Trending Now

John Freund's Posts

3005 Articles
Commercial

Climate-Related Litigation is Coming. Who’s Ready?

After the United States, Australia leads the world in climate-related litigation. Some companies, like Rio Tinto, are making climate resolutions of their own. Many other ASX-listed companies are doing likewise—knowing that disclosures relating to climate impact may be coming sooner rather than later. Financial Review details that Australia is looking to compel its largest companies to develop and adopt climate targets, upgrades, and regular status reporting. With a federal election approaching, the climate is expected to take center stage in the public discourse over the coming months. Some say this sets up companies for the herculean task of managing shareholder profit expectations with the goals of climate activists and the needs of local communities. Both the plans themselves and public disclosures are fraught with risk. Currently, climate change disclosure is adapting to a world that’s changing at a dizzying pace. There exist multiple frameworks for voluntary reporting, with the one developed by the Task Force on Climate-related Financial Disclosures containing the most public support. As of now, no single framework has been adopted as the standard. Australian laws sometimes determine liability even when there is no deliberate fault. With that in mind, disclosure on climate targets can invite litigation, even when every good faith effort is being made to meet them. Does this mean companies are better off never disclosing their climate goals or progress? How does that impact the communities they serve? Clearly, there is much ambiguity on this subject. What seems to be needed is a more functional system that balances disclosure with responsibility.
Commercial

Akhmedov Divorce Settlement Hinges on Superyacht

It’s probably not a surprise that London’s biggest divorce settlement has taken years to finalize. The contentious divorce between Tatiana Akhmedova and Farkhad Akhmedov has been going on since 2014. Bloomberg Quint explains that Akhmedova was awarded 41% of her husband’s assets, much of which he earned in the oil and gas industry. This comes to about GBP 450 million. The most prized asset in the settlement is the Luna, a massive luxury superyacht currently anchored in Dubai. The Luna alone is worth roughly $353 million, which comprises a considerable portion of the former Mrs. Akhmedova's settlement. Akhmedova has a funding agreement with Burford Capital. While they declined to comment on the specifics of the case, they reject Akhmedov’s claim that their client is acting in bad faith and that they are involved in a ‘wild goose chase’ in an array of jurisdictions. Meanwhile, Farkhad Akhmedov remains adamant that his ex will not obtain any part of his assets. While he appears to have no legal basis to dispute the order, Akhmedov has stated that he’d rather burn his assets than give them to his former wife. In order to see her share of marital assets, Akhmedova took her own son to court, accusing him of helping his father hide capital and valuable items. Later, a settlement of $100 million to Akhmedova and $15 million to Burford Capital was proposed, but never agreed upon. This forced Akhmedova to continue the pursuit of her award. Akhmedova has managed to seize a helicopter and a private plane. Her hunt for assets is being stymied, however, by her husband changing ownership of items or moving them into other jurisdictions. James Power, part of Akhmedova’s Burford Capital-funded legal team, stated that well-monied individuals can delay the inevitable, but only for so long. 
Commercial

Will Federal Courts in New Jersey Soon Require Funding Disclosure?

As the use of litigation funding grows more mainstream, accusations that the industry is opportunistic, greedy, and suspiciously secretive abound. Some have suggested that litigation funding will lead to a glut of frivolous cases and clogged court dockets, and therefore increased regulation is necessary.  Ropes & Gray explain that a proposed rule in New Jersey Federal Courts would require automatic disclosure whenever third-party litigation funding is used. What specific disclosures?
  • The identity of the funder
  • Whether funder approval is required for settlements or decision-making
  • The funder’s financial interest (specifics of the funding agreement)
In addition, parties can request additional information on funding agreements if they show undue influence from funders. This can include conflicts of interest between funders and claimants, or situations where class members aren’t being protected in favor of funders. Interestingly, the wording of the proposed rule addresses “funding for some or all” of legal fees and expenses. This means it’s unclear whether the proposed rule applies to third-party litigation funding only, or whether contingency fee arrangements might also require similar disclosures.   The proposed rule would mark a significant change in regulation—one that could reverberate throughout the US. Currently, the top five US district courts for patent litigation (a major source of cases for funders) do not require disclosure of funding information beyond identifying the funding entity by name. The Northern District of California, for example, has ruled several times that disclosure of third-party funding is unnecessary and often irrelevant.   As drafted, the proposed rule is broad and ambiguous. Some suggest that it could deter potential claimants from seeking out legal funding. Those with legitimate need though, are likely to be undeterred. What is clear is that regulations requiring disclosure of third-party funding are on the rise.
Commercial

Funding Support for LawTech Startup ‘Find Others’ Grows

Find Others, a UK-based lawtech startup, has secured funding from multiple prominent legal entities. These include Australian law firm Shine and UK litigation funder Woodsford. The focus of Find Others is on collective actions. Litigation Futures explains that Find Others is actually the former Glow Legal, rebranded with a host of free online tools, allowing users to develop campaigns and petitions. Ultimately, the plan is to move on to book building for collective actions large enough to attract interest from litigation funders and prominent law firms. Find Others is meant to address the expensive and outdated processes used to begin collective actions in the courts. One co-founder explains that Find Others has developed a solution to modernize this sector of the industry—and that the backing of Shine Lawyers and Woodsford will be invaluable the startup moves forward.
Commercial

Litigation Funder LegalPay Fundraises with Accelerator VC

Tech-based litigation funder LegalPay has secured seed funding to expand into Indian markets. 9Unicorns and Accelerator VC led this round of funding, also supported by several angel investors. BW Disrupt details that LegalPay was founded last year by Kundan Shahi. Its focus is on late-stage cases, or those nearing resolution or settlement. LegalPay plans to capitalize on the COVID-related spike in litigation.
Announcements Commercial

Validity Welcomes Marlon Becerra and Shao-Jia Chang for the 2021 Equal Access Fellowship

