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Commercial Special Features

Key Takeaways from LFJ’s Special Digital Event: Insights from New Entrants into Litigation Funding

On Wednesday, December 15th, Litigation Finance Journal hosted a special digital event featuring insights from new entrants into litigation funding. A panel featuring Charles Schmerler (CS), Senior Managing Director of Pretium Partners, Zachary Krug (ZK), Director of Signal Capital Partners, and Mark Wells (MW), Co-Founder of Almatura, discussed deal sourcing fundraising and hiring from a new entrant's perspective.  Below are some key takeaways from the panel discussion, which was moderated by Ed Truant, founder of Slingshot Capital: Broadly speaking, how do you view the current investor landscape for fundraising in the jurisdiction in which you’re involved? Also, what sort of goals do LPs have when approaching the litigation finance space, and how should new entrants into the space prepare when speaking to prospective investors? MW: Our first fundraise really was a slow burn between 2008 – 2010 when we closed the first fund. You’ll remember when we arrived in the market then, pretty much everyone was a first time manager. There was very little in the way of seasoned product, or to say nothing of the type fund 2 fund 3 type of opportunities. So the investors who were attracted in those days were the pioneering investors and they really had no choice but to commit themselves to first time managers. I think if we fast forward to 2021, it’s a much more mixed environment. There’s a lot more players. My experience is mainly on the European side, but I understand this is also true on the west side. And a number of the players have now matured and are on fund 3, fund 4, fund 5, so investors are presented with a more complete offering ranging from first time managers all the way through to repeat managers. ZK: In some respects, I think the high returns that are uncorrelated to the market remains, and is even a stronger factor in terms of investor appetite, particularly when you look at a landscape where many asset classes are at historically high valuations and it’s difficult to achieve the kind of multiple style returns that you can potentially achieve in litigation funding. So I think that attraction remains there and is quite strong. I think the difficulty for anyone who’s trying to raise money, there’s certainly a lot of money out there, and interest—but the difficulty is, if you’re a new entrant without a track record, you may be an excellent litigator with a long track record of trial victories, but I think without a track record of successful realizations, it can be difficult. Given the asset class and how it performs, it takes a while to develop a track record that’s worth anything because of the long tail risk in these assets. CS: My advice at first was ‘don’t try to raise a lot of money at the beginning of a global pandemic.’ But once you get past that, I think these are key points. Mark touched on something important in that there’s been a significant change in the way investors are able to approach the asset class from the way it was ten years ago. There’s much more data available right now. It’s not a mature industry yet, but there is empirical data out there. So investors are able to diligence this very carefully and they have a number of choices, there are a lot of players as Mark and Zach said. So I think anyone who is looking to raise capital has to be extremely well prepared. Let’s turn our attention toward deal sourcing. Where are you currently originating deals from, and to the extent that you’re willing and able to respond—what methods have you tried and what have yielded the best and worst results? MW: I think we’d say probably four channels of deal flow, the most important deals are from lawyers, and then the other sources would be claimants coming to us direct typically via advertising, LinkedIn, Google, media mentions, stuff like that. And then brokers and intermediaries; both specialist brokers and some of the ad hoc intermediaries. ZK: Mark hit on the key channels from my perspective. I do think it remains very much a relationship driven business, and in terms of what works and what doesn’t work. There is, I think in terms of the lawyers and even the brokers and intermediaries, and I suppose with the funders as well, an aspect where there’s a fair amount of relationship building, business development, what have you, that’s important to maintain those relationships. Let’s shift into a different topic: Hiring. How do you think about organizational design for your firms in terms of a combination of finance, legal, quants type of expertise. Mark, how do you tackle that, historically? MW: Yeah, that’s interesting how you list the financing and the legal and quantitative skills. I think I’d add one more characteristic which can really cut across all those disciplines—and that’s factual curiosity and factual inspection. In our experience over the years, when we look back and look very long and hard about why we lose cases., often it’s singular one-off factors. Something that we get a few times is that we lost the case because the facts that were eventually found deviated from what we’d assume when we were underwriting the case. I think really probing the facts and thinking about what can fill in any blanks in the claimant’s narrative is a really important part of the picture that needs to apply to everyone involved in underwriting the cases. ZK: It’s an interesting question, one that I’m grappling with as we speak, as a relatively new strategy within what is otherwise a very quantitative and numbers-driven organization. My experience is that most litigation funders are staffed by ex-litigators or have many lawyers on staff. They tend to bring that litigation mindset with them, which obviously is important from an underwriting and diligence perspective. But often when you put a bunch of litigators into a room to discuss a case, we can be very good at identifying the risks of what could go wrong, but less good at being creative about how to structure for those risks or to price for those risks, or be willing to take those risks. So my sense in terms of organization and hiring is—it’ll be more important to find folks who are creative about deal structuring and pricing more than simply smart lawyers. It’s more important to have that commercial acumen. Charles, can you comment about what the market for talent is like at the moment and what’s the general professional background that you’re seeing from some of your hires? CS: This feeds off the discussion you were just having with Mark and Zach. The market is good, there is always opportunity to find smart capable lawyers. We have a lot of analysts and quantitative people at the firm already. So we are less in need of hiring those. But I think you already touched on what is the ongoing debate—which is, where should you focus your energies? Should it be on the analytical side, the financial analytical side, or the legal side? We find that you can hire—but the question is: What’s the best way to go about hiring? So for us, we are looking more for people who are not just creative in structuring, but who understand how to recognize value. And that can mean different things in different contexts. For example, we have a particularly strong patent team. Between our two senior-most people, only one is a lawyer. Both have extensive experience monetizing patents over decades, and they understand how to assess the value of a portfolio in ways that most other people cannot.
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Commercial Regulatory Issues

