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Commercial Legal Innovation

 Blockchain Technology: Emerging Legal Use Cases 

Multiple use cases are emerging for the integration of blockchain technology into modern global law practices. Traditionally, many legal enterprises start out as small to medium businesses which have been risk averse when it comes to new technologies.  The Spanish publication ObservatorioBlockchain.com reports that while the infancy of blockchain technology is obvious, the benefits for the legal community and litigation finance are real. The programmatic facilities of blockchain technology allow for litigation finance contracts to be more or less automated.   Document manipulation in litigation finance agreements is somewhat of an unspoken problem today. Blockchain technology could help small law practice businesses evolve into proper global enterprises, complete with enterprise document management systems. Smart legal documents are the forefront of law, many argue.  Check out Observatorio’s full outline of blockchain technology and law. Use your browser's translation tool to toggle between Spanish/English, or your preferred language.
Commercial Deals

Bloomberg Reports on Patent Litigation Financing  

Patent litigation growth is expected to increase, with innovation gracing the sector. In terms of a risk/reward profile, IP litigation is one of the most profitable areas of litigation finance.  Bloomberg Law reports an expected uptick in investment across patent litigation claims. Bloomberg notes that 2020 patent law funding saw a 19% increase. 2021 saw a 24% increase in patent litigation funding.   Investment firms have started to hire in-house patent experts to weed out and invest in best-in-class cases. One such case in 2021 was LSVI vs. Intel, scoring the second largest patent verdict in history at $2.19B.  Bloomberg forecasts that 2022 will usher in investment dollars to explore funding patent licensing, as well. Not only will patent litigation grow and evolve, but so too will enforcement of patent licensing claims, according to experts. Bloomberg outlines that the top level patent litigation investment houses are developing bespoke due diligence frameworks to help set the foundation for long-term success. To see all of Bloomberg's findings, click here to access their survey results.
Commercial

Emily O’Neill of Deminor Discusses Litigation Funding and IP Claims

Emily O’Neill is an expert in structuring and financing IP litigation in multiple jurisdictions. O’Neill says that an authentic, personal approach to clients is key. Pointing to a 30-year history and an 80% success rate doesn’t hurt either. I am Media asks O’Neill five questions about her approach and experience in IP and litigation funding. First, she explains her methods for building trust with clients, despite third-party legal funding being a comparatively new industry. When asked about her proudest professional achievement, O’Neill reveals that she was recently appointed to the council of the Law Society. This is an opportunity to improve diversity and social mobility within the finance sector, and the legal one. Questioned about her impressions of patent litigation in the UK, she states that like many legal areas, the UK patent court is in recovery from an unpredictable and difficult couple of years. Delays, increased costs, and longer case durations have caused multi-jurisdictional matters to lag. But O’Neill also points out that new IP specialist judges in the UK High Court are bringing improvements. In discussing Spectris plc’s global IP management system, O’Neill details that making employees aware of their responsibility to safeguard IP is the foundation of a successful system. Implementation was then tailored to the needs of specific subsidiaries that could be used between teams—allowing for collaboration while protecting IP. Finally, O’Neill cautions those embarking on multi-jurisdictional litigation to ensure coordination between the different jurisdictions. Not all teams will coordinate well, but having everyone working together is essential to see a successful case through to completion. 
Consumer