Validity Finance is pleased to welcome Harvard law students Marlon Becerra and Shao-Jia Chang for its 2021 Equal Access Fellowship. The program, in its third year, provides a 10-week paid summer fellowship to first-year law students of diverse backgrounds. The Equal Access Fellows spend the first half of their summer at Validity learning basic principles of litigation funding, and the second half working at a legal non-profit of their choice. Validity, which covers Fellows’ salary for the entire 10-week program, is one of the only litigation funders to provide such a program for first-year law students. Mr. Becerra and Ms. Chang will both work at Validity for the first five weeks of their fellowship, from June 1 through July 3. They will assist in analyzing potential case investments, participating in meetings with claimants and lawyers, and conducting legal research on topics related to litigation and dispute funding. Like many major law firms, Validity is introducing a hybrid return to work, mixing in-person visits to its New York office with remote work, as the rest of its team has been doing in recent months. “We’re proud to have Marlon and Shao join us as Equal Access Fellows for the summer of 2021,” said Validity Finance founder and CEO Ralph Sutton. “Both have outstanding backgrounds, including personal histories that may not have suggested they’d end up at one of the nation’s top law schools. We’re also pleased to have arrived at a point in the pandemic where we can offer an in-person experience for Marlon and Shao.” The two Fellows were chosen from a pool of 36 applicants from 18 top-tier law schools. Candidates submitted academic transcripts and essays addressing their interest in litigation funding and describing how they have overcome personal challenges. Mr. Sutton commented, “Given the past year’s events — pandemic-related and in terms of social justice — there is a heightened need for young lawyers interested in helping to expand equal access to the civil justice system, which is one of Validity’s core mandates as a litigation funder.” About Equal Access Fellow Marlon Becerra A native of Jackson Heights, New York, Marlon was the first member of his family to attend college. He obtained his B.A. in Economics from Political Science from Hampshire College and is now a rising second year student at Harvard Law. Having to return to New York in the middle of his first year of law school, Marlon created an initiative called Civic Engagement and Social Justice for Legal Outreach, Inc. The non-profit teaches New York City high school students of color how to be more proactive leaders in addressing social issues. “As many of the students come from the inner-city, they are particularly interested in addressing the obstacles preventing them from having an equal opportunity to succeed in high school and in college,” he wrote in his personal statement. “I partnered with attorneys from firms across the city to support the students’ efforts to develop and implement campaigns to address their social justice issues.” During the summer of 2020, Marlon worked for the NYC Department of Social Services’ Employment Law Division. As he notes, “I had the opportunity to write a memorandum recommending how COVID-19 guidelines will impact the agencies’ accommodation policies. I saw the importance of considering people’s access to resources and justice, as we focused on urgent issues impacting one of the city’s largest agencies that both hires and serves primarily minority communities.” At Harvard, Marlon is a member and Section Representative of the law school’s chapter of the American Constitutional Society for Law and Policy, which promotes progressive legal change in order to realize economic and social justice. He is also a member of La Alianza, a student-run organization composed of Latinx and Latin American students interested in issues affecting the Latinx community at Harvard Law, and a member of HLS First Class, a student affinity group for first generation law students. About Equal Access Fellow Shao Chang Shao Chang grew up in a rural Northern California town of only 4,500 residents, where she notes, “few families lock their front doors, and many people proudly leave their keys in the ignition.” She writes of frequent bias against her own parents and her own early struggles with proficiency in English. Shao obtained her B.A. in Psychology and Legal Studies from the University of California, Berkeley, in 2017. She received Dean’s Honors and Highest Honors in Legal Studies, and is a member of Phi Beta Kappa. Following college, Shao spent several years as a field representative and aide for Napa-area Congressman Mike Thompson. She recalled taking on projects and facing circumstances that were considered too difficult to accomplish in rural parts of the district, which included her hometown. Motivated by a desire to increase equity and access, she asserts, “I did not believe that infeasibility is a reason not to try, especially when it came to the neediest area in the district.” At Harvard Law, Shao is the External Vice President of the school’s Mock Trial Association and Willem C. Vis Moot Team, and is a sub-citer for the Harvard Journal on Legislation and the Harvard Negotiation Law Review. She is also a member of the Social Committee of the Asian Pacific American Law Students Association at Harvard, a member of the Reproductive Justice Team of the Mississippi Delta Project at Harvard, and serves on the board of the Women’s Law Association. About Validity Validity is a commercial litigation finance company that provides non-recourse investments for a wide variety of commercial disputes. Validity’s mission is to make a meaningful difference in our clients’ experience of the legal system. We focus on fairness, innovation, and clarity. For more, visit www.validityfinance.com.
Read More
Consumer Special Features

Both Law Firms and Plaintiffs Benefit from the Expanding Consumer Legal Funding Industry