The Debate Over TPF Costs

Traditionally, English courts are reluctant to interfere with decisions relating to arbitration proceedings. Arbitrators are given broad discretion to manage cases as they see fit. Courts therefore seldom get involved unless the conduct of an arbitration is so egregious that the situation demands an intervention.  JD Supra explains that the case of Tenke Fungurume SA v Katanga Contracting Services SAS, was just such a situation. It revolved around a mining operation in the Republic of Congo. At one point, a request to adjourn the arbitration to allow for an inspection of facilities was denied. Later, an adjournment was requested due to illness. Again, it was denied. When this was challenged, Justice Moulder ruled that the arbitrator’s decision was reasonable. When costs were submitted, Katanga revealed the existence of a third-party legal funding agreement from a funder controlled by a Katanga shareholder. Katanga was not cross-examined about the details of the agreement, and awarded over $1 million in costs relating to the funding agreement. Tenke labelled the disallowing of cross-examination a procedural error. Judges examined both the type of funding and the amount—which was determined to be reasonable. It was also probably necessary, as Katanga was unlikely to have obtained funding from another source. Still, Tenke challenged the award for costs based on the idea that it was unforeseen that the costs would include fees to litigation funders. Yet Section 61 of the Arbitration Act does allow for awards allocating “costs of arbitration” including “legal or other costs.” Certainly that would apply to funders. Justice Moulder dismissed Tenke’s challenge, determining that the tribunal did not exceed its powers under Section 68. It’s been noted that this decision illustrates that the threshold to challenge an award under Section 68 is a high one. It’s also noteworthy that Justice Moulder declined to say whether TPF costs should be recoverable expenses as a matter of law.
Commercial

The Burford Quarterly (Q4-21)

Burford has released its Q4 2021 report, which contains exciting insights into the evolution of the legal finance marketplace. Two new products adorn the LF space: Affirmative recoveries and litigation insurance policies. These new sectors are dominated by the same large insurance firms that have offered complimentary insurance and liability products over the last decade.   Burford’s research explains that the new LF-focused features cover the top tier of the industry, representing 10-20% of overall value. Between judgment preservation and affirmative recovery, policy holders are secure with features that represent similar characteristics of traditional insurance. The holder pays a regular premium (monthly, quarterly) to secure coverage. What is keenly interesting is that many policyholders have backdoor participation clauses if a claim were to be executed and ultimately prove successful.     The bundling of the LF product portfolio extends the reach of the emerging marketplace, allowing firms to “goose” (to increase the activity, speed, power, intensity, or amount of) cash value of a claim; a thrilling concept in reality. Download the Buford Quarterly for in-depth analysis of how the LF market is ushering in insurance and asset recovery as avantgarde industry supplements.
Commercial Legal Innovation

Liti Capital to Attend Metaverse in Decentraland Convention

The Global Family Office will host Swiss litigation funding cryptocurrency and blockchain trailblazer, Liti Capital, at the immersive Metaverse in Decentraland’s Crypto Convention Centre.   Liti Capital reports that the crypto-funder is currently a pioneer in the emerging LF token and blockchain technology ecosystem. With such innovation, more investment is pouring into the rapidly-appreciating LF asset marketplace. Benefits include the support of collapsing legacy systems and processes, transformation of access and increase of appeal to sophisticated investor audiences.  Metaverse Decentraland is Europe's prime exploration of future technologies staged to disrupt the future of humanity. Liti Capital scored strategic investment from GDA Capital to spawn user growth, and help lead innovation research across the global LF marketplace.   The first Metaverse in Decentraland, held in 2020, attracted European private wealth executives who look to the Global Family Office for other networking events such as the NFT Summit, the Asia Disruptive Summit and Europe’s Disruptive Investment Summit.
Commercial Regulatory Issues

Are Group Costs Orders Becoming the New Norm?

A recent Victorian Supreme Court decision represents the first Australian ruling for an application seeking a group costs order. The case, Fox v Westpac Banking Corporation, Crawford v Australia, and New Zealand Banking Group Limited, relied on the provision of “the Act” which permits solicitors to be paid with a percentage of a court-ordered settlement or award. Lexology explains that the group costs order application was adjourned, rather than dismissed. This means the plaintiffs could reapply at a later time. Plaintiffs sought group costs plus 25% of an award or settlement be paid to the plaintiffs' legal team. Concerns over ‘flex commission’ arrangements arose in the case with regard to consumers purchasing cars. Because of this, plaintiffs alleged that car dealers had the power to set their own interest rates. Plaintiffs argued that these undisclosed arrangements (there was no legal requirement for disclosure) encouraged dealers to set higher interest rates than those of traditional bank loans. The Court ultimately determined that there are multiple factors to consider when deciding the necessity of a group costs order. In this instance, the plaintiffs did not establish that a group costs order was an improvement over the funding agreement already in place. The best interests of the group members is the standard by which the courts determine group costs orders. This case punctuates the importance of plaintiffs taking the time to closely vet funding agreements and assess whether class members would be better off with a group costs order. The issue of group costs orders isn’t going away. Relevant legislation is almost certainly on the horizon and will present new challenges to plaintiffs and the funders that support them.
Commercial

Money&Co Losses Deemed “Excellent Result”

Despite a loss of GBP 200,000, Money&Co chief executive Nicola Horlick is still hopeful. She remains confident that the firm will turn a profit by March of next year. Peer2Peer Finance News explains that the firm anticipates a “substantial expansion” of the lending book, according to Horlick. The company’s 2021 assets were GBP 777,767 compared to GBP 73,448 in 2020. Money&Co offers secured loans for legal finance and music rights.
Commercial Regulatory Issues

