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Commercial

Australian Funding Partners Declares Bankruptcy

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

What Makes a Case Attractive to a Litigation Funder?

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

The 2021 Litigation Finance Survey Findings

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

Woodsford Funds Govia Thameslink Railway Action

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

What Have We Learned from Lloyd v Google?

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

Delta Capital Partners Management Welcomes Michael Callahan as Chief Operating Officer

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

Burford Managing Directors Talk Potential Law Firm Ownership

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

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

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

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

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

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

Commercial

Is Brazil the Next Hot Litigation Destination?

The International Chamber of Commerce has ranked Brazil the #2 destination for matters held in the International Court of Arbitration. This is according to a new report on dispute resolution stats—one of many indicators that Brazil’s legal sector is experiencing impressive growth. Omni Bridgeway explains that Brazil has grown more sophisticated in recent years, with many more industries and businesses availing themselves of the benefits of arbitration. Fernando Merino, Managing director at Steptoe & Johnson LLP is licensed to practice law in Brazil and the US. His ties with the Brazilian legal community affords him specific insights into what’s happening in Brazil, and how that will shape the future of Litigation Finance there. His views on the region include:
  • Brazil has been developing new arbitration laws since 2000, to great effect.
  • Much of this new growth stems from the involvement of industrial sectors like mining, and energy excavation and production.
  • The rise of legal funding provides more opportunities to pursue litigation and arbitration when needed.
Commercial Regulatory Issues

AU Litigation Funders See Agreements Grandfathered Through MIS Regime

An Australian court recently offered guidance regarding when litigation funding agreements will be grandfathered, vs when they’ll be subjected to the Managed Investment Scheme regime. This came in the form of a Federal Court decision in Stanwell Corporation Limited v LCM Funding Pty Ltd (2021). MONDAQ details that funding agreements that were signed prior to August 22 of last year can be grandfathered even if the case was in an early investigative phase at the time. At the same time, calling a class action an MIS is something that may be brought before an appellate court. Before 2009, the MIS regime didn’t apply to litigation funding. Decisions made with regard to a work program for investigations and book building can still be considered part of an MIS when they share the same dominant purpose—to facilitate class members seeking remuneration. The decision on grandfathering was determined because, according to amendments made by CALF regulations, a litigation funding scheme is not an MIS, nor will it require an AFSL, if it was entered into before August 22 of 2020. This is provided that the ‘dominant purpose’ (a term that is defined objectively) of the scheme is for claimants to seek remedies for damages incurred. In the case, LCM was accused of operating an unlicensed MIS. When cross-claims were made by LCM, judges determined that even if the scheme had not been eligible to be grandfathered, the scheme itself was arguably not an MIS. It was asserted that the true dominant purpose of the program was not to help claimants seek remedies for damages, but rather, was for LCM’s sole benefit. Ultimately, the case determines that book building or early investigations can be part of a litigation funding scheme—even when group members are not yet involved.
Consumer

Consumer Legal Funding in Personal Injury Cases

Sometimes referred to as ‘lawsuit loans,’ funds given by third-party legal funders are not loans at all. Loans are paid back, typically with interest, regardless of what happens with the money once it’s provided. Legal funding is offered on a non-recourse basis, so funders get nothing if the cases they choose aren’t successful. When they are, funders may take what some describe as the lion’s share of an award. National Law Review explains that the legal funding industry is only about two decades old. But it’s recently come barreling into the mainstream. Economic instability exacerbated by COVID led investors to seek out alternative, uncorrelated assets. Understanding the basics of litigation funding is a good idea for any personal injury lawyer. First, funding requires that a lawsuit be filed. Funders vet cases according to their own guidelines and analytics to determine the best candidates for funding. Funded cases are typically those with a probability for a high payout, and defendants that have suffered significant personal or financial damages. Plaintiffs may also be given an advance to tide them over while they wait for their case to conclude. Clients may use the advanced monies in any way they see fit. The timetable for this can be unpredictable, with duration risk being a major consideration for funders, lawyers, and clients alike. The application process can take 1-7 business days to complete. For complex or high-value cases, the vetting process may last even longer. Underwriters will examine discovery, filed paperwork, deposition transcripts, and anything else they may require to determine whether a case has viability for funding. Along with collective actions, personal injury cases are a commonly funded case type. Other common litigation types include medical malpractice, discrimination, whistleblower actions, and product liability. Litigation funding transactions are still largely unregulated—though that is expected to change.
Commercial

Understanding the Data in Legal Analytics

Third-party litigation funding has grown by leaps and bounds over the last decade, and brought with it tremendous innovation. The pandemic spurred many investors to diversify their portfolios with uncorrelated, alternative assets. Litigation Finance has the potential for very high rewards despite the risk and duration involved. Business Law Today explains that while clients, investors, and attorneys are generally positive about their experiences with litigation funding, detractors persist in arguing that funding leads to a glut of frivolous cases lacking in merit. This assertion is disputed by funders and by available evidence. It also fails to hold up to basic logic—since no one wants to invest in a meritless case. In fact, funders vet cases carefully to ensure that only the most viable and promising litigation receives the funding needed to move forward. In 2020, the American Bar Association released Best Practices guidelines. While not legally enforceable, the report outlines vital factors for consideration by industry professionals. It describes third-party legal funding as a form of risk distribution not unlike a contingency agreement. It’s subject to risk, though that risk can be mitigated with careful research, vetting, and analytics. Litigation Finance provides a means to transfer quantifiable legal risk to the parties best able to weather it. Funding is provided on a non-recourse basis, so the funder is taking 100% of the financial risk in a funded case. Ultimately, the ABA Best Practices Report doesn’t mandate rule-following so much as it suggests broad philosophical principles be applied to all funding types. Among its most specific suggestions are:
  1. Clients, not funders, should control decision-making in cases.
  2. Funding agreements should always be in writing, using clear language.
  3. Written funding agreements should include provisions in the event that the client and funder disagree on strategy, or if the funder wishes to withdraw.
  4. Disclosure should be given in accordance with the rules of the jurisdiction, which vary widely.
Commercial Legal Innovation

