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Does Legal Funding Generate Frivolous Lawsuits? Experts Say No

One of the most common assertions from Litigation Finance naysayers is that access to funding to pursue cases will result in frivolous lawsuits that lack merit. Claims that such filings will clog court dockets, especially at a time when delays relating to COVID are abound, continue to be rampant. But are they accurate? The second International Congress on Litigation Funding suggests that no, legal funding does not generate meritless lawsuits. Stonward explains that several arbitration experts gathered to discuss that very issue. Panelists included:
  • Antonio Bravo: Partner, Eversheds Sutherland
  • Daniel Rodriguez: Partner, CMS Rodriguez-Azuero
  • Luis Dates: Partner, Baker McKenzie
  • Heitor Castro: Portfolio Manager, LexFinance
  • Guido Demarco: Director, Stonward
Topics at hand included the assertion that litigation funding necessitates increased regulation around the globe. This is needed, some say, to prevent a flood of nuisance lawsuits that are essentially cash grabs for funders. But does that argument hold water?  First, let’s note that funding opponents assert that litigation funding “could” lead to a rise in frivolous claims. They do not assert that it has yet led there, despite Litigation Finance being a growth industry for more than a decade. Surely, if the number of meritless cases were going to increase—it would have done so by now in at least a few jurisdictions. Yet, that has not happened in any demonstrable way. Transparency and disclosure are still concerns from some anti-funding groups. This begs the question, is funding relevant to all cases? Or is disclosure a ploy by defense lawyers to obfuscate the facts of a case in favor of prejudicing a court? Panelists believe that disclosure should only follow actual relevance and avoid conflicts of interest. As such, no sweeping disclosure requirement should be legislated. Influence is another area of concern. But as LF agreements don’t allow funders to control settlement or strategy decisions, the point is essentially moot.

Legal Funding Looks Toward Interim Finance for Bankrupt Firms

Resolution professionals are increasingly turning to third-party legal funders in order to provide operating capital until liquidation is complete, or a new owner reorganizes the company. Economic Times explains that a corporate insolvency resolution process is a tenuous situation requiring a balancing act between making payments and keeping the business going. When lenders refuse to provide the needed funds, third-party funders can provide interim funds to cover costs. This type of financing, called debt-in-possession, has become increasingly popular in Australia, Canada, the US, and the UK. LegalPay CEO Kindan Sahi says that the India-based funder is targeting mid-market clients to fund these ongoing concerns until firms can support themselves.

Galactic Pulls Out of Hog’s Breath, Priceline Class Actions 

Levitt Robinson, class action lawyers leading the cases against Priceline and Hog’s Breath, estimate that it will take over $8 million to continue the Priceline case. The case is now in jeopardy, as funder Galactic Litigation Partners has pulled its financing. Executive Franchise Business details that class actions claimants in the Priceline case are likely to discontinue their pursuit of the case now that funding has dried up. The Hog’s Breath case is unfunded, and an order to provide $1.23 million in security for costs is outstanding. With one case being withdrawn and one on hold, it’s unclear if Levitt Robinson will be able to court the funding necessary to continue either claim.  

Litigation Funder Focuses on High Volume of Small Claims 

The United Kingdom is home to The Catch Litigation Fund (KLIF), a litigation investment portfolio that saw returns of about 16% during 2021. Traditionally, many ligation portfolios focus on a small number of high value claims, with long timelines for successful execution. What makes KLIF different is that managers invest in a high volume of lower value claims, with a shorter duration to maturity.  G., Opalesque Geneva recently issued a report on KLIF’s performance. Launched in 2020 with $56M, the fund focuses on financial services sector claims for investment. With an average loan of $6.7M, KLIF sports an average time for return on investment of just three to 24 months.  Organization is key to KLIF’s approach, and by partnering with attorney’s directly they are able to source claims with shorter overall durations. With this structure, the fund is able to loan directly to the firms representing cases. KLIF is run by Katch Investment Group, with offices across the UK, Europe and South America. Founded in 2018, the alternative investment fund manages over $800M in assets.

Omni Bridgeway Funds NovelStem Arbitration

The stem cell biotechnology firm NovelStem International Corporation has launched arbitration proceedings against NetCo Partners to maximize value from legacy entertainment publishing assets. Omni Bridgeway has been announced as the litigation funder backing NovelStem’s ambitions. NewsFileCorp.com’s press release on the developing matter outlines that NovelStem’s Chairman plans to extract value from their 50% stake in Netco Partners. Netco’s publishing arm, Net Force, has generated over $24M in total revenue since inception, and NovelStem anticipates substantial returns may be captured across digital, media and entertainment pillars.   NovelStem’s Chairman further details that litigation investment by Omni Bridgeway is enabling flexibility for broader investment in NewStem Ltd. Over the coming months, NovelStem plans to brief investors on the success of the NetCo Partners litigation and growth of NewStem Ltd.’s new investment dollars. 

Lion Air Flight 610 Victim’s Fund Embezzlement Probed by California State Bar 

With $2M missing from the Lion Air plane crash victims fund, California’s State Bar fears that disgraced attorney Tom Girardi may have embezzled the funds. Mr. Giradi was disbarred this past August, however, it appears that California investigators may have fallen prey to free gifts, plane rides and expensive wine from Girardi … allegedly tainting justice in the process.    DailyMail.co.uk reports that the State Bar of California is launching a new investigation into their handling of Tom Girardi’s potential malfeasances. The question is if Girardi has been able to buy his way out of discipline by California officials. A federal judge froze Girardi’s assets in 2020, after growing concern that he routinely misappropriated settlement funds to bankroll his Beverly Hills lifestyle.  Recently, Girardi was diagnosed with dementia and late stage Alzheimer's. Girardi has previously been sued by a slew of Law Firm Funders, each of whom made financial misappropriation claims against him. 

