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Commercial Legal Innovation

Hackers Are Targeting High Value Litigation

According to Reuters, a group called the World Association Detectives is cultivating an elite group of hackers to aid in litigation case discovery. These hackers come from places such as Germany and India, and will funnel key intelligence to clients all over the world.   Reuters reports these 'hackers for hire' spy on individuals (on both sides of a case) to glean perspectives on facts and figures with the aim of securing high value litigation awards. Hackers leverage a suite of techniques, including spoofing and phishing scams on attorneys in order to gain access to privileged documents that can help sway a litigation battle. In some cases, the hackers sent emails from porn sites, and in others used scandalous news headlines to lure unsuspecting victims into clicking the links.  Claimants, lawyers and litigation funders need to be aware of the shady tactics being deployed against the industry. It seems that in the modern age, no sector is safe from malicious spying.
Case Developments Commercial

Italian Corrugated Cardboard Cartel Collective Action 

It is being alleged that Corrugated Cardboard products have been organized under a "cartel structure" in Italy over a 13-year period. Two contract structures have been identified as being designed to manipulate markets, comprising corrugated and packaging cardboard materials.  Deminor is investing in potential victims of the Cartel to join a collective action with efforts to recoup fees and damages associated with cardboard packaging price fixing. Deminor suggests that the Cartel organized sophisticated evidentiary architectures with managed competitive price severities. Estimated damage fines assessed by the Italian Competition Authority are upwards of €287M.  Deminor is seeking potential claimants who purchased packaging from Cartel companies between 2004 and 2017 to apply for review.
Commercial Deals

Post COVID-19 Legal Finance Outlook

Christopher Bogart (CEO at Burford Capital) recently published an essay profiling the legal finance industry from a post-COVID mindset. Mr. Bogart says that many lessons were gleaned from the pandemic experience. Bogart suggests that delays in litigation calendars due to the pandemic are starting to become less problematic.  Mr. Bogart notes that the legal finance industry continues to evolve as a maturing line of business for many third party investors. Commercial litigation is turning to litigation finance as part of innovative bottom line management.  Bogart explains that post COVID-19 business enterprise could be impacted by tough economic times ahead, and highlights that litigation financiers historically have been party to exponential industry growth in both boom and bust economic cycles.  Mr. Bogart concludes that the takeaway here is that attorneys around the world are turning to legal finance products and services to meet client demands. 
Commercial

The European Litigation Funders Association to Launch Operations 

Omni Bridgeway, Deminor and Nivalion AG have teamed up to organize the launch of the European Litigation Funders Association (ELFA). Tasked with helping expand legal finance innovation across Europe, ELFA will represent industry best practices before international governments and legal associations.  According to ELFA, Wieger Wielinga (Managing Director, EMEA Omni Bridgeway) will be the inaugural Chairman of the association. Additionally, Marcel Wegmuller (Co-Founder and Co-CEO of Nivalion AG) and Charles Demoulin (Chief Investment Officer of Deminor) will serve as directors.  ELFA says the organization will be open to legal finance franchises of all sizes. Prospective members will need to accept ELFA's code of conduct.  Read more about ELFA's planned organizational activities here: ELFAssociqtion.eu.
Commercial Regulatory Issues Special Features

Federal Court of Australia approves its power to make future orders for class closure