Initial Litigation Offering is First Tokenized Lawsuit

An ‘Initial Litigation Offering’ billed as the first tokenized lawsuit debuted on Republic in October of this year. In the case against one California county, token holders may receive a stake in any amount recovered. Legal Examiner explains that this ILO began as an initiative by Roche Freedman LLP—a firm also representing the estate of David Kleiman in a case to determine the exact working relationship between Kleiman and Craig Wright during the creation of Bitcoin. Wright has asserted that he is “Satoshi Nakamoto” and therefore owns a huge fortune in Bitcoins. He has maintained his position despite a lack of support from the entire crypto community. Roche Freedman is also involved in multiple class action cases against various token issuers including Civic, Tron, Binance, Status, and Quantstamp. In the ILO case, Apothio is asking for up to $1 billion in damages after the Kern County Sheriff Department destroyed its entire hemp crop in 2019. The Sheriff's department claimed that the crop exceeded the legal THC limit for hemp. The ILO allows investors to buy tokens to fund the case, receiving a portion of the resulting award commensurate with the size of the investment. Republic, a platform known for tokenizing investments normally reserved for high-end investors. Unlike investments that must register with the SEC, this ILO is governed under crowdfunding rules, which are significantly more lenient. The Ava Labs worked with Roche Freedman and Republic to conceptualize and launch the ILO toward the end of 2020. Those who wish to buy tokens in the ILO will first be required to create wallets on the Avalanche platform, which is blockchain-based. Payouts will be automatic through the use of pre-programmed smart contracts which distribute funds once certain conditions are met. The tokenization of litigation funding will allow people of modest means to join the high-risk, high-reward playing field.
Commercial Fundraising

Manolete Secures GBP 35MM Finance Package from HSBC UK

Manolete, the leading UK insolvency LitFin firm, recently secured a GBP 35 million funding package in support of its plans for future growth. The London-based funder focuses on specialist recovery litigation across the UK. Bdaily News details that the company currently manages more than 260 insolvency cases. Part of the incoming package, which includes a GBP 25 million revolving credit facility and a GBP 10 million uncommitted accordion, will be used to invest in new cases over the coming years. Manolete CFO Mark Tavener affirms that a core value of the company is to address inefficiency in insolvency litigation--and to always scale up.
Commercial Regulatory Issues

US Development Sees Relaxed Rules for Law Firm Ownership

Law firm ownership has been changing in recent years. Legal professionals in Australia and the UK are leading the world regarding ownership of legal firms. Recent developments in US states like Arizona, combined with a more liberal approach on ownership from the American Bar Association, means that the tide may be turning on this issue. Other US states are considering similar measures, including California, Utah, Florida, Illinois, and Michigan. Kluwer Arbitration Blog details that every US state has a version of ABA Rule 5.4 in their Rules of Professional Ethics. This rule forbids fee sharing and law firm ownership between lawyers and non-lawyers. Because the District of Columbia is not a state, it is not bound by this rule. As such, DC allows for non-lawyer ownership of firms—though these arrangements are few and far between. In New York state, the popularity of portfolio funding led to questions about whether this amounted to fee-sharing. In 2018, a formal opinion from the NYCBA stated that portfolio funding contingent on the lawyer receiving legal fees in one or more cases is in violation of Rule 5.4. After considerable pressure, the NYCBA formed a Working Group to reevaluate its stance. Ultimately, they concluded that both attorneys and the clients they serve would benefit from less restricted access to funding. At the same time, the Working Group suggested reforms including disclosure requirements and specific types of client consent. Disclosure continues to be a contentious issue in cases that utilize litigation funding. While disclosure of the identity of the funders is becoming an accepted norm, questions regarding conflict between investors seeking to profit from LitFin investments and the clients, whose interests may be wildly divergent. Meanwhile, the benefits and drawbacks of Alternative Business Structures (ABSs) continue to be a popular suggestion—even as many jurisdictions bristle at allowing such an unregulated process.
Commercial Regulatory Issues Special Features

Price Control to Ensure the Affordability of Litigation Finance?