The following piece is a contribution by Charles W. Price, CEO of Capital Now Funding, LLC.  The following scenario was once all too common – plaintiffs injured in an accident, waiting impatiently for a complex lawsuit to settle. With the clock ticking and the plaintiff often unable to work, there was little they could do except wait for the phone to ring while medical and other bills kept piling up. Meanwhile, their attorneys must candidly tell them that it will be weeks to months or years before they might receive their settlement money. Faced with this situation, it was not at all surprising that clients grew increasingly frustrated, gradually giving way to worry, fear and anxiety. And dealing with this level of stress, plaintiffs were capable of placing unneeded pressure on their attorneys to settle before the legal process had fully played out. Attorneys, who naturally want to get the best possible settlement for their clients, were often faced with having to settle prematurely even though they knew that a much better resolution could soon be reached. Fortunately, a better solution has emerged in recent years that meets the needs of all parties – Consumer Legal Funding. Consumer Legal Funding is often mislabeled and referred to as a pre-settlement loan or a loan against a lawsuit, but it is not technically a loan. Consumer Legal Funding is legal funding that is advanced from a portion of the consumer’s future settlement proceeds. As defined by Eric Schuller with the Alliance for Responsible Consumer Legal Funding, providing a client with consumer legal funding is merely the purchase of an asset – a portion of the consumer’s future settlement proceeds. In essence, plaintiffs are borrowing from their own future settlement funds. How Do All Parties Benefit? The real story of consumer legal funding is best viewed in light of the benefits it provides. For the plaintiffs, the benefits include:
  • Immediate, much-needed financial assistance to pay medical, housing and living expenses while their legal claim is in process
  • Zero to no risk to the consumer, since consumer legal funding is non-recourse (which means that if the plaintiff loses the case, they do not have to pay the funding company back)
  • Better relationships with their attorneys, as attorneys generally play a positive role in approving consumer legal funding
  • Avoids the need to turn to other, riskier forms of borrowing, which may result in unnecessary debt
  • Plaintiffs are in a much better position to receive the best possible legal settlement
For attorneys representing the plaintiffs, the benefits include:
  • Reduced pressure to settle a case too soon and accept a settlement that is less than deserved
  • Adequate time to get the best possible outcome for clients
  • Immediate relief for plaintiff clients struggling with bill payments when they may be unable to work due to accident injuries
  • Better relationships with their clients, who need the legal funding as well as the added time for the attorney to properly settle their case
  • Improved communications with their clients during the course of the case, as clients who are under less financial pressure will make for a better settlement outcome
  • More favorable attorney reviews and increased referrals from happier clients
Understanding The Basics of Consumer Legal Funding Once you know how the consumer legal funding process works, it’s easy to see what a valuable solution it is for both plaintiffs and attorneys. Pre-settlement legal funding is a great description of this funding, because the funding company actually provides funds to a plaintiff prior to the legal settlement of their case. The pre-settlement funds are usually taken from the portion of the total funds that will be dispersed at the time the case is settled. Pre-settlement funds are intended to help a plaintiff cover medical and living expenses until the case settles and settlement funds are received. But it all begins with the attorneys. Why Law Firms Should Be Involved In The Process It is essential for the law firm to approve the funding amount given to the plaintiff, as the attorney must confirm that the case is legitimate and has a strong likelihood of being settled favorably. This approval by the attorney is the signal for the funding company that the plaintiff’s case is deserving of legal funding. Pre-settlement funds do not have to be repaid if the plaintiff were to lose the case. Most often, when the plaintiff wins or favorably settles their case, the attorney will repay the pre-settlement amount to the funding company out of the settlement funds at the time the case is settled. Clearly, providing plaintiffs with the ability to receive financial assistance while their legal claim is in process is a benefit when they have nowhere else to turn and no other assets of significance to leverage for capital. As The Consumer Legal Funding Industry Has Evolved, It Has Greatly Improved In the past, some attorneys may have been hesitant to recommend pre-settlement funding for their clients because they may have been concerned over the perception of getting involved in the process, or worried about it from an ethics compliance standpoint. However, over recent years, bar associations and state licensing agencies have upheld, and now agree, that pre-settlement legal funding is a highly beneficial product. Additionally, in the past, when there were not a lot of options for pre-settlement legal funding companies, clients may have been charged unnecessarily high fees and interest on funds with an indefinite payback period. As a result, if the case went on longer than expected, the client could be left with a payoff that was more than their settlement. This just isn’t the case any longer. As the industry has matured and evolved, products and options have improved. States have implemented laws regulating the amount of fees that can be charged by pre-settlement funding companies and have required increased disclosure and transparency. Additionally, the fees being charged have become more competitive, and companies like Capital Now Funding have joined the industry who are dedicated to providing fully transparent payoffs that are fixed for the life of the case with zero interest. What is most essential in order to benefit the consumer is that law firms have access to legal funding companies they trust and can recommend to their clients. It is important that the attorney helps their client properly evaluate the funding company. Always look for a legal funding company with positive reviews, and one that is forthcoming about its fee structure. Everyone Wins As an attorney or law firm, you’re only going to see the benefits of pre-settlement funding if you choose the right consumer legal funding provider. Different providers have different terms and conditions, different fees and interest rates, and different levels of service and communication. Make sure you choose a good fit for you and your clients’ needs. About the Author Charles W. Price is Chief Executive Officer of Capital Now Funding, LLC, a nationwide provider of pre-settlement funding for personal injury cases. Capital Now Funding provides industry leading Fixed Fee funding with zero interest, which protects clients and preserves their ultimate settlement amount. For more information, you can contact Charles at cwprice@capitalnowfunding.com.
Read More
Commercial

Why Choose a Reliable Legal Funder? Ask Feltex Carpet!

Can failure to provide security for costs derail an otherwise meritorious case? It appears that’s what happened in a New Zealand-based collective action against Feltex Carpets. The case was funded, but stopped abruptly when funders failed to provide security for costs. Why did that happen? Omni Bridgeway details that in a funded class action, defendants are entitled to security for costs. The judge gave a specific “unless” order, stating that the case would end if the security was not filed. An appeal was lodged and it failed. Courts stated that it was against the public interest to allow the case to go forward. The judge stated his skepticism that the funders could meet their obligations to the court. What can others do to avoid the fate of the Feltex case? Here’s what to consider when choosing a litigation funder:
  • Reputation. Is the funder well-suited to the type and subject matter of your case? Are there experts on staff? Will funders assist or encourage the use of investigations or experts?
  • Relationships. Does the funder have experience or connections in the jurisdiction where your case will be tried? Are they connected to a specific law firm or larger business entity?
  • Transparency. Is there adequate capital? What about insurance? Can funders meet their obligations as stated in the funding agreement?
  • Track record. Do they make money for investors? What is their record of choosing successful cases?
  • Peace of Mind. Does the funding agreement seem clear, straightforward, and fair? Are the representatives of the funder listening to you and answering your questions fully and completely?
Asking the right questions will go a long way toward finding a reliable funder in which you can feel confident. The legal funders you partner with are a vital part of the team you’re building, so ensure they meet the above criteria.
Commercial

Woodsford Promotes Alex Hickson to Senior Investment Officer

Woodsford Litigation Funding has recently announced the promotion of Alex Hickson to Senior Investment Officer. Hickson joined the firm in 2019. Woodsford went on to explain Hickson’s return to Australia to grow business in that market—along with Clare Owen. The firm recently earned its AFSL, allowing it to fund new class action claims under new Australian regulations. That makes Woodsford the first non-Australian based funder allowed to fund such claims in the land down under. 
Commercial

LCM Funds Carillion Claim against KPMG

Litigation Capital Management is providing capital in a High Court claim against KPMG. The case revolves around KPMG’s audits of Carillion’s financials amid losses of GBP 250 million. Proactive Investors explains that LCM has a long tradition in funding insolvency cases. Some refer to LCM as the ‘insolvency funder of choice’ in the UK. LCM executive vice chair Nick Rowles-Davies stated that the funder is delighted to be supporting creditors who have suffered due to KPMG’s actions. Nearly 200,000 employees lost their jobs when Carillion underwent compulsory liquidation after amassing nearly GBP 1.5 billion in debt—despite receiving a ‘clean bill of health’ from KPMG. The FRC is expected to publish its findings on KPMG’s audits soon.
Commercial

