-19 patent infringement lawsuit, the Supreme Court and Congress are assessing sweeping changes to United States patent law. All this with a new Patent and Trademark Office director priming the pump for consequential changes to patent eligibility.  Reuters recently outlined a report on the questionable reliability related to patent infringement claims. One such instance explores American Axle and Manufacturing Inc.vs. Neapco and the potential for the Supreme Court to weigh in on the timeless question of when a new invention can earn patent protection. Similarly, Congress is picking up the baton on patent infringement eligibility, as a group of Senators has stated that it was way “past time that Congress act to address this issue.” The question is, will new and broadened legislation engage more patent and trademark litigation?  Meanwhile, two new patent claims are on the desk of Moderna’s CEO:
  • The question of whether the National Institutes of Health scientists should recieve credit for vaccine patent applications has the government and Moderna at odds. 
  • Moderna may also be pressed on who should be credited for mRNA technology via patent protection. 
Pfizer has similar headwinds, facing patent litigation on the origin of fluorescent proteins. Time will tell if Pfizer is held responsible for corresponding patent infringement related to its COVID-19 vaccine design.  All this said, President Joe Biden has signaled his intent to lobby the World Trade Organization to forego intellectual property concerns specific to COVID-19, in an effort to increase vaccine production worldwide.
Consumer

Market Insights: Pre-Settlement Lawsuit Funding 

Pre-settlement funding is a financing tool for claimants who need access to capital in order to invest the necessary resources to succeed at litigation. Prudence requires all members of a pre-settlement agreement to consider a holistic approach to the funding agreements, and any potential ethical actions by all parties during litigation.  Advance Market Analytics has announced new industry research, titied “Pre Settlement Lawsuit Funding Market Insights, to 2027." The 232-page text charts leaders in the pre-settlement space, and makes global predictions on drivers of trends, opportunities for stakeholder and predictions on target markets, that enable funders to direct research and development budgets in order to capture market share.   Here are some key pre-settlement funding topics the report covers:
  • Market trends outlining growing demand for pre-settlement funding to avoid claimant bankruptcy 
  • Demand of pre-settlement funding will continue exponentially industry market growth  
  • Immense public awareness opportunities for funders to educate the border public about pre-settlement funding and associated benefits  
  • Educational demands are necessary to mitigate risks associated with pre-settlement disasters that could hinder the broader market
  • Exploring process oriented techniques to finesse the time complexity of successful litigation 
  • Broader pre-settlement funding market awareness of pitfalls associated to non-compliance of data privacy and cybersecurity
Checkout the report for a full outline of Advance Market Analytics’ predictions for the future of pre-settlement funding. 
Announcements Commercial

CIO Magazine Recognizes Kerberos as the “Very Best of Institutional Investing”

Kerberos Capital Management was named as a finalist in the private credit category of the 2021 Industry Innovation Awards by Chief Investment Officer (CIO) magazine. The Innovation Awards celebrate the “very best of institutional investing” and recognize management firms that have “truly and reliably enhanced the portfolios of their clients” using innovative approaches to asset management, according to CIO. Finalists and winners are chosen by the CIO editorial team in conjunction with an advisory board of chief investment officers.

“We are honored to be named a finalist for the Innovation Award, given especially the pedigree of prior Innovation Award winners and finalists,” said Joe Siprut, CEO and CIO of Kerberos. “I am proud of the work our Investment and Operations Teams have done to continually evolve our client offerings and seek opportunities to improve our investment platform. We think of ourselves as innovators who provide white-glove service to our clients while generating consistent results.”

About Kerberos

Kerberos Capital Management is a boutique alternative asset manager. Kerberos’ flagship strategy is providing innovative capital solutions to law firms. The firm’s differentiated offerings leverage an extensive network of industry relationships, creative financing capabilities, broad credit structuring, and special situations expertise. 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.

Kerberos’ investment team is comprised of senior members from both the legal and private credit industries, including former principals of the world’s leading law firms and multi-billion dollar private credit funds. In 2020, the independent, London-based Private Debt Investor magazine named Kerberos Capital Management one of its Top 3 Global Newcomers in the private debt fund category. Kerberos manages both separate accounts and pooled vehicles for institutional and high net worth investors worldwide.

To learn more, please visit www.kerberoscm.com.