The following post was contributed by Guido Demarco, Director & Head of Legal Assets of Stonward. In March 2021, the European Parliamentary Research Service published a study on Responsible Private Funding of Litigation. This study was later supplemented by a draft report prepared by the European Parliament’s Committee on Legal Affairs in June 2021. Both documents, the study, and the draft report, contain certain recommendations to regulate litigation funding and criticize the economic costs that these funds impose on their clients by referring to them as “excessive”, “unfair” and “abusive”. Specifically, on the issue of fees, the study suggests setting a 30% cap on funders’ rates of return, while the draft report recommends that LF agreements should be invalid if they foresee a benefit for the claimant equal to or less than 60% (unless exceptional circumstances apply). In other words, a cap of 40%. While this might be viewed as a logical measure to make litigation finance more affordable, what needs to be considered is that the funders’ expected return is simply a consequence of the risks and costs that arise from litigation, not the other way round. The costs Let us take the case of a foreign national, ‘Citizen Kane,’ who makes an investment in the energy sector in Ruritania[1]. Let us imagine that a bilateral treaty between Mr. Kane's country of nationality and Ruritania protects Citizen Kane’s investment. The Republic of Ruritania suddenly indirectly expropriates Mr. Kane's business without due compensation. To claim damages, Mr. Kane will start an arbitration through the International Center for Settlement of Investment Disputes (ICSID). The total cost of the dispute will depend on the complexity and the duration of the case, including the number of pleadings, experts, hearings, and the time incurred by the attorneys. Only the first advance to ICSID can be circa $150,000. If Citizen Kane estimates damages of $30 million, the costs of such a dispute could easily amount to $3 million or more. In investor-state arbitration, the mean costs for investors are about $6.4m and the median figure is $3.8m. The mean tribunal costs in ICSID arbitrations is $958,000 and the median $745,000.[2] Therefore, after years suffering arbitrary measures and pursuing fruitless disputes in local courts, Citizen Kane will now have to invest an additional circa $3 million to file a claim for damages with a completely uncertain outcome. Even if Citizen Kane wins, Ruritania may not be willing to follow the award voluntarily, and he will have to incur more expenses to enforce the judgment. The risks Aware of the prohibitive costs of litigation, Ruritania may play the long game, unnecessarily prolonging the dispute to financially drain the claimant while expecting a future administration will be in office to foot the bill down the road. This might be challenging even for a financially healthy company, as litigation costs are often considered an expense on the profit and loss statement and therefore CFOs are increasingly looking for alternatives to preserve working capital for the company’s main activity. How long will the proceeding take? What will be the final amount of the damages awarded? Will the other party voluntarily follow the award? What if, in the end, I lose? These questions have no exact answers because the answers depend on third parties, including how a judge or tribunal interprets the law and the facts of case, as well as the performance of experts and lawyers in pursuing the claim. The litigation budget and estimated damages will play a key role in the investment decision, together with the merits of the case, liquidity, and reputation of the respondent, as well as the reputation of the law firm chosen by the client. Analyzing the risk is not easy, considering the latest figures that show that investors prevail in only 47% of cases, and that the median amount of damages claimed vis a vis damages awarded is 36%. However, the main factor in determining risk is the structure of non-recourse litigation finance loans. This is not just a typical loan, but a mechanism to transfer risk. It is normal that the greater the risk assumed by the funder, the higher the return expected. Conclusion Limiting a funder’s expected return will not reduce financing costs for clients, and therefore will fail to make litigation more affordable, which is the aim of the EU’s regulation proposal. Funders will not grant funding if they perceive the risk/reward of a case is not worth the given circumstances. However, a cap on the return could have a direct effect on the number of cases taken up by funders – which is already low – since there will be cases in which the combination of factors described above will not make the investment worthwhile, considering the risk tradeoff. Unfortunately, there is a cost floor shared by both large and small cases, and complex claims like Citizen Kane’s expropriation case would be made all the more challenging to finance. A cap could therefore limit Mr. Kane’s litigation options. Should funders charge any profiteering fee? No, but a cap to the fees may not be the solution. In the end, the direct beneficiaries of the proposed regulation could end up being certain states such as Ruritania, which act as defendants in arbitration or judicial cases, rather than the individuals that the EU is attempting to protect. Ironically, states finance their legal firepower with taxes, the same taxes that Citizen Kane has paid for years to the Republic of Ruritania. [1]  Ruritania is a fictional country used as a setting for novels by Anthony Hope, such as The Prisoner of Zenda (1894). Jurists specialising in international law and private international law use Ruritania when describing a hypothetical case illustrating some legal point. [2] 2021 Empirical Study: Costs, Damages and Duration in Investor-State Arbitration, British Institute of International and Comparative Law and Allen & Overy, available at: Costs, damages and duration in investor-state arbitration – Allen & Overy.
Announcements Commercial People Moves

Zachary Krug Joins Signal Capital, Helps Launch Lit Fin Arm

Zachary Krug has joined Signal Capital Partners, a London based special situations fund with over $2.5B AUM, where he will be leading a new strategy for litigation finance and legal assets.  Funding will be through SLF Capital Limited, a joint venture focused on legal assets.

Through SLF Capital, Signal provides capital to law firms, legal service providers and claimants in high value disputes on a global basis, as well as offering non-dilutive capital solutions to entities with legal assets or IP holdings. Signal also has strong relationships with traditional litigation funders and often serves as a partner to co-fund larger opportunities or to help litigation funders manage concentration risk within their own portfolios.  Signal provides flexible capital solutions to its counterparties, delivered transparently and efficiently through a streamlined investment decision-making framework.

Zachary notes that the draw of litigation finance is two-fold:  “As an asset class, litigation finance is attractive for its uncorrelated returns and can help claimants and corporate entities monetize and manage legal risk. But we also feel strongly that access to justice should not be dictated by financial resources and that litigation finance can play a pivotal role in vindicating legal rights.”

Zachary has nearly two decades of experience in international disputes and finance, and has been recognized as a Global 100 Leader in Litigation Finance. At Signal, Zachary works closely with claimants and lawyers, not only to provide much needed capital, but craft winning litigation strategies from pre-filing through enforcement.

Prior to joining Signal, Zachary was a Senior Investment Officer at Woodsford Litigation Funding in London, where he helped oversee the growth of its US and international disputes portfolio.  He was previously a trial litigator at the Los Angeles headquarters of the global disputes firm Quinn Emanuel Urquhart & Sullivan, where he focused on the trial of complex commercial disputes and international matters. He was also an associate at Shearman & Sterling in New York and clerked for the Honorable Shira A. Scheindlin in the Southern District of New York.

Zachary graduated from Yale University and Cornell Law School, and is an attorney admitted in New York and California.

To contact Zachary and learn more about Signal Capital:  zachary.krug@slfcapital.com

Announcements Consumer

Leading US firm Pogust Millrood merges into global firm PGMBM

Leading US mass tort and personal injury firm Pogust Millrood is to merge into the rapidly expanding international operation of global firm PGMBM.

Pogust Millrood LLC, one of the leading mass tort and personal injury firms in the US, will merge with sister firm, global powerhouse PGMBM, as of today (01 December 2021).

