John Freund

October 13, 2021

Bringing a legal case in India is expensive, and can take years from start to finish. This often means the pursuit of justice is out of reach for citizens of average means. Kundan Shahi, who worked in insurance, knew there was a solution. Your Story details that Shahi saw a connection between what insurers did and how legal cases could be funded by third-parties. His initial idea was to set up Advok8—an insurance company dedicated to funding cases. But the legal setup required to start an insurance company was expensive, complicated, and full of regulatory hoops to leap through. In 2019, Shahi set up LegalPay as a legal services company. Cases being considered for funding are vetted by in-house lawyers using a variety of criteria. Cases are run through software that measures and calculates to determine the merits and probability of winning. LegalPay also considers precedence in similar cases, assessing the defendants' ability to pay an award, as well as other factors. Ultimately, LegalPay agrees to fund about 5% of the cases they consider. In addition to litigation funding, LegalPay also offers interim financing for insolvent companies. This practice is welcome by creditors and debtors alike. Investors provide the monies used to fund cases. Shahi estimates that investors can expect an IRR of 25-30%. Because third-party litigation funding is so new to India, regulation of the industry is practically non-existent. The hope is that regulatory oversight is forthcoming. The industry is sure to grow in India.

Case Developments Commercial

October 13, 2021

Three men from Chorley and one from Leyland are suing auto giant Mercedes over its role in “dieselgate.” Dieselgate impacted multiple car manufacturers, accusing them of using defeat devices to illegally skirt emission standards. National consumer rights firm Slater and Gordon are bringing the claim. The Guardian details that the case is expected to expand into a collective action. At present, Slater and Gordon are also joint lead attorneys in a class action against Volkswagen—also related to ‘dieselgate.’ It has been estimated that 600,000 Mercedes cars in the UK could have been impacted. As many as a million people could be eligible to make claims of up to GBP 10,000 each—as the payouts apply to cars bought new or second hand. The case is being funded by third-party litigation funder Asertis. This funding allows all impacted Mercedes buyers to become claimants without any upfront payment. Claimants are understandably outraged that a luxury car company could engage in such alleged deceit. Eric Kos of Chorley, who has owned multiple Mercedes cars, explained that his trust in the company was destroyed when he realized they’d used illegal means to “dupe” customers like him into thinking they were paying for high quality cars. Defeat devices were found installed in Mercedes cars in June 2018. The German Federal Motor Transport Authority findings necessitated a recall of more than 750,000 vehicles from across Europe. Later, Mercedes was required to recall about 90,000 more cars in England and Wales. Still, Mercedes intends to fight the claims, making a trial inevitable.

Public

Commercial Legal Innovation Special Features

Key Takeaways from LFJ’s Digital Event on The Evolution of Corporate Portfolio Funding

October 12, 2021

Last week, Litigation Finance Journal held a special digital event on the evolution of corporate portfolio funding. How has portfolio funding evolved over the years? Why have corporates been slow to adopt the practice? How is COVID impacting that adoption rate? And what can funders do to convince corporates that the benefits of portfolio funding outweigh any perceived drawbacks? A panel discussion led by Ed Truant, founder of Slingshot Capital, addressed these and other questions. The panel consisted of Neil Purslow, Co-Founder of Therium Capital Management, Greg McPolin, Managing Director of Burford Capital, Patrick Molony, CEO of Litigation Capital Management, and Rebecca Berrebi, Founder and CEO of Avenue 33, LLC. Below are some key takeaways from the discussion: Ed: Patrick, can you provide a brief description of the corporate portfolio financing market? Patrick: Sure. This is a part of the market where the litigation financier approaches a large sophisticated and potentially well-capitalized corporate entity, either directly or through another channel—and provides to that corporate a facility in relation to a number of disputes that corporate might have. The capital that’s applied to funding that portfolio of disputes is typically collaterally secured against the outcome of a number of disputes. And through that process, it’s provided to that corporate at a reduced price reflecting the reduced risk of capital. And as you say, it is a part of the market that hasn’t seen a lot of attention from litigation finance, and is something I think the industry is starting to have a close look at now. It’s certainly one of the investment strategy that LCM—the company that I manage—is looking at and focusing on very closely. Greg: The two things I’ll add are that Patrick was right in that the market for corporate portfolio financing is certainly a newer evolution of the Litigation Finance market. For Burford it’s really come into focus over the past 18 months or so. For fiscal year 2020, we noted that about 57% of the capital we committed across our portfolio went to corporations. Not that that all happened in the context of portfolios, but certainly corporates were the majority recipients of the capital that Burford committed in 2020. That’s consistent with what I see in the market, certainly here in the US. That is an increased uptake by corporates of litigation finance, and corporate legal departments and finance professionals coming to realize, after people like Rebecca and Patrick and Neil and I have been out in the market explaining that litigation finance is just another form of corporate finance. Corporates should be looking at their legal assets, those affirmative arbitration and litigation claims as having value—as assets that can be monetized and financed. Ed: Rebecca, through your advisory business you must come across corporations all the time who are looking for some perspective on the litigation finance market. Why do you think corporations haven’t adopted litigation finance sooner? Rebecca: It’s a good question. I think it follows along what Greg said which is—first of all, this market in general, litigation finance, remains relatively new as compared to other types of corporate finance in the world. So I think everybody in this industry recognizes that it’s not a new industry, but still becoming more well-known. I think a large part of it is just education, right? I think a large part of it is that corporates are just beginning to recognize that this type of financing is available to them. So there is a big hurdle in terms of education, but as Greg said, Burford for sure is funding a lot of corporates. I think and expect that that trend will probably continue as more and more corporates become more and more comfortable with the idea of Litigation Finance. Ed: Greg, in terms of those corporates who are looking at litigation funding, what are some typical objections you might hear from corporates? Greg: I think Rebecca made this point, which I think is massively important and that is—this is so much about education, and a mind-shift within corporate legal departments and the CFO suite to think about Litigation Finance as just another form of corporate finance. The number one objection is sort of an unseen one, just lack of awareness...status quo. Treating legal assets the way they were treated years and years ago without thinking about how to bring in Litigation Finance to begin to shift the legal department from a cost center to a profit center. Once you get past that...you come up with the typical objections like...some companies believe, wrongly, that commercial litigation funders are behind many of the litigations that they have to defend. So they don’t feel about using capital from a litigation funder on the affirmative side. Rebecca: I think Greg covered the bulk of what I’ve seen—the emphasis being on ‘we don’t like litigation funders because they fund the people who sue us.’ So I do think there’s a bit of a PR campaign that we as an industry should be working on. That this money is legitimate money that is compliant with all types of rules and regulations. We need to bolster the opinion of what Litigation Finance is, and the legitimacy of what it is. We in the industry know that it’s legitimate, and it’s very real and there are a lot of lawyers now who practice specifically in Litigation Finance law. I also see one thing Greg may have alluded to, it’s hard still to learn about Litigation Funding unless you dig deep and listen to panels like this one. It’s not as mainstream as other types of financing are. So while of course we all know there’s a lot about Litigation Finance in the NYT or Wall Street Journal, it’s definitely not front page news consistently. Ed: Neil, can you comment on the role that law firms play in the decision-making process for corporates. Are they absent or behind the scenes or front and center? Neil: They’ll essentially play the same role litigators would in in originating single case fundings, that’s certainly true. But we’ve certainly seen law firms play a very substantial role in some of these deals. But they won’t necessary litigate because it may well be the corporate folks and the key is going to be people with senior contacts in companies that want to deliver a sort of commercial benefit to the company, and go beyond narrow legal advice. Certainly law firms do play roles, and they can play an important role in bridging the gap between the GC and CFO. Ed: In terms of how corporates approach finding the right litigation funder, Rebecca what’s your experience—are they hiring advisors? Or relying on their law firms to run a process? Can you give us some perspective? Rebecca: I will tell you that I think the way that I’ve heard from corporates historically have been through law firms or people reaching out to me because they are interested in taking on Litigation Finance. But just as a corporate wouldn’t make a big investment in something without having some expertise in house or going outside to find it. I find this is the same thing. I’ve been talking to people who find me to learn how the industry works—‘who do I talk to,’ ‘how do I learn about this.’ On a less frequent basis I get calls from corporates that say ‘I’ve been approached by a funder, what do I do? Is this a good deal? What do these deals look like?’ Sometimes it’s a proactive thing, or they get approached.