Federal Equity Receivers Can Improve Recoveries with Legal Funding

Contingency arrangements are often used by federal equity receivers when financial constraints keep them from pursuing litigation against fraudsters. These arrangements can shave off a sizable portion of the expected recovery—up to 50% in some cases. Omni Bridgeway explains how litigation funding can maximize recoveries in a way that’s flexible and adaptable. Portfolio claims in particular—but how else can litigation funding help receivers?
  • Funders often conduct research to confirm the strength of a claim.
  • Sometimes funders can cover fees and expenses pursuant to a preliminary evaluation of a prospective case. This allows limited budgets to be maximized.
  • Estates that use funding have more flexibility in planning and forming a legal team.
  • Hybrid approaches may be used, and portfolio funds may be released on a case-by-case basis.
Portfolio funding is a growing industry that can be applied to estate recoveries to maximize returns. Diversifying the portfolio creates less risk than bundling similar cases, and is more likely to attract funders.
Announcements Commercial

Harvard Law Students Marlon Becerra and Shao-Jia Chang Selected for Validity Finance’s 2021 Equal Access Fellowship

Leading litigation funder Validity Finance has selected Harvard law students Marlon Becerra and Shao-Jia Chang for its 2021 Equal Access Fellowship. The program, in its third year, provides a 10-week paid summer fellowship to first-year law students of diverse backgrounds.

The Equal Access Fellows spend the first half of their summer at Validity learning basic principles of litigation funding, and the second half working at a legal non-profit of their choice. Validity, which covers Fellows’ salary for the entire 10-week program, is one of the only litigation funders to provide such a program for first-year law students.

Mr. Becerra and Ms. Chang will both work at Validity for the first five weeks of their fellowship, from June 1 through July 3. They will assist in analyzing potential case investments, participating in meetings with claimants and lawyers, and conducting legal research on topics related to litigation and dispute funding. Like many major law firms, Validity is introducing a hybrid return to work, mixing in-person visits to its New York office with remote work, as the rest of its team has been doing in recent months.

“We’re proud to have Marlon and Shao join us as Equal Access Fellows for the summer of 2021,” said Validity Finance founder and CEO Ralph Sutton. “Both have outstanding backgrounds, including personal histories that may not have suggested they’d end up at one of the nation’s top law schools. We’re also pleased to have arrived at a point in the pandemic where we can offer an in-person experience for Marlon and Shao.” The two Fellows were chosen from a pool of 36 applicants from 18 top-tier law schools. Candidates submitted academic transcripts and essays addressing their interest in litigation funding and describing how they have overcome personal challenges. 

Mr. Sutton commented, “Given the past year’s events — pandemic-related and in terms of social justice — there is a heightened need for young lawyers interested in helping to expand equal access to the civil justice system, which is one of Validity’s core mandates as a litigation funder.”

About Equal Access Fellow Marlon Becerra

A native of Jackson Heights, New York, Marlon was the first member of his family to attend college. He obtained his B.A. in Economics from Political Science from Hampshire College and is now a rising second year student at Harvard Law.

Having to return to New York in the middle of his first year of law school, Marlon created an initiative called Civic Engagement and Social Justice for Legal Outreach, Inc. The non-profit teaches New York City high school students of color how to be more proactive leaders in addressing social issues. “As many of the students come from the inner-city, they are particularly interested in addressing the obstacles preventing them from having an equal opportunity to succeed in high school and in college,” he wrote in his personal statement. “I partnered with attorneys from firms across the city to support the students’ efforts to develop and implement campaigns to address their social justice issues.” During the summer of 2020, Marlon worked for the NYC Department of Social Services’ Employment Law Division. As he notes, “I had the opportunity to write a memorandum recommending how COVID-19 guidelines will impact the agencies’ accommodation policies. I saw the importance of considering people’s access to resources and justice, as we focused on urgent issues impacting one of the city’s largest agencies that both hires and serves primarily minority communities.” At Harvard, Marlon is a member and Section Representative of the law school’s chapter of the American Constitutional Society for Law and Policy, which promotes progressive legal change in order to realize economic and social justice. He is also a member of La Alianza, a student-run organization composed of Latinx and Latin American students interested in issues affecting the Latinx community at Harvard Law, and a member of HLS First Class, a student affinity group for first generation law students.

About Equal Access Fellow Shao Chang Shao Chang grew up in a rural Northern California town of only 4,500 residents, where she notes, “few families lock their front doors, and many people proudly leave their keys in the ignition.” She writes of frequent bias against her own parents and her own early struggles with proficiency in English. Shao obtained her B.A. in Psychology and Legal Studies from the University of California, Berkeley, in 2017. She received Dean’s Honors and Highest Honors in Legal Studies, and is a member of Phi Beta Kappa. Following college, Shao spent several years as a field representative and aide for Napa-area Congressman Mike Thompson. She recalled taking on projects and facing circumstances that were considered too difficult to accomplish in rural parts of the district, which included her hometown. Motivated by a desire to increase equity and access, she asserts, “I did not believe that infeasibility is a reason not to try, especially when it came to the neediest area in the district.” 

At Harvard Law, Shao is the External Vice President of the school’s Mock Trial Association and Willem C. Vis Moot Team, and is a sub-citer for the Harvard Journal on Legislation and the Harvard Negotiation Law Review. She is also a member of the Social Committee of the Asian Pacific American Law Students Association at Harvard, a member of the Reproductive Justice Team of the Mississippi Delta Project at Harvard, and serves on the board of the Women's Law Association.

About Validity Validity is a commercial litigation finance company that provides non-recourse investments for a wide variety of commercial disputes. Validity’s mission is to make a meaningful difference in our clients’ experience of the legal system. We focus on fairness, innovation, and clarity. For more, visit www.validityfinance.com. 