Calls for Europe to Regulate LF Marketplace

With the exponential rise in funded claims across Europe, calls for further regulation abound. Similar to what we’re seeing in the US and Australia, many on the continent want to see added transparency and regulatory control in the nascent industry.  The Parliament Magazine’s Axel Voss argues preserving the purity of justice is key to avoiding the limbo of a profit-focused legal system. The LF industry is generally an unregulated sphere across Europe, which prompts Voss to warn that a lack of transparency and regulation standards could fuel abuse across the industry. The funding industry’s prized pitch is offering litigation access to those normally unable to afford justice. However, oftentimes, successful funders target top dollar cases, and pass over smaller, less profitable ones. With the global LF scene staking $45b-$90b a year currently, Voss urges the European justice system to act on “common sense regulation and transparency.”  While some consider tackling regulation a radical venture, Voss hints at proposed standards which he claims are common sense. A study of over 5,000 respondents spanning Poland, Spain, France and Germany found that 83% of Europeans want LF regulatory standards in place. Similarly, only 31% embraced the idea of the LF marketplace being self-regulated.  Voss notes that LF revenues will likely increase exponentially year-over-year and that it is “crystal clear” Europe should innovate in cultivating common standards, beyond today’s loose regulatory arbitrage wild west. Adding that the market sees some instances of 500% return on investments, claimants sometimes lose out on fair compensation, according to Voss.  Voss says it is now up to members of the European Parliament to work with the Commission to usher in a modern generation of regulatory standards.
Consumer

Advocate Capital Scores Top Texas LF Prize

Texas Lawyer Magazine crowned Advocate Capital one of the top three Consumer Litigation Funding Providers across two of Texas’s major metropolitan areas for 2021.    Texas Lawyer recognized Advocate Capital, Inc’s legal professionals, and showcased the firm’s products in the publication’s annual year-end edition. The Texas Magazine heralds Advocate’s standout attorneys, replete with the essentials they require to compete in today’s legal market. Advocate is planning for a successful 2022 as a leading plaintiff injury practice, with attorneys staffed across Texas and the United States.  
Commercial Legal Innovation Special Features

Key Takeaways from LFJ’s Podcast with Steve Shinn

On the latest episode of the LFJ Podcast, Steven Shinn, founder of FinLegal, described the solutions his platform provides for both funders and lawyers, and explains his company's points of differentiation with other third party platform providers.

Q: Why move into litigation funding and after-the-event insurance? Can you explain how FinLegal’s offerings are different than those of traditional funders?

A: Absolutely. I think one of the challenges is that the litigation funding market could grow a great deal. But there are challenges where lawyers don’t necessarily understand litigation funding, and there are a lot more funders that you can go to. So you want to help educate people who are new to litigation funding and ATE about how to access it and how it works.

There are more funders joining, which is increasing the number of claims that get funded. So whereas before you might have only had funders looking to deploy $5 million to a claim, you now find situations where there are funders who want to deploy as little as $100,000 or less. So there’s a much broader range of funders...and it’s hard to go to all of them individually and it’s hard to know who’s in the market.

We thought, let’s build a sticky platform which provides the law firm with visibility and control over those funding requests, and let’s give them an online process (to write the best possible funding request) in terms of how it’s positioned to the funders so that it does get funding. With lots of funders to navigate, let’s build a platform to help lawyers navigate them, help them understand it—and let’s help them put forward the request with the best possible positioning.

Q: You mentioned getting involved in group actions (the UK version of US-style class actions). What got you interested in that space particularly, and does your technology background in any way penetrate that space?

A: Definitely. It started out as me seeing the VW group claim, and also seeing cartel claims, price-fixing on football shirts, and things like this. With my technology background, I thought ‘Well, how are law firms doing this?’

I saw that they had a lot of off-line case management platforms, they use a lot of spreadsheets. You know these systems didn’t talk to each other. There’s a lot of manual effort and no mobile interfaces for claimants to interact with the law firm. So I thought, ‘We can build a platform that will enable that.’ Essentially, we’d be taking a completely fresh look at it. With a technology and software development background and a product development background. How do we build/provide something that enables lawyers to spend the least time possible working with each claim. We know that’s important to the economics of the claim—not having to spend a lot of manual effort on each claim.

So that’s what we produced, a solution that works on a management by exception basis, so essentially the claimant goes through an automated set of steps. And where they fall out of those steps or where they don’t meet certain criteria, only then do they need to get picked up by the law firm.

Q: I know you offer a claim automation solution, can you explain what this solution does?

A: The main benefit of the solution is that it increases the volume of clients. So what you tend to find, is if there’s a bad claimant experience, people fall out of the process. You’ve spent money on acquiring that claimant, you spend advertising pounds or dollars to get them into your funnel, to start working with them. But they become disenfranchised from your process, right? Or they don’t like getting a lot of phone calls, or they feel like the process is insecure and it happens via Email without clear instruction. So if you have a good online process, it increases the volume of clients. That’s the first thing.

And it reduces the amount of time spent per client also, because...the law firm is only working with clients who fall out of the automated process. It’s also plug-n-play, so if you want to start work on a new type of matter it might be that this week you’re building a book of emissions claimants, and the following week you want to launch a shareholder claim.

You can launch that from the platform in a matter of days and start book building. You’re not having to have lots of different contractors and different systems that you have to modify to start doing something new or different. You talk to us, we set it up for you, and then you manage it through an interface that you’re very familiar with.

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Commercial

Social Inflation Meets Litigation Finance

Social inflation is a significant factor impacting the future of the litigation finance (LF) industry, detailed in a new report released by Swiss Re. With LF investment increasing to $17B in 2020, the market saw a 16% increase year over year, highlighting a greater need for transparency and disclosure standards across the industry.   The Insurer notes the global LF industry is forecasted to reach $30B+ by 2028, with the United States leading with over half of overall investment. LF investment is also allegedly contributing to social inflation across the industry, with the report estimating that 57 percent of LF investment is earmarked for legal expenses, compared to 45 percent, historically.  Regulatory arbitrage could be a significant factor for LF investors to consider over the next decade. Swiss Re highlights that LF regulation is emerging with no real common regulatory standard across the global marketplace. With this trend, transparency is a factor that claimants should consider, as LF investors may choose to operate under opaque regulatory circumstances.  Swiss Re suggests the LF industry adopt compulsory standards of disclosure of investment arrangements to all parties. These disclosures are a bid to usher in transparency and ensure overall consumer protection. Swiss Re forecasts a continued disparity between sophisticated LF investors assessing social inflation costs that will generally affect net proceeds to client plaintiffs. Finally, the report suggests that large corporations may seek investment in “legal expense insurance policies” that may serve as a buffer and/or alternative to the LF marketplace. 
Commercial Fundraising