Commercial Regulatory Issues

Reinsurers Clamor for Regulation of Litigation Finance

It’s fewer than two decades old, but Litigation Finance has blossomed into an industry worth $17 billion across the globe. Just over half of that money, 52%, is being spent in the United States. One reinsurer places blame on legal funding for enabling more large legal awards in cases involving medical malpractice and various types of liability. Calling it “social inflation,” reinsurers decry the industry currently hard at work increasing access to justice for those who can afford it least. Insurance Journal explains that over the past ten years, commercial auto lawsuits and general liability cases are ending in multi-million dollar awards far more than in previous years. For claims involving vehicle negligence, the percentage of outsize awards rose from 21% to 30%. Insurers complain that larger verdicts lead to higher loss ratios and larger premiums for all clients. But surely that’s a reason for businesses to behave better, rather than restrict access to judicial relief for those who have been victimized? We hear insurance providers lamenting their losses, as well as the fact that third-party funders are enjoying high returns on their investments. Could that be because funders use their talents to help clients and businesses, while insurers spent much of the pandemic looking for reasons to not make good on their policies? Not everyone agrees that Litigation Finance is the problem. Michael B McDonald of Morning Investments Consulting, explains that funding is used for meritorious claims—so while this may increase the number of lawsuits overall—it does not make individual lawsuits more expensive. McDonald also points out that legal funding can be used by law firms who are typically barred from raising equity as other businesses can. Debate over funding issues like disclosure, percentages, and security for costs are bound to continue. But the evidence that further regulation is necessary appears to be lacking.
Case Developments Commercial

Award for TPF Costs Upheld by English High Court

International arbitration cases are utilizing third-party litigation funding at increasing rates. As this industry grows, thorny legal issues often arise. One such decision in Tenke Fungurume Mining v Katanga Contracting Services is being hailed by funders and the clients who work with them. Overall, the decision affirms that an arbitration taking place in London is authorized to award costs for expenses relating to third-party funding. MONDAQ details that the arbitration involved commercial agreements regarding a mine in the Democratic Republic of Congo. The arbitration was seated in London and governed by ICC rules. After the hearing, submissions on costs and interest were exchanged by the parties. At which point, Katanga Contracting Services revealed that they had a litigation funding agreement. Some disclosure was ordered, while a request from Tenke Fungurume Mining to cross-examine witnesses in the cost claim was denied. Ultimately, TFM was ordered to pay all expenses claimed by KCS. Counterclaims were dismissed. The litigation funding portion of expenses is estimated at about $1.7 million US dollars. The two challenges were brought under section 68 of the Arbitration Act 1996. This rule states that a party may challenge an award where there’s a “serious irregularity” resulting in an intolerable injustice. The grounds for this challenge were that the tribunal was remiss in not adjourning the arbitration to permit a visit to the construction site, and failing to adjourn the arbitration due to a lead counsel getting COVID. The courts eventually determined that the tribunal considered all relevant factors before rendering a decision, as required. It was suggested that some tribunal decisions were made specifically to hasten the case’s resolution. In fact, the arbitration agreement contained a specific clause that the proceedings should be done as expeditiously as possible. In addition to clarifying costs associated with funding, this ruling affirmed a non-interventionist trend in the courts.
Commercial Fundraising

ESG Investors Enable Discrimination and Racial Harassment Litigation

As the Litigation Finance industry matures, leading funding groups have been vocal about the importance of ESG investing. This is investing in support of Environmental issues, Social Justice, and Governance that works for the greater good. With that in mind, a new fund has been made available specifically for racial discrimination and harassment cases. Black Wall Street details that when funding is used in support of ESG cases, there is more deployable cash for cases involving social justice—such as racial harassment and discrimination litigation. This facet of responsible investing is gaining popularity among third-party litigation funders and LPs who invest with them—leading to positive outcomes for those impacted by environmental and social justice failures. In discrimination and harassment situations, it’s vital that the victims have a path toward justice against their abusers. It’s equally important that employers and services providers are brought to account when they do not follow the law. In a recent video, George the Poet eloquently explains that we all have a responsibility to further the interests of justice. In this context, justice refers to public empowerment on ESG subjects that ultimately impact us all.
Announcements Commercial Fundraising

Forbes Ventures Plc – Update on Litigation Funding Securitisation

Forbes Ventures provides a further update on its first Litigation Funding Securitisation and an update on the suspension of trading in its shares. Litigation Funding Securitisation Update Forbes is advised by its Maltese Corporate Advisors that Forbes Ventures CC 1 (the “Issuer”) for which the Maltese Corporate Advisor acts as manager, did not receive the expected binding commitments for the First Issue by 17 December 2021. The Issuer is continuing its discussions with multiple investors and the Company is continuing to work on the First Issue during the last week of December 2021. The Company will make further announcements upon receipt of relevant information. Publication of Results and Restoration of Trading The Directors expect that the Company’s audited accounts for the year ended 31 December 2020, and the interim accounts for the period to 30 June 2021, will be published on 31 December 2021, and that trading in the Company’s ordinary shares on the Access segment of the AQSE Growth Market will be restored following those announcements. CC Capital Limited (formerly MEGH UK Limited), the Company’s principal shareholder, has confirmed that it will continue to provide funds to meet the operating costs of Forbes Ventures, pending receipt of funds by the Company from Litigation Funding Securitisations. The Directors of Forbes accept responsibility for the contents of this announcement. For further information, please contact:
Forbes Ventures Peter Moss, Chairman Rob Cooper, Chief Executive Officer01625 568 767 020 3687 0498
AQSE Corporate Adviser Peterhouse Capital Limited Mark Anwyl020 7469 0930
Market Abuse Regulation (MAR) Disclosure This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation EU 596/2014 as it forms part of retained EU law (as defined in the European Union (Withdrawal) Act 2018).
Commercial Regulatory Issues