Litigation Finance Arrangements in the United States

Like a lot of things in America, the pursuit of justice can be out of reach for all but the wealthy. To pursue a case in the US, litigants have to cover the costs of lawyer fees, out-of-pocket expenses, and any other associated costs. Depending on their situation, potential claimants may be expected to do this while unable to work, injured, or having recently lost significant financial resources. MONDAQ explains that because of the prohibitively high cost of litigation, well-capitalized wrongdoers can deflect lawsuits with threats of high costs, or with lowball settlement offers. Contingency fee agreements may be helpful for plaintiffs in some situations. But rates can be as high as 50%, and still do not cover filing fees, discovery, and deposition costs. So while CFAs can be helpful for some, it’s not a solution to the widespread, runaway costs of modern litigation. Litigation Finance is a rapidly growing industry for good reason. It allows investors to fund individual cases, or a portfolio of several, in exchange for a stake in any award given or settlement reached. TPF can be utilized for consumer and commercial litigation and can be used at any point in the legal process—including enforcement of an award. Before accepting a case, funders conduct due diligence on the case itself, and those involved in it. Essentially, funders are providing funds in a situation where the case itself is the only collateral. The non-recourse nature of funding means that if the case is not successful, funders can lose their whole investment. 
Commercial Regulatory Issues

Singapore Allows No-Win, No-Fee Arrangements in Arbitrations

As of January 12, conditional fee arrangements—once banned outright in Singapore—are now permitted in some case types. No win, no fee agreements are allowed in international and domestic arbitrations, some mediations, and certain proceedings in the Singapore International Commercial Court. Straits Times details that the proceedings in question are those involving high-end commercial disputes. According to Singapore’s Minister for Law, Edwin Tong, allowing conditional fee arrangements will help domestic lawyers compete with lawyers outside the country who are not bound by rules prohibiting CFAs. He also explained that conditional fee agreements increase access to justice, allowing businesses with meritorious claims to pursue cases despite lacking the available funds with which to do so. Conditional fee arrangements could take the form of ‘no win, no fee’ agreements, or ‘no win, less fee’. Lawyers may also choose to charge an uplift fee on successful claims. Singapore is not the only jurisdiction to abolish prohibitions against CFAs. The United States, Canada, Australia, England, and Wales are among those who now allow CFAs in a variety of forms. According to Tong, the Singapore ministry is examining whether the use of CFAs should be expanded to other case types. He notes that CFAs should not be considered a replacement for traditional fee structures. He also affirms that safeguards, such as written agreements signed by lawyers and clients, will be put in place to protect clients from potential abuse.
Commercial Legal Innovation

Litigation Funding via ILO

Litigation finance has a new tech savvy way of doing business, with the emergence of Initial Litigation Offerings (ILO). So far, there has been only one group to gain notoriety employing an ILO. Weed vs. Hemp crop destruction is the controversial ILO investment subject.  RounTabelGroup.com reports that a $1B+ California based hemp operation was allegedly destroyed by agricultural mercenaries sponsored by the government. The operation has launched an ILO to gain investment dollars to start litigation.  The ceiling to the ILO offering is $5M, and is being brokered in $100.00 increments. This is the world’s first approach to litigation funding via ILO.  SEC regulation requires registration of such funding levels under certain conditions related to crowdfunding. However, the SEC has remained silent on the specifics of ILOs.
Commercial

Stonward’s 2022 Litigation Finance Predictions

Stonward forecasts a bright future for litigation finance and third party investment opportunities for 2022. Cash flow is the heart of every successful enterprise, as such Stonward finds liquidity being an extremely attractive bonus for third party clients.  Stonward recently published a LinkedIn feature outlining five trends for litigation finance developments in 2022. Here are some of the highlights:
  1. Regulatory clarity will bring cross-border litigation finance opportunities to fruition. 
  2. COVID-19 bears new opportunities for litigation finance agreements.
  3. Class action and antitrust litigation is set to increase, with third party investors sure to follow.
  4. Litigation portfolio finance will mature with risk mitigation facilities forefront. 
  5. Long term relationships will foster legacy profitability. 
Check out Sonward’s report to learn more about their 2022 predictions.
Commercial