The following piece was contributed by Lillian Rizio and Max Hensen of Australian law firm, Piper Alderman.  The Full Federal Courts’ decision in Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 (Parkin) confirms the courts’ power to issue pre-mediation (and settlement) soft class closure notices to group members. The decision hints at the (positive) appetite of the Federal Court in making future orders for class closure that facilitate a just outcome,[1] simplifies the assessment of quantum prior to settlement, and reduces an element of risk in funded litigation. Opt-Out Nature of Class Actions   The Australian position on class closure orders is set out in Part IVA of the Federal Court of Australia Act 1976 (Cth) (Act). It serves as a guide for commencing Class Actions in the Federal Court of Australia, and is the reason why they are run on an ‘opt out,’ and ‘open’ basis. By virtue of the Act, class actions are commenced by a representative applicant on behalf of ‘group members.’ Group members are not required to register their interest, provide their consent, or even have knowledge of the proceedings on foot. Whilst the Act provides that a group member might ‘opt-out’ of the proceedings,[2] it does not compel one to submit information prior to settlement or judgment in order to participate. Ultimately, an ‘opt-out’ proceeding means that the size and composition of a class is difficult to quantify in pre-settlement discussions. Uncertainty as to the potential quantum of a claim complicates settlement negotiations. Background The parties in Parkin sought clarification from the Federal Court on its statutory power to issue notices to class members following two 2020 judgments handed down in the Court of Appeal of New South Wales. Both judgements considered the court’s powers pursuant to the Civil Procedure Act 2005 (NSW), in sections that mirrored the powers conferred by the Act on the Federal Court. In Haselhurst v Toyota Motor Corporation Australia Ltd t/as Toyota Australia,[3] the court found that its statutory powers did no extend to authorise it to make orders relating to class closure before settlement. It rationalised that, a class closure order extinguishes the cause of action of a group member. Therefore, that ordering the issuance of one was beyond the scope of its statutory ‘gap-filling’ power in facilitating a just outcome. In Wigmans v AMP Ltd[4] the court found that making an order to issue a notice for soft closure was contrary to the ‘fundamental precept’ of the class action regime.[5] Here, it rationalised that a group member was entitled to not act prior to settlement, or judgement. Questions In seeking clarity on the courts’ statutory powers, the parties in Parkin filed applications which put two questions to the Court. Namely, whether:
  1. section 33ZF of the Act permitted the Court to make orders to notify group members that, if they failed to register their interest, or opt out by a given date, they would remain a group member, but not be entitled to benefit from settlement (subject to Court approval) (Question One); and
  2. section 33X(5) permitted the court to order that group members be notified that in the event of a settlement, the Applicant would seek an order which (if made) would prevent a group member that had failed to register their interest, or opt out by a given date, from being entitled to benefit from settlement (Question Two).
Findings and Discussion Ultimately, the court found that, whilst no power under s 33ZF of the act was ‘enlivened,’[6] the specific power available under s 33X(5) permitted the court to issue the orders sought by the Applicant in Question Two. As to the precedential decisions from the Court of Appeal in New South Wales, the court in Parkin found that:
  1. the decision in Wigmans[7] was ‘plainly wrong.’ Here, the court affirmed that s 33X(5) conferred a power that was ‘broad and unqualified’[8] with respect to making an order that a notice be issued to group members at ‘any stage’ and of ‘any matter’[9]; and
  2. contrary to Wigmans[10] assertion on ‘fundamental precept,’ the court held that whilst group members may take a passive role in proceedings, they can also be required to act prior to settlement, and that the court may exercise its statutory powers to motivate them to do so.
In its discussion relevant to Question One, the court found that the power conferred by s 33ZF was discretionary and ‘gap filling.’[11] On the facts, the court did not consider that a ‘gap’ applied, given the relevance of s 33X(5) in providing a resolution to the issue at hand. Interestingly, however, the court hinted at its sentiment towards potential future application of s 33ZF in the following comment: ‘one could not foreclose the possibility, depending upon the circumstances of the case, that such an order could advance the effective resolution of proceedings.’[12] Conclusion – What does it Mean The decision of the Full Federal Court, means that parties can expect to be awarded notices that identify the intention of ascertaining future class closure orders in proceedings. This has resulted in the ratification of a strategy in which parties can agree to obligate group members to affirm their interest, or opt-out prior to mediation (for settlement purposes). As for the future of class-closure, the court comments on the potential of the issuance of class closure orders enlivened by s 33ZF in instances where they effect the effective resolution of proceedings. Going forward, competing interpretations of the statutory powers conferred upon the courts leaves room for the High Court to interpret the matter, or perhaps, call for statutory reform.  Given the positive findings as to the ability for pre-mediation notices to be issued, the Federal Court will likely be the preferred jurisdiction for class actions commenced on an open class basis. About the Authors Lillian Rizio, Partner Lillian is a commercial litigator with over 14 years’ experience in high stakes, high value litigation. Lillian specialises in class action, funded and commercial litigation, with expertise across a broad range of sectors including financial services, energy & resources, insurance and corporate disputes. Max Hensen, Lawyer Max is a litigation and dispute resolution lawyer at Piper Alderman with a primary focus on corporate and commercial disputes. Max is involved in a number of large, complex matters in jurisdictions across Australia. For queries or comments in relation to this article please contact Lillian Rizio, Partner | T: +61 7 3220 7715 | E:  lrizio@piperalderman.com.au -- [1] Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [144]. [2] Part IVA Section 33J Federal Court of Australia Act 1976 (Cth). [3] (2020) 101 NSWLR 890. [4] (2020) 102 NSWLR 199. [5] Wigmans v Amp Ptd (2020) 102 NSWLR 199 at [89]. [6] Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [1]. [7] Wigmans v AMP Ltd (2020) 102 NSWLR 199. [8] Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [111]. [9] Ibid. [10] Wigmans v AMP Ltd (2020) 102 NSWLR 199. [11] Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [13]. [12] Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [144].
Commercial

New UK Litigation Funder Rankings 

Conducted by over 200 researchers in more than 200 global jurisdictions, Chambers Research collates more than 6,000 tables that rank some of the world's most important business enterprises.  Chambers has released their UK litigation funding rankings, although they have yet to release their methodology, leaving many to wonder how they arrived at their results. That said, the Chambers Research team organizes their list into five bands, as detailed below:  Band 1 Bench Walk Advisors LLC Harbour Litigation Funding Limited Therium Capital Management Limited Band 2 Augusta Ventures Burford Capital Woodsford Litigation Funding Band 3 Balance Legal Capital Litigation Capital Management Band 4 Asertis Orchard Global Asset Management Omni Bridgeway Band 5 LionFish Litigation Finance Some prominent funders are notably absent, while others are curiously listed. What are your thoughts?
Commercial Deals

LegalPay Exits First Successful Insolvency Investment 

LegalPay is proud to announce the firm's first successful exit. In less than nine months, LegalPay was able to achieve a 26% return for investors who funded a facility to rescue Yashomati Hospitals.  According to VCCircle.com, LegalPay's CEO Kundan Shahi calls the Yashomati Hospitals deal a landmark deal.  Mr. Shahi says that the nine month turnaround illustrates LegalPay's operational 'excellence.' Shahi notes that third party funding can be a great opportunity for firms looking for help in restoring their business, similar to what Yashomati Hospitals achieved here. Click here to read more about the deal. 
Case Developments Commercial

Therium Found Liable for HSBC Court Fees 

The ECU Group Plc recently lost a claim against HSBC Bank, alleging that HSBC was culpable for front running and manipulation of international markets. In a decision that has implications for the funding sector, Therium has been held liable for costs.  One Essex Court reports that Therium has funded a wide variety of ECU claims. Yet the HSBC claims were successfully defended, and Mrs Justice Moulder handed down judgment in a third-party costs application made by HSBC Bank Plc, leaving Therium holding the bag. Therium was held liable for all costs incurred by HSBC from the date when costs were incurred, rather than the execution date of the funding agreement, which was a later date and would have resulted in less costs to cover.  Click here to read more about the case.
Commercial Legal Innovation