Lead Mine Owners Face Human Rights Class Action 

Augusta Ventures is funding a lead poisoning class action that may include more than 100,000 Zambians. London human rights attorneys at Leigh Day have collaborated with South African Mbuyisa Molee attorneys to file the class action lawsuit against Anglo American South Africa Limited (AASA).  Bloomberg.com reports that an AASA spokesman says that the suit is bogus, misdirected and completely opportunistic. The lawsuit alleges that AASA managed the mine in question, and for years contributed to toxic exposure to lead. Proponents further argue that lead exposure has damaged waterways adjacent to the mine. AASA’s parent company, Anglo American Plc, reported revenue of $30B in 2020, which leads many experts to suggest that the firm will look to string out any forthcoming litigation claims.  Augusta Ventures has taken on funding of the lead mine litigation class. Augusta is funded by the $2T asset management firm, Pacific Investment Management Company. With Augusta on board, it would appear that outgunning justice may be difficult for AASA over the long term. 

PriceRunner Launches $2.4B Anti-Competition Claim Against Google

After a seven year investigation, the European General Court upheld a $2.7B fine for Google’s breach of antitrust laws, for providing Google Shopping preference over competitors. Now the Swedish price comparison company, PriceRunner, has filed its own $2.4B claim against Google for cultivating anti-competitive behavior that allegedly disenfranchised PriceRunner’s business. CNBC.com reports that PriceRunner views the claim against Google as part of a pattern of anticompetitive behavior that has caused significant consumer suffering and has stifled entrepreneurial innovation. Furthermore, PriceRunner suggests that Google has not complied with the European Union’s ruling on abusing its search engine’s dominant position.  PriceRunner was recently acquired by the fintech firm Klarna. Similar to purchasing a litigation claim, PriceRunner’s new owners want Google to pay for PriceRunner’s lost revenue in the United Kingdom, Sweden and Denmark. The theme of reverse regulatory arbitrage is seemingly what PriceRunner hopes to profit from regarding this claim. 

Billionaire Seeks Litigation Bankruptcy Protections 

Guo Wengui, a notable Chinese billionaire with close connections to Republican advisor Steve Bannon, has filed for Chapter 11 bankruptcy protections. Recently, a court ordered Wengui to pay $134M in restitution after being accused of avoiding debt collection. Wengui stresses that his debts are not related to any business expenses. Wengui shares that his debts nearly all stem from litigation expenses attributed to claims and judgments against his various enterprises.  Politico.com reports that a judge has sought to seize Wengui’s yacht, previously anchored in New York. Wengui argues that he is not an owner of the yacht, but authorities have tracked the vessel, which was moved from New York Harbor down to the Bahamas. Wengui was given five days to pay a fine associated with the yach’s departure from New York against court order. Releasing a statement on social media, Wengui suggests he must file for bankruptcy given his debts may be close to $500M. He further claims that currently his net worth is somewhere between $50,000 to $100,000.  Mr. Wengui amassed a real estate fortune before going broke, according to Politico.com. Wengui’s relationship with Donald Trump advisor Steve Bannon is subject of watercooler discussion, this after Bannon and Wengui partnered to launch the G-TV media company.

LexShares’ Litigation Funding Marketplace Review

With the pandemic beginning to ebb, the numbers are in and point to an increase in litigation funding across global markets, with some lawyers reporting up to 70%+ uptick in business. Correspondingly, litigation funders are seeing a near 60% uptick in business during the same period. Disclosures are still a hot topic for the industry, with only two high profile discovery disclosures during 2021.  LexShares recently released their industry outlook profiling the fourth quarter of 2021. Research figures suggest that over 20% of attorneys plan to explore the benefits of litigation investment in the near future. The single case is still the bread and butter of litigation finance, claiming over 50% of overall litigation business revenues. That said, asset class diversification of ligation investment is prospering, with portfolio and counterparty organization a major target for many funders.  LexShares attributes non-conformity to disclosure regulation as a positive situation, while the industry solidifies jurisdictional clarity. LexShares points to a more opaque scenario in terms of attorney compensation with the rise of litigation finance. Some suggest that partner salaries are the major beneficiaries of the industry's success.    Check-out LexShares’ full research, which outlines key facts and figures pertaining to litigation investment.

Claimants in Brazil Seek Faster Rewards 

Four years and three months; that is the average time it takes to be rewarded with justice in Brazil, according to research data released by Brazil’s National Council of Justice (CNJ). Four years to win a claim can then lead to a lifetime of seeking to execute any monetary judgements. Four years is a long time for the potentially guilty to shift cash and assets across Brazil and abroad, in a bid to exhaust any potential victims.  Fecomercio.com recently profiled the idea of claimants having the opportunity of selling their claim, or having a third party investor cover legal costs on their behalf. The benefits of this are twofold, 1): The claimant does not have to worry about funding the claim throughout the judicial system, and 2): Oftentimes, when the claimant is funded by a reputable third-party, the potentially guilty cave to pressures related to facing the heavy hand of justice.  Fecomercio.com is right to suggest that litigation funders are tasked with the responsibility of evaluating the merits of cases that come before their review. More and more, technology is being engaged to assess the validity of a claim being investable. As litigation finance continues to flourish, it may become a powerful cross-border exercise in linking technologies, where appropriate. 