China’s Social Justice Approach to Litigation Finance

Former Communist China has not been known for access to justice. In fact, recent protests in Hong Kong sprung up due to China’s Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation. Yet Communist China is experiencing a Social Spring (a transformation from Communism to Socialism). What role will China’s Communist roots play in future access to justice?  Recently the Bank of International Settlements (BIS) discussed financial inclusion. For litigation finance to reach peak ‘high quality’ development, robust international standards are required. The United Nations Universal Declaration of Human Rights (UNDHR) is an example where 192 countries agreed on the common standards of achievement for all people and nations. There is no ‘regulatory arbitrage’ when dealing with human rights.   BIS is pioneering the social etiquette around litigation finance, according to Mr. Liu Guiping, Deputy Governor of the People's Bank of China. Mr. Guiping’s startling approach marks a historic milestone for access to justice in China. Guiping says China aims to pioneer social justice, and that litigation finance’s ultimate potential logically requires coordinated development of regulation innovation. China’s Social Spring Key Takeaways: 
  • Guiping remarks on China’s potential to harmonize the now clunky relationship between attorneys, third-party investors and claimants. 
  • China is a very large country with 31 provinces. The Social Spring in China must ethically address claimants in certain jurisdictions, while in others champion access to justice, reasonable disclosures and a standard for litigation finance regulatory innovation. 
  • The notion of a common cross-border regulatory standard for litigation finance is considered absurd by many. International funders have boosted litigation finance revenues by leveraging regulatory arbitrage structures. How will China play into all of this? Only time will tell… 
As an added bonus, we collated 39 highlights from Guiping’s speech, for reference. 
Commercial Deals

The Third Party Funding Market in Asia

Funding requests across Asia are on the rise, prompting exponential growth in third party investment. Paul Starr, co-head of arbitration at King Wood & Mallesons, is one of Asia’s third party funding pioneers. Starr underscores the various litigation costs that weigh heavily on investors' minds.  In a video produced by Conventus Law, Starr profiles Asia’s third party funding marketplace. Below are some key highlights from a corresponding report from Starr, also under the Conventus banner: Starr: “It’s at the point where clients have requested a review of already-agreed legal fees for ongoing cases. While discussing such things at the start of a case is not an issue, it becomes exponentially more difficult once a case is underway.” Starr added: “Some are even opting to settle disputes for far less than expected, rather than continue carrying the cost of the case. In some cases, settlements have been reached on the verge of a judgment being handed down.”
Commercial Legal Innovation

Business Litigation Finance – What You Need to Know

We know that Litigation Finance is an excellent tool for individuals or groups who have meritorious litigation that they cannot afford to pursue. But what about businesses looking for new ways to put their limited capital to good use? Curiam discusses the ways in which businesses can use third-party legal funding to monetize legal assets, transform legal departments into profit centers, and offset the risk and expenditure of pursuing litigation. Using legal funding allows claimants to choose the legal team they want—even if that team doesn’t work on contingency. Funding lowers risk for businesses and can free up capital that can be applied to recruitment, expansion, or operating expenses. When used in a case already in progress, legal funding affords plaintiffs a stronger bargaining position—making it more difficult for defendants to push through a low-ball settlement offer. Before seeking funding, it’s important to understand the process and what funders are looking for when vetting cases for potential funding.
  • First, a non-disclosure agreement will be executed. Then relevant details will be offered to the funder.
  • 1-3 Weeks, the potential investment is evaluated and financial due diligence conducted.
  • Next, a funding agreement is proposed. Terms are agreed upon, and funds are deployed.
  • Finally, the investment is monitored and progress assessed regularly. While funders do not control litigation strategy or decisions, it’s typical for funders to remain attentive to the case until an award or settlement is reached.
Commercial