The Merging of Finance and Litigation Teams 

Now more than ever, in-house legal and finance professionals can collaborate to build solid affirmative recovery teams. The notion of siloed teams is an obsolete economic framework when it comes to litigation finance, according to new research published by Burford Capital. Burford Capital suggests that the stereotypical barriers between corporate litigation and finance teams should be dismantled as part of firm wide innovation.  The notion that litigation teams incrementally increase firm expenses should be considered antiquated thinking. Even more, Burford suggests that new revenue channels are available to teams that construct aggressive affirmative recovery systems between legal and finance teams.  Click here to read more about Burford's insights on this matter.
Announcements Consumer

Mustang Litigation Funding of Wayzata, Minnesota; Mustang Specialty Funding I and II; James “Jimmy” Beltz, and Kevin Cavanaugh Remove Legal Bay Lawsuit to New Jersey Federal Court

Legal Bay, The Lawsuit Settlement Funding Company, announced today that on June 15, 2022, its recent New Jersey State Court lawsuit filing against Mustang Legal Funding and its principals has been removed to the United States District Court for the District of New Jersey, Newark Vicinage, by the Mustang Entities, James Beltz, and Kevin Cavanaugh. The case now bears the following docket name: Legal Bay LLC v. Mustang Funding LLC, et al., No. 22-cv-3941 (ES) (JBC). The matter has been assigned to District Judge Esther Salas and Magistrate Judge James B. Clark, III. Previously, Legal Bay had notified its business contacts of the suit's filing, but had not made any public statements. With the removal of Legal-Bay's action to Federal Court, Legal Bay believes that the time is now appropriate to disseminate a notice to the ligation funding industry about its lawsuit and its importance to the industry's direction and commercial standards. Chris Janish, CEO of Legal Bay, commented, "Our complaint against the Mustang entities and their principals is a public record at this point, and we will let the legal process play out in Federal Court. Legal Bay's purpose in pursuing this matter is not only to protect its own interests from the Mustang defendants' misconduct, but to send a message that their documented, abhorrent behavior is not limited to the Mustang defendants, but commonplace in the litigation and pre-settlement funding industry. These issues will hopefully, at long last, be formally addressed by Legal Bay's lawsuit." Legal Bay has asked the court to dissolve its joint venture with the Mustang entities and is asserting other equitable and legal claims against the Mustang defendants. Legal Bay has reason to believe that, in addition to the equitable relief it is entitled to, its monetary damages are substantial. The exact amount of those damages is not yet fully calculable, but will be determined in due course during the litigation. Janish added: "While we had hoped to avoid the need for a lawsuit, our hands were tied by Mustang's continuing misconduct. Legal Bay looks forward to continuing their work with the industry's leaders and regulators in order to find better ways to protect members engaged in formal business relationships from deceptive and anti-competitive business practices in the industry, as well as initiatives for better disclosures to consumers where previous legislation has fallen short." Legal Bay is represented by Fox Rothschild LLP within its Morristown, New Jersey office, and Timothy P. Kebbe, Esq. of Hawthorne, New York. Mustang and the other defendants are represented by Kasowitz, Benson, Torres, & Friedman LLP, of Manhattan.
Case Developments Commercial

WestConnex Construction Claim Funded by Omni Bridgeway Australia 

The Australian office of Omni Bridgeway has organized funding vehicles for land owners impacted by WestConnex roadway construction in Sydney.  Omni says they have partnered with Dentons Australia to puruse a claim against WestConnex, which erected a 33 kilometer underground motorway. The blueprint was designed to connect New South Wales avenues, and was undertaken in conjunction with the Australian government.  Litigation funding agreements will be offered to help repair damage from tunnel vibration, along with water and soil damage from the construction. You can find more information at https://WestConneXClassAction.com.au.
Consumer

Cash4Cases Inc. Found Guilty of Funding Fraud

Jaeson Birnbaum, suspected owner of Cash4Cases Inc. has been found guilty of a felony in New York State for his role in a litigation funding fraud scheme. Mr. Birnbaum stands to be expelled from the New York State Bar Association for funding crimes. The Postman 24 reports that Mr. Birnbaum conned investors out of funds to run his Cash4Cases Inc. scheme. In September, Birnbaum pleaded guilty to securities fraud. On June 21, a New York appeals court confirmed recommendations for Birnbaum being disbarred. You can read more about the litigation funding scam here.
Commercial Deals

Augusta Ventures on Cross Border Funding 

Augusta Ventures has published new research into pitfalls associated with self funding cross border dispute resolution. Augusta suggests that international litigation should be supported by third party funding rather than self funding practices that may jeopardize balance sheets. Augusta says that third party funding can foster conditions that promote expeditious international dispute resolutions. Driving better outcomes with legal costs off balance sheet is becoming a priority for large, international companies.  Furthermore, Augusta says funders can help clients with solutions associated with asset recovery. Click here to read more about Augusta's findings.
Case Developments Commercial

Federal Court of Australia Rules Litigation Funding Not Managed Investment Scheme

An Australian Federal Court has ruled that litigation finance agreements do not fall under rules regulating managed investment schemes under the Corporations Act of 2001. Many litigation finance scholars are hailing the decision as a win for the industry.  According to the ruling, the characterization of litigation funding arrangements as managed investment schemes, "is a case of placing a square peg into a round hole." Furthermore, the ruling suggests that for litigation funding to be considered responsible to the Corporations Act of 2001, the agreement would need to embody strict characteristics both in context and purpose.  Click here to read more about the ruling in detail.
Commercial Regulatory Issues