Public

Announcements Commercial Deals

Nivalion expands in Latin America

October 8, 2021

Nivalion, Europe´s leading provider of legal finance solutions, announced today that it will acquire the portfolio and know-how of Carpentum Capital Ltd., a Swiss company that has been at the forefront of the development of litigation funding in Latin America, with lawyers on the ground in Argentina, Brazil and Chile. Marcel Wegmüller, Nivalion’s Co-CEO, said: ”Having supported Carpentum over the last years, we are pleased to be stepping into their shoes in offering funding to companies and law firms doing business in Latin America. This transaction is a logical step after having decided to proactively pursue business in the Americas. Litigation funding is growing rapidly in Latin American jurisdictions. With the assistance of the experienced team at Carpentum in these markets, as well as Nivalion’s long-standing and substantial expertise with litigation funding in different markets, we will be perfectly placed to successfully expand our business in that part of the world.” Managing Director of Carpentum, Detlef Huber, comments: ”We are pleased and proud to have helped bring litigation funding to Latin America, and we look forward to supporting Nivalion with its progress in this exciting market.” About Nivalion Nivalion is a Swiss litigation finance provider with offices in Zug, Munich, Frankfurt and Vienna. We focus on funding complex litigation and arbitration disputes in Europe, the Americas and Asia-Pacific, including direct and secondary funding of individual cases, case portfolios and law firms. Our team includes 25 professionals with substantial experience in dispute financing and private practice in leading financial institutions and law firms, offering the financial strength of its Swiss core investors. Nivalion is a member of the International Legal Finance Association (ILFA) and is committed to and compliant with the ICCA Queen Mary Task Force Best Practices, the ILFA Best Practices and the SIArb Third Party Funding Guidelines.

Commercial Regulatory Issues

October 7, 2021

Over the last decade, third-party litigation funding has been increasingly popular as a means of increasing access to justice. At its core, TPF is a way to put investor money toward meritorious legal cases (often, but not always, class actions) in exchange for a share of the award or settlement it generates. As the cost of litigation increases, the need for legal funding grows. Lexology explains that funders have adapted to the needs of clients since outdated concepts like champerty and maintenance were stricken from the law in 1967. It’s thanks to the popularity and acceptance of funding that countless potential claimants have been able to see their day in court—when they would not otherwise have been able to afford to do so. Many funded cases are so-called “David v Goliath” situations involving well-monied defendants that average individuals or small companies are trying to hold accountable. Courts have become increasingly likely to approve funding in these situations, and some even encourage it. Funders can enter into a case at any time, even after a verdict or settlement is reached. Typically though, funders tend to enter cases after the case is filed—so after the pre-action communication state. The landmark Valetta decision of 2012 affirmed that, according to Jersey courts, funding improves access to justice under specific conditions. These include:

Control of the case strategy and decisions be left to plaintiffs and lawyers—not funders.
Claimants retain a significant share of the award (staving off concern that funders see the lion’s share of the eventual payout).
The funding agreement contains provisions for potential adverse costs orders.

The Valetta decision has led to the widespread use of legal funding in Jersey, despite England having more permissive laws that also include DBAs and CFAs as options. Increasingly, the types of cases that can be funded is expanding to include family law cases like divorce, construction, and personal injury litigation.

Commercial

October 7, 2021

Investment management firm Vltava Fund recently published Q3 2021 earnings. Of particular interest is Vltava’s mention of Burford Capital Ltd—a New York-based third-party legal funder with a market capitalization of about $2.4 billion. Yahoo! Finance details that Burford’s stock price has been reason to celebrate. Since the beginning of 2021, Burford has maintained a 12.31% return rate. Its 12-month returns are up by 20%. As of October 5th, Burford shares stood at $11. Vltava’s Q3 investor letter has glowing commentary for the funder. The letter explains that it’s a rare company that can call itself a pioneer and leader in a field they themselves helped to create. But this is undoubtedly true about lawyer/investment banker, and CEO of Burford, Christopher Bogart. As a leader in Litigation Finance, the team at Burford appreciates the focus on increased access to justice. But there’s also the matter of risk. Finding the sweet spot between limiting risk and pursuing high awards or settlements is an art form—one Bogart and Burford Capital have vividly brought to life. While many new entities have flooded the litigation funding space, few are capable of doing what Burford does. The strong competitive advantages Burford has are apparent in the size and breadth of its client base, the company's strong cash reserves that allow for large deployments, and its results to date. Burford’s total closed investments show an ROIC of 95%--which means that investments have roughly doubled. What’s more, Burford accomplishes this feat without the use of AI or computer algorithms. Its reliance on human experience and intelligence may be its strongest selling point. While Burford did not make Insider Monkey’s list of 30 most popular stocks among hedge funds, it did deliver a more than 7% return over the last 90 days.