Read More
Announcements Commercial

KBRA Assigns Preliminary Rating to TVEST 2021A, LLC Note

Kroll Bond Rating Agency (KBRA) assigns a preliminary rating to one class of notes from TVEST 2021A, LLC, an asset-backed securities (ABS) transaction collateralized by litigation finance and medical receivables serviced by Experity Ventures LLC ("Experity"). TVEST 2021A represents Experity’s second ABS transaction collateralized by litigation finance and medical receivables, following the issuance by TVEST 2020A, LLC in August 2020. Experity, formed in April 2019, is the parent company of the various receivable originators including Thrivest Legal Funding, LLC, a direct to market pre-settlement legal funding company with a history of originations dating back to 2009 and ProMed Capital Venture LLC, a leading medical lien funding company that has been originating since 2017. Experity is also the parent of six other litigation finance receivable originators that were formed in connection with strategic financing and operational partnerships with third parties. The portfolio securing the transaction has an aggregate discounted receivable balance ("ADPB"), of approximately $70.3 million as of the April 30, 2021 cutoff date. The ADPB is the aggregate discounted cash flows of the collections associated with the TVEST 2021A portfolio’s litigation funding receivables and medical receivables. The discount rate used to calculate the ADPB is a percentage equal to the sum of the assumed interest rate on the Class A Notes, the servicing fee rate of 1.00%, and an additional 0.10%. As of the Cutoff Date, medical receivables comprise 56.7% of the portfolio by advance amount and have an average advance to expected settlement case value ("Expected Case Worth Ratio") of 22.84%. Litigation receivables comprise the remaining 43.3% of the portfolio by advance amount and have an Expected Case Worth Ratio of 7.92%.
The Receivables are sold by the various originators, and two special purpose vehicle affiliates, to the seller who then sells the Receivables to the issuer. The Class A and B Notes are issued pursuant to an indenture under which the issuer pledges the Receivables to the trustee. The Class A Notes benefit from credit enhancement in the form of overcollateralization, subordination and a cash reserve account. Click here to view the report. To access ratings and relevant documents, click here. Disclosures Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above. A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here. Information on the meaning of each rating category can be located here. Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com. About KBRA Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
Read More
Announcements Commercial

Delta Capital Partners Management Launches Delta Defense Solutions – Lit Fin Industry’s First Comprehensive Set of Funding and Risk Mitigation Solutions for Defendants and Respondents

Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, is pleased to announce the launch of a new venture, Delta Defense Solutions ("DDS"). DDS offers defendants and respondents funding to pay the legal costs associated with their defense, including professional fees, experts, tribunal costs, and the cost of any utilized risk mitigation solutions. Much like a typical plaintiff-side litigation funding arrangement, Delta typically provides DDS solutions on a non-recourse basis such that if the defendant loses then it is not obligated repay Delta its capital investment. There are many ways that defense solutions can be structured, and each solution offered through DDS is unique and highly customized. Defense solutions are quite versatile and can be used by a range of defendants and respondents, including those in cost-shifting jurisdictions and whether involving court-based litigation or arbitration. Defendants benefit from DDS by obtaining funding and gaining access to risk mitigation solutions that otherwise may be very difficult and/or costly to obtain, including customized insurance solutions and structured financial products offered through Delta's venture partners.  Additionally, if a party is involved in multiple pieces of litigation (whether as a defendant, respondent, or plaintiff), then DDS offers portfolio financing solutions that provide more favorable terms compared to individual case funding arrangements for defendants or plaintiffs. Christopher DeLise, Delta's Founder, CEO, and CO-CIO, stated, "Delta's years of experience and success with offering litigation funding solutions for plaintiffs has enabled Delta to develop proprietary solutions for defendants and respondents.  By partnering with top-tier insurance and structured finance professionals, Delta is pleased to be able to offer bespoke, comprehensive, cutting-edge defense solutions across the globe.  As the market continues to evolve, we believe defense-oriented legal finance solutions will become very popular and we are proud to be the first in the industry to offer a comprehensive set of funding and risk mitigation solutions for defendants and respondents." About Delta
Delta Capital Partners Management LLC is a global private equity firm specializing in litigation and legal finance, judgment enforcement, asset recovery, and related strategies. Delta provides capital and related services to individuals, businesses, private investment funds, law firms and other professional service firms across the world that seek to hedge their financial exposure, reduce legal spending, enhance the probability of a successful and timely resolution of claims, and maximize the effectiveness of their core businesses.
Read More
Commercial

Appeals Courts Clarify Litigation Funding for Bankruptcy

At present, the United States has about 40 litigation funding entities actively funding cases. Assets under management are estimated to be close to $10 billion. In the bankruptcy arena, some say legal funding isn’t growing. But there are two recent appeals court decisions that may change that. Pullman & Comley detail the two relevant appeals decisions. First, Dean v Seidel, in the US District Court for the Northern District of Texas. Courts approved a legal funding agreement where $200,000 was given to a trustee to prosecute claims. The recovered funds would be distributed in order: trustee commission, reimbursement of the advancing creditor, a 30% return on investment, and finally the balance would go to creditors. The arrangement was challenged as unfair to creditors, as one would receive a larger share, and again because the recovery was not strictly for the benefit of the estate. Courts were unmoved by these arguments and pointed out that the trustee did attempt to reach an agreement on a contingency fee arrangement, but was unsuccessful. Ultimately a lack of applicable case law meant that despite legitimate concerns in regard to ethics, there was no actual wrongdoing. In another case, Valley National Bank v Warren, funders sought to finance litigation against the bank for its role in fraudulent transfers, and for aiding and abetting breach of duty. Courts approved what many considered an unusual funding agreement in which funders would cover monthly expenses, and would later be reimbursed plus a whopping 85% of any recovery. The bank objected to the agreement, saying it would hinder efforts to liquidate and negotiate a settlement. The appeals court held that the bank did not have standing to appeal, and that in fact, the bank was not aggrieved because it wasn’t directly impacted by the approval of the agreement. In all likelihood, litigation funding in bankruptcy will increase in usage.
Commercial

How Might Cryptocurrency Impact Litigation Funding?