The Czech Republic’s First Litigation Funder

The Czech Republic is beginning to embrace litigation finance with the announcement of the country's first litigation investment firm, LitFin. According to Ondřej Tyleček, a partner at LitFin, the agency plans to model itself after other successful European Jurisdictions such as Germany and the United Kingdom.  Pravniprostor.cz recently profiled LitFin’s journey in the Czech Republic. Basically, LitFin is taking a successful blueprint for litigation finance and promoting the concept with hopes of exponential rewards. LitFin seems to be funding personal injury claims, which the firm itself represents (legally) in some cases. LitFin suggests that their investment in the space is a legacy play, with hopes that access to justice in the Czech Republic will increase, given the company’s funding initiatives. As litigation funding is a novel practice in the Czech Republic, LitFin’s emergence may help usher in standardized regulation. We’ll have to wait and see. 

Politician Alleges “Lawsuit Abuse” Against Consumer Legal Funders

Is there “lawsuit abuse” happening in Iowa and elsewhere? If so, is Consumer Legal Funding to blame? One former trucker and current Iowa state senator alleges exactly that—and Governor Kim Reynolds is on board. Several bills are in the works to limit award sizes and prevent litigation funders from increasing access to justice for those who have been hurt in traffic accidents. Transport Topics News details that Republican state senator Adrian Dickey (owner of a transport company and board member of Iowa Motor Truck Association) wants to outlaw the use of litigation funding to sue trucking companies. But isn’t there a conflict of interest when the owner of a trucking company introduces a bill which protects his own company from well-funded lawsuits?  According to “experts,” consumer legal funding is on the rise and puts defense attorneys at a disadvantage. While it’s true that the funding industry is growing, it’s equally true that funders seek out cases with merit. Funding a weak case is financially irresponsible and would deplete cash reserves that could be used to support stronger, more meritorious claims. At present, Dickey’s bill SF 2085 has not moved forward. Some felt the bill required a clarifying amendment defining the ‘litigation funding’ it hopes to ban. If passed, the bill would make Iowa the only US state to outlaw third-party legal funding, leaving many average citizens without recourse should they require legal representation. Governor Reynolds spoke out in favor of the bill that advocates for a $1 million limit on awards in cases involving trucking accidents and medical malpractice. But who does this bill protect? Not legal professionals, and certainly not those who have been injured by medical malpractice. The question then becomes, who is advocating for them?

Funders Continue Raising Large Capital

The litigation funding boom continues. LionFish (owned by RBG Holdings) recently agreed to a GBP 20 million funding deal. Balance Legal Capital recently raised GBP 130 million for a new fund—tapping eight institutional investors. With this, Balance’s total assets under management have surpassed the GBP 20 million mark.

Legal Futures UK explains that Balance now has access to even more co-investment capital from investors. Robert Rothkopf, managing partner, stated that this is the second multi-investor fund launched in two years. He went on to say that this demonstrates an ongoing and fervent demand for the services the company provides.

LionFish, which is part of RBG Holdings PLC, funds cases run by lawyers outside RBG. Its recent deal with a sizable alternative investment firm means that the firm will fund 75% of all cases over the next two years. LionFish then would be eligible to collect a significant share of returns after the return hurdle is met. This could provide the potential for high returns well beyond LionFish’s initial investment.

LionFish will also have sole discretion on the cases they pursue, and exercise great capital flexibility. This allows the funders a more diversified risk portfolio while moving away from the current investor sales model. Managing director Tets Ishikawa explains that the new arrangement will allow for greater funding investment without returning to deployment-focused management with lower margins.

Burford Capital has made over AU $1.1 billion in new funding commitments, deploying roughly AU $841 million. Case realizations have remained lower than expected, however, due to court delays and stoppages caused by COVID. Still, as Chief executive Christopher Bogart details, writing over a billion dollars in new commitments during a pandemic is an impressive feat. It also bodes well for future returns, as these cases come to fruition.

Should We Be Concerned About Funder/Law Firm Partnerships?

As the litigation funding industry grows, many newcomers are flocking into the sector. This in turn has led to a number of mergers and new partnerships between funders. But what about partnerships between legal firms and litigation funders? Is this a conflict of interest? Will clients be limited in their choice of funders? MONDAQ reports that there are strong arguments to be had on both sides of the issue. While it can be true that clients may feel some pressure to accept funding from those associated with their legal firm of choice, these partnerships can also increase the client’s chances of getting appropriate funding for their case. This, of course, increases access to justice. Most clients are looking for fast access to funding capital, and to fully understand the terms they’re agreeing to. If clients are getting this, choice of funders will likely take a backseat. Some jurisdictions may still maintain prohibitions on champerty and maintenance, which then have to be excised or diminished in order to allow legal funding to operate effectively.