Alt Investment Platform LegalPay Raises Funding

Venture capitalists and Amity Technology Incubator are leading the funding of LegalPay, an Indian investment platform democratizing investment in third-party legal funding and tangential services like insolvency financing. LegalPay specializes in legal financing products backed by assets. These investments have potentially lucrative IRRs, often as high as 30%. Economic Times details that New Delhi-based fintech invites investors at all levels. This includes family offices, retail investors, international funders, and others. Investment in this type of alternative asset class is an excellent means of diversifying a portfolio while instilling the benefits and discipline of long-term investing. This, aside from the obvious benefits of potentially high returns in an asset not connected to the global market. Founder and CEO Kundan Shahi explains that LegalPay opens LitFin investment to those who had been shut out of legal finance since its inception. Now, everyday investors have access to assets that were only available to the mega-rich--even as recently as last year. Among its other products, LegalPay offers short-term interim finance for distressed businesses. This is obviously an important service in the time of COVID when many businesses continue to struggle. LegalPay has also launched technology products to meet the needs of insolvency professionals including banks, resolution specialists, ARCs and other creditors. By offering an efficient and seamless process, more parties in need have access to help. Ultimately, LegalPay will enable customers to use AI and other tech to effectively invest in this alternative asset class.
Commercial Regulatory Issues

On ATE Insurance as Security for Costs

Article 6 of the European Convention on Human Rights states that every citizen has the right to unimpeded access to the courts. Citizens of modest means who cannot afford an attorney might say that principle falls short in practice. Legal Futures explains that the insurance market and third-party legal funding both have a crucial role to play in collective actions, and for individuals who cannot afford to pursue their claims. Yet, there’s an imbalance between access to justice and cost protection. This imbalance has led to claimants, particularly those in class actions, feeling frustrated. After-the-event insurance is typically used as protection against an adverse costs order, but can also be deployed for the defendant’s costs. But ATE may not always be enough to cover security for costs. So, who bears the financial risk when a David takes on a Goliath? Do the courts ultimately favor the clients with the biggest war chest? What happens when securities for costs are ordered against a third-party funder? In the so-called Ingenious litigation, a funded case with over 500 claimants sought to recover losses. Defendants filed for security against a litigation funder, requiring that Justice Nugee revisit specific legal points. He ultimately found that ATE policies, in this case, did not provide sufficient protection. Is the only option for claimants to purchase an anti-avoidance endorsement so that insurers cannot void or terminate a policy? Some say so, despite the significant financial outlay for such an endorsement. Such an expense would ultimately be counted against any future recovery.
Commercial Regulatory Issues

Calls from Reinsurers to Regulate US Litigation Funding Continues

In any discussion on rising insurance costs, fingers are sure to be pointed at Litigation Finance. LitFin is a $17+ billion industry, with more than half of assets being leveraged by US clients. Reinsurers have claimed that third-party legal funding is the catalyst for the increase in excessively large legal awards. Insurance Journal explains that litigation funding is being blamed for the increase in liability insurance premiums in a number of industries—including commercial auto, general liability, and medical malpractice. One might think the impetus would be on manufacturers and medical care providers to conduct themselves in a way that won’t attract lawsuits. The alternative is to complain about the rise in verdicts of over a million dollars—which is the path many have chosen. Still, the size of verdicts is growing. From 2010 to 2019, awards surpassing $1 million increased from 29% to 36%. During the same time frame, average awards for cases over $1 million rose from $8 million to more than $10 million. Is this just general inflation? Or is litigation funding really causing havoc among insurers and the insured? Michael McDonald of Morning Investments Consulting doesn’t agree that LitFin is the cause of high insurance prices. He explains that litigation funding makes it possible for meritorious cases to find their way to court, and this represents increased access to justice, rather than a cudgel with which to beat insurers. Indeed, insurers could benefit from some aspects of third-party legal funding, such as making their own investments or monetizing legal assets. So while funders are creating solutions that work for attorneys, clients, and investors, insurers and reinsurers are fighting for increased regulation. Is this out of an abundance of caution—or a desire to hobble a thriving industry that’s making life harder for those who aren’t meeting their obligations to customers?
Case Developments Commercial

McDonald’s Faces Class Action for Alleged Denial of Employee Breaks

Shine Lawyers, with backing from Court House Capital, has filed a class action in Federal Court alleging that McDonald’s failed to provide employees with 10-minute breaks. These are required during shifts of four hours or more. Inside Retail explains that in addition to not providing proper breaks, McDonald’s routinely misrepresented the breaks workers were entitled to. The case alleges a systemic failure. The victims of these failures are mostly minors, many working their first proper jobs. The suit alleges that the loss of breaks impacted the physical and mental well-being of employees. The blatant disregard for established rules protecting employees has been described as ‘breathtaking.’ McDonald’s gave a short statement affirming their own compliance.
Announcements Consumer Deals

Legal-Bay Lawsuit Funding Taking Applications on Astroworld and Other High Profile Personal Injury Claims