Insurance Europe Joins Associations Calling for Regulation 

Actuarial Post reports that Insurance Europe has joined a group of associations lobbying European Union legislations to engage regulation to rein in unsavory third party litigation funding practices. According to the Actuarial Post, the profit model behind litigation finance can foster social inflation. The report suggests that third party funders are forced to consolidate profit models, sometimes at the disadvantage of claimants. Actuarial Post says that key advantages can emerge from the European Union enabling regulation to police third party funders. Other associations involved with the letter include Europe (A4E), AmCham EU, BUSINESSEUROPE, DIGITALEUROPE, DOT Europe, EFPIA, Eurochambres, EuroCommerce, European Banking Federation, European Justice Forum, Insurance Europe, MedTech Europe and the U.S. Chamber Institute for Legal Reform.
Commercial People Moves

Omni Bridgeway Names Mark Wells Global Head of Portfolio Management 

Mark Wells has been named the Global Head of Portfolio Management at Omni Bridgeway. From Omni's London Office, Mr. Wells will be tasked with expanding the firm’s capital management structures, while also leading the financial structures team.  Mr. Wells comes to Omni from Calunius Capital. Previously, Mr. Wells spent two decades in derivatives trading at JP Morgan Chase and Toronto Dominion.  Mr. Wells says that he plans to help lead Omni Bridgeway's continued growth, particularly in the EMEA region.
Commercial Deals

International Legal Finance Association on Increasing Liquidity

The Global Legal Post reports that litigation financiers are experiencing increased cash flows with assets jumping more than 11% over the last year. With the jump in figures, Gary Barnett (Executive Director, International Legal Finance Association) says litigation finance is being widely accepted as a professional financial utility to access justice. Global Legal Post says that hedge funds are starting to look to litigation finance as an investment vehicle. Meanwhile, only 10% of cases presented to funders ultimately obtain funding. Funders are also considering a wide variety of additional products and services to offer potential customers.  Raymond van Hulst (EMEA Executive Director at Omni Bridgeway) warns that high liquidity may suffer in the near future. This, as inflation and interest rates are rising. Mr. van Hulst suggests that given these constraints, only the most attractive litigation finance franchises will be successful over the long term.
Announcements Commercial Deals

DLA Piper launches global partnership with UNHCR

DLA Piper today announces a new partnership with the UN Refugee Agency (UNHCR) that will see the two organisations working collaboratively to develop innovative responses to the global refugee crisis, enhance refugee integration and advocate for impactful, systemic change. During the first three years, DLA Piper will provide pro bono support worth over $3.7m and contribute financially to the agency’s global programmes.

The partnership has been developed in collaboration with UK for UNHCR, an organisation responsible for developing humanitarian partnerships with British corporations that support global relief efforts for refugees.

DLA Piper and UNHCR already have a long-established relationship spanning over ten years. Since 2012, the firm has provided more than 8,500 hours pro bono legal support valued at over USD 3,000,000 to UNHCR. This new phase of the partnership will focus on the co-development of innovative responses to the refugee crisis, including innovative finance models and impact investment, among other key areas.

According to UNHCR, there are now more than 100 million people who have been forcibly displaced from their homes. The number of displaced people has increased every year over the past decade and now stands at the highest level since records began. These unprecedented levels of displacement represent a global humanitarian emergency. The impact is especially pronounced on children, who account for 30% of the world's population, but 42% of all forcibly displaced people.

DLA Piper has long-standing commitment to working to protect the rights of refugees, displaced people and those who are stateless, with a particular focus on supporting the most vulnerable groups, including women, children and LGBT+ people. Human displacement has a number of components that are relevant to businesses as it affects how companies manage the relationship with their workforce, their value chain, the societies in which they operate and the political environment. Over the past ten years, the firm has worked to address the root causes and consequences of displacement by providing legal recognition for people on the move and supporting inclusion into destination countries.

This partnership with UNHCR is an extension of this work and DLA Piper’s ongoing commitment to protecting and upholding the rights of displaced people.

Simon Levine, Global Co-CEO, DLA Piper, said: “We are honoured to enhance our partnership with UNHCR. This is a unique opportunity to contribute to the organisation’s work and, ultimately, support displaced people all over the world. The current crisis in Ukraine is just one example of why UNHCR’s work is so critical.

“Legal protections are especially important when people’s lives are uprooted and they face challenges such as lack of basic shelter, violence, exploitation and restrictions on freedom of movement. As part of this new phase of the partnership, we will be working with UNHCR to support a fairer, more effective system, to develop new approaches and to help foster inclusion as people rebuild their lives.”

Jean-Pierre Douglas-Henry, Managing Director, Sustainability & Resilience, DLA Piper added: “This exciting partnership means we can amplify our work to protect the rights of displaced people globally. The partnership will involve innovative approaches to long-term issues that we hope will lead to positive and lasting change. At this crucial time our firm is excited to be collaborating with an organisation that is focused on building a better future for refugees.”

Emma Cherniavsky, Chief Executive of UK for UNHCR said: “We greatly value this new partnership with DLA Piper which builds on ten years of valuable support for UNHCR’s work. People fleeing conflict and persecution are amongst the most vulnerable people in the world, with many on the front lines of the climate crisis or facing significant barriers to employment, and DLA’s partnership will help deliver innovative solutions to support them.”