Singapore Introduces Path to Conditional Fee Agreements

Singapore recently passed a Legal Professional (Amendment) Bill that permits CFAs (conditional fee arrangements) in international arbitrations. This change, introduced by the Legal Professional (Amendment) Act 2022, is said to improve the options to share risk among the involved parties. Burford Capital explains that these reforms represent a natural progression of Litigation Finance in international arbitration cases, which was adopted into law in Singapore in 2017. The legislation is similar to what was passed in Hong Kong last year, which uses outcome-related fee structures for arbitrations. Singapore is poised to become a destination jurisdiction for certain types of cases—and this legislation promises to expand that. To wit, Singapore is currently on par with London as a preferred locale for arbitration. Runaway legal costs have increased demand for flexibility in payment structures and risk tolerance. The new legislation promises to give Singapore a more competitive standing, as many surrounding jurisdictions already allow a greater array of risk-sharing options. This will also be a benefit to those pursuing arbitration—affording parties access to better legal representation and minimizing legal costs. That begs the question: Who is best able to take on the risks associated with these cases? Litigation Finance professionals can provide funding as they take on the risk associated with the cases they choose to fund. Funders are adept at evaluating cases for funding, ensuring that the most meritorious cases have their day in court. Those funders who already maintain a presence in Singapore are perhaps best suited to take advantage of this new legislation.

Oasis Financial Becomes Libra Solutions as Offerings Grow

Oasis Financial announced today the change of its parent company name to Libra Solutions. The change was filed on January 10, 2022, and the company formally launched the new name February 23, 2022. “The name Oasis Financial is synonymous with pre-settlement funding, and it will remain the name of the country’s preeminent pre-settlement funding solution,” said Greg Zeeman, Chief Executive Officer of Libra Solutions. “But our recent growth and acquisitions significantly expand our ability to support current and new customers and necessitated a name change. We are much more than pre-settlement funding, and it is time for a name to match.” The growth of the Oasis Financial portfolio began in 2017 with the acquisition of Key Health, a California-based leader in medical lien funding. In 2021, Oasis Financial acquired Probate Advance, the largest provider of inheritance funding, and that same year, Oasis Financial joined forces with MoveDocs, a Nevada-based provider of medical lien management technology. Together, the portfolio offers solutions for heirs with inheritance in probate, personal injury plaintiffs awaiting settlement, and the attorneys and healthcare providers dedicated to helping them recover. “We chose the name, Libra Solutions, as a reflection of what we do,” said Zeeman. “Libra is Latin for ‘scales,’ as in the scales of justice. Our product portfolio helps balance the scales of justice for those involved in long, drawn out legal processes – providing financial options to help wait it out, and technology to help speed it along, so everyone has a chance for a fair outcome.” About Libra Solutions Libra Solutions works closely with customers and industry advisory groups with one focus – to help level the playing field in slow-moving legal processes. With origins dating back to 1996, we were founded by attorneys, healthcare providers, and innovators who saw that the legal system was not working for many. Today, our solutions have helped hundreds of thousands of clients, their attorneys, and medical providers achieve positive outcomes through funding and technology to speed and transform cumbersome processes. Libra Solutions continues to innovate, leveraging technology and financial strength to help plaintiffs, heirs, and those who serve them succeed. As of December 2021, Libra Solutions has helped over 750,000 clients, their attorneys and healthcare providers overcome slow moving legal systems. To find out more, visit www.librasolutionsgroup.com.

Third-Party Funding Utilized by Resolution Professionals in India

Insolvency is a growing problem for businesses, especially in light of the COVID pandemic. Recently, an indebted company in Faridabad, India, was able to raise enough interim funds to cover the operations budget, despite being in the midst of insolvency. Economic Times India details that during the Corporate Insolvency Resolution Process, RPs must pay processional fees, for maintenance of machinery and workspaces. When companies cannot meet these expenses, RPs are increasingly relying on third-party interim finance. This concept is called debt-in-possession, and has become increasingly popular in Australia, Canada, the UK, and the US. LegalPay, one such funder, targets mid-market businesses for interim funding in India. Recently, LegalPay provided funds to allow Yashomati Hospitals to continue to run through the insolvency process. This type of funding is gaining steam throughout the region, where insolvency laws have recently expanded to welcome the use of third-party legal funding. As one legal professional put it, investors are willing to invest when there’s certainty toward recovery—especially for manufacturing companies or those involved with infrastructure.

How Litigation Finance Can Help with COVID Claims

Despite our best efforts, COVID is still raging. Precautions, closures, delays, and supply chain issues persist. What can businesses do to mitigate the effects of COVID? Omni Bridgeway notes some important things companies and legal teams need to consider as COVID continues to impact us. First, we need to appreciate that limitation periods may be expiring. Companies that have set aside legal claims like various commercial disputes, breach of contract, and even IP matters may find that deadlines to file may be nearing expiration. That said, legal funding may allow these businesses to pursue claims without adding debt to balance sheets. Funders can also help determine which cases are viable to pursue, and which aren’t. Opportunity exists for those who strike while the iron is hot. COVID has introduced unprecedented opportunities for mergers, public offerings, expansion, and attracting new talent. Third-party funding can provide businesses with the funds they need to pursue these opportunities. Funders can also assist in enforcing awards from slippery sources. While COVID is not a legal excuse for violating contracts, courts have come to accept that the definition ‘ordinary course’ has changed due to the virus. No business should be expected to operate as if COVID was a non-issue. Still, funders can determine whether a case exists when clients believe they’ve been harmed by COVID-related conduct.

Validity Finance Welcomes Michelle Eber

US-based legal funder Validity Finance is pleased to announce the addition of Michelle Eber to its team. Validity Finance details that Eber will handle patent cases, including vetting new cases for funding and the management of existing cases. Formerly of Baker Botts, Eber has a degree from the University of Texas Law with honors, and graduated magna cum laude from the University of Pennsylvania. She is reportedly thrilled to join the team, and looks forward to helping clients maximize the value of IP assets.