The merger will see the existing Pogust Millrood operation incorporated into the rapidly expanding PGMBM organisation, with a US operation that will now include offices in Philadelphia and Miami. Globally, PGMBM now boasts over 100 lawyers and 500 staff in countries including the US, the UK (London, Liverpool and Edinburgh), the Netherlands (Amsterdam) and Brazil (São Paulo and Belo Horizonte).

Pogust Millrood was founded in 2005 and for the last 16 years has focused on mass tort and consumer class actions. In 2010, the firm was named one of the top Plaintiffs' Product Liability Firms of the Year by Law360. The award recognised Pogust Millrood as one of the top firms of the year garnering “substantial verdicts against pharmaceutical heavyweights” and obtaining “multi-million dollar verdicts for their clients”.

Pogust Millrood was class counsel and instrumental in the $1.15billion Pigford II settlement, where it assisted thousands of African-American farmers in claims that the US federal government had discriminated against them in applications to participate in agricultural programs. The firm played a critical role in the $1.4billion dollar settlement for victims of devastating side effects from the Stryker metal-on-metal Rejuvenate Modular-Neck and ABG II Modular-Neck hip implants. It is also currently lead counsel in the Pennsylvania-wide opioid litigation pending in Delaware County, Pennsylvania, helping deliver a settlement that could provide $1billion to affected communities.

PGMBM is a partnership between British, American and Brazilian lawyers passionate about championing justice for the victims of wrongdoing by large corporations. The firm is at the cutting edge of international consumer claims, including leading group cases against:

  • Mercedes, Volkswagen, and other automotive firms over diesel emissions scandals

  • British Airways and easyJet in cases related to breaches of personal data

  • Several of the world’s largest pharmaceutical companies over the harmful risks associated with their drugs and medical devices

PGMBM is also a leader in environmental litigation, leading proceedings on behalf of over 200,000 victims of two major Brazilian tragedies – the 2015 Mariana Dam disaster and the 2019 Brumadinho Dam disaster, litigating against mining giant BHP and German technical services firm TÜV SÜD respectively.

Harris Pogust, Pogust Millrood Partner and Chairman of PGMBM, said: “Over the last 15 years, we have developed Pogust Millrood into one of the top mass tort firms in the US. We have helped defend the rights of those who cannot defend themselves against the misdeeds of big business.

“Not long ago, I had the opportunity to start a sister firm, PGMBM, with an amazing group of lawyers, including an amazing barrister, Tom Goodhead, and trail-blazing Brazilian lawyers Tomás Mousinho and Pedro Martins.

“In four years we have grown PGMBM into a firm with more than 500 employees and counting across several countries. I am beyond proud of the work we are doing and will do in the future, representing the oppressed and those whose access to justice is difficult.

“Environmental tragedies, human rights violations and personal harm inflicted by some of the world’s largest corporations. The credo of PGMBM is to find justice for these people no matter how far we have to go to obtain that justice.

“As with anything in life people and law firms grow and change. This merger is the next step in that cycle. Now is the time to bring our amazing team at Pogust Millrood under the PGMBM umbrella and share our joint experiences and knowledge to help those in need of our assistance not just in the US but across the globe.”

Consumer

NFL Concussion Lawyer Fights Order to Repay Litigation Funder

Craig Mitnick is a New Jersey lawyer who represented hundreds of current and former players in a settlement with the NFL. After taking part in a $1 billion settlement, Mitnick is now fighting an order to repay loans from a litigation funder amounting to more than $2 million. He has asked a federal judge to vacate the award to the finance company Balanced Bridge (formerly Thrivest), which also made settlement advances to former NFL players.

Legal Newsline reports that in his filing, Mitnick alleges that Balanced Bridge and its Fox Rothschild legal team took advantage of him, violating the canons of ethics. Mitnick is a former client of Fox Rothschild, which represented him in a dispute with his co-counsel in the NFL case, Locks Law Firm.

In a statement, Fox Rothschild noted that Mitnick’s arguments had largely been rejected by the arbitrator already. Balanced Bridge is owned by Joseph Genovesi. Thrivest is one of the companies the Consumer Financial Protection Bureau focused on after it provided high-interest loans to concussion victims in the NFL case. A judge ruled that the funding agreements were invalid.

The Third Circuit Court of Appeals eventually reversed that ruling, saying that the judge overstepped when she invalidated all financing contracts. Meanwhile, Chris Seeger of Seeger Weiss was accused of persuading class members to accept high-interest loans from Esquire Bank, where he served as director. Seeger is also known to have accused Mitnick of persuading his clients to partner with Thrivest, despite only two of his 1,000+ clients borrowing from Thrivest.

Mitnick had taken money on multiple occasions from Genovese, and the two discussed financing his firm. Mitnick’s argument is that the contracts with the funders were unenforceable because they were described as non-recourse, while including provisions that were not consistent with non-recourse loans. The arbitrator found that this was true of the first loan, but not the subsequent funds.

Commercial

Financing Affirmative Recovery Programs

Affirmative recovery programs are a growing trend, and with good reason. ARPs involve monetizing existing litigation once believed to be too costly or time consuming to pursue. Burford's 2021 Legal Asset Report has some telling insights on ARPs. This year’s survey includes 378 senior financial officers of companies whose revenue is at least $50 million annually. Burford Capital details that a growing number of companies have vigorous affirmative recovery programs— with 73% calling their ARPs “extensive.” Still, almost half of those say that their current programs don’t meet the needs of the company completely. Companies with revenue over $1 billion annually are among the most likely to claim that their ARPs need improvement. Nearly half of those surveyed stated that their companies left judgements unpursued, due to how much it would cost to enforce. Not surprisingly, companies who said their ARPs were inadequate were 27% less likely to enforce judgements. How does one set up an affirmative recovery program? And won’t doing so add cost and risk to the business? What about duration risk? By working with a litigation funder, companies receive non-recourse funding to pursue cases in exchange for a portion of any awards or settlements. A financed ARP shifts costs and transfers risk in exchange for a portion of a judgement that would have otherwise remained unpursued.
Case Developments Commercial