Litigating Universal Cognitive Liberty

Freedom of thought is recognized by the Universal Declaration of Human Rights (UDHR). Interestingly,, cognitive liberty is not recognized as an international human right. Some want to change that, making the argument that humanity has the right to be free to think whatever they want (freedom of thought).   The Ottawa Citizen reports that the Canadian armed forces have launched ‘psychological operations’ as an experiment in government propaganda to counter civil disobedience. International human rights scholars are quick to point out that the lack of protection of cognitive liberty in such instances is due to the relative lack of technology capable of directly interfering with mental autonomy at the time the core human rights treaties were created.   Similar to a ransomware attack, the technology behind such operations can be abused. Canada is said to have exploited advanced technologies without the authority to do so. Even worse, it is alleged that Canada forcefully abused technology in the unsanctioned production of reports that appeared to be aimed at cognitive activities of Canadians. 
  • Other reports highlight similar technologies being explored by the New York City Police Department. 
  • In 2021, members of the National Lawyers Guild won $650,000 in litigation financed fees from abuse of the technology in New York. 
The semantics empowering freedom of thought as a human right hold new opportunities for modern international recognition of the right to cognitive liberty. 
Commercial Deals

Litigation Funding May See Boost from Rise in Commercial Cases

After a COVID-caused dearth of commercial cases, it’s beginning to look like disputes are on the rise. During a pandemic, it makes sense for companies to forego risky litigation in favor of conserving resources. In-house legal departments, however, are already reporting an increase in commercial cases that are only expected to grow. Law 360 details that a rise in commercial litigation will likely also lead to increased use of third-party litigation funding. As the Litigation Finance industry grows in maturity, and more legal firms have positive experiences with funders—applications for legal funding will only increase. Companies would do well to implement claims recovery strategies and vet existing claims to determine which should be pursued. A recent survey by Ernst & Young shows that 63% of lawyers (external and in-house counsel) reported eschewing litigation during the pandemic. A stunning 81% of respondents said they negotiated contracts to stay out of court, while 1/3 of respondents reported deferring or ignoring a valid legal claim due to a desire to reduce costs. These are situations where litigation funding can be especially helpful. More than half of companies surveyed say they’re expecting an increase in the volume of claims, while 66% of external legal counsel are in agreement. At least 1/3 of counsel surveyed report already seeing an increase in litigation. Stephen McBrady, partner at Crowell & Moring LLP, explains that the commercial litigation space is already seeing more recovery-oriented action. It is troubling though, that despite the expected increase in litigation, attorneys are not seeing an uptick in resources. In fact, half of lawyers surveyed by Burford Capital say they expect legal budgets to be reduced. In-house lawyers, therefore, should expect to do more work with fewer resources and greater time constraints. With that in mind, it makes sense to look to litigation funding as a way to continue pursuing litigation without taking away from the operating budget.
Commercial Deals

LegalPay Partners with Jumbo Finance

FinTech startup LegalPay has recently formed a partnership with non-banking financial company, Jumbo Finance. The Delhi-based start-up focuses on litigation funding for insolvencies. Business Today explains that the stressed asset market in India has an estimated TAM of about $150 billion, and will almost certainly see an uptick in deals in the near future. According to the Reserve Bank of India, the gross non-performing asset ratio could increase from 7.48% (March 2021) to 9.8-11.22% by March of this year. LegalPay founder and CEO Kundan Shahi claims that his company is aggressively capturing the insolvency market.
Commercial Regulatory Issues

Can a Defunct Company Sue? Courts Respond with a Resounding “Maybe”

Pursuant to a case involving bid-rigging from some of the world’s largest banks in 2013, a 2019 dismissal affirmed a longstanding precedent in the United States: Dead people can’t sue. Generally speaking, this applies to defunct companies as well. In order to initiate a lawsuit, the person or entity must exist. Chief Executive details that the Second Circuit Court of Appeals in New York reversed that decision. It reasoned last March that it doesn’t matter if the plaintiffs died before they filed suit—so long as someone still living had a viable stake in the case. This set off the US Chamber of Commerce, among others, which warned courts that this decision could lead to third-party legal funders anonymously launching cases simply for profit. The Chamber of Commerce went so far as to ask SCOTUS to overturn the reversal. It claims that the Constitution limits federal court involvement to cases that revolve around “real controversy” that have a tangible impact on “real persons.” It went on to suggest that the ruling would empower class-action lawyers, funders, or hedge funds to act unscrupulously. While that’s certainly possible—all industries have bad actors—is that really a reason to limit which cases can be pursued?
Commercial Regulatory Issues