UK Competition Appeal Tribunal Certifies Collective Action Against Shipping Companies For Overcharging Customers

The UK Competition Appeal Tribunal (CAT) has certified a collective action against multiple maritime car carriers who operated an illegal cartel to manipulate car shipping prices. Certification clears the way for the class action filed by consumer rights champion Mark McLaren, who has instructed has instructed Scott+Scott UK LLP as solicitors on behalf of consumers and businesses who purchased or leased new cars or vans, to proceed to trial. Over 17 million cars are said to have been affected by a price-fixing scheme run by the named international shipping firms. If the collective action is successful, anyone who bought or leased an affected vehicle will be automatically entitled to compensation. Customers affected include those who bought from Ford, Vauxhall, Volkswagen, Peugeot, BMW, Mercedes-Benz, Nissan, Toyota, Citroen and Renault between October 2006 and September 2015. The claim value is up to £60 per new car bought or leased and class members will be able to claim in respect of more than one vehicle. Anyone who wishes to register their interest can do so here: https://www.cardeliverycharges.com/ The proceedings against Nissan Motor Car Carrier Co. Ltd, Kawasaki Kisen Kaisha Ltd, Nippon Yusen Kabushiki Kaisha, Eukor Car Carriers Inc and Compañía Sudamericana de Vapores S.A. were filed in February 2020, following the European Commission’s decision in 2018 to fine these shipping companies €395 million for fixed prices and rigged bids for roll-on, roll-off (“RoRo”) transport of vehicles. The claim, estimated to be worth £150 million, seeks to recover damages for individual customers and businesses who overpaid for their car as a result of higher delivery charges. This differs from earlier claims filed in relation to the RoRo cartel that represented car manufacturers. Scott+Scott is a specialist dispute resolution firm at the forefront of the evolving collective action regime in the UK judicial system. Scott+Scott is working with an experienced barrister team led by Sarah Ford QC of Brick Court Chambers. Woodsford Litigation Funding is funding the collective action. Mark McLaren said: “The CPO is a crucial step in our case, and we are delighted at the CAT’s decision to authorise our claim to move forward. We look forward to securing compensation for the millions of UK consumers impacted by the cartelists’ illegal behavior” David Scott of Scott+Scott UK LLP said: “This is an important judgment for class members, but also for the UK collective actions regime as a whole.  When granting the collective proceedings order, the Tribunal correctly noted that collective proceedings such as this claim are important for ensuring that wrongdoers like the shipping companies modify their behaviour.” For additional information or to register interest please visit https://www.cardeliverycharges.com/

Validity Launches New Fund to Support the Wrongfully Convicted

When people serve hard time for a crime that they did not commit, the entire societal fabric suffers. And when the innocent are eventually vindicated, oftentimes they face a difficult re-acclimation process back into normal life. Validity Finance has stepped in to help right these wrongs with a groundbreaking new fund.  Announcing the new fund this month, Validity plans to help cover living expenses and legal financing to pursue civil claims for the wrongfully convicted. Sometimes decades after being initially incarcerated, just the idea of freedom is the only hope a human being can dream of. The thought of a long fight for remuneration may seem too onerous to take on. Validity aims to help ease such pains with its new exoneree fund.  To help get selected individuals off the ground, Validity will provide up to $100,000 for those who have been vindicated after five or more years of incarceration. The fund aims to work with state, county or city governments to right the wrongs.  Read more about Validity's new exoneree fund by clicking here

Alliance for Responsible Consumer Legal Funding (ARC) Teams Up with Money Management International (MMI) to Offer Customers Access to Financial Resource Site