Litigation Funding Matures in 2021

Litigation finance picked up steam in the U.S. in 2021. Notably, the largest litigation funder in the world, Burford Capital, announced that corporate business outpaced direct law firm earnings for the first time.   Law.com reports that the litigation funding marketplace was generally crisis free in 2021, foreshadowing that year over year growth in 2022 may continue to trend up. While all signals seem positive, some critics highlight the concern of social inflation being a red flag for the industry, along with some debate over the disclosure of funding agreements.   Disclosure will be a hot topic for the industry going forward. Many legal reform initiatives have focused on litigation finance regulation as a marquee accomplishment. Overall, the industry does not seem to be rushing to find common ground on funding agreement regulatory considerations.  2021 also saw law firm investment schemes evolve in novel and unique ways. For example, Arizona lawmakers now allow non-attorneys to invest in law firms. The pace of these types of transformations are expected to increase as the litigation finance industry matures.  The emergence of hedge fund investment into the litigation finance sector continues to draw robust attention. The prospect of large funds entering the space is expected to accelerate, as litigation finance continues to grow exponentially on the international stage. 
Commercial Regulatory Issues

The Dawn of Litigation Finance in South Africa

South Africa is experiencing the emergence of litigation funding as a key driver of access to justice. Regulation, however, figures to be the burning issue foreshadowing thorny ethical debates regarding the country’s nascent litigation funding marketplace.  Cms-lawnow.com profiles insights across continental Africa, highlighting South Africa as a prime market for investment in litigation finance. The future of the industry depends on the actions of attorneys who engage third party investment in client litigation. South African lawyers must embrace pure intentions when parties enter into funding agreements. Without such stewardship, litigation finance stands to be banned by South African lawmakers.  Conflicts of interest are obviously a must to avoid. In the United States, third party funders hold a passive role in the litigation process. South Africa’s market is still budding, thereby generating concerns over who will be making strategic decisions.  Similarly, ownership of the overall work product in South African litigation funding agreements is vague. Regulatory guidance can solve such matters, but until then, funders and attorneys must strive to promote and embody avantgarde ethical standards to protect claimants. 
Commercial Legal Innovation

LegalPay Aims to Democratize Litigation Finance

Legal Pay is a standout across India, championing the goal of access to litigation finance tools and services. Traditionally, many in India were forced to rely on friends, relatives and/or personal loans to fund litigation if they did not have access to adequate capital. Today, Legal Pay is not only spearheading litigation funding, but also bespoke insolvency products.  Recently, Asia Tech Journal’s Ashu Agrawai (AA) sat down with Kashish Grover (KG), Legal Pay’s Chief Investment Officer, for a video interview on the future of litigation finance in India. Here some key takeaways from the conversation:  AA: What is the construct of Legal Pay? What kind of products are you doing? You basically rate and assess the quality of an asset and open it up for people to invest, right?  KG: You have actually summarized what we are doing in a very plain way. I think that the vision or idea is to help structure the entire litigation finance funding market to help plaintiffs who do not have money… You create wealth and diversify.   AA: What is the role that you play?  KG: It can take ages for cases [to mature]. That is where our filtering criteria comes into play… We only take a cut or receive any money once you win a case or receive the money. The idea is pretty simple, but we have our own proprietary algorithm that rates each case on scoring criteria.  AA: Is the money coming from your coffers? Is the money coming from partners? Because financial institutions have continued to stay away from [litigation finance].  KG: Imagine this: We have a pool or different basket of funds. If this case fits in, we allocate the case. We have investors who can invest $20,000 - $25,000. Basically, digitizing a VC model.  The interview with Legal Pay extends nearly an hour. Follow the link above to check out the entire video. 
Commercial

Texas Wrestles with Backlog as Energy Market Bounces Back

It’s estimated that the state of Texas will be dealing with case backlogs for the next 3-5 years—particularly for in-person jury trials. Before COVID, Texas saw more than 10,000 jury trials per year. In 2020, jury trials numbered 222. While the energy market is bouncing back, it will take a long time before it reaches pre-COVID levels. With all that in mind, litigation funding can offer low-risk solutions that can be highly profitable and beneficial. Validity Finance explains that as of June 2020, COVID created a bleak landscape, especially with regard to key industries. At that time, the price of oil was below the zero mark, unemployment hovered around 13%, and revenue losses were plaguing the healthcare system. Months later, bankruptcies were piling up at an alarming rate—with the energy sector being among the hardest hit. At the same time, the Texas court system ground to a halt. In 2019, it was common to have an average of 186 jury trials per week. Between March–December 2020, that number fell to just four trials a week. COVID continues to negatively impact the global economy, causing rampant uncertainty as to when, if ever, things will return to normal. Legal services, however, have enjoyed boom times during the pandemic. Legal funding in particular has grown by leaps and bounds. COVID has inspired creativity and adaptability in the legal field, while third-party legal funders are managing record sums of cash from investors clamoring for uncorrelated assets with the potential for high returns. Legal firms and clients alike are making use of Litigation Finance to share risk, bring in revenue, and pursue cases that would otherwise not be economically feasible. Legal funding also allows firms to engage in alternative fee agreements, providing greater flexibility to clients. As the world continues to address the impacts of COVID, litigation funding stands by to assist.