Recovering TPF Costs in Arbitrations: The Current Approach

Five years ago, Essar vs Norscot brought about a landmark decision. The English High Court upheld a ruling requiring that the defendant cover the claimant’s costs associated with legal funding in the arbitration. Now it appears that arbitral tribunals are increasingly likely to award costs associated with procuring third-party legal funding. Omni Bridgeway explains that third-party funding costs may refer to the funder’s success fee, which is one of many payouts funders receive when a claim is successful. Plus, the costs can include reimbursing funders for costs paid over the course of the arbitration itself. In Essar, courts cited three reasons for awarding WPF costs:
  • The respondent engaged in “reprehensible conduct” well beyond typical breach of contract—thus spurring the arbitration.
  • The claimant’s lack of resources
  • The respondent’s actions, intended to take advantage of the claimant’s lack of financial resources.
Recovery of TPF costs is now a common part of arbitrations in multiple jurisdictions. A recent tribunal decision in Singapore held that tribunals do have the authority to award recovery of claimant legal costs—including those associated with third-party legal funding. What changes have been spurred by the Essar ruling? First, disclosure of funding agreements early on in the arbitration process is preferred. Some jurisdictions, Singapore and Hong Kong, for example, now require this. Next, some tribunals have signaled a willingness to include TPF costs of ATE (after the event) insurance premiums. One tribunal determined recently that a claimant’s ATE premium was a necessary part of their TPF costs—and could be recovered just as any other TPF costs. Finally, tribunals are evaluating the “reasonableness” of TPF costs sought, as they determine whether to award costs. In Essar, the TPF costs were about three times the legal and arbitration costs. Clearly, tribunals are responding to the necessity of third-party funding in arbitrations, and are ruling accordingly.
Commercial Regulatory Issues

 New ATE Premium Privacy Precedent 

Precedent has been set by Kent v. Apple. on the merits of ATE premium privacy. The court ruled that Apple is not privy to ATE policy details, in that it may afford the company an unfair advantage to dispute the claim.  Mishcon.com further dissects the relevance to ATE Premium disclosure in a new profile on courtroom strategic sensitivity. Competition Appeal Tribunal rules normally make determinations to authorize funding agreement details. In most cases, the details of the funding agreements are made available to all parties involved, under scope of common disclosure.   However, in this instance, Kent redacted her funding budget’s ATE premium details. Apple petitioned the court with objection to the redactions. As the tribunal weighed the argument, it debated if the information Apple sought was necessary. In this instance, the court found that the ATE premium details were not privileged, but were strategically relevant to the case and henceforth not privy to Apple under competitive fairness.   The landmark decision is welcomed as fundamental precedent in litigation finance proceedings. Similarly, the notion of “strategic sensitivity” may hail additional rulings in the future.
Commercial Fundraising

Jack Dorsey to Launch Bitcoin Defense Fund 

Jack Dorsey, founder and CEO of Block, Inc. (formerly, Square) announced plans to launch a Bitcoin legal defense fund. The proceeds from the fund will be used to support legal actions for open source developers in the cryptocurrency and blockchain communities.  ZDNet.com explains that the Bitcoin community is facing various challenges via litigation. Dorsey’s new Bitcoin Defense fund would help ease pressures on open-source developers as they defend and/or pursue various cryptocurrency and blockchain litigation instances. Dorsey is labeling the fund as a coordinated and formalized facility for the cause.  The fund aims to help pay for developer legal bills in retaining quality attorneys. Dorsey alludes to advantages from litigation funding scenarios in developing strategies to protect cryptocurrency and blockchain developers from legal attacks. Furthermore, Dorsey is positioning the fund to be a free and open option for developers to engage, if they wish.   The fund will look to engage volunteer and part time legal leadership to operate. Dorsey plans to share more about the Bitcoin Legal Defense Fund’s future in the coming weeks and months.
Commercial Deals