Court Rules in Case of the REAL Katie/Katy Perry

What happens when two women using similar names both want to sell branded clothing lines in the same country? When that name is Katy or Katie Perry, the result is a trademark infringement suit. Canberra Times details that clothing designer Katie Jane Taylor (DBA Katie Perry) is suing pop star Katheryn Elizabeth Hudson (DBA Katy Perry), arguing that the singer has infringed on her trademark. Both women have clothing lines sold in Australia. Taylor trademarked her name in 2008—the same year Katy Perry’s first single debuted to much acclaim. While Taylor did purchase the single, and describes it positively in an interview, she denies there being any connection between the song and her choice of name. The case will be heard by Justice Brigitte Markovic. The American pop singer is not expected to appear. Taylor’s case is funded by LCM. She describes her case as a “real David and Goliath fight.”
Commercial Regulatory Issues

Non-Attorney Ownership of Law Firms Attracts Litigation Funders

With the elimination of ethics Rule 5.4, the state of Arizona loosened regulations prohibiting non-attorney ownership of law firms. Not unexpectedly, this has attracted interest from several prominent litigation funders. Comparable legislation is expected in multiple states in 2022, with Michigan, North Carolina, Illinois, New York, and California already considering it. Bloomberg Law explains that the first wave of outside investment in law firms is likely to come from heavy hitters in the Litigation Finance space. The experience and insight that large-scale funders can bring to legal firms cannot be underestimated. Burford Capital and Longford Capital Management executives expect law firm partners to be more open to the benefits of non-attorney ownership. While all eyes are on the big firms and funders, mid-size and boutique firms may also look toward ownership offers from litigation funders. Forward-thinking firms will be looking for ways to innovate and improve access to legal services. Sharing risk with a funder over time is mutually beneficial. The so-called “Arizona experiment” began a year ago when Rule 5.4 was abolished, allowing non-lawyers to hold an economic interest in a legal firm or legal service company. With the goal of increasing access to legal services for non-wealthy Arizonans, a dozen legal firms have been approved to join its alternative business structure program since its beginning in January of last year. Globally, non-lawyer ownership of law firms is uncommon—but not unheard of. Burford Capital assumed a minority ownership of PCB Litigation in 2020. If these experiments are successful and more states loosen their rules for non-lawyer ownership, investing in legal firms is likely to become a hot trend. Burford’s recent high-profile successes include the $103 million it will receive for its funding in the Akhmedova divorce enforcement, and the so-called Petersen case, which brought them $236 million as of March.
Case Developments Commercial

Collective Action Likely as UK Customers Overcharged for Car Delivery

This week, a hearing was held to determine whether a collective action against five car carriers based in Japan, Sweden, and Chile. The action will allege that more than 17 million cars were impacted by a price-fixing scheme run by the five firms that ship internationally. The case is being funded by Woodsford Litigation Funding. Fleetpoint reports that the hearing is expected to last three days, and will be live-streamed for public consumption. Mark McLaren, formerly of Which?, hopes to recoup losses affecting millions of consumers and businesses who purchased or leased cars. If the collective proceeding order is successful, all those who bought or leased an affected car will be automatically eligible for compensation. Cars impacted include Ford, BMW, Mercedes-Benz, Toyota, Vauxhall, Volkswagen, Nissan, Citroen, and Renault. The impacted time frame is October 2006 – September 2015. The facts of the case were settled in 2018 when the European Commission ruled that the shipping companies in question did violate EU competition law. The commission found that the companies coordinated rates and capacity reductions in the market. They also shared confidential or sensitive information to maintain artificially high pricing. The shippers saw fines of over EU395 million. Outside the EU, the shippers saw additional fines of over $755 million due to investigations in Australia, Japan, Mexico, China, South Africa, the United States, Chile, Brazil, and Korea. McLaren explains that consumers couldn’t realistically claim their losses individually, yet most people agree that compensation is due when people are harmed by intentional unlawful behavior. Eligible participants pay no fee to become claimants, thanks to support from Woodsford Litigation Funding.
Announcements Commercial People Moves

Burford Capital’s industry-leading legal finance team continues to grow

Burford Capital, the leading global finance and asset management firm focused on law, today announces it is further enhancing its industry-leading team and legal finance offerings to clients. In addition to new hires in New York, Washington and Chicago, Senior Vice President Dr. Jörn Eschment has relocated to Switzerland to oversee the growth of Burford’s substantial business in the DACH region of Germany, Austria and Switzerland.

Christopher Bogart, CEO of Burford Capital, said: “As the industry leader with a $4.8 billion portfolio, we continue to build Burford’s team to meet the needs of our clients and the continuing growth of our business.

“At Burford, we place significant emphasis on a collaborative culture, with strong intellectual and interpersonal dynamics at the heart of our organization. As we add experts to our team, we look for intelligent, thoughtful and creative individuals who always try to expand upon what is possible—which we believe we have found with each of these new additions.

“We are pleased to announce these new hires and Jörn’s move to the DACH region, which continue to amplify our position as the gold standard in commercial legal finance.”

The composition of Burford’s global team of over 140 employees – 66 of whom are lawyers – reflects its category leadership as well as its commitment to diversity, equity and inclusion, as half of Burford’s team are women, racial minorities or self-identify as LGBTQ.