Legal-Bay, the premier Pre Settlement Funding Company, announced today that over 150 lawsuits have been filed in the Astroworld tragedy that took place at Houston's NRG Stadium last month. The event was sponsored by Live Nation and intended to be a showcase for rapper Travis Scott. Unfortunately, however, the day took a darker turn when attendees rushed the stage causing numerous injuries, and in the case of ten people, death. Over a dozen law firms representing approximately 600 plaintiffs have filed premise liability and gross negligence suits against Scott, concert promoter Live Nation, and numerous other businesses including venue staff and security of NRG, along with first-aid providers that were hired to attend to injured fans. Plaintiffs claim that security and medical services were inadequate, leading to a predictable and preventable catastrophe. Safety measures could and should have been put in place in order to avoid the carnage that occurred, but instead, numerous corners were cut at almost every step. Concertgoers soon found themselves in an environment they had no control over, leading to the hundreds of injuries and tragic deaths that took place. Plaintiffs allege that there was a lack of crowd management even though official plans stated that this was necessary, lending weight to the negligence charges being brought against the defendants. Reportedly, there wasn't even a strategy for a crowd surge, even though comparable problems had occurred during Astroworld's preceding event held in 2019. In Scott's case, it might be even more difficult for him to claim he had no idea a crowd crush would happen since his own concerts have had other similar incidents, a fact which the venue and event organizers of this year's Astroworld were most certainly already aware. In 2015, he was arrested and charged with disorderly conduct after he flay-out told a Chicago audience to ignore security and rush the stage. Chris Janish, CEO, commented on the situation, "We are expecting many more of these unfortunate large scale personal injury events in 2022 now that larger events are being planned following the Covid hiatus. To our knowledge, we are the only company funding Astroworld plaintiffs at this time. Our staff is familiar with cases of this nature and can evaluate quickly for victims who are in need of cash now." If you have an existing lawsuit and need a loan on lawsuit against your impending case settlement, Legal-Bay may be able to assist you immediately. To apply online, please visit us HERE or call the company's toll-free hotline at 877.571.0405. Even outside the Astroworld tragedy, Legal-Bay has seen a flood of new premise liability filings in 2021, and their team is prepared to keep up with the demand. They're one of the leading lawsuit loan funding companies in the industry, and offer a lightning-fast approval process. A good thing, considering there's been a noticeable backlog in the courts due to Covid delays and court closures in response to the pandemic. Rather than wait indefinitely until cases get settled, Legal-Bay believes plaintiffs shouldn't be left waiting for the money they have coming to them. They have expanded their premise liability and personal injury departments in order to accommodate litigants who would rather opt for presettlement funding. Applications are reviewed on a case-by-case basis, and funding is awarded based on the merits of your particular situation. The legal concept of premise liability is used in certain personal injury cases if the injury involved was caused by a property owner's failure to ensure his property is safe. To win a premise liability case, the injured person needs to prove that their injuries were caused by unsafe conditions as a direct result of the property owner's negligence to suitably maintain the property. However, just because you were injured on someone's property doesn't automatically mean that the property owner is liable. Proof will need to be provided showing the property owner was aware of the unsafe conditions on his premises and failed to take action to rectify an unsafe situation. That being the case, you may be entitled to compensation. If you are involved in an active personal injury or premise liability lawsuit and need an immediate cash advance against an impending lawsuit settlement, please visit Legal-Bay HERE or call toll-free at 877.571.0405. Legal-Bay is one of the market's premier funders. If you've previously been denied by other funding companies, you might want to give Legal-Bay a try. More often than not, they'll be able to refinance your rate at a lower cost than other funders, with an added bonus of getting you more money. Anyone that has an existing lawsuit and needs cash now can apply for loan settlement funding to help get through their financial crises. Legal-Bay funds all types of premise liability loans for lawsuits including personal injury, slips and falls, car accidents, construction site accidents, work-related injuries, injuries incurred due to negligent business practices or lack of maintenance on private property, and more. Legal-Bay's pre settlement funding programs are designed to provide immediate cash in advance of a plaintiff's anticipated monetary award. The non-recourse law suit loans—sometimes referred to as loans for lawsuit or loans on settlement—are risk-free, as the money doesn't need to be repaid should the recipient lose their case. Therefore, the lawsuit loans aren't really loans, but rather cash advances. To apply for lawsuit funding right now, please visit the company's website HERE or call toll-free at: 877.571.0405 where agents are standing by.
Contact:Chris Janish, CEO Email: info@Legal-Bay.com Ph.: 877.571.0405 Website: www.Legal-Bay.com
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Commercial Regulatory Issues

What Claimants Need to Know About DBAs and LFAs

When surveying funding agreement options, claimants will often come across damages based agreements, or “DBAs,” and litigation funding agreements, or “LFAs.” Both DBA and LFA agreements help clients achieve the ultimate goal of winning a case, and transfer the overall cost and risk of litigation on to the representatives tasked with investing in the case.  As Temple Legal reports, the objective of a DBA or LFA is an overall shared responsibility that the litigation will be funded, and in the event of a successful outcome, the benefits shared between the parties. When organizing any deal of this nature, both parties should be careful to look after their own long term interests.   Things can get complicated when an LFA evolves into a DBA, prompting consequences which the parties may want to evaluate. Overall, DBA agreements are associated with claims management services more than traditional LFA  contracts. In fact, a recent court of appeals decision found that funders of litigation do not typically engage with claim management. Should any degree of claim management exist, the contract would therefore be considered a DBA contract. In conclusion, the differences between DBAs and LFAs are contingent on the funder providing litigation services such as advocacy and/or claims management. However, if at any time there is a question of whether the terms and conditions of an LFA are in jeopardy, either party should seek professional advice to remedy the matter.
Commercial

Reading a Legal Funding Agreement: Five Tips

Legal funding agreements are not yet standardized. Before signing, it’s essential to read a funding agreement carefully and ask questions about anything you don’t understand. Validity Finance’s Joshua Libling shares his insights for reading a term sheet for a litigation funding agreement.
  • Collateral. In this context, collateral is the case itself. Take note of any rights of refusal or mention of future litigation. The description of collateral is often broad so the funder is a party to relevant awards or settlements.
  • Budget Risk Responsibility. Funding isn’t a bottomless well. If a case goes beyond the expected budget, someone must pay the difference. It’s essential that the claimant know who that is.
  • Calculation of Return. How the division of a payout is calculated is very important and should be thoroughly understood before the deal is reached. Understand terms like waterfall, deployed vs committed capital, and net vs gross in the calculation of the funder’s return.
  • Fees. In addition to a percentage of an award, funders may charge structuring or transaction fees—usually based on a small percentage of the committed amount. Be sure you ask when fees are due and if the funder gets a return on the fee.
  • What’s Missing. Not every eventuality will be covered by the funding agreement. That’s not necessarily cause for alarm.
Commercial Deals