 AxiaFunder Closes First Limited Partnership 

AxiaFunder, the UK-based crowdfunding platform for litigation finance, announced a closing of its first $300,000 limited partnership case. AxiaFunder plans to have the details live on its platform over the next few weeks.  P2Pfinance.co.uk reports that AxiFunder’s first case is said to be a shareholder dispute over unfair prejudice. Forecasted returns on the dispute are expected to be 3.7 times that of the funded investment.  Last month, AxiaFunder revealed its plan for a limited partnership organization to support crowdfunding in litigation finance. According to AxiaFunder, the limited partnership design is extremely tax efficient and will boost litigation investors' overall returns.  
Commercial Deals

$58M+ Owed to Litigation Finance Backer 

New allegations are emerging that Affiniti Finance lent thousands of law firms millions of dollars, only to leave its financier empty handed. Now in administration, Affiniti’s creditors have concluded the firm cannot keep it’s doors open while operating an orderly run off.  LelgalFutures.co.uk reports that Affiniti engaged Consumer Credit Act contracts to disburse monies associated with personal injury and claims related to mis-selling. Now, many of the aforementioned agreements are under investigation by auditors. Apparently, a series of events transpired resulting in Affiniti defaulting on its obligations to longtime financier, Fortress Capital. Affiniti’s dependency on Fortress was crucial, so when the hedge fund decided to cease funding, Affinity lost its ability to operate. Now auditors are left to sift through Affinity's loan book to understand the firm’s financial position.  As recently as 2020, Affiniti announced plans to raise a $500M capital raise with plans to invest in as many as 5,000 new claims. However, it seems those plans were a pipe dream, at best.
Commercial Legal Innovation

A Stock Market for Litigation Finance 

A litigation finance stock market? That is what one new New York startup called Ryval is looking to launch. The idea is to let everyday citizens bet on litigation claims.  Faisal.nyc reports that Ryval plans to issue tokens so that users can invest in individual litigation claims, much like the stock market. The platform is being depicted as similar to GoFundMe and other crowdfunding platforms. The idea is that empowering justice through tokenization is a worthwhile cause.  What is interesting about Ryval is the proposal that tokens may be bought and sold during a litigation lifecycle. No word on how and if the litigation tokens will increase or decrease in price during the span of a successful or unsuccessful litigation.  With innovation, naturally comes criticism. The notion that Ryval is going to “democratize the court system” is irking some. Some are labeling Ryval as a betting market, rather than a justice facilitator. Others note that the general public is not privileged enough to access detailed discovery information to make mindful decisions on a case’s lifecycle.
Announcements Consumer