Commercial

October 7, 2021

Last month, litigation funder Manolete Partners received no less than 50 case referrals. That staggering number is largely due to COVID-related insolvency claims. Law Gazette reports that Manolete has expanded its staff to better handle cases in the North East, and will continue to add staff as needed. Chief Executive Steve Cooklin explains that these positive changes come with a challenge to ensure that the company has the human resources to adequately serve the influx of insolvency cases sure to present themselves in the next few months. Creditor protections related to COVID were withdrawn in the UK as of October 1st. Meanwhile, the HMRC will impose harsh penalties on anyone fraudulently claiming pandemic stimulus monies. Analysts suggest that Manolete shares are likely to increase in value. While it is still below pre-pandemic levels, analyst Paul Hill at Vox Markets suggests that by fiscal year 2024, Manolete could see a theoretical stock price of 460p per share.

Commercial Fundraising

October 6, 2021

UINTA Investment Partners has released a portfolio update for Q3-1021, which covers the period between July 1, 2021- September 30, 2021. According to the release, the preliminary estimate of net return to investors in the Uinta Income Fund LP—the Litigation Finance fund—is 2.11%. This estimate is subject to revision. Investors of record as of July 1, 2021, will receive a preferred return distribution of 2.5% for Q3. Distribution will be prorated for investors who withdrew or added funds during the quarter. About 86% of returns generated in Q3 were related to income—with the rest coming from net gains. Payoffs rose to 14.51% of portfolio value, up from 7.33% in Q2 and 2.5% in Q1. This suggests an increase in settlements. The cash flow increase has led to an accumulation of idle cash. Uinta is actively seeking opportunities to deploy that cash into worthy projects.

Commercial

October 6, 2021

Mining companies are especially susceptible to disputes arising from the impact of COVID. Tax issues, regulatory changes, politics, and supply chain failures can all lead to large-scale disputes. In fact, mining disputes made up the majority of investor-state arbitration cases last year. Burford Capital explains that while mining cases are complex and can span multiple jurisdictions—the potential awards can be in the billions. For those in the mining sector, the ability to maximize the earning potential of legal assets is essential. How can mining entities extract more value from these claims? Nearly half of CFOs reported forgoing unenforced judgments—some valued at $20 million or more. This is all the more impactful for the mining industry, given how vulnerable the industry is to a host of external variables, such as COVID lockdowns, supply chain issues and commodities prices, all of which led to a significant drop in net profit margin—to a low of 11% last year. One way to mitigate these risks is to create a quantitative financial model of existing legal assets, and leverage legal finance to provide funding on a predictable schedule. For most companies, this will involve a closer relationship between financial and legal departments. This relationship may take time to nurture, but will generate dividends down the road in the form of legal settlements or awards that would otherwise go unrealized.

Public

Announcements Commercial People Moves

Pretium Expands Senior Team with Addition of Two Managing Directors

October 6, 2021

Pretium, a specialized investment management firm with approximately $30 billion in assets, today announced that Tatiana Gutierrez and Jeannette Arazi have joined the firm as Managing Directors on its Affordable Housing and Real Estate Capital Markets teams, respectively.

These appointments underscore Pretium's continued commitment to increasing access to quality, affordable rental housing for households of all price points. The additions of Ms. Gutierrez and Ms. Arazi enhance the depth of expertise, insight, and support Pretium provides for residents, investors, and community stakeholders across its platform. These appointments follow the announcement of the firm's $1 billion build-to-rent investment in partnership with Crescent Communities.

"Welcoming two talented professionals with long track records of success and innovation is an exciting milestone as we grow our team," said Don Mullen, CEO and Founder of Pretium. "Tatiana and Jeannette have made an incredible impact in their respective focus areas, and the experience they bring to Pretium will play a pivotal role as we continue to grow our real estate investment platform, building on the success of our single-family and build-to-rent strategies. We are confident that their additions will further strengthen our leading efforts to set the standard for professional single-family rental ownership. We look forward to their contributions as we continue to invest in our communities and expand our capabilities to bring the benefits of professionally managed single-family rental housing to more American households."

Based in New York, Ms. Gutierrez will be integral to advancing Pretium's social impact goals, including instituting an array of supportive services for residents of all price points and adding to and preserving low-income rental housing stock. Over the course of her nearly 20-year career, Ms. Gutierrez has built a reputation as a leading practitioner focused on the development and preservation of affordable housing across the United States. As a real estate attorney at Nixon Peabody LLP for more than 15 years – including the past eight years as a partner – she represented a wide range of leading for profit and nonprofit developers, syndicators, asset managers, housing authorities and tenant organizations on affordable housing transactions and regulatory issues across the United States. Ms. Gutierrez also has extensive experience in HUD assisted housing programs and has advised on numerous affordable housing and social impact real estate transactions. Ms. Gutierrez currently serves on the board of Women in Housing and Finance, on the Advisory Board to the Real Estate Association for LatinX Professionals, and on the Advisory Council to the National Housing Conference.

"Affordability and social impact continue to play an increasingly important role in today's housing market, particularly in the wake of the pandemic and the important social issues that have been brought to the forefront, as a result," said Ms. Gutierrez. "With almost 20 years of industry experience and recent experience working with the Pretium team, it is clear they are at the forefront of providing quality, affordable housing in neighborhoods of opportunity with a housing product that serves vulnerable populations like large families with children. Having the opportunity to bring my distinct affordable housing experience to Pretium's world class residential real estate platform, I believe I can help bring the benefits of Pretium's professional ownership and management model to those who will benefit from it the most."

Based in Chicago, Ms. Arazi joins Pretium from Sidley Austin LLP, where she worked for the past 22 years, including the last 14 as a partner. Widely known as a leading capital markets advisor and one of the earliest advisors for financing single-family rental housing, Ms. Arazi has extensive experience representing financial institutions in a wide range of transaction types and creating financing solutions tailored to the nuances of unique asset types. She will focus on structuring and executing transactions and strategic financial initiatives firm-wide across Pretium's residential real estate platform and portfolios.

"Having worked closely with Pretium and a number of its team members for almost a decade, I have long admired the firm's vision and commitment to creating a unique residential platform that encompasses both real estate and finance," said Ms. Arazi. "It is a privilege to join the team that serves the evolving needs of today's rental market participants—from renters to communities to investors—and I am excited to contribute to their incredible momentum."