The leading trade association for the consumer legal funding industry, Alliance for Responsible Consumer Legal Funding (ARC), a nonprofit organization, announces the relaunch ARCFinanciallyFit.com (Financially Fit), a website providing consumers with tools to achieve financial wellness, bolster emergency savings, and better prepare for a rainy day. ARC teamed up with the nonprofit Money Management International (MMI) to offer an easy-to-digest web platform. ARCFinanciallyFit.com presents the best expert resources to help consumers combat a financial crisis, form healthy spending habits, and prepare for the future. The site also offers free one-on-one budgeting help through partnership with MMI, one of the largest and longest-serving financial counseling agencies in the country. “Unfortunately, most Americans are living paycheck to paycheck, and if that income stream gets interrupted, they start to spiral,” said Eric Schuller, President of ARC. “When an emergency is thrust into a consumer’s life, like a car accident or a personal injury, they usually need some help in getting through those difficult times. By providing resources like ARCFinanciallyFit.com, ARC Members can be an ally to consumers on their journey to long-term financial wellness.” A 2021 survey by PYMTS.com found that up to 70% of millennials live paycheck to paycheck. This further illustrates a significant financial gap many Americans face in the event of an emergency situation, such as an automobile accident or sudden injury. The same study found that even a significant number (39%) of those earning over $100,000 a year are living paycheck to paycheck. “Consumers reach out to us because they are in a bind financially and they are in need of assistance,” said Charles W. Price, CEO of Capital Now Funding, an ARC Member. “Offering our clients a resource like ARCFinanciallyFit.com enables us to continue helping clients long-term, not just for their short-term financial needs. Financially Fit is an excellent resource and one we hope consumers will utilize to help them regain their financial footing.” “Our entire mission is to help those in need,” added Reid Zeising, Founder and CEO of Cherokee Funding, another ARC Member. “We are committed to access to care for all, and the ability for plaintiffs to meet short term financial needs while awaiting a fair settlement. When settlement does come, we believe ARCFinanciallyFit.com will provide essential nonprofit guidance and resources to our clients, and we look forward to sharing this important resource with them.” ”Regardless of age or income level, financial emergencies often lead to feelings of embarrassment and shame among impacted individuals,” said Jim Triggs, President and CEO of MMI. “Research has shown that stigma and fear of judgment prevents many consumers from taking action, but confidential and compassionate help is just a click or phone call away. Our experienced, certified, and empathetic counselors welcome ARC Member customers to lean on MMI as they navigate the financial challenges that come with life’s unexpected twists and turns.” About ARC The Alliance for Responsible Consumer Legal Funding (ARC) is a diverse coalition of consumer legal funding providers, consumers, academics, community activists, policy makers, and other supporters. It was established to preserve legal funding as a choice for the many Americans who have suffered an unexpected economic loss due to an accident and have a pending legal claim. Legal funding can help families pay for immediate personal needs such as rent, mortgages, car repairs, utilities, and groceries while they wait for their claims to settle fairly. ARC promotes practices and regulations that lead to informed decisions between individuals and their attorneys, so that families have more options—not fewer. ARC advocates at the state and federal levels to recommend regulations that preserve consumer choice. ARC member providers handle the majority of all legal funding transactions in the United States. About MMI Money Management International (MMI) is changing how America overcomes financial challenges. MMI helps create, restore, and maintain a life of financial wellness through empowered choices. For over 60 years, our clients have achieved financial confidence through nonprofit programs that educate, motivate, and liberate. MMI inspires action by delivering expert professional guidance and timely solutions aligned with our client's goals. Experiencing a financial challenge? Find your solution 24/7 at 866.980.2227 and MoneyManagement.org.

Court decides that groundbreaking £150m class action on behalf of UK car buyers can proceed

London’s specialist competition court, the Competition Appeal Tribunal, has today given the green light to a class action on behalf of millions of motorists and businesses, who bought or leased a new car between October 2006 and September 2015, to claim against 5 shipping companies that imported cars into Europe.

The European Commission (EC) has already found that the maritime car carriers fixed prices, rigged bids and allocated the market for roll-on, roll-off (“RoRo”) transport.  According to the EC, the carriers had agreed to maintain the status quo in the market and to respect each other’s ongoing business on certain routes, or with certain customers, by quoting artificially high prices or not quoting at all in tenders for vehicle manufacturers.

The class action, which benefits from significant financial backing from Woodsford, follows on from the EC decision. It is one of the first of its kind to be filed in the UK and is estimated to be worth around £150m in damages for car buyers.

The Tribunal has authorised the claims to continue as collective proceedings, meaning that millions of motorists and businesses who bought or leased a new car between October 2006 and September 2015 could be in line for compensation because of the additional cost passed on in the price of their vehicles by the higher transport charges which resulted from the operation of the cartel. These individuals and businesses will now automatically be represented at court, unless they choose to leave – or opt out – of the claim.

The Tribunal confirmed that a special purpose company led by Mark McLaren, formerly of The Consumers' Association, will act as the Class Representative. He is represented by the London office of international law firm Scott + Scott, and barristers from Brick Court chambers, funded by Woodsford.

Woodsford’s Chief Investment Officer, Charlie Morris, commented: “This is an important milestone in the promotion of collective redress in the UK, which allows consumers and small businesses to achieve compensation for the wrongs committed by big business. Woodsford, a business dedicated to holding corporates to account and delivering access to justice, is proud to support Mr. McLaren, who is now much closer to obtaining compensation for the millions of consumers and businesses who have been overcharged.”

Steven Friel, Woodsford’s Chief Executive Officer, commented:  “This is a huge success for consumer redress in the UK, and I am proud of Woodsford’s significant part in it. This victory in Mark McLaren’s case relating to car delivery charges follows hot on the heels of a similar victory in Justin Gutmann’s case relating to train fares. Both are backed by the team here at Woodsford, which is now clearly established as the most successful ESG and litigation finance business in this area of UK collective redress. My only regret is that big corporate defendants, even after they have been found to have acted unlawfully, continue to use their significant legal and financial resource to fight technical arguments, with the goal of delaying compensation payments to consumers. The cartelists in this case should not have objected to certification of this class action. Now that the Court has thrown out their futile objections, they should settle the case and allow UK consumers to receive the compensation they are owed.”

Individuals and businesses who bought or leased a new car or van in the UK between October 2006 and September 2015 should visit cardeliverycharges.com.

About Woodsford

Since 2010 Woodsford has been helping to hold corporates to account for their egregious behaviour. Whether it is helping consumers achieve collective redress, ensuring that inventors and universities are properly compensated when Big Tech infringes intellectual property rights, or helping shareholders in collaborative, escalated engagement up to and including litigation with listed companies, Woodsford is committed to ESG and access to justice. Working with most of the world’s leading law firms, our strength lies in the combination of our legal experience, investment, business and technical expertise, together with significant financial resources.

Woodsford is a founder member of both the International Legal Finance Association (ILFA) and the Association of Litigation Funders of England & Wales (ALF).

Litigation Finance News

Key Takeaways from LFJ’s Special Digital Event–Litigation Funding in 2022: What to Expect

This past Tuesday, Litigation Finance Journal hosted a panel discussion and Q&A with a global swathe of litigation funding experts. The subject was key trends facing the industry in 2022, and the panel did not disappoint by delivering in-depth responses across a broad array of subjects.