Further growth of Burford’s industry-leading investment team

  • Apoorva Patel has joined Burford in Washington, DC, as a Vice President with a focus on assessing legal risk in international arbitration, a topic about which he writes and speaks regularly as a leader in several global and national lawyers’ organizations focused on international dispute resolution. Prior to joining Burford, he was most recently Counsel in WilmerHale’s international arbitration and international litigation practices. Mr. Patel graduated from Harvard Law School, where he served as editor-in-chief of the Harvard Negotiation Law Review. He earned his bachelor’s degree in public policy from Duke University, where he graduated magna cum laude. 
  • Gabriela Bersuder has joined Burford in New York as a Vice President. She previously practiced as a litigator at Patterson Belknap Webb & Tyler, where she represented Fortune 500 companies, food and beverage manufacturers and large corporations in complex commercial litigations, arbitrations and mediations. She clerked for the Honorable John G. Koeltl (Southern District of New York) and Honorable Christopher F. Droney (Second Circuit). Ms. Bersuder earned her law degree from Duke University School of Law and her bachelor’s degree in political science from Columbia University.
  • Peter McLaughlin has joined Burford in Chicago as a Vice President. Prior to Burford, he was a litigator at Sidley Austin, where he specialized in conducting investigations related to securities and healthcare regulation and served as counsel for jury trials, bankruptcy proceedings and arbitration hearings. He clerked for the Honorable James B. Zagel of the US District Court for the Northern District of Illinois. Prior to earning a law degree from Northwestern University School of Law, he was a trading analyst at Credit Suisse. Mr. McLaughlin is a graduate of Georgetown University.

Dedicated staff to pursue business opportunities in DACH region

  • Dr. Jörn Eschment, Senior Vice President, has relocated to Zug, Switzerland, to oversee the growth of Burford’s substantial business in Germany, Austria and Switzerland. Prior to joining Burford’s investment team in London in 2018, he practiced international commercial arbitration and litigation at Herbert Smith Freehills in Hong Kong and at Schellenberg Wittmer in Zurich. Dr. Eschment read law at the universities of Freiburg, Liverpool, Marburg and Passau, graduating with the German Staatsexamen, an LLM in European law and a doctorate in public international law, all with distinction. He also holds a master’s from the War Studies Department at King’s College London.

Additional talent augments new business origination team 

  • Bill Walker has joined Burford in Washington, DC, as a Director, building on a career spanning consulting, in-house and law firm roles. Most recently he expanded Deloitte’s law-focused business development efforts with key clients at Fortune 500 companies, publicly traded middle-market companies and law firms. Previously he founded Ansun Management Partners, a boutique professional services firm, was a corporate attorney specializing in complex corporate transactions at several large multi-national law firms and was an in-house lawyer at the American Red Cross. Mr. Walker earned his JD from the University of Connecticut School of Law, where he served as articles editor of the Connecticut Journal of International Law, and his bachelor’s in economics from College of the Holy Cross. 

Global organization strengthened with top talent across business functions

  • Chermia S. Hoeffner has joined Burford as Vice President, Human Resources. Prior to joining Burford, she was Head of Human Resources at the National Audubon Society, where she led the human resources team, implemented organization-level job architecture and developed policies, procedures and initiatives crucial to the overall strategy at Audubon. Ms. Hoeffner has also worked in human resources roles at TIAA-CREF, Mercer and Osler, Hoskin & Harcourt LLP. She has over two decades of experience managing a broad range of HR functions at global organizations. Ms. Hoeffner graduated with an MBA in management from Pace University and a bachelor’s in English from SUNY-Albany.
  • David Helfenbein has joined Burford as Vice President, Public Relations. He has over a decade of experience in litigation and legal communication, crisis management, public affairs, government relations and public policy. Prior to joining Burford, he worked as an Associate Director at Finsbury Glover Hering and held senior roles at several public relations firms and branding agencies. He began his career working in the US Senate, followed by the US Department of State. Mr. Helfenbein earned his law degree from the School of Law at Washington University in St. Louis and his bachelor’s degree, magna cum laude, from the University of Pennsylvania.
  • Ilya Podolskiy, CPA, CGMA, CRMA, Cr. FAC, has joined Burford as Vice President, Sarbanes-Oxley (SOX) Compliance. Mr. Podolskiy has over a decade of experience implementing audit and SOX strategies. He was previously a SOX Manager for Sirius Group and for Assured Guaranty. Prior to that, Mr. Podolskiy held roles with internal audit functions including Senior Internal Auditor for American International Group (AIG) and Tokyo Marine North American Services (TMNAS). Mr. Podolskiy earned his bachelor’s in accounting from CUNY Hunter College and his master’s in taxation from Villanova School of Law.
  • Phillip Lu has joined as Head of Burford’s Project Management Office, with responsibility for Burford’s program/project management, business analysis and strategic planning capabilities. He was previously a Director at KPMG, where he evaluated and developed new digital and data strategies, technologies and business models; he also served as a Senior Manager at EY. Mr. Lu began his career as a management consultant and held technology strategy and project management roles at Morgan Stanley and Merrill Lynch. He earned his bachelor’s in economics from New York University.

About Burford Capital

Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its principal offices in New York, London, Chicago, Washington, Singapore and Sydney.

Announcements Commercial Deals

Law firms eye up the IPO market

A survey of law firm partners commissioned by Harbour on post pandemic strategies revealed that:

  • 31% of those surveyed said their firms are actively considering an IPO in the next 12-18 months
  • 50% said the pandemic had presented new opportunities for their firm
  • 80% felt their senior leadership team should embrace innovation to deliver growth
  • Only 22% of respondents said their firms had ruled out credit facilities with third party funders over the next 12-18 month

30th NOVEMBER 2021: In a recent nationwide survey of over 200 law firm partners, 31% stated that their firm is actively considering a stock market listing in the next 12-18 months with a further 44% saying an IPO was under consideration.

Coupled with this, 78% of law firm partners said their firms were either in active discussions or considering whether to pursue a credit facility indicating that there is greater demand than ever before from partners at UK firms to seek external capital to complement their own equity.