About Pretium

Pretium is a specialized alternative investment management firm focused on U.S. residential real estate, residential credit, and corporate credit. Pretium was founded in 2012 to capitalize on secular investment and lending opportunities arising as a result of structural changes, disruptions, and inefficiencies within the economy. Pretium has built an integrated analytical and operational ecosystem within the U.S. housing, residential credit, and corporate credit markets, and believes that its insight and experience within these markets create a strategic advantage over other investment managers. Pretium's platform has approximately $30 billion of assets under management as of October 1, 2021 and employs approximately 2,500 people across 29 offices. Please visit www.pretium.com for additional information.

Commercial

October 5, 2021

On the topic of third-party legal funding, trial judges past and present have much to say. Hearing them out can tell us a lot about how the industry is perceived by the courts and how that may impact its future. A recent interview with Judge Shira Scheindlin includes three questions that shed light on how courts view the practice of litigation funding.

Above the Law presents the interview with a legendary SDNY judge, with additional commentary by Gaston Kroub. The first question involves the recent Litigation Finance Dealmakers Forum.

When asked why she wanted to participate, Scheindlin's answer was twofold. First, giving a keynote address always leads to increased knowledge and perspective. Second, she was drawn to the conference for the enthusiastic interest in the practice of TPLF and its impact on social justice.

With specific regard to IP litigation, funding can be crucial because there’s so often a large financial disparity between IP owners and defendants. It’s been suggested that third-party funding can make IP cases more difficult to settle. This may make sense in that funded parties cannot easily be pushed into a settlement as their funds run low.

Scheindlin disagrees with this sentiment, however. She refers to her own experiences when she says that she’s seen many plaintiffs with unrealistic expectations for the value of their case and its potential award. Because funders (especially during the vetting process) offer an unbiased opinion—they can lend clarity to the case and help set reasonable goals.

Funders and legal experts alike are torn on the subject of disclosure of funding agreements. Scheindlin states unequivocally that disclosure is not important in the majority of cases. A funder’s involvement in a case suggests that the case itself has merit—this could serve to affirm the merits of the case as opposed to a frivolous or punitive action.

Consumer

October 5, 2021

In 2017, RD Legal Funding was sued by the New York attorney general. It was accused of deceptive business practices with regard to 9/11 victim advance compensation, as well as NFL concussion settlements. Reuters explains that RD Legal Funding challenged the Consumer Financial Protection Bureau’s standing to bring the case. This has been a source of debate in several other cases, with one court eventually ruling that the protections given to a CFPB director were unconstitutional. Now that SCOTUS has declined to hear this challenge, similar cases will return to lower courts.

Case Developments Commercial

October 5, 2021

The Competition Appeals Tribunal has granted permission for a class action against British Telecommunications to move forward. The action could be worth as much as GBP 600 million, and asserts rampant overcharging of landline customers. The action is being funded by third-party funder Harbour Litigation Funding. Harbour Litigation Funding explains that Justin Le Patourel, founder of a group called Collective Action on Land Lines (CALL), has launched the case, which could represent as many as 2.3 million customers. Noted law firm Mishcon de Reya will be advising on the case. Many of these customers are land-line only or purchased phone plans and broadband services without bundling them into a single package. Claimants could be entitled to as much as GBP 500 each. This is significant, as many impacted claimants are on fixed incomes. Harbour CIO Ellora MacPherson stated that the case may serve as a reminder of the importance of litigation funding in the pursuit of justice—especially for those, like these BT customers, who could not otherwise afford to see their day in court. Claimants not wishing to participate may opt out.

Public

Announcements Commercial Deals

Fortress Announces Integration of Vannin Capital into Fortress Legal Assets Business

October 5, 2021

Fortress Investment Group LLC (“Fortress”) today announced that following the acquisition of Vannin Capital by funds managed by Fortress in 2019, the operations of Vannin Capital are now being restructured into the Fortress Legal Assets business.

As part of the restructuring, a number of Vannin Capital employees will transfer to Fortress. This change will have no impact on Vannin Capital’s existing investments, and Vannin Capital will remain the counterparty to its various litigation funding agreements. The restructuring is taking effect immediately. “We are confident that this combination will further strengthen our leadership position in the litigation finance market, broadening our sourcing capabilities and bringing counterparties the benefits of a deeply experienced, fully-integrated, global Legal Assets team,” said Jack Neumark, Managing Director and head of the Fortress Legal Assets business. “We believe this represents a logical next step for our Legal Assets business and managed funds as a whole, which will now receive the full benefit of the expertise and relationships that the Vannin Capital employees have built over the last decade.”

About Fortress

Founded in 1998, Fortress manages $53.9 billion of assets under management as of June 30, 2021, on behalf of approximately 1,800 institutional clients and private investors worldwide across a range of credit and real estate, private equity and permanent capital investment strategies.