How LitFin Drives Profits for Investors and Lawyers

Those attorneys who represent venture capital or private equity firms understand that it’s common to make big decisions about whether or not to invest in litigation—even when the case is strong and the outcome potentially lucrative. Still, encouraging clients to pursue litigation can be a steep hill to climb. Omni Bridgeway explains that many firms are reticent to spend on litigation when their capital is needed for operating expenses, expansion, or product development. Complex litigation is risky. The timelines and outcomes are largely unpredictable. One adverse ruling could erase years of careful planning and shrewd investment. What’s the solution? Litigation Finance. Lawyers for private equity or venture capital firms greatly benefit when they offload their legal spending to a third-party. Non-recourse funding means that the risk is essentially transferred to that party in exchange for a portion of an eventual recovery in accordance with the funding agreement. Funding agreements vary depending on the case, funder, and other factors. In addition to the long-term benefits present when cases are won, legal funding carries with it several immediate financial benefits. The legal expertise funders bring to the table is substantial. Funders can vet cases and focus on which ones have the greatest probability of success. In single case funding, legal expenses can be removed from the books as soon as they’re incurred. Portfolios are typically funded with a large one-time deployment, or in several lump sum payments on a predictable schedule. This cash can be used for legal expenses, but may also fund operating expenses. The capital infusion itself is a financial asset, as is any revenue from successful claims. The process begins with selecting the right cases for the funding portfolio. Strong merits, a large expected recovery, and a defendant with the ability to make good on an award are all vital factors funders consider when vetting any portfolio of cases.
Commercial Deals

IPOs Dominate as Legal Firms Pursue Post-COVID Growth

Are we about to see a deluge of IPOs? A recent survey of 200 law firm partners in the UK suggests as much. Of those surveyed, 31% said their firm is actively considering an IPO sometime over the next year and a half. Another 44% said their firm is contemplating a stock market listing with no time frame given. Harbour Litigation Funding details that a whopping 78% of partners came from firms actively pursuing a credit infusion to supplement its own equity. The reason? For about half of respondents, ambitious plans for growth was the catalyst. Meanwhile, 86% of partners stated they felt pressure to reduce costs.
Commercial Regulatory Issues

New Possibilities in Litigation Funding

As the Litigation Finance industry grows, attorneys, insurers, corporates, and even small businesses are seeing the benefits of non-recourse third-party funding. As regulation adapts to these new realities, new opportunities are arising. Bloomberg News reports that one main driver of litigation funding growth is the search for non-correlated assets with the potential for high returns. Consumers are fueling the advancement of funding with claims portfolios, individually financed cases, class actions, and corporates reorienting legal departments as profit centers by monetizing existing legal assets. At its finest, litigation funding is a win-win proposition. Claimants receive the funding they need and could not otherwise afford. Law firms can reduce risk and add to operating budgets—allowing them to take on more contingency and even pro-bono work. Meanwhile, investors receive the large returns needed to encourage further investment, helping even more people who need assistance funding litigation. Debate about the transparency and discoverability of litigation funding agreements will continue. Courts have already explored what happens when lawyers advise clients to use legal funders, but no cross-jurisdictional consensus has been reached. So too are issues of privilege, as vetting by potential funders necessitates access to information typically held between lawyers and clients. So far, courts seem ambivalent on the common interest privilege. As more players enter the Litigation Finance space, we can expect more access to funding, a wider range of funding solutions for clients to choose from, and investment opportunities for smaller investors. As legal funding evolves, law firms are likely to rethink compensation models for partners and associates alike—especially when adopting flexible payments structures combining contingency and hourly billed models. As some jurisdictions relax restrictions on non-lawyer ownership of firms, compensation and bonus structures are likely to evolve further. Courts, financial specialists, and bar associations will have to rise to the challenges that the expansion and maturity of Litigation Finance will bring.
Consumer

Novitas Loans Announces Cessation of New Client Acceptance

Despite an announcement that assets reached more than GBP 200 million in 2019, Novitas Loans recently announced that it will stop funding new customers. The statement affirmed that the company will continue to manage current cases. Applications for extension funding will also be considered. Law Gazette reports that Novitas’ owner, Close Brothers, stated that the current profile of the company was not in line with the long-term strategy or tolerance for risk. For the fiscal year ending July 2020, Novitas’ assets were up more than 50%, though profit before taxation decreased to GBP 10.3 million. Director dividends were up from 6.1 million to 8.3 million. Still, COVID negatively impacted Novitas’ profitability, though Novitas did appear to have adequate resources for the next fiscal year. In July of this year, Novitas was ordered to end a funding agreement with a client, and required to cap her liability at under GBP 2,000. This was after the Financial Ombudsman Service found that the client was duped over a GBP 45,000 loan. Novitas was also impacted by three collapsed loan facilities that together owe Novitas nearly GBP 2 million.
Commercial Resources

Webinar on Increasing the Value of Insurance Claims with LitFin

A free online webinar will cover the fine points of utilizing Litigation Finance to unlock the value of insurance claims. It is possible for insurers and policyholders to make use of non-recourse funding when pursuing matters of bad faith, reinsurance, coverage issues, subrogation, and more. Chambers and Partners details that the upcoming webinar will offer insight on these issues from leading litigation funders and lawyers with experience working with funders. Topics include:
  • Funding reinsurance and insurer subrogation claims.
  • Funding policyholder claims and using bad faith claims to resolve third-party actions.
  • Explanation of how non-recourse finance is secured by potential litigation awards or settlements.
The panel of speakers is scheduled to include:
  • Linda Kornfeld, Partner Insurance Recovery-Blank Rome. A prominent insurance recovery lawyer in predominantly high-stakes litigation. Her specialties include risk mitigation and maximizing recoveries.
  • Gavin Beardsell, Investment Manager and Head of New Zealand – Omni Bridgeway. Based in the Sydney office, Beardsell’s experience in managing insurance matters spans over 25 years.
  • Maurice Thompson, Senior Equity Partner – Clyde & Co. Thompson has nearly three decades of experience advising clients in the natural energy industry, and founded the Global Drones Group.
  • Simon Christian, Editor – Chambers and Partners. Editor of the High Net Worth Guide, Christian has an LLB from University College London and studied for the BPTC at City Law School.
Commercial Regulatory Issues