About DLA Piper

DLA Piper is a global law firm with lawyers located in more than 40 countries throughout the Americas, Europe, the Middle East, Africa and Asia Pacific, positioning us to help clients with their legal needs around the world. In certain jurisdictions, this information may be considered attorney advertising. dlapiper.com

Commercial Deals

Video: Aera-IP on Litigation Finance in Europe and Abroad  

Patent and trademark litigation is forecast to increase as Europe’s Unified Patent Court (UPC) opens in Q4-22, or Q1-23. Aera-IP is a Nordic consultancy focused on serving clients with various EU IP claims. Aera-IP has published a series of videos profiling what legal professionals should expect when the UPC opens, and what funding opportunities may be available to inventors.  Aera-IP’s video discussions on the future of IP litigation are expansive, with four features totaling nearly two hours of discussion. Aera-IP features Stephanie Southwick (Investment Manager and Legal Counsel at Omni Bridgeway), in a near half-hour video discussing litigation investment insights for funding EU IP claims.  With the opening of Europe’s UPC, many are forecasting a wide range of international patent and trademark claims that could set historic precedent in terms of inventor protections. Click here to check out Aera-IP’s video discussions.
Commercial Legal Innovation

The Value of Appellate Funding 

The time and effort behind multi-year litigation is at the mercy of the appeals process. Litigation finance is rapidly being engaged to fund various approaches to the appeals process. Furthermore, quality appeals financing is often engaged in the form of judgment preservation insurance.    Woodsford has published the firm’s approach to investing in cases associated with appellate proceedings.  Bringing a case to court is contingent on financial planning and liquidity. The same can be said for navigating the appeals process. The concept of navigating the appeal of an award is generally not part of per-appeal litigation investment contracts. Those seeking to overturn claim awards via the appeals process may find it daunting  to be on the other end of claimants and their litigation funders, with ample resources at their disposal.  Adversaries often seek to leverage appellate pre-settlements as a negotiation exercise. Judgment preservation insurance is being embraced as a tool that mitigates recovery delays associated with the appeals process.
Commercial Legal Innovation

New York as Capital of International Arbitration Demand

Serving as the center of global finance, New York may soon grow to become the world’s capital of international arbitration proceedings. Today, New York is ranked sixth in the world for arbitration proceedings, tied with Beijing, China. New insights published by Burford Capital suggest that market forces are fostering a scenario for New York to move up arbitral ranks as world markets seek relative stability. This, as New York’s court system has historically been recognized as one of the world’s most legitimate, while also embracing responsible legal innovation.  Buford Capital’s research profiles international arbitration as the most agreeable way to settle cross-border disputes. Global jurisdictions such as Latin America, the Caribbean, the Middle East and North Africa are expected to experience an increase in claims seeking international arbitration as a solution to settle differences.  As global financial markets are forecast to ebb and flow over the near future, Burford seems to suggest that New York legal innovation has systematically survived the test of time. Making New York an agreeable destination for quality international arbitration proceedings.    Burford’s research points to a forecasted increase in international arbitration surrounding the construction industry. Similar to leading quality innovation in law, New York is also home to some of the world’s most notable success in construction. As investment in construction-based international arbitration proceedings is expected to increase, New York may take advantage of market share opportunities where possible.
Commercial

Legal Teams Support CEO and CFO Investment Vehicles 

Traditionally, CEOs and CFOs have approached legal expenses from a risk averse perspective. Yet litigation finance is increasingly being understood as a modern instrument of legal innovation and balance sheet protection. Something has got to give.  Burford Capital discusses these concepts in a new LinkedIn post that suggests corporates who engage litigation finance will reap rewards. Burford seemingly suggests that those who are not looking to leverage litigation investment as a tool will succumb to loss of market share. Burford suggests that CEOs and CFOs who design a portfolio of litigation assets may be respected as best-in-class in terms of financing quality litigation.   Litigation portfolio architecture is innovating litigation finance from a one case risk mitigation utility to a bundle of cases that hedge overall corporate and legal risks. Buford also suggests that law firms that engage in ethical litigation finance practices stand to inherit reputational benefits typically associated with legal innovation.   
Commercial Regulatory Issues

LexShares Debates Delaware’s Legal Finance Disclosure Guidelines  

Litigation Finance Journal has been covering Delaware’s Chief Judge, who has ordered  disclosure of litigation finance agreement details, in a move the court claims helps provide funder transparency (akin to KYC/AML). LexShares has published a debate on the significance of Delaware’s disclosure mandate, discussing the implications for quality United States regulation of the litigation finance industry.  Lexshare’s insights suggests a hawkish approach to disclosures, questioning if claimant interests are being promoted or protected. Traditionally, third party funders have been skeptical of mandatory disclosure of litigation agreements. LexShares seemingly suggests that common regulation of litigation investment is not on the horizon in the United States.  Litigation Finance Journal has reported the World Bank’s Settlement of Investment Disputes has adopted a common set of rules and regulations for third party legal investors. Meanwhile, in Singapore and Europe, universal rules and standards are being discussed as imminent requirements for the industry to reach its full potential.
Announcements Commercial People Moves

Apex Litigation Finance to appoint Stephen Allinson as ‘Head of Legal’