Public

Announcements Commercial People Moves

Omni Bridgeway expands its team of US-based investment professionals

October 5, 2021

Omni Bridgeway (formerly known in the US as Bentham IMF) is pleased to announce a significant expansion of its US investment team to accommodate its growth in the world’s hottest legal finance market. In addition to adding four brand new investment professionals, we are thrilled to announce the promotion of four team members who have been key players on our US team. In New York, former Kirkland & Ellis LLP partner Ian Spain has joined Omni Bridgeway as an Investment Manager and Legal Counsel, bringing with him over a decade of complex litigation experience. Chris Citro, also formerly of Kirkland, has joined the team as a Legal Counsel with specialized experience in patent litigation (including ITC matters) and other intellectual property disputes. In Los Angeles, former Pillsbury Winthrop Shaw Pitman Counsel Justin Brossier comes aboard as an Associate Investment Manager and Legal Counsel, where his diverse prior litigation experience will enable him to identify strong investment opportunities as well as provide sound strategic advice to Omni Bridgeway’s internal Investment Committee and to external stakeholders alike. And in Houston, Raj Duvvuri joins as an Investment Manager and Legal Counsel. A graduate of Harvard Law School with deep ties in the Houston market, Raj began his career at top-tier law firms such as Baker Botts. Most recently, Raj served as the General Counsel for Atlas Operating LLC and Affiliates, a privately held energy and real estate conglomerate known for operation of oil and gas assets and commercial properties in U.S. and Canada. His unique combination of law firm and in-house skills and expertise will be key as the company’s corporate and law firm portfolio financing opportunities continue to grow in size and number. “Omni Bridgeway is the gold standard in this industry, and I am honored and excited to join the organization,” observed Justin. Similarly, Raj remarked that "Omni Bridgeway has an unmatched reputation in the funding space and is at an exciting moment in its development. I'm thrilled to be joining the team." In addition, Omni Bridgeway is delighted to announce the promotion of the following investment professionals, all of whom have displayed excellent judgment and counsel on potential opportunities and funded investments. They have expertly navigated several funded matters through their life cycle and have assisted Omni Bridgeway with its growth and expansion into new legal finance areas, from private equity to insolvency and international arbitration. Advancing to Investment Manager and Legal Counsel are Amy Geise in Houston and John Harabedian in Los Angeles. Both Sarah Jacobson in New York and Nilufar Hossain in San Francisco are being promoted to Associate Investment Manager and Legal Counsel. “All of these team members have proven themselves to be great assets. Moving them up the ranks is not only recognition of all their hard work and dedication to maintaining Omni Bridgeway as the go-to funder in the US, it also demonstrates our commitment to promote well-deserving folks from within,” says US Chief Investment Officer Allison Chock. On the recent hires and promotions, Andrew Saker, Omni Bridgeway’s Managing Director & CEO and Chief Strategy Officer, notes that “the expansion of the US investment group is a direct result of the demand we are seeing in the market for legal finance products and also displays our advancement of, and execution on, our US growth strategy to remain a top dispute finance funder regionally, as well as globally. Keep an eye on this space; we’re just getting started.”

ABOUT OMNI BRIDGEWAY

Omni Bridgeway is a global leader in financing and managing legal risks, with expertise in civil and common law legal and recovery systems, and with operations around the world. Omni Bridgeway offers dispute finance from case inception through to post-judgment enforcement and recovery. Since 1986, it has established a record of financing disputes and enforcement proceedings.

Commercial

October 4, 2021

As more investors discover the benefits of Litigation Finance, funders have had to become more proactive about funding cases. Collective action cases are particularly attractive to funders due to large class sizes and the potential for high payouts. As the industry becomes larger and more influential, innovations abound. Law Gazette details that competition between funders is becoming more pronounced—as courts must now parse disagreements between separate claimant groups for the same matter. Meanwhile, a push for standardized funding agreements and other types of standard documentation is underway. This advancement is expected to help new investors to understand how litigation funding works to better inform their investment strategies. COVID-19 has spurred the industry forward in several key ways. Perhaps most impactful is the embrace of high-end investors who are increasingly seeking non-correlated investment opportunities. That, combined with the promise of impressively high returns, has investors flocking toward the industry. This past summer, Augusta Ventures’ new GBP 250 million fund brought its total assets under management to a staggering GBP 585 million. Once the funds are in hand, funders have an obligation to make that money work for investors. As funders seek to proactively find new cases to bankroll, collective actions are frequently on their radar. Neil Purslow of Therium Capital Management explains that funding is more common than ever in large group actions—leading to a symbiotic relationship between funders and cases. The Consumer Rights Act of 2015 has also impacted third-party litigation funding. The opt-out provision of the law means that a case with a huge class size—even in the millions—can be represented by a single person. However, in the case of multiple claimant groups, legal teams, or funders—only one group will be certified to represent the entire claimant class. There is a Competition Appeal Tribunal that makes these decisions. Largely though, litigation funding is self-regulated.

Commercial Deals

October 4, 2021

Miami company MSP Recovery, along with its new partner—Lionheart Acquisition Corp II—announced a deal with Virage Capital Management for a 50% share of all future awards against property and casualty insurers. Claims Journal reports that software used by MSP assessed that as much as $50 billion in Medicare claims should legally have been paid by insurers. That number could expand to as much as $263 billion. CEO of MSP, John Ruiz, explains that while the company expects revenue from their efforts to recoup these payments, no revenue is projected to accrue until after 2022. MSP’s business software is the cornerstone of its business plan. It examines Medicare payouts to determine if they should have been paid by another payer—usually a private insurer. Because of the Medicare Secondary Payer Act, private claimants are eligible for double damages from insurers that failed to reimburse Medicare. On average, MSP collects just over two times the value of the bills paid by Medicare—because insurers who fail to pay endure interest payments as well as double damages. In addition, insurers will have to pay the market rate for care instead of the typical discounted rate for Medicare patients. So far, Ruiz’s plan appears to be working. A recent whistleblower lawsuit filed in a Michigan court is seeking billions from more than 300 auto insurers who allegedly filed false reports to Medicare. Ruiz expressed disdain for insurers who would turn a blind eye to their obligations.

Public

Announcements Commercial Fundraising

Litigation Funder Validity Finance Raises New Managed Fund of $70 Million to Commit Alongside Permanent Capital Base

October 1, 2021

With demand for litigation finance continuing to grow among businesses of all sizes, leading dispute funder Validity Finance reports it has raised a new managed fund of $70 million in capital commitments. The newly raised “sidecar” fund further diversifies Validity’s business and advances its experience as an alternative asset manager. To date, Validity’s third-party managed funds total nearly $150 million of assets under management, in addition to its permanent capital base.

Validity’s latest fund investors include its original private equity investors, as well as previously committed third-party investors and a prominent family office. Since its launch in mid-2018, Validity has committed nearly $300 million towards clients in more than 40 separate investments, helping clients in scores of commercial disputes, backing law firms as well as businesses, individuals and institutions. In the past 18 months, the firm has evaluated hundreds of potential investments and committed approximately $150 million toward a wide span of cases, including contract disputes, antitrust claims, trade secret and misappropriation claims, insurance coverage cases and intellectual property matters. The firm has also supported civil rights cases. Validity CEO Ralph Sutton commented: “The pandemic created enormous challenges for pending cases, with trial dockets slowed and financial pressures weighing on many claimants. We’re fortunate to have maintained a strong pipeline of capital and a circle of investors who support our approach to fairness and client needs. We’re especially pleased to welcome some prominent new investors into the fold.” Mr. Sutton noted the high demand from law firms seeking funding – for individual matters as well as portfolios. “We can finally say that Big Law understands our business, and even many of the biggest, most profitable firms understand the value of non-recourse funding to help their clients and their own profitability, especially as time horizons for financial outcomes have stretched.” He also noted a pronounced uptick in funding requests from larger corporate clients seeking alternatives to conventional lenders or commercial finance companies. “Corporates have come to appreciate the sophistication and focus of high-quality dispute funders. Even well-capitalized businesses understand the economic advantages of lit funding to move risk off their balance sheets.” Since its founding, Validity has reviewed over 1,500 investment opportunities, reflecting the firm’s exacting due diligence process. That process also reflects the caliber of Validity’s team of portfolio advisers, consisting of experienced trial lawyers from the country’s preeminent litigation firms, many of whom served as federal law clerks. The firm has backed commercial matters across federal and state courts, as well as domestic and international arbitrations. For the months ahead, Validity plans to continue expansion plans that were put on hold during the pandemic, with more growth anticipated before the end of 2021. Validity has two U.S. offices (New York and Houston) and recently marked the one-year anniversary of launching its Tel Aviv office.