The event was moderated by Peter Petyt (PP), Co-Founder of 4 Rivers Services. Panelists included Tets Ishikawa (TI), Managing Director of Lionfish in the UK, Stuart Price (SP), Co-Founder of CASL in Australia, and Molly Pease (MP), Managing Director of Curiam Capital in the US.

Below are some key takeaways from the discussion:

PP: Stuart, I’d like to get your view on this: Is there an ideal portfolio that a funder might invest in, in terms of the numbers of cases, the types of cases, the size of cases?

SP: I think that’s an interesting question, Peter. I come at it from a first principles perspective and it’s portfolio theory 101, so we’ve got to salute a problem within the law firm that they’re looking to solve, and we’re trying to tailor a solution for them. I think ultimately portfolio theory says you need diversification...you need to have the ability that you can spread the risk across multiple cases, so really depending on the nature of what the problem is, you may structure a portfolio to be thematic...and when I say thematic, it might have an insolvency or flavor or class action securities flavor because that’s a problem that you’re trying to solve. But really, the art and design and pinning together of portfolio funding is probably understanding what the problem is, and I think starting from that you need to have the diversity across a number of cases. I’d look and see on a portfolio, you certainly shouldn’t have more than ten percent in one case. I think logically that follows that you have to have at least ten cases then, that concentration and manage properly. But I think that defining the ideal portfolio is a very difficult component because you’ve got to start at first principles. I think the duration is important to consider, long and short, and dated assets, jurisdiction and common issues that may arise when you get a contagion risk in particular cases. You’ve got to consider the return profile and ideally you want to mix those factors all together and ensure that you’ve got the diversification, ensure that you’ve got an appropriate funding source to actually meet what the client ultimately is wanting, and put that all together and deliver something that’s tailored, I really push back against us as litigation funders defining what the product law firms or corporates want. We should listen to what their problems are, and tailor something to their requirements.

PP: Molly, obviously Curiam has been around for a while now, and I’m assuming you’re seeing an increase in uptake on portfolio funding from law firms, more inquiries, more interesting opportunities being presented to you?

MP: Yes, it’s definitely become more prominent than it was four years ago when we started. I really think there is not an ideal portfolio. I think it’s so dependent on the circumstances and there are so many different ways to do it, that can all work out well for all the parties involved. You could have a portfolio that is a collection of cases all for one claimant, and maybe they have one case that’s very very strong and very likely to succeed, and has significant enough damages to be able to cover a number of other cases, or are maybe a little bit more of a long shot or have more binary risk or whatever it is. So they may see some benefit in being able to pursue all of the cases, and maybe have the handful of cases that aren’t as strong free ride a little bit off the really strong case. So that could be an instance where you have a small portfolio, but it might make a lot of sense in that context, versus the other end of the spectrum where you could have a law firm trying to pool together a number of different cases for different clients across different practice areas that really have quite a bit of diversification. And that’s probably a little bit more work to figure out the appropriate pricing on that. But I think it’s certainly doable, and I think at every point in between there are portfolios that make sense. So I agree with Stuart, that you just have to understand the situation, what the law firm and the clients are trying to accomplish. I think there’s almost a portfolio that makes sense of all different types. So it’s very broad and I think there’s a lot to consider.

PP: Yes, I can see that there isn’t necessarily an ideal portfolio, you need to look at each one as a separate entity. Tets, I was wondering what your views were, being someone from the investment banking background on pricing for portfolio funding? Clearly, if you can get it right, the costs of capital for portfolio funding structure should be significantly better than just looking at single case funding. Shouldn’t it?

TI: Absolutely. I mean I started in fixed income but I was actually doing credit portfolios and that’s just heavily involved in a lot of the early days of the credit indexes, which are now part of the standard credit benchmarks. When we were constructing those portfolios, we were saying basically a combination of both the principles of 101, of keeping it diverse but also at the same time having to be relevant to the actual market that you want, which in this case is the client base. In terms of pricing, of course diversification is always going to work, but I don’t think diversification necessarily means looking through different types of cases. What you have to also factor in, is also the alignment of interest and the areas of expertise that the law firm has. So you can have a firm that’s specialized in one type of law, the diversification comes just from the cases themselves because each case is so sufficiently different that the fact that they’re in the same area of law doesn’t necessarily mean that they’re correlated. And that in itself brings down pricing. But what does also help bring down pricing at least on an academic level, and whether this translates to another market is another matter, but on an academic level when you have diversification and you have strong skills which back it up and an alignment of interest by the people running the claims, then absolutely pricing should be reduced to reflect those risk mitigants.

PP: What we want in the market are well-funded, well-capitalized, well-run funds. And certainly, there’s been some issues recently. In the UK, Affinity went into administration, Augusta had to shed half of its staff, move to other premises, restructure its lending agreement with lenders. Vannin got subsumed into Fortress, so clearly there were some business model issues, probably has something to do with working capital during the time it takes for cases to resolve. Stuart, I don’t know what your view is on this, but I would have thought there’s a need for consolidation at some point, amongst the funder market, what’s your view?

SP: Consolidation in the traditional sense of funders or businesses—I think is probably not likely. I think you’ll have a bit of exits from the industry. You will have groups of people leaving one funder and joining or establishing another funder. So I think you will have an aggregation and consolidation, but not in the traditional sense of a mergers and acquisitions approach. I don’t think that necessarily is the nature of this market—unless you’re getting together two very large funders or two very established funders, and taking a global view on the market.