Golden Pear Funding Closes $55.0 Million Corporate Note Financing

Golden Pear Funding (Golden Pear), a national leader in pre-settlement legal funding, announced the closing of a $55.0 million investment-grade rated, Senior Secured Corporate Note financing. The transaction was assigned a BBB rating by a nationally recognized statistical ratings organization. Proceeds will be used by the company to restructure existing debt and support additional growth of the business. Since inception, Golden Pear has funded over $735 million in aggregate to more than 62,000 clients nationwide. "This transaction gives Golden Pear the financial flexibility to continue building the best independent, specialty finance platform serving the consumer litigation marketplace," stated Gary Amos, Chief Executive Officer of Golden Pear. "It was made possible by the strong performance of our business, driven by industry-leading innovation, our team, and the products we deliver with a continued focus on service for attorneys, providers, and their clients." Daniel Amsellem, Chief Financial Officer of Golden Pear, added, "Our capital strategy continues to be an important point of competitive differentiation for Golden Pear. We are pleased that this transaction has reduced our cost of capital and attracted a diversified group of institutional capital partners to the company." Brean Capital, LLC served as the company's exclusive financial advisor and sole placement agent in connection with the transaction. About Golden Pear Funding  Founded in 2008, Golden Pear is one of the largest specialty finance companies in the United States funding legal matters and purchasing medical receivables from physicians and medical centers. The company empowers its clients to navigate the legal system and provides them with financial solutions that work. Golden Pear is backed by a partnership of several private equity firms that allow for the stability and continued institutional growth of the firm. For additional information about the company, visit https://goldenpearfunding.com.
Consumer

Post-Pandemic Predictions Include Extended Case Durations

Law firms that rely on contingency fee structures will soon feel the impact of the pandemic, if they haven’t already. Many contingency fee law firms experienced an immediate slowdown in cases once stay-at-home orders and mass business closures went into effect. While many firms used settlement income from previous years, those funds are likely nearly depleted by this time. Above the Law explains that personal injury cases and workers comp cases have dramatically slowed, impacting law firms' bottom lines. Meanwhile, court closures and excessive delays led to an increase in case durations—delaying payouts for law firms as well as third-party litigation funders. This can leave funders with a dearth of working capital, and could increase the chances of an adverse occurrence like bankruptcy, or the case going over its allotted budget. Even worse, some opportunists took advantage of slow courts and a long wait for jury trials by pushing through low-ball settlements for litigants already suffering from the pandemic. In nearly every state, trial delays, shutdowns, or extensions abounded, and delays continue even as venues are cautiously reopening. It’s predicted that consolidation is on the horizon for many contingency fee firms. Firms that aren’t already on track with sustainable growth initiatives are likely looking at consolidation or being acquired by a larger firm. The question then becomes: Buy or be bought? Firms that have financed cases instead of bearing the full cost may now be in a position to acquire. The continued effect of the pandemic on law firms can lead to an inability to secure competitive interest rates—owing to cases staying on balance sheets for longer than anticipated. This is good news for litigation funders though, as it means more firms in need of funding.
Case Developments Commercial

Flight 752 Victims’ Families Awarded $107M by Ontario Court

Nearly two years after 176 people died when Ukraine International Airlines Flight 752 was shot down, families of six victims have received a $107 million award in civil court. The decision included $100 million in punitive damages that will be split among the families, plus $1 million for specific losses, and another $6 million for pain and suffering. CBC details that the Flight 752 disaster was part of a deliberate terrorist act. Lawyer Mark Arnold explains that the team plans to seize Iranian assets in Canada and elsewhere to ensure that the award is paid. Canada is currently joining forces with multiple countries also seeking reparations from Iran for citizens lost on the flight. Iran has stated that its government will not engage in negotiations, prompting a statement by the countries promising to consider more aggressive actions against Iran. Unsurprisingly, Iran’s foreign ministry asserted that the courts lacked evidence, calling the Ontario ruling “shameful.” Because this was a civil case, not criminal, plaintiffs were not required to prove their case beyond a reasonable doubt. Iran has spoken out against Canadian class actions relating to Flight 752, saying any relevant litigation should take place in Iran. A news conference is expected this week.
Consumer

Advocate Capital Honored as a Top Litigation Funder

Florida’s Daily Business Review’s Best of 2021 has recognized Advocate Capital as a top litigation funding firm.  The survey compiled by Daily Business Review aims to recognize the best law service professionals and emerging products innovating Florida’s legal community.  Advocate Capital provides strategic accounting for law firms. Advocate’s team is passionate about helping attorneys get even better results. Advocate likely won Florida honors by always looking for ways to encourage, educate and support our law firm partners as they pursue justice on their clients’ behalf.
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.