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

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Commercial Special Features

Day Two Recap of the LF Dealmakers Conference

October 1, 2021

Day two of of the two-day event saw a trio of panels that covered topics such as investment strategy and risk management, the interplay between fund types, and litigation finance as a tool for ESG. The first panel of the day was titles "CIO Roundtable: Focus on Investment Strategy & Risk Management," and was moderated by Steven Molo, Founding Partner of MoloLamken. Panelists included:

Patrick Dempsey, Chief Investment Officer, US, Therium Capital
Sarah Johnson, Co-Head Litigation Finance, The D. E. Shaw Group
Aaron Katz, Chief Investment Officer, Parabellum Capital
David Kerstein, Chief Risk Officer & Senior Investment Manager, Validity Finance

The conversation began with the rise of business interruption claims. Patrick Dempsey of Therium hasn’t seen much in the way of business interruption claims that have been successful yet. There was an initial interest in this case type, but then a lot of negative decisions came out of federal courts, and so interest waned. That said, you can build a portfolio of these claims and hedge your risk going forward. Aaron Katz of Parabellum noted how his firm hasn’t been active in the business interruption space, though the pace of all other claim types is picking up, with interesting new product areas being developed, including credit-like structures, different stages of cases being presented, lower risk investment types, and even partial recourse feature investment. Sarah Johnson of D.E. Shaw commented on the emergence of new entrants into the litigation funding space. Competition does affect pricing, and this has more of an impact in creative structuring—with new tranches of risk being created. David Kerstein of Validity jumped in to parse this out. He has seen more competition in pricing in larger size deals, however not so much in the more modestly-sized deals. There is still competition there, as claimants are approaching a lot of funders, just not as much price pressure in these types of claims. The conversation then turned to bankruptcy. This was a very quick distressed cycle—given that there was a lot of sophisticated money chasing these deals, there wasn’t as much of a need for litigation funding. However, we may soon begin to see bankruptcies driven by litigation, which could prompt claimants to approach funders for partnership or monetization. And smaller cases might be a place for funders, given that these bankruptcy claims are typically underfunded. As David Kerstein of Validity noted, “When there are bankruptcies that are based on litigation assets or issues, litigation funders are well placed to come in and provide value.” And on the issue of insurance, Aaron Katz noted that judgments are being protected with insurance, products are out there to preserve capital or even back some of the profit in a deal. That said, Parabellum hasn’t seen it as part of the bread and butter of their work. Yet Katz feels it’s only a matter of time before insurance permeates the space, but we’re not there yet. Patrick Dempsey chimed in on his experience with insurance in UK-based claims. Adverse costs insurance is inherent in the jurisdiction there, and so insurance on a portfolio basis was being considered very early on. That was ultimately deemed unnecessary, but that discussion is starting to return, and will likely come back in full force. Therium only uses insurance for judgment protection in the U.S. On the issue of regrets, Sarah Johnson noted how she wishes she had been more aggressive at the outset—doing more deals, and being less price sensitive. Having worked previously in distressed investments, she was used to price sensitivity being an issue, but she found that the industry grew a lot faster and provided much better returns than perhaps even she expected. This speaks well to the industry’s continued growth potential. Later in the day, a pair of panels tackled topics such as fund types, deal structures and costs of capital, as well as ESG and impact investing. One interesting takeaway from the former discussion came from Sarah Lieber, Managing Director and Co-Head of the Finance Group at Stifel. Lieber commented on the large commercial bank syndication model that her firm is structured with. What Stifel does is essentially a merchant banking model—they use their own balance sheet and originate their own transactions. When they approach a partner, whether that is a litigation funder, insurance company, private equity or multi-strategy firm, they choose their partner based on the return profile. And they can syndicate their partnerships within a larger deal construct. Stifel generally operates in the $50MM+ range, and can take on multiple co-investors with various tranches. So Stifel operates in cooperation with many other in the space, in a syndicated investment model. Stifel's very presence in the market is emblematic of how prominent the funding industry has grown, and how much it has matured over the past few years. Doubtless there will be further maturation ahead, and likely more funding entities which enact a similar merchant banking model. As Tets Ishikawa Managing Director of LionFish noted (on the same panel discussion): “When the market started in the last 15-20 years, it really started as a litigation funding industry—as one single entity. But I believe this market will become like the commercial real estate market. There are many different types of real estate, just as there are many different types of litigation, so in the end there will be many different types of litigation finance investors.”

Case Developments Commercial

September 30, 2021

Three Warrington men are bringing a claim against German carmaker Mercedes, relating to its role in the recent dieselgate scandal. Working with lawyers from consumer rights firm Slater and Gordon, the trio expects the case to become a collective action. Slater and Gordon is also a joint lead attorney in the dieselgate action against Volkswagen. Warrington Guardian explains that the action against Mercedes is funded by third-party legal funder Asertis. This funding will allow potential claimants to join the case without an upfront fee. The action involves the aftermath of an emissions scandal that necessitated a recall of diesel Mercedes cars, after which a software update was made. About 25% of car owners who had this fix experienced issues with their car’s reliability. More than 30% of respondents stated that they lost confidence in the reliability of their car, and 81% said they felt Mercedes was not forthcoming about potential problems that the fix could cause. About 600,000 vehicles are believed to be affected. The allegations against Mercedes include the use of ‘defeat’ technology that allowed cars to provide inaccurate emissions data during testing. It’s also alleged that the carmaker colluded with other manufacturers to thwart tech that could have better protected the environment from car emissions. Mercedes representatives have stated that the claims are ‘unfounded,’ along with their intention to defend themselves.