It was big news last year when Ava Labs debuted an ILO or Initial Litigation Offering. The ILO was released through the open-source platform Avalanche. Without going into minute details, Avalanche provides the ability to connect existing blockchain platforms into a single ecosystem in which digitized assets can be bought, sold, or traded. FRT Services details that these ILOs are similar to better-known Initial Coin Offerings. But instead of being applied toward digital coins or services, ILOs are used to directly fund litigation. In essence, it’s a micro-investment in a lawsuit. Ava Labs is currently working out the regulatory details. How might this impact the industry on the whole? For starters, micro-investors will likely choose cases to fund based on trends or subjects rather than by the individual merits of a case. ILOs might also lead to more funded cases with a larger funding pool. For now, all eyes will likely be on the first ILO-funded case, Apothio LLC v Kern County et al. Time will tell how blockchain impacts litigation funding on the whole.
Commercial

Harbour Founder Discusses Litigation Funding Trends

Susan Dunn, a founder at Harbour Litigation Funding, recently gave a wide-ranging interview discussing pertinent issues regarding Litigation Finance, including global trends, the debate over value, defendant-side funding, and more. HFW Litigation had an array of relevant questions for Dunn. The topic of cross-jurisdictional litigation came up early, as Harbour alone funds in 17 jurisdictions and growing. Dunn is even in talks with a nation state looking to utilize funding to recoup capital that has left the country. Brazil, for example, is considered to be an up-and-coming growth area for legal funding. Portfolio funding is still growing in usage and remains one of the more flexible, adaptable funding models. Dunn explains that while legal funding is discussed as a way to get legal matters off company balance sheets, that isn’t what she sees in her work. Dunn also expressed that the discussion of value needs to be more common and possibly more forceful. Ultimately, legal funding has to make money for investors. Dunn explained why Harbour doesn’t fund much arbitration, saying that results are often “mixed.” She states that Harbour has done better in courts than in arbitration. And of course, appeals aren’t an option in arbitration cases. Insolvency is on everyone’s mind since COVID, but Dunn states that these cases will take longer than expected. When contracts are canceled, for example, it’s because of an inability to pay. Such defendants aren’t good choices for funders—since there’s little chance of recovering an award even with a winning case. A ‘good case’ is only good when defendants have assets. In the coming years, Dunn suggests that law firms will need to improve their tech for better data management and analysis. 
Litigation Finance News
Announcements Commercial

Australia: The Evolution of a Litigation Finance Market

On Tuesday, June 15th, 6pm EST, Litigation Finance Journal is hosting a roundtable discussion on the evolution of Litigation Finance in Australia. Topics will include the increasing threat of industry regulation, the Joint Parliamentary Committee's perspective on litigation funding and class actions, how Australia may serve as a blueprint of sorts for global jurisdictions including the US, UK and EU, and the structural and cultural differences inherent to running a litigation funding firm in Australia.

As followers of the lit fin industry are well aware, Australia is the nation where Litigation Finance was born. The funding industry has come a long way since then... so far, in fact, that there is increased talk of regulation given the massive class actions that are taking place. But will such regulation be fruitful or counterproductive? And what about the many benefits Litigation Finance brings to Australian society, such as increased access to justice and a more robust legal landscape?

Hear from prominent founders and CEOs of major Australian-based litigation funders, including Omni Bridgeway, LCM and CASL, as they discuss the evolution of the Litigation Finance market in Australia, as well as the lessons other jurisdictions such as the US, UK and EU can learn from Australia.

This is a can't miss digital event!

  • When: Tuesday, June 15h, 6pm EST (Wednesday June 16th, 8am Sydney time).
  • What: Panel discussion and Q&A with attendees. Audio-only event.
  • Who: CEOs and Founders from three major Australian litigation funders.  

This 1hr and 15min event will be recorded, and all ticket holders will receive a recording of the event. So if you can't make the time, you can still access the conference!

The event will be moderated by Ed Truant of Slingshot Capital. 

For more information and tickets, please visit this link.

We hope you enjoy! - The LFJ Team

Read More
Commercial

LIDW Looks at Litigation Funding and Class Actions

London International Disputes Week 21 includes numerous discussions on dispute resolution. This year’s theme, Looking forward: Change, Challenge, and Opportunity, encapsulates how the legal and financial worlds have had to adapt to a rapidly changing landscape. LIDW2021 details that Tuesday’s sessions included a variety of relevant topics, from collective redress and class actions to litigation funding and the agreements that govern them. The group brought attention to some of the recent innovations the industry has made, including those pertaining to class actions. These include leveraging tech to sort through potential claimants, enabling similar smaller claims to share costs and risks, and opt-out provisions. The group discussed the recent Merricks vs Mastercard case, which led to a landmark judgment for consumers. The discussion featured Boris Bronfentrinker of Quinn Emanuel. This case, Bronfentrinker explained, ignored other classes of consumers—such as intermediate purchasers. While dissecting the issues, Bronfentrinker suggested that courts should develop the common law while innovating and adapting—but in an incremental way. Hausfeld’s Lucy Pert explained why litigation funding is unlikely to result in a glut of frivolous lawsuits. Adverse costs orders will dissuade some, but overall, funders aren’t interested in bankrolling frivolous lawsuits. Insurers are also unlikely to offer coverage for such suits. David Walker of Deminor, in his speech, juxtaposed the altruism of increasing access to justice with the pragmatism of the need to make money for investors. As he explains it, the goal is to use economic know-how to develop funding models that work for funders, lawyers, and clients. The session wrapped with an enthusiastic defense of Damages Based Agreements, and a generally positive tone about the future of Litigation Finance.
Announcements Consumer

Legal-Bay Reports Class Action Filings in Peloton Treadmill Defaults

Legal-Bay, The Pre Settlement Funding Company, reports an update in the lawsuit filings against exercise equipment company, Peloton. Class-action suits have been filed in courts of both the Northern District of California and Eastern District of New York; as a result a recall has been initiated on the Tread+ model treadmill. Peloton's exercise machine is allegedly responsible for accidents involving pets and children. The high-end treadmill company is being accused of fraudulent advertising, as the images in their media and print ads show young children near the machines, indicating the product was safe for use around them. However, according to the lawsuits, pets and children can easily be trapped underneath the treads causing injury, and in one case, even death. Legal-Bay is prepared to assist with the numerous Peloton plaintiffs who may be seeking settlement loans. They are considered one of the best lawsuit loan funding companies in the industry, and offer a lightning-fast approval process. Chris Janish, CEO, commented, "We are deeply concerned with the injuries that the Peloton treadmill can cause.  As a result of the recent recall, Legal-Bay is actively considering cash advances for plaintiffs on select cases at this time." If you're a plaintiff involved in an active Peloton injury lawsuit and need an immediate cash advance against an impending lawsuit settlement, please visit Legal-Bay HERE or call toll-free at 877.571.0405. Legal-Bay remains dedicated to helping clients with their Peloton injury claims. Any new clients that need cash now can apply for loan settlement funding to help get through their financial crises. Legal-Bay funds all types of loans for lawsuits including car accidents, personal injury, medical malpractice, and more. Legal-Bay's settlement loan funding programs are designed to provide immediate cash in advance of a plaintiff's anticipated monetary award. The non-recourse law suit loans—sometimes referred to as loans for lawsuit or loans on settlement—are risk-free, as the money doesn't need to be repaid should the recipient lose their case. Therefore, the lawsuit loans aren't really loans, but rather cash advances. To apply for a loan on lawsuit now, please visit the company's website HERE or call toll-free: 877.571.0405 where agents are standing by.
Read More
Commercial