Ambitious plans for growth are the catalyst for this sentiment change, with more than 50% of those surveyed saying the pandemic had presented new growth opportunities to expand existing practice areas or develop new business lines with several firms acquiring talented teams to spearhead growth.

Many law firm partners felt that adopting innovative practices was key to accelerating growth or maintaining market position, with 80% of respondents observing that senior leadership teams should incorporate innovation in the firm’s post pandemic strategies.

Whilst 86% of respondents highlighted some continued downward pressure from clients on costs for certain services, innovation and attracting external investment are expected to counteract this pressure and to meet the growth agenda.

Ellora MacPherson, Chief Investment Officer at Harbour said: “This survey shows a real desire by firms to access external finance to support their growth ambitions.  IPOs are one way of doing this but won’t be the best fit for all firms.

The survey reveals an expanding appetite amongst firms to source credit facilities from established litigation funders.

For more information, please contact harbour@thephagroup.com

About Harbour

Harbour is the largest privately-owned, dedicated litigation and arbitration funder in the world. Since its foundation in 2007, Harbour have become trusted advisors and providers of capital to law firms, corporates and claimants, supporting them in progressing high-value commercial disputes all over the world. So far, the organisation has funded 126 cases, with a total combined claim value of US$19billion, in both common and civil law jurisdictions, and in several arbitral forums.

About the survey

The survey was conducted by Censuswide and commissioned by litigation and arbitration funder Harbour. Through a survey of over 200 partners at law firms with 50 + layers, the survey sought to deduce the key challenges and opportunities law firms are facing, and what their priorities are post-pandemic.

Commercial Legal Innovation

LegalPay: India’s First Homegrown LitFin Company

LegalPay bills itself as India's ‘first homegrown litigation finance company.' The business was founded in 2020 by Kundan Shahi, and strives to expand the reach of legal funding as both an alternative asset class and a means to increase access to justice. Financial Express details that LegalPay focuses on cases nearing completion, or in the latter stages. Most funds are raised through large family offices in India. What’s unique about LegalPay is that it broadens the range of investors that can allocate capital into Litigation Finance. Shahi explains that regardless of net worth, anyone can take part in this alternative asset class. Democratizing access via a proprietary tech platform was instantly popular—as the first SPV launched was oversubscribed, then closed in an uncommonly short amount of time. LegalPay is a data-driven, tech-focused funder with a high bar for those seeking funding. Every case must pass a 15-point vetting system via a unique algorithm which ensures that only the most viable reach the legal team. In the short term, LegalPay hopes to create a banking system within the legal industry similar to what’s happening in the Indian agricultural sector.
Commercial

Who is Litigation Funding Really For?

When litigation funding began in earnest, funded cases tended to be those against deep pocketed corporations and governments. While Litigation Finance is a boon to justice, it’s also a business, with capital concerns. As such, most funded cases were chosen based on their ROI potential. MONDAQ details that the growth of the litigation funding industry is leading to an expansion of the potential client base. In the last three years, assets held by funders have more than doubled. Investors are flocking to legal funding seeking uncorrelated assets that can generate impressive returns. As new players enter the field, funders are casting a wider net. Rather than funding only large class actions, funders are bankrolling medium and even small cases, individual plaintiffs, and portfolios held by a company, university, or corporation. As opportunities to enter funding agreements increase, cases that were once viewed as too expensive to pursue are more likely to move forward. As a result, small businesses in particular stand to benefit from new funding opportunities. With the evolution of the industry in full swing, it's likely the client base will expand even further to encompass a wider range of potential claimants.
Announcements Case Developments Commercial

Operator of Great Northern, Southern, Gatwick Express and Thameslink to face legal claim worth up to £73m as over 3 million consumers are overcharged for London train fares

A legal claim seeking compensation worth up to £73m for routine overcharging on train tickets affecting an estimated 3.2 million passengers has been filed against the operator of one of Britain’s busiest commuter railway networks.

The collective claim against Govia Thameslink Railway (“GTR”) – the operator of the Great Northern, Southern, Gatwick Express and Thameslink lines - was filed on Wednesday 24th November with London’s specialist competition court, the Competition Appeal Tribunal (the “Tribunal”).

It was filed by Mr Justin Gutmann, a consumer rail campaigner who last month secured the landmark legal approval to bring to trial collective actions seeking compensation worth up to £93 million against two other rail operators, the South Western and Southeastern rail franchises, over the same issue.

The claim revolves around the lack of access to so-called ‘boundary fares’ – where travellers holding a London Travelcard should be offered discounted tickets taking them from the boundary of any zone covered by the card to their destination.

GTR is alleged to have not made ‘boundary fares’ sufficiently available for Travelcard holders to purchase, nor making passengers aware of their existence. The rail company’s failure has left customers with little option but to buy a higher fare than was necessary because their travelcard already entitled them to travel part of their journey. It is calculated that 240 million journeys since November 2015 could have benefited from boundary fares if travellers had been aware of them.

This is a breach of the UK’s competition rules (s.18 of the Competition Act 1998) and an abuse by GTR of its market powers. Great Northern serves destinations including Cambridge, Peterborough, King’s Lynn and Ely while Thameslink is a key commuter line to central London linking Brighton, St Albans, Bedford, East Grinstead and Luton Airport. Southern serves destinations including Brighton, Hastings, Portsmouth, Southampton, Eastbourne and Milton Keynes.

The claim is thought to affect an estimated 3.2 million passengers who held travelcards and used GTR services since November 2015.  The abuse is ongoing despite GTR also being the parent company of Southeastern.

Mr Gutmann, formerly of Citizens’ Advice, said: “This claim is the latest step in my campaign to stamp out routine overcharging of millions of passengers by some of Britain’s top rail operators. The failure of these companies to make Boundary Fares more freely available is scandalous and has been going on for years. It’s a practice that needs to stop – and passengers who have overpaid deserve compensation.”