Commercial Deals

September 30, 2021

Even among other large-scale infrastructure projects around the world, China’s Belt and Road Initiative (BRI) is impressive. Its plan is to expand and fortify the Silk Road in an international effort that involves stakeholders from around the globe. In any venture of this size, legal disputes cannot be avoided. LCM's Nick Rowles-Davies, Roger Milburn, William Panlilio and Joe Durkin explain that international arbitration is often the most effective means to resolve disputes. But this can be costly and time-consuming. That’s why anyone involved in BRI disputes would do well to seek out third-party litigation funding. The scale and scope of the BRI means that a large and complicated network of stakeholders, contractors, governments, investors, and project companies will be involved. Many, but not all, will be Chinese. The various BRI projects are vulnerable to risks involving politics or even military action. Regulations may be inconsistent or non-existent, and the further impact of COVID is still unpredictable. The potential for international, multi-party disputes can be largely mitigated with a partnership with an experienced litigation funder. Because there is no established forum for BRI legal disputes, parties will have their own ideas about where, when, and how to address conflict. With that in mind, those involved should be ready for anything. Litigation finance doesn’t just help with managing legal costs (though it certainly does that too). When project budgets are developed, room isn’t always left for surprise legal disputes. Legal finance can provide funding for claimant side or defense side legal action—usually on a non-recourse basis. Not all BRI-impacted jurisdictions will allow the use of third-party legal funding. Many do, including Hong Kong, Singapore, and India, with China not specifically prohibiting the practice. Shifting risk to a litigation funder is a savvy business move and may be a necessary one as the BRI gets underway. After all, modern projects call for modern legal solutions.

Case Developments Commercial

September 30, 2021

Nearly 150,000 customers have allegedly been impacted by unscrupulous practices by Australia New Zealand Banking Group. A class action alleges that the banking behemoth failed to refund fees and pay out interest. The Motley Fool reports that as claimants seek compensation from the bank, ANZ stocks have plummeted into the red. As of this writing, shares are trading at $27.39. The class action is being co-funded by Australian LitFin firm CASL, and New Zealand funder LPF Group. The bank agreed last year to pay out about NZ $30 million to about 100,000 customers after a purported coding error. Scott Russell, a former Commerce Commission Lawyer, called the bank’s actions a serious breach of CCCFA provisions. After rising over 20% in the last 12 months, ANZ share prices have dipped 3% in just the last month.

Commercial

September 30, 2021

AxiaFunder has announced that the company remains confident of its ability to turn a profit in 2022. In 2020, the platform—which focuses on crowdfunding for legal actions—reported a loss of nearly GBP 400,000. P2P Finance News details that Cormac Leech, AxiaFunder founder and CEO, is optimistic that the firm will become profitable in 2022. He stated that it’s not uncommon for a business to invest in itself in the beginning, with profitability being achieved much later. AxiaFunder has also announced a new partnership solution for investors, and a secondary market for litigation-related investments. Its investor base has grown by about 70% per year. Leech explains that his business has funded about GBP 2 million in cases, all told. Five cases have already been successful, with a sixth win expected to be announced soon. This speaks highly of AxiaFunder’s vetting process for cases.

Consumer

September 30, 2021

Jaeson Birnbaum has pled guilty to securities fraud related to activities surrounding the Litigation Finance firm he founded: Cash4Cases. According to Audrey Strauss, US District Attorney for the Southern District of New York, Birnbaum affirmed the assertions that he used investor funds for personal expenses. The US Department of Justice details that Birnbaum also admitted to double-pledging case recoveries as collateral to gain further investments. Between 2017-2019, Birnbaum amassed over $3 million from investors based on blatant misrepresentations. He also demanded that one of his employees falsify company records in order to secure more fraudulent investments. At one point, Birnbaum used a $1 million influx of cash for deployment to litigants—but instead used more than half of the money to purchase a New Jersey home. The USPIS Inspector-in-Charge, Philip R Bartlett, reminds investors to beware of investment offers promising returns that seem too lucrative. Birnbaum could face up to 20 years in prison for his crimes. His sentencing will take place on January 6 of next year. The case is being run by the Securities and Commodities Fraud Task Force, with Assistant US Attorney Daniel Loss leading the prosecution.

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Commercial Deals Special Features

Day One of LF Dealmakers Concludes

September 29, 2021

Day one of the two-day 2021 LF Dealmakers conference has officially concluded. The day included a keynote address from Judge Shira A. Scheindlin, six panel discussions, and a host of networking opportunities. The initial panel discussion was titled "State of the Litigation Finance Industry: Innovations & Outlook." The panel was moderated by Annie Pavia, Senior Legal Analyst at Bloomberg Law, and featured the following panelists:

Brandon Baer, Founder & CIO, Contingency Capital
Fred Fabricant, Managing Partner, Fabricant
Michael Nicolas, Co-Founder & Managing Director, Longford Capital
Andrew Woltman, Principal & Co-Founder, Statera Capital