UC Budget Approval Focuses on IP as a Budgetary Source

The University of California Board of Regents passed the 2021-22 budget at its most recent virtual meeting. The budget includes mental health support for students, open access for research, and finding new ways to innovate and support entrepreneurship. How will the university accomplish these goals without raising tuition? Partially through litigation funding. The Daily Californian details that the new budget is nearly $100 million larger than that of the previous year. Updates to cybersecurity are paramount, especially with the ongoing adoption of remote learning. Some say that the recently passed budget will not cover the necessary upgrades for the schools’ cybersecurity needs. Also added to this year’s budget will be vaccine support for unvaccinated students, and updates to the school’s Eligibility in Local Context (ELC) program that fosters socioeconomic and geographic diversity. The board also approved a special committee that will advance entrepreneurship and innovation while reducing obstacles caused by bureaucracy. This will include revising older, outdated policies and focus on the success of undergrads and faculty. UC regents recognize that some communities need more help than others to succeed. To expand available funding without raising tuition, regents are looking into litigation funding in order to monetize existing IP. By using third-party legal funding to support IP lawsuits, the university can pursue litigation with capital from funders—reaping the benefits without taking on risk. Funders get a cut of any award, and UC receives payouts they wouldn’t have pursued without funding. These cases take time, but can provide a much-needed boost to university budgets. If UC decides to go this route and utilize Litigation Finance, it may allow them to pursue all the changes and upgrades in this year’s plan without burdening students with higher tuition. In that way, litigation funding increases access to education, as well as justice.
Commercial

Morgans Agrees to $5.5 Million Settlement Payout

One of the largest wealth management entities in Australia, Morgans, has agreed to settle its lawsuit with clients. The issues allegedly  stemmed from one Brisbane-adjacent branch of the company that repeatedly caused concern for compliance officers. Financial Review explains that even though Morgans has defended itself against accusations of bad advice and poor management, their own internal investigations were spurred by suspicion of problems at the branch. The case has been active for more than two years. Spokespeople for Morgans maintain that the proposal for a settlement payout is not an admission of wrongdoing or liability on their part. David Wilkins once promoted a scheme called “Income Machine,” before his ASIC reprimand. He’s accused of providing misleading information (for example—that options trading carried almost no risk) and inappropriate advice—such as giving investors of limited means strategies more appropriate to high-end investors. Eventually, Wilkins received a five-year ban from ASIC. It is unclear how many claimants will share in the $5.5 million settlement, though Shane Roberts of Holman Webb has been involved with more than 40 claims with clients regarding the Springwood branch. Of those, 37 shared a similar set of facts and circumstances. If the case were to go to trial, claimants would almost certainly need support from a litigation funder, which means this case may be ripe for funding.   In the last 12 months, Morgans has earned more than $10 million in profit, which is down from the previous year. Spokespeople for Morgans maintain that they have a strong defense against the accusations against them.
Commercial

DLA Piper Looks Toward Cryptocurrency and NFTs

It was only a few years ago that most people thought cryptocurrency was a passing fad. Non-fungible tokens (NFTs) are similarly misunderstood among consumers—but that may be about to change. Financial Times details that trailblazers like Scott Thiel are doing their part to bring cryptocurrencies into mainstream consciousness. Now that bitcoin’s value has increased dramatically and NFTs are pulling in hundreds of thousands apiece, all eyes are on the blockchain. Thiel has suggested that it’s possible to issue digital tokens that are connected to real-world objects like property or art. In effect, that takes any physical asset and makes it tradable on blockchain. DLA Piper has taken this concept and run with it, creating Toko—an engine that can create fractions of physical assets and makes them tradable digitally. This is likely to attract a new class of investors—those who are looking for alternative assets unconnected to traditional markets. Toko’s debut project was a commissioned art piece by Wang Xiaobo. It was divided into 16 shares—each representing a square piece of the painting. Each fraction is the same size and price, though some investors were picky about exactly which piece of the painting they owned. Currently, Toko works with NFTs and digital tokens representing physical assets. But the sky is the limit. DLA Piper is now asking clients how they want to use Toko. Speculation abounds on how illiquid assets can utilize Toko to trade or sell parts of assets with digital tokens. At the same time, digital tokens are a new currency fraught with compliance risks and an unsure status around the world. Do individual tokens have the same status as an investment contract? What are the duties to disclose information with regard to NFTs? We don’t know yet because it’s all too new.
Commercial

Estia Class Action Settles for $12.35 Million

Estia Health announced an agreement to settle a class action over disclosure. Shareholders allege that failure to disclose relevant information to ASX led to inflated stock prices. The Weekly Source explains that shareholders would have paid a lower price for shares had proper disclosure occurred. The case was co-funded by Litigation Lending Services and Investor Claim Partners, and led by the firm Phi Finney McDonald. As the total settlement of $38.4 million was approved by Federal Court—Estia will pay $12.35 million. Estia’s insurers will pay the balance of the settlement.
Commercial

UK Panel on Collective Actions & Litigation Funding

London International Disputes Week recently held a discussion regarding the role of litigation funding in collective actions. As the practice of third-party funding grows in popularity and scope, those in power have been seeking to regulate it.

ICLG.com reports that in 2009, Lord Justice Jackson was instrumental in reforming costs associated with legal cases. Determined to decrease costs as a means to increase access to justice, the Jackson reforms (which became law eight years ago) led to specific regulations about legal insurance and litigation funding. Litigation funding aside, it makes sense that controlling court costs would also increase access to justice for average citizens.

Hausfeld partner Lucy Pert explains that there is no comprehensive class action regime in England and Wales, unlike Australia or the US. However, the Competition Appeal Tribunal holds that an opt-out claim could be used to settle a breach of competition law—and that this would not require active participation by members.

Pert went on to assuage concerns that litigation funding leads to nuisance lawsuits. She explained the many factors that would keep funders from bankrolling frivolous cases—with adverse costs being chief among them.