Litigation funding specialists, Apex Litigation Finance have announced the appointment of Stephen Allinson, Solicitor and Licensed Insolvency Practitioner, as their new Head of Legal. Stephen is a credit, debt and insolvency specialist who has worked in the field since 1987. His extensive background also includes setting up his own consultancy and before that he was a Business Recovery and Insolvency Partner at a major law firm. As well as acting as a consultant within the legal field, Stephen also pursues other projects in the legal, insolvency and credit fields, and is a Visiting Lecturer at the University of Law. In addition to Stephen’s extensive licensed insolvency work, he has also been an Associate Member of the Association of Property and Fixed Charge Receivers. A multi-disciplinary consultancy whose council is selected through leading members of combined professions, to offer professional support in property, legal and insolvency matters. Stephen says: "I am absolutely delighted to be joining the growing team at Apex. Without a doubt, litigation funding is now a vital area in the litigation sector. With its concentration on mid-tier claims, Apex is well placed to become a very important player in this market. I am looking forward to working with Maurice and the team, and with the many solicitors and insolvency colleagues who will, no doubt, wish to discuss opportunities with us." Furthermore, Stephen is no stranger to the position of Chairman as he was appointed Chairman of the Board of The Insolvency Service in January 2017, serving in that role until May 2021, and is also the Chairman of the Joint Insolvency Examination Board (JIEB), a member of ICAEW Investigation Committee and a Chairman of the Methodist Church Disciplinary Process. Apex CEO Maurice Power says: “We are excited to announce Stephen’s appointment and to welcome him to our growing team. His skill and experience will add real value to the Apex proposition and further cement our position as a litigation funder of choice for the insolvency sector.” Apex was proud to attend and to sponsor the first in person R3 National Conference since COVID. The Apex team thoroughly enjoyed greeting new and existing contacts and demonstrating how the Apex funding model is a perfect fit for insolvency litigation. As Apex continues to grow the team, they are keen to hear from interested individuals from various disciplines, including legal, insolvency, litigation funding, AI development, and business development. Specific litigation funding experience is not essential. Apex will look at an individual’s skillset and identify those who can contribute to their success. Interested applicants are asked to contact Apex via enquiries@apexlitigationfinance.com by sending a current cv and details of why they would be the right fit for Apex. About Apex Litigation Funding: Apex Litigation Finance Limited brings together experts from the legal and finance sectors to provide third party litigation funding to litigants (corporates, liquidators, and individuals) who are unable to pursue a claim due to the prohibitive cost of litigation. Although the claim may have merits, uncertainty over the total costs and the potential risk of being ordered to pay the defendant’s cost, should they lose the claim, prohibits access to justice for many claimants. Our process is augmented by artificial intelligence systems to assess risk. As a professional litigation funder, Apex will make available funds to pay legal and other costs associated with a claim in return for an agreed share of any successful return. If there is no recovery, or if the claim is lost, there is nothing to repay.   For details, please see www.apexlitigation.com
Commercial Regulatory Issues

Litigation Finance Confidentiality Concerns

As litigation finance grows in popularity, the industry will be on the hook for responsibility associated with confidential client information. Right now, litigation investment facilities hold inherent third and fourth party risks associated with confidential information. Sentry Funding has published insights suggesting that litigation financiers have been overly focused on assessing potential client awards, and have forgotten to respect legal fundamentals associated with client confidentiality.  Sentry Funding suggests that a robust confidentiality agreement is the first step in mitigating risk associated with confidentiality. Sentry suggests that with Europe’s upcoming patent and trademark marketplace expansion, European litigation investment professionals should be extremely cautious. Patent and trademark protection has a long history of confidentiality breaches, which could pose problems for plaintiffs.   Sentry’s research underscores the importance of litigation investors spearheading legal innovation through exemplary confidentiality practices, and outlines several steps claimants can take to ensure proper confidentiality.
Commercial Deals

Potential Uptick in IP Finance and Investment on the Way

Law Business Research’s IAM-Media.com has published new guidance that the United States and European patent and intellectual property marketplace will soon experience increased activity. West U Capital is making headlines in the United States as a powerhouse with a patent and trademark pedigree hard to match. In other news, Europe will soon open its Unified Patent Court (UPC), which is rumored to represent over 24 of the 27 European Union member states. Over 40 countries are eligible to join the UPC, helping to solidify the notion that increased IP marketplace activity should be expected forward.  IAM-Media.com has collated an outline of several global patent and trademark marketplace events for litigation investors to consider. Specifically, trends point to an inflow of capital in patent, trademark and intellectual property portfolio building. Trends also suggest a growing disparity between United States and European risk as trends point to Europe’s UPC being a conduit for aggressive IP claims against US enterprises.  As an added bonus, Litigation Finance Journal has included 33 highlights to Citibank’s Metaverse and Money report that includes several IP and trademark issues expressed by leaders in the United States, Europe and Russia, that could become part of UPC portfolios.
Case Developments Commercial Special Features

Funding a Credit Crunch: How Litigation Finance Has Fueled Global Actions Against Visa and Mastercard