New Jersey Disclosure Rule Puts Undue Burden on Litigants

Much has been made of the US District Court of New Jersey’s Local Rule 7.1.1, which requires disclosure of any non-recourse legal funding used to support a case. Some have suggested that this “harmless” rule will encourage transparency and increased oversight. But does it? Law 360 explains that the rule necessitates burdensome filings requiring tens of thousands of attorney work hours—leading to increased expenses for clients. At what point should we ask what purpose this serves, and whether or not it’s worth the extra resources. After all, it can be argued that transparency is a vague, even arbitrary goal. Why should legal funders and their clients be subjected to it, given all the good that funding does? Commercial litigation funding works to ensure that litigation focuses on merits rather than legal games meant to frustrate parties with fewer resources. Funded plaintiffs cannot be pushed into lowball settlements or stalled until they run out of money. This, of course, leads to increased fairness—which should be everyone’s goal. This is emphasized by the fact that funders only take on cases with merit. A solid claim backed up by compelling evidence and a clear illustration of damages is what funders are looking for. The cacophony of accusations of ‘frivolous litigation’ simply cannot be supported by evidence. Confidentiality is an essential part of any case. Any legal professional should view intrusions of confidential information with suspicion. Protecting attorney-client privilege is a vital part of that relationship. It’s worth noting that other legal services are exempt from mandatory disclosure, such as consultants or strategists. Perhaps the most sinister part of Rule 7.1.1 is how easily it could be weaponized against clients who use legal funding. Defendants concerned about a losing case, or frustrated with untenable settlement offers, could make spurious demands for funding agreements, even when no suggestion of impropriety is present.
Commercial

Australian Funding Partners Declares Bankruptcy

Once hailed as the team behind the Banksia class action, Australian Funding Partners has gone into administration. In October, Supreme Court judge John Dixon found that the litigation funder and five lawyers involved in the case had committed fraud, and made dishonorable attempts to charge unnaturally high legal fees to Banksia claimants. Lawyers Weekly details that in 2018, AFPL reached a settlement with Banksia Securities over an investor loss of AU $660 million in 2012. Later, a class action participant challenged the nearly $5 million in legal fees and a further $12 million+ in funder commissions. The Victorian Court of Appeal did not approve them. As a result of the actions of AFPL and the attorneys involved, Norman O’Bryan and Michael Symons were ordered removed from the roll. Prosecutions may soon follow for the pair.
Commercial Deals

What Makes a Case Attractive to a Litigation Funder?

As Litigation Finance grows in popularity and sophistication, not everyone is on board just yet. In fact, some clients and even their legal teams aren’t sure how to attract the interest of an experienced litigation funder. As the practice grows in use, understanding it becomes even more important. Lesa Online explains that there are some things funders look for when vetting any potential funding opportunity. This generally begins with an NDA followed by a thorough vetting. This due diligence may include looking into the viability of case theory, the defendant’s ability to make good on an award or settlement, and the evidence itself. Time, cost, and expenses are all considered, including the possibility of security for costs. How is this broken down?
  • Merits. The case should have a very high probability of success based on applicable law and existing evidence.
  • Damages. A sound theory of damages must be present and is typically valued using the most conservative estimates.
  • Budget. How much will the case cost? A viable case must have a solid ratio between what will be spent vs a potential reward.
  • Ability to pay. Regardless of merits or proven damages, if the defendant cannot reasonably pay the award, funders will not be interested. 
  • Adverse costs. Cost exposure is an essential aspect to consider when vetting any case for funding. Insurance is often applicable here as well.
Commercial Resources

The 2021 Litigation Finance Survey Findings

In September, Bloomberg Law surveyed 38 litigation finance providers, 37 lawyers, and 75 legal professionals in the UK, US, and Australia on their interest in and use of Litigation Finance. This survey provides a stirring look at developments and attitudes within the industry. As Bloomberg Law explains, the main area of concern for funders and attorneys is the question of who maintains control over the litigation. Current and pending legislation tends to guarantee that clients retain the right to decision-making even in funded cases. Meanwhile, it appears that ethical implications are of far greater importance to lawyers—with 55% listing it as a concern, compared to just 14% of funders. Matters of return waterfall provisions (based on a multiple of invested capital) and attorney returns subordinated to return of funder capital were of high importance to both funders and lawyers. Factoring duration risk in calculations of proceeds distribution is also important to lawyers and funders—though funders find it a more crucial issue. Funders also focus on the right to withhold funding. When lawyers are considering entering a funding agreement, they tend to look at the factors in this order.
  1. Financial terms
  2. Reputation of the funder
  3. Track record of the funder
  4. Type and quality of in-house legal consultancy
Commercial litigation remains the most popular area of practice for funder/attorney agreements. This is followed by international litigation, antitrust matters, international arbitration, insolvency, patent law, environmental actions, copyright/trademark cases, insurance issues, and product liability. General industry views are largely positive toward funding, though there are some specific areas of concern. At least 39% of funders and 56% of lawyers do not feel that Litigation Finance is transparent as an industry. In more positive news, more than ¾ of lawyers and 97% of funders do not agree with the oft-repeated accusation that legal funding enables frivolous filings and cases without merit clogging court dockets. Still, lawyers were largely neutral on the positive ethical reputation enjoyed by funders. Most interestingly, about half of lawyers and nearly 4/5 of funders disagree with mandatory disclosure of legal funding agreements. In the end, we see that lawyers are 69% more likely to seek out litigation funding compared to five years ago. That’s solid news for this industry that continues to grow and adapt to meet the changing needs of lawyers and clients.
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Case Developments Commercial