Senior legal counsel at Deminor, David Walker, noted that in the eyes of funders, cases are economic investments. If the numbers don’t work, funders aren’t interested. A common formula for funders is that the expected payout must be greater than 10 times the funding amount. Funders also consider the book-building process, the legal team and strategy, and finally—the defendants themselves and how their feelings might impact the process.

Elena Rey, a partner at Brown Rudnick, stated that the UK has a better-developed framework than the EU, though that market is advancing and adapting quickly. She believes more syndication deals will be forthcoming in the months and years ahead.

Consumer

California Lawyer Joseph Hoats Avoids Prison Time After Perjury

Joseph Hoats, a California attorney, has been stripped of his ability to practice law following a guilty plea for perjury. He will, however, avoid prison time after lying to a judge about his knowledge of a lawsuit filed in his name. Prosecutors sought a 15-21 month sentence for the crime. ABA Journal explains that Hoats’ wrongdoing comes as part of a fictitious settlement with auto giant General Motors. Two of Hoats’ clients, Christopher and Susan Hammatt, solicited litigation funders seeking funds based on a non-existent settlement of over $16 million from GM. The couple received $30,000 of $75,000 promised in a signed funding agreement in 2016. Lawyers for Hoats characterized his illegal actions as ‘an aberration,’ and lauded his long career in law. They pointed out that Hoats spent his time in law improving the legal response to the intellectually disabled, and by taking on pro bono work. Hoats himself stated that his actions were ‘foolish’ and a sad ending to a long career. Justice Paul Gardephe of the Southern District of New York determined that leniency was appropriate, because Hoats did not directly profit from the crime.  These events might lead one to wonder if laws are needed to protect third-party funders from those who would seek funding based on lies.
Commercial

Tech Giant Apple Embroiled in Class Action Asserting App Store Overcharges

Apple has been accused of flouting UK competition laws by overcharging UK customers for products from its app store. The London case, filed in the Competition Appeal Tribunal today, involves about 20 million customers in the UK. Global Legal Post explains that third-party litigation funder Vannin Capital is backing the case. The legal team includes barristers from Brick Court and Monckton Chambers, and is led by specialist firm Hausfeld. Hausfeld partner Lesley Hannah notes that Apple has a captive market that they’ve exploited for years. The legal team claims that the fees Apple charges are excessive and do not reflect the costs associated with providing services. Apple has called the claim “meritless.” A spokesperson claimed that 84% of available apps are free—conveniently omitting that they are in fact ‘freemium’ games that offer extensive in-app purchases with fees passed down to consumers. Another Hausfeld partner, Antony Maton, speculated that last year’s class action against Mastercard—which also dealt with overcharging--has opened the door for collective cases in the UK.
Commercial

Shattercane Decision Appealed

Claimants have launched an appeal in the Shattercane class action. The Queensland Supreme Court decision came down last month in the case, which involved contamination by shattercane weeds in seeds sold to produce sorghum. Queensland Country Life details that in April of this year, the court ruled in favor of Advanta Seeds on the question of accountability. One key question in the case was whether Advanta’s duty of care was negated by a disclaimer. Should a disclaimer alleviate responsibility for selling contaminated products? Lawyer Dan Creevey says no. Creevey said this would prove to be a key point in the appeal. He is adamant that a disclaimer should not allow the company to avoid repercussions for the contamination—which impacted farmers financially for years after the initial planting. Another point may revolve around the cause of contamination. The class action is funded by Balance Legal Capital. Barry Croker of Advanta stated that the company will be defending the appeal—but would not make further comments about the case, as the appeal is in progress.
Commercial

India Confronts Litigation Finance

Members of the IALF Working Group met to discuss seven agenda items including filling leadership positions within the organization. Seven members attended via video, and six via Email. Indian Association for Litigation Finance details their minutes including a reading of the charter. Alain Grec expounded on his feeling that self-regulation may not be the best path for Litigation Finance. He asserted that core issues facing the industry should be deferred to a non-participating entity. Most attendees agreed that there are benefits to external regulation—credibility of the industry being a vital concern. Caveats were discussed as well. Overregulation was an ongoing concern for many members, as was unnecessary bureaucracy that could hinder efficiency to the detriment of clients and cases. Matters impacting collective action cases were discussed here as well. Agenda item #2 concerned capitalizing on the momentum COVID has given the industry, and how that can be used for growth. Item #3 discussed whether the IALF should be a non-profit company. Most members agreed that it should. Division of responsibilities and leadership within the organization made up agenda item #4, while #5 addressed scheduling for document placement for discussion by members. If litigation funders plan to welcome external regulation, agreeing on regulator qualifications is crucial for success. Litigation Finance is a complex and nuanced industry that requires sophistication and experience in the legal and financial fields. Agenda item #6 involved suggestions for leadership roles and committees. This included a board of advisors, directors, judicial and regulatory liaisons, public relations, education, global affiliations, and handling concerns from members of the community at large. Finally, members celebrated the successful launch of the organization—noting the significant industry interest in joining the organization. This includes law firms, legal services providers, and funders. The IALF is expected to formally accept applications for membership in the near future.
Commercial

Nike Counterfeit Case May Define US Court Reach Against Foreign Banks

Between 2013-2015, sportswear giant Nike won court battles against more than 600 counterfeit shoe sellers based in China. Assets were ordered frozen by a US court. While Nike did win, every counterfeiter defaulted on the judgment. Reuters details that it’s at this point that things become less clear. Nike sold the judgment to a subsidiary of third-party funders Tenor Capital Management back in 2017. The subsidiary subpoenaed various Chinese banks that allegedly held accounts for the counterfeiters—holding them in contempt for refusal to comply with the asset freeze. However, US District Judge McMahon determined that the banks were not in contempt because it was unclear whether the freeze applied to them under New York’s ‘separate entity rule.’ On appeal, lawyers argued that banks were using the separate entity rule to avoid accountability. Attorney Robert Weigel correctly pointed out that there’s no valid policy reason for courts to allow banks to encourage users to break the law or ignore a court order. Weigel also suggested that Chinese banks receive transactions from New York every day—suggesting that they are not, in fact, separate entities—but facets of the same entity working in concert. Meanwhile, lawyers for the banks asserted that routine banking was not the same as active participation in crimes. A three-judge panel will determine whether the banks are in contempt.