Mastercard and Visa are no strangers to legal action, having endured class actions and legal challenges all over the world. Currently, a collective action funded by Bench Walk Advisors accuses the credit giant of illegally overcharging Multilateral Interchange Fees (MIFs) in the UK. It has been asserted that MIFs, here charged as a percentage of each purchase, are unlawful. If the courts agree, merchants will be compensated for the money lost—possibly with interest. A similar case was recently settled in Canadian courts. Merchants across Canada will share a $131CA million settlement for businesses accepting Visa and Mastercard since 2001. Given these developments, we thought it prudent to take a look back at the Visa and Mastercard claims. What happened? How did we get here? How are litigation funders impacting the case? And what can we expect from all of this going forward? So, without further ado… The Story Behind the Case Visa and Mastercard have been accused of overcharging merchants on multilateral interchange fees, or MIFs. This fee is charged to the merchant’s bank in every credit card transaction. It also makes up the largest portion of the Merchant Service Charge—which is assessed simply so that the merchant may accept Mastercard and Visa payments from customers. Unlike other types of merchant fees, MIFs are not set with regard to market rates. In this case, the credit card companies are accused of unlawful and anti-competitive practices. Because merchants have no choice but to pay these fees, lest they forego the ability to accept credit card payments—Visa and Mastercard appear to be taking full advantage of the leverage they maintain over merchants. Merchants and banks pass these charges on to consumers, which means everyone is adversely impacted by this type of overcharging. The Upcoming UK Class Action The UK class action was launched in August of last year with funding from Bench Walk Advisors. Bench Walk is taking over for Therium Capital Management, the original funder slated to finance the exceptionally large claim, valued at GBP 15 billion. Interestingly, the Competition Appeals Tribunal (CAT) scrutinized the funding agreement, and observed that there was enough funding in the agreement to cover the potential costs of the claim, even with extensive disclosure motions. Bench Walk is said to be providing up to GBP 45.1 million in funding, with an additional GBP 15 million slated for adverse costs. The CAT has found estimated costs to be roughly GBP 32.5 million for the claim, leaving plenty in the budget should disclosure motions rain down, or the claimant class experience any additional unforeseen consequences. In August of 2021, a London court approved the class action. Claimants assert that as many as 46 million Britons may receive roughly GBP 300 each if the case is successful. As is de rigueur in funded cases, Mastercard is calling the class action “spurious” and asserting that it’s a glib and cynical ploy to make money. Ironic, no? According to financial ombudsman Walter Merricks, these consumer-focused class actions are designed to hold big businesses responsible for misdeeds. Noted class action focused firm Harcus Parker is helming the UK case, which includes merchants and customers who used credit cards between May 1992 and June 2008. In 2015, UK law capped MIFs at .3% on consumer credit transactions, and .2% for consumer debits. While the cap was not applicable to corporate or inter-regional transactions, Harcus Parker asserts that such MIFs should be zero. Bench Walk Advisors’ funding will help more than 100,000 companies pursue claims against Visa and Mastercard. The Case in Canada  Settlements with Capital One, Bank of America, National Bank, and others have been reached with merchants. Lawyers for the Canadian class action include Consumer Law Group, Branch MacMaster LLC, and Camp Fiorante Matthews Mogerman LLP. The settlement includes a provision giving merchants the ability to make surcharges (up to a cap) for the next five years minimum. This codicil seems less consumer-focused, as the end result will be customers paying surcharges with each credit card purchase. Consumers may find this especially galling, given recent inflation and a COVID-inspired increase in credit card shopping, both in-person and online. In Canada, Mastercard and Visa have settled with class action participants to the tune of $131 CAD. Merchants will be reimbursed for MIFs paid on credit transactions from 2001 forward. Smaller businesses (those which make under $5 million in yearly sales) may claim as much as $30 per year, up to a maximum reimbursement of $600. Both settlements have been approved by the courts. Meanwhile, none of the banks involved have not admitted any malfeasance. The Canadian class action did not rely on traditional litigation funding. Rather, lawyers were compensated from settlement funds as approved by the courts. Does this mean that third-party legal funding isn’t necessary for a successful class action in Canada? Not necessarily. The differences between funded class actions and cases taken on contingency can vary widely depending on the case at hand. In the United States In September of last year, Visa and Mastercard were both ordered to face antitrust class actions over MIFs by a Brooklyn judge. The class action includes claimant merchants who accepted Mastercard or Visa between 2004 and 2019. A settlement was reached in 2012, but was not approved by several large merchants. It was then overturned on appeal—resulting in a new settlement offer of a whopping $900 million more than the original settlement. A representative from Mastercard, which vociferously defended against the antitrust and unlawful fees allegations, stated that the company is pleased to have reached an agreement. That’s not surprising, given how frequently the company finds itself in court on the same type of accusation. Again, a Mastercard spokesperson asserted that the class actions were brought by “US-based lawyers and litigation funders primarily focused on making money...wasting the court’s time...” It’s noteworthy that in the US case, major retailers may see an even larger windfall. Walmart, Target, Kroger, and other large merchants have opted out of the settlement in the hopes of striking a better deal. A court has found that the credit card companies violated antitrust laws—ordering a preliminary settlement amount of between $5.5-6.25 billion. In short, US merchants may be reimbursed for interchange fees overpaid for the past 15 years. The preliminary settlement was approved by the courts. However, the Second Circuit Court of appeals has entertained objections to the settlement approval in March of this year. It’s unclear when a decision will be reached. Mastercard Around the World Mastercard in particular is no stranger to lawsuits, particularly those surrounding interchange fees. Jurisdictions around the world have pursued, or attempted to pursue, class action cases against the credit giant. These include:
  • European Union: 2012—resulting in Mastercard repealing earlier pricing changes and promising greater transparency in pricing.
  • France: 2009—resulting in Mastercard committing to reduce interchange fees across the board.
  • Poland: 2007—determined Mastercard’s interchange fees to be unlawful, while the Protection of Competition and Consumers disagreed. An appeal is pending
  • Hungary: 2009—Visa and Mastercard both found to have violated competition laws and fined $3 million.
  • Italy: 2010—Mastercard fined 2.7 euros, though this was annulled the following year.
  • United States: 2012—Mastercard opted out of a settlement of $7.25 billion, reducing the settlement amount to $5.7 billion. This is still a record-setting amount of an antitrust class action.
How are Litigation Funders Helping? As the appeals are being decided and the claims period draws near, a number of funders are offering post-settlement funding to claimants with payouts en route. This provides an avenue for struggling merchants to gain access to reimbursements without waiting. For small businesses hurt by rampant overcharging, this can be tremendously helpful. We can see from this that Litigation Finance can do more than ensure that class actions are funded and that claimants have their day in court. The industry can also monetize payouts, offering choices not previously available to members of a class. In short, it’s not just access to justice that the Litigation Finance industry provides, but access to much needed funds that can keep business afloat, especially during turbulent economic times. So What’s Next? All eyes will no doubt be watching for the outcome of the UK anti-competition case against Visa and Mastercard. The European Commission has already declared that Mastercard breached its duty when setting its fees, thus the meritorious nature of the claim should never have been in question. It is now up to a court to decide the culpability of the credit card giants, as per UK law. One interesting final note: you might have been wondering how a financial ombudsman such as Walter Merricks can possibly discern the specific payout that each of the 46 million or so claimants deserve? Well, the answer is he likely can’t, but that won’t affect the outcome of the case. The Supreme Court has found that the impossibility of Merricks’ task does not take defendants off the hook. Instead, Merricks may seek an aggregate award with data that affirms an appropriate amount of damage, even if he cannot apply a methodology that is fair to everyone in terms of a final payout. As opponents of the action have duly noted, the court’s ruling could potentially “open the floodgates” to a bevy of future class actions, similar in scope to what we’re witnessing here. Perhaps ironically, many in the funding community are nodding their heads, as the potential for large, US-style class actions in the UK is viewed as a positive development – greater access to justice, after all. We will continue to bring you updates on the Merricks claim as it winds its way through the UK legal system.
Announcements Commercial People Moves