What is the claim about? What are boundary fares?

Boundary fares allow passengers who own a Travelcard to travel beyond the zones it covers without doubling up on payment. Independent research has demonstrated that such fares are not readily available online or over the telephone and are rarely offered at ticket counters unless expressly requested. This practice is an abuse of the company’s dominant position and in breach of UK competition laws.

Who is eligible?

Passengers who owned a Travelcard at any time from 1 October 2015 and also purchased a rail fare from a station within the zones of their Travelcard to a destination outside those zones may be eligible for compensation under the Consumer Rights Act 2015 (“2015 Act”). This allows for a collective claim to be brought on behalf of a group of individuals who are alleged to have suffered a common loss. As a result of the 2015 Act, groups of persons who have all lost out do not need to bring an individual claim to bring compensation for their loss. Instead, these consumers may all receive compensation through a single, collective claim brought on their behalf by Mr Gutmann.

Affected passengers will not have to pay any legal costs to participate in the claim and do not need to do anything at this stage to be included in it.

What next?

The Competition Appeal Tribunal will now determine whether or not Mr Gutmann’s claim is allowed to proceed. Anyone who would like to receive further information about the claim, can visit the claim website, www.BoundaryFares.com, to sign up for updates.

Justin Gutmann represents the passengers bringing this legal case against Govia Thameslink Railway Ltd. Mr Gutmann has a wealth of experience working in the consumer rights sphere and he has strong expertise in the transport sector. He has spent a large part of his professional life dedicated to consumer welfare, public policy and market research, and he was recently approved as class representative in similar cases against the South Eastern and South Western rail franchises.

Mr Gutmann’s final job was Head of Research and Insight at Citizens Advice. He spent eight years working for London Underground. Mr Gutmann is represented by Charles Lyndon Limited and Hausfeld. His claim is funded by Woodsford, a global ESG and litigation funding specialist.

Commercial Regulatory Issues

Vultures in Litigation Funding—The Exception, Not the Rule

As litigation funding grows in popularity and legislation struggles to keep up—much attention is drawn to the outliers who fill funding opponents with fear. Unscrupulous funders get plenty of press coverage, further clouding already contentious issues. The FCPA Blog explains that multiple funders are currently facing civil suits for theft, fraud, and basically twisting the funding model into a dishonest profit center that harms clients and investors alike. Scams like double-promising shares of awards, or outright theft of funds make the entire concept of third-party funding seem suspect. It also adds fuel to the fires of those who want to over-regulate, or even curtail the practice altogether. These fraudsters aren’t just harming the Litigation Finance industry. They’re impeding access to justice, which is an essential component of legal funding. Ordinary people wronged or cheated by corporations, governments, or industry norms rarely are able to see their day in court. But litigation funding allows individuals and groups to have proper legal representation so cases can be adjudicated on a more level playing field. Thus far, funders have largely self-regulated. Ensuring that the unscrupulous are held accountable for misdeeds may become more important than ever in order to maintain integrity across the industry.
Announcements Commercial People Moves

Delta Capital Partners Management Welcomes Michael Callahan as Chief Operating Officer

Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, has announced the hiring of new senior executive Michael Callahan.

Mr. Callahan joins Delta as its Chief Operating Officer, where he will execute the firm’s strategic and tactical plans worldwide; lead investor relations; and oversee the implementation of new business initiatives, product development, and office openings.

Prior to joining Delta, Mr. Callahan worked at Boston Capital for 28 years, where he was a Senior Vice President and the Director of Asset Management. At Boston Capital, Mr. Callahan was responsible for a team of over 60 professionals monitoring and reporting on the performance of Boston Capital’s $7.7 billion portfolio, including both lower tier asset management and upper tier investor relations functions.  Mr. Callahan also led the team at Boston Capital that developed a proprietary asset management and reporting platform which was utilized throughout the company.

Christopher DeLise, Delta’s Founder, CEO and CO-CIO, stated, “We are very pleased to welcome Michael to the Delta team, where his extensive experience in asset management, investor relations, and investment company operations will be invaluable as Delta continues its global expansion and further enhances the firm’s strong position within the litigation and legal finance industry.”

Consumer

What’s in the New York Consumer Litigation Funding Act?

Litigation Finance has grown exponentially in recent years, with legislation trying to catch up. Opponents of the practice warn of frivolous litigation and usurious lending rates—owing to involvement from venture capitalists and other high-end investors. A recent New York Post editorial demanded increased oversight and new legislation governing the practice. National Law Review details that over nearly two decades, the litigation funding industry has evolved into a powerhouse force. It has created dynamics and partnerships that didn’t exist before, giving rise to a host of knotty concerns that must be untangled for the industry to gain mainstream acceptance and appeal. Several US states have adopted regulations that are already in place in some global jurisdictions. These new rules may place caps on the rates funders can charge, or mandate that funding agreements require specific types of disclosure or court approval. A new bill introduced before the New York State legislature, the New York Consumer Litigation Funding Act, includes an array of provisions. These include:
  • Communications with funders are protected under attorney-client privilege and work product rules.
  • Funders will not exercise control or decision-making over the cases they fund.
  • Referral fees to plaintiff lawyers are disallowed.
  • Third-party funding entities must register and post a bond.
  • Maximum annual interest rate will not exceed 36%.
  • Prepayment of the advance without penalty.
  • Funding agreements must disclose exact terms, in plain language, including the maximum possible amount the consumer will pay.
While these seem straightforward, some provisions here do not take all relevant factors into account. Fee and interest caps, for example, don’t consider that funders are taking 100% of the financial risk in a case. Still, it’s largely agreed that some formal regulation is necessary, and this bill may serve as a first step.