PP: We’ll see. I think you’re right that there will be movement between funders, there’ll be split-off groups and I think there might be some traditional, good old fashioned M&A at some point. But it’s an evolving market so we’ll see. 

Let's move onto blockchain crowdfunding platforms—do you as panelists see this as being an interesting way of raising money for you funds?  

TI: We don’t actually manage money, so we don’t really think about raising capital. As a business model, I think it’s a slightly different business model to be raising money. So I don’t have a particular view on that. Having said that, I don’t really understand blockchain. That’s not to say ‘therefore it’s bad.’ Just that I don’t have the intellectual capacity or the ability to understand it as things stand. But yeah, it’s certainly been very successful in other markets at raising capital. And if it means raising cheaper capital and it means raising and passing some of that benefit onto the end users of litigation, then I don’t think that can be anything but a good thing.

LFJ will be hosting more panel discussions with audience Q&As throughout the year. Please stay tuned for information on future events.

Litigation Investment Sees Fewer Contract Breaches 

The long running argument in favor of the ‘up-and-coming’ field of litigation finance has been equitable access to justice. With this Robinhood type mindset, there is also new research into what other ancillary benefits litigation investment has provided.  Validity Finance's new research explores the benefits and deterrents to contractual breaches, and the role litigation finance plays in mitigating those breaches. Validity notes that in some instances, breaking contractual obligations can be a keen strategic exercise. Oftentimes, breaching an agreement has money-making benefits. In most cases, however, the organized effort and resources necessary to recover a breach simply amounts to a great headache.  Validity argues that litigation finance brings both parties to a level of excellence, notably with far fewer contract breaches than straight non-financed litigation. Validity highlights that more and more litigation finance contracting should be expected over both the near and long terms.  Check out their research to learn more on the fascinating trends related to litigation finance’s role in mitigating contractual breaches.   

Forbes Brazil Report on Litigation Finance 

Brazil’s National Council of Justice tracks an average of four years and three months for decisions for normal litigation claims. Time to execute winning decisions is attributed to ‘God only knows…’. Now some in Brazil are embarking on new ideas to speed up the process of successful litigation: Selling litigation orders.  Forbes.com Brazil issued a new story profiling metrics attributed to high values of litigation finance in capturing returns on successful litigation. Many in Brazil are awakening to the benefits that litigation funding has in store for balance sheet management. Forbes suggests that Brazilian litigation funders commonly expect to receive upwards of 15% return on their litigation investments.  Forbes notes the success that Harbour Litigation Funding has had in Brazil, funding 126 cases, and seeing 76 come to conclusion. The high profile cases include a Petrobras minority partner fraud claim.  Techniques to capture such high value claims are growing increasingly reliant on FinTech platforms, which is an interesting trend to watch as litigation funders spread their wings globally, into jurisdictions like Brazil.

Millennial Attorneys Embrace Litigation Finance 

The proverbial millennial attorney graduated law school at the height of an economic recession. Greeted with one political and bank scandal after another … followed by the mother of all pains, a global pandemic now three years running. Safe to say that the modern, young, savvy attorney of today would be keen to explore any and all benefits that could positively affect the bottom line.  PravatiCapital.com profiled attorneys with ten years or more of experience and how they can excel with the tools of litigation finance. The notion of litigation finance being a crutch for ambulance chasing legal quacks has faded away, especially for the younger generation of legal professionals, according to Pravati.  The concept seems to reside in an ability for lawyers to live the life they had always dreamed of: Winning cases and sporting a bounty of happy clientele. Pravati argues the invisible hand to meet such goals is that of litigation investment.  Check out their features to learn more.

Legal Finance and Legal Analytics 

The impact of legal analytics will soon become priceless, according to a new report. As big law embraces the next generation of technology, adoption acceleration can be tracked via balance sheet line items. Big data sometimes can be a misnomer, but now more than ever, dashboard signals indicate the investment in technology may be paying off. BufordCapital.com recently conducted a survey sampling the role of technology in modern litigation finance practices. Results showed that 98% of respondents attribute technology as a beneficial analytical tool to overall litigation success. Burford claims that adding legal analytics tools to a successful litigation practice is the future of litigation investment.  Technical analytics tools are now being engaged to evolve litigation portfolios into ‘unicorns,’ according to Buford. Traditionally, the term unicorn is attributed to a $1B corporate valuation. Refer to Buford’s research to learn more about technology and litigation finance.

Georgia Man Gets 5 Years in Prison for Consumer Legal Funding Scheme

Anyone who was wondering if the Federal Bureau of Investigation (FBI) is tracking the up-and-coming litigation finance sector, need wonder no more. A Georgia man who has been tricking litigation investigators since 2016, has met the heavy hand of justice.  Justice.gov reports that Chalmer “Chuck” Detling, II, is now a disbarred attorney, was sentenced to five years in prison this week, with three years supervised release, due to a multi-year, multi-client litigation finance fraud. According to investigators, Mr. Detling made significant efforts to take out advanced loans against medical litigation claims without his client’s knowledge. When clients got wind of Mr. Detling’s actions, it is alleged that he lied to cover his tracks.  The dozens of fraudulent litigation investment loans totaled upwards of $400,000. Yet, Mr. Detling was only ordered to pay restitution of $254,837.89. Read Justice.gov’s full report to learn more.