Omni Bridgeway APAC Leadership Developments

Omni Bridgeway (ASX:OBL), the world’s largest legal risk finance and management team, is pleased to announce new appointments in its Asia Pacific leadership team. Managing Directors and co-Chief Investment Officers (APAC) Oliver Gayner (Sydney) and Tom Glasgow (Singapore) assume new roles as Managing Directors and co-Chief Investment Officers (APAC), responsible for jointly overseeing all aspects of Omni Bridgeway’s investment management, due diligence processes and operations across the Asia Pacific region. Tom has led Omni Bridgeway’s Asian operations since joining the company in 2017 and has built the largest and most respected legal risk finance and management team in the Asian region, applauded by clients and recognised and awarded by industry participants and commentators. In addition to his expanded regional role, Tom will also manage Omni Bridgeway’s international arbitration portfolio, leading our team of arbitration specialists across the globe. Oliver joined Omni Bridgeway in September 2015 and is a highly experienced legal risk financier with an international practice who has played an integral role in Omni Bridgeway’s expansion into Asia, EMEA and Latin America. Omni Bridgeway’s APAC team serves clients across Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pacific Islands, The Philippines, South Korea, Vietnam and beyond. The joint appointment advances the ongoing global integration of Omni Bridgeway’s business operations, and also reflects the cross-border nature of funding in the region. Managing Director - Transformation We also congratulate Tania Sulan who assumes a newly-created role as Managing Director – Transformation, in which she will oversee the implementation of strategic projects for the Board. Tania joined Omni Bridgeway in November 2007 and previously led the Australia New Zealand team as Chief Investment Officer – ANZ, and prior to that she led the establishment and growth of Omni Bridgeway's Canadian operations as Chief Investment Officer – Canada. Andrew Saker, Omni Bridgeway’s Managing Director & CEO and Chief Strategy Officer, said: “These exciting appointments recognise the immense talent in our leadership team and reflect the ongoing  integration and transformation of our business, from its origins as a founder of the dispute finance industry, to our present status as a global fund manager, specialist in legal assets, and the largest legal risk management team in the world.” ABOUT OMNI BRIDGEWAY Omni Bridgeway is the global leader in financing and managing legal risks, with expertise in civil and common law legal and recovery systems, and with operations around the world. Omni Bridgeway offers dispute finance from case inception through to post-judgment enforcement and recovery. Since 1986, it has established a record of financing disputes and enforcement proceedings.
Announcements Commercial

ILFA Announces Inaugural International Legal Finance Conference in New York

The International Legal Finance Association (ILFA) today announced it will host its first annual International Legal Finance Conference on Monday, October 24, 2022, at the prestigious Morgan Library in New York City.

The conference will draw together legal and finance leaders from across the world—including providers of legal finance, investors, law firms, corporate general counsels and CFOs to discuss the best practices in managing litigation and arbitration costs and risks and monetization of legal assets. A range of speakers from across the legal finance ecosystem will present on the industry’s most substantive topics such as managing in-house legal budgets, managing financial and reputational risk, the impact of global economic trends on liquidity pressures, enforcement and monetization of awards, law firm financing and portfolio funding.

“As the world’s only global trade association for commercial legal finance, we are excited to launch this industry-leading conference,” said Gary Barnett, Executive Director for ILFA. “The event will provide a forum for legal finance professionals and users of legal finance including corporate counsel to explore the role of litigation finance in today’s global marketplace as a cost and risk management tool, as well as for investors in legal assets.”

“The conference marks an exciting moment for ILFA and comes at a pivotal time for our industry,” said Neil Purslow, ILFA Chairman and Co-Founder and CIO of Therium Capital Management. “Conference attendees will have a unique opportunity to learn from leaders in the field about how it can be used as an integral part of their cash management strategy.”

To register for the legal finance conference or view additional details, visit http://conference.ilfa.com/

About the International Legal Finance Association

ILFA was founded to represent the global commercial legal finance community, and its mission is to engage, educate and influence legislative, regulatory and judicial landscapes as the global voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA is incorporated in Washington, DC, and will have chapter representation around the world. For more information, visit www.ilfa.com and find us on Twitter @ILFA_Official and LinkedIn.

Case Developments Commercial

Therium Funds Multi-Billion Pound Action Alleging Truck Cartel Price Collusion 

Six producers of big rigs have allegedly conspired in a 14-year scheme to defraud government regulators over emissions mandates. The Competition Appeal Tribunal has approved a £2B claim marking a historic first for United Kingdom collective actions. The Road Haulage Association (RHA) is representing an estimated 18,000 claimants as the beneficiaries of the hopeful award.  Law Gazette reports that Therium is the litigation funder that will earn a total of 6% of the award’s proceeds of anything over £2B. Therium will be granted 8% of an award of over £3B. Therium will NET 30% of collective proceeds if the award amounts to anything less than £150M. While the payout ratio of the funding deal is large, claimants say litigation would not be possible without access to third party investment.  Similarly, RHA claims that the case’s lifespan may vary as well, depending on tribunal preference of proceedings. RHA underscores the importance of the litigation agreement’s scaled architecture.