Woodsford Funds Govia Thameslink Railway Action

A legal claim that could be worth as much as GBP 100 million has Govia Thameslink Railway concerned. It alleges that one of the most active commuter railways in Britain has been routinely overcharging as many as 3.2 million passengers. The claim, filed late last month, is funded by Woodsford. Woodsford Litigation Funding explains that the case addresses a lack of access to ‘boundary fares’ in which commuters with a London Travelcard are entitled to discounted fares from the boundary zones covered by cards to their destination. A similar case, also funded by Woodsford, involves a claim seeking up to GBP 93 million against two unconnected rail operators. Govia Thameslink Railway is accused of not making boundary fares available to riders, nor informing passengers that they were an option. Since November 2015, it’s estimated that 240 million trips could have been more affordable thanks to boundary fares—had commuters been aware of them. This constitutes a breach of UK competition rules, plus an abuse of market powers. To be eligible for inclusion in the class action, claimants must meet specific criteria:
  • Must have owned a Travelcard after 10/2015.
  • Must have also purchased at least one rail fare from a station within a zone covered by the Travelcard.
  • Must have purchased a rail fare to a location outside the zone of the Travelcard.
Potential claimants aren’t required to bring individual claims, nor is there a fee to participate in the action. Funding from Woodsford makes it possible for claimants to sign on at no initial cost to them.
Commercial Regulatory Issues

What Have We Learned from Lloyd v Google?

The Supreme Court recently rejected the claim filed by Richard Lloyd against Google. Lloyd is the former executive director of Which?, a consumer protection organization. The case involved a data breach from over ten years ago, wherein Safari users were subject to double-click ad cookies without their consent. Law Gazette details that Lloyd v Google tackles two significant issues. First, it examines whether or not there’s a right to bring an opt-out class action in cases involving data privacy and protection. Second, it looks at whether there should be compensation in data rights cases when there has not been proof of individual impact. In February of this year, the UK government debated, then declined, to introduce legislation specific to opt-out class actions for matters involving user data. Their reasoning was that there was another, perhaps better, form of class action. Lloyd pursued this and was not successful. Litigation funders have taken a particular interest in this case—calling it a test case for UK collective actions in the future. Justice Leggatt denied claims made on behalf of roughly 4 million iPhone users in the UK, saying they only have a right to compensation if they have evidence of financial losses or distress. What might constitute evidence of distress is unclear. This ruling means that Big Tech won’t have to demonstrate that they’ve acted ethically. Rather, the people they harm, whose privacy has been violated, have to prove some tangible damage. There are still opt-in class actions, but it’s admittedly untenable to expect millions of clients to collect and submit evidence of the individual impact of a large data mishandling. It also leaves funders in a lurch—choosing between increasing access to justice and risking a large investment on a class action that may never reach a profitable conclusion. Ultimately, we’re left with millions of users allegedly violated by a tech company which will face no tangible repercussions.
Announcements Commercial People Moves

Delta Capital Partners Management Welcomes Michael Callahan as Chief Operating Officer

Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, has announced the hiring of new senior executive Michael Callahan. Mr. Callahan joins Delta as its Chief Operating Officer, where he will execute the firm’s strategic and tactical plans worldwide; lead investor relations; and oversee the implementation of new business initiatives, product development, and office openings. Prior to joining Delta, Mr. Callahan worked at Boston Capital for 28 years, where he was a Senior Vice President and the Director of Asset Management. At Boston Capital, Mr. Callahan was responsible for a team of over 60 professionals monitoring and reporting on the performance of Boston Capital's $7.7 billion portfolio, including both lower tier asset management and upper tier investor relations functions.  Mr. Callahan also led the team at Boston Capital that developed a proprietary asset management and reporting platform which was utilized throughout the company. Christopher DeLise, Delta's Founder, CEO and CO-CIO, stated, “We are very pleased to welcome Michael to the Delta team, where his extensive experience in asset management, investor relations, and investment company operations will be invaluable as Delta continues its global expansion and further enhances the firm’s strong position within the litigation and legal finance industry.” About Delta Delta Capital Partners Management LLC is a US-based, global private equity firm specializing in litigation and legal finance, judgment and award enforcement, and asset recovery. Delta creates bespoke financing solutions for professional service firms, businesses, governments, financial institutions, investment firms, and individual claimants. SOURCE Delta Capital Partners Management LLC
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Commercial Deals

Burford Managing Directors Talk Potential Law Firm Ownership

Now that several US states are experimenting with non-lawyer ownership of legal firms, it’s no surprise that major players in Litigation Finance are thinking about taking part. Several more states are considering loosening regulations on who may buy into a law firm, including California and Michigan.

Law 360 reports that Burford Capital may be one funder looking to make a law firm investment. Emily Slater (Managing Director) and Andrew Cohen (Director) are jointly responsible for valuing and underwriting the company’s investment risk. Currently, they’re tasked with assessing an investment in legal firm ownership.

With regard to overall strategy, Slater explains that law firm investment compliments Burford’s funding efforts. Permanent equity in a law firm is a long term investment with a collaborative foundation. She goes on to state that there are some key reasons partial ownership by funders can benefit law firms:

  • Investment provides needed capital that can be used to grow and strengthen the business.
  • Partners can maintain equity in the firm after retirement.
  • These benefits may serve to encourage firm management to employ long-term growth strategies and allow more freedom to innovate.

While some have speculated that private equity firms may also race to buy into legal firm ownership, Slater is not convinced. She explains that legal funders have a far better understanding of law firms than other investment managers, which gives them a huge advantage. Beyond that, Slater is confident that Burford will be first to market.

Obviously, ethics will be examined at length as non-lawyers buy into firms. It’s speculated that non-lawyer ownership may lead to financiers making business decisions—such as which cases to take and when to settle—on behalf of lawyers. Andrew Cohen disputes this vehemently. He claims it’s unlikely that investors would make decisions at the client level.