The discussion began with big picture trends regarding the economic downturn, which a lot of people posited would result in a boost to Legal Services and the Litigation Funding industry. The panelists all weighed in: Brandon Baer explained that the case pipeline has been extremely robust. There is strong origination, and a lot of need from law firms for capital. Fred Fabricant explained that from law firm side, it’s been the busiest time in his career in terms of case load. More opportunities have come to his attention in last year and a half than ever before, with things being very active in the Eastern and Western Districts of Texas. And the quality of the opportunities is higher. New players are in the market, and existing players have raised more money than ever before. Michael Nicolas added that he’s seen an increase across all different sectors – law firms (both those who have used funding previously and those who have never used funding before), and clients (facing extreme demands stemming from COVID-related issues). Longford manages over $1Bn in AUM, so they have a lot of flexibility in terms of investment potential. Andrew Woltman ended the discussion by noting how comfortable law firms and clients are becoming with litigation finance. Structurally they are being more proactive about approaching fund managers than ever before. The panel all agreed that demand is strong across the board when it comes to case types. Capital deployment is not a problem here, and the panelists expressed hope that this trend would continue, and that clients will continue to recognize the value that funders bring to the table. In terms of current challenges the industry is facing, duration and collectability are obvious issues, but these are leading to certain efficiencies–like courts learning to be more efficient in order to address duration risk. So there is a silver lining here. At this point, Annie Pavia, the moderator, switched gears and asked Michael Nicolas about Longford’s $50MM funding deal with Willkie Farr. Nicolas acknowledged the longstanding relationship between the two firms, and how that developed into a $50MM financing arrangement. Willkie also brings a lot of commercial matters to the table, which helps Longford diversify away from its core focus on IP matters. Nicolas also mentioned that they went public with the deal in order to be fully transparent to Willkie’s clients, and make them aware that Longford’s funding is possible for their claims. The question of disclosure then popped up. Will the disclosure of the funding relationship lead to unnecessary discovery sideshows in Willkie claims? Nicolas does not believe the publicity of the relationship will hamper any Willkie claims, and that the trend line favors courts finding discovery irrelevant, where litigation funding is concerned (in most cases). While he understands this may prompt some questions, Longford isn’t particularly worried about the consequences here. Of course, most funds still keep their partnerships private, so Longford’s decision to publicize its relationship with Willkie may perhaps be a turning point for the industry—could less opacity be around the corner? Nicolas believes we will see more transparency as the asset class continues to grow. The rest of the day featured panels across a range of topics, including legal and regulatory challenges in the U.S., and changes in law firm and contingency fee models. One discussion on "How CFOs View Legal Assets: Data & Insights from a Recent Survey," featured Kelly Daley, Director at Burford Capital, and Bruce MacEwen, President of Adam Smith, Esq. MacEwen asked an interesting question regarding law firms’ attitudes–law departments and finance departments typically don’t talk to each other. So how do conversations with law firms go, compared with conservations with corporate CFOs. Daley explained that conversations with law firms are different than those with corporations, because the assets at law firms are human labor, so it can be harder for law firms to leverage that than it is for corporations to leverage abstract assets. Law firms take their time more personally, so the conversation with law firms is more about risk shifting than with cash flows. Legal finance does both of these, but there is different value applied to each depending on what specific assets you value. MacEwen agreed, and followed up with the note that it can be tough for clients to define the value they get from a law firm, and therefore they are always looking for ways to get discounted rates. Litigation funding can play a part in that… in ameliorating the concerns clients have about overpaying for legal services. All in all, there was a lot of ground covered in the first day of the LF Dealmakers conference. And with the plethora of networking opportunities (both digitally and in-person), the event surely struck a powerful chord with all those in attendance.

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Commercial Regulatory Issues Special Features

Judge Shira A. Scheindlin Delivers the Keynote Address at LF Dealmakers

September 29, 2021

The LF Dealmakers conference kicked off this morning with a keynote address from Judge Shira A. Scheindlin. The address was titled "Litigation Finance: Survey of a Shifting Landscape," and covered four main issues: ethics, fee sharing, disclosure regulations and privileged communications between funder and attorneys. Judge Scheindlin began on the topic of ethical issues, the three most common of which boil down to competence, confidentiality and truthfulness. She explained the common pitfalls that funders need to be aware of, including how different states treat confidentiality issues, for example. Scheindlin asserted that the ethical concerns most have about the industry do not pose any serious threat to its future growth potential. In terms of fee sharing, Scheindlin pointed out how bar associations play a critical role in drafting and interpreting codes of conduct, which are then adopted by the states. She noted the New York bar's opinion on Rule 5.4, which found that litigation funding violates the fee sharing restriction. This was a controversial opinion, for obvious reasons. In fact, there was such an outcry, that the city bar created a working group around litigation funding, to make recommendations around ethics and principles. The working group addressed the realities of litigation funding, and whether disclosure of funding should be required in litigation and arbitration. In the end, the working group offered two proposals. The first being that the funder can share fees with the client, provided that the funder remains independent and does not influence case decisions by participating in the claim. The second being that the funder can participate in the claim, if it benefits the client. And the client can provide informed consent to disclose confidential information to the funder (Scheindlin noted that she favors the second proposal). Neither proposal has yet been adopted, though Judge Scheindlin believes Rule 5.4 regarding fee sharing will be modified in NY, based on these recommendations. It remains to be seen which proposal will win out. On the issue of control, which is related to fee sharing, Scheindlin explained that many funding agreements give the funder the right to approve the selection of counsel. Some may view this as control, but really the funders just want to ensure the counsel is adequate to handle the claim. In terms of disclosure, Scheindlin pointed out how 12 states have passed legislation on litigation funding, with another 11 proposing legislation. Most involve consumer funding. Only Wisconsin specifically includes financing of commercial claims. So it's clear the focus is on consumer cases, but no one knows where this will go. There is a robust debate on the subject of disclosure, with many industry opponents pushing to reveal the identity of the funder, as well as the terms of the funding agreement. There is a lot of disagreement on the various avenues that can be taken regarding the issue of disclosure, so it will be interesting to see how this issue will develop. On privilege, Scheindlin noted the common interest exception in regard to sharing privileged information, and how courts are split as to whether this applies to litigation funders. Is a shared commercial interest the same as a common legal interest? This is the question at hand. However, most courts have found that privileged documents are protected by work product, where a funder is concerned. Ultimately, though, an NDA or confidentiality agreement is likely needed here to ensure that work product applies. So while there are plenty of minefields, in terms of issues that could upend TPLF, Judge Scheindlin feels confident that funding will prevail in the end. To quote Judge Scheindlin: "There are always those who will oppose new ways of doing things. Those who seek to restrict TPLF… are in my opinion, merely afraid of the level playing field that such funding creates. I don’t think they will succeed. TPLF is now an accepted part of the legal landscape, and is here to stay."

Commercial Fundraising

September 28, 2021

New-Delhi based start-up LegalPay has announced the closing of its first special purpose vehicle. The arbitration-focused SPV, which involved a pool of 8-12 cases that would diversify investment risk, was oversubscribed in record time, according to a recent statement from the company. Live Mint details that LegalPay went on to announce a second SPV that will focus on commercial disputes. LegalPay, founded in 2020 by Kundan Shahi, maintains a focus on B2B disputes with the potential for high payouts. The LegalPay SPV structure involves investors putting money into a pool of cases, which generates a pre-tax IRR of as much as 25%. An entirely digital investment process also offers claims tracking along with portfolio monitoring. Within this framework of taking on mid and late-stage cases, investors realize returns as the pool of cases are resolved. These SPVs represent new opportunities to upper-retail category investors who were previously shut out. Many more such SPVs are expected.

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Announcements Commercial Legal Innovation

Liti Capital Launches Scambusters to tackle Crypto Fraud

September 28, 2021

Liti Capital SA, the Swiss-based litigation funding provider disrupting private equity investing with blockchain technology, is launching Scambusters (https://liticapital.com/scambuster/), a revolutionary new tool that allows users to vote for which crypto-focused cases the company should pursue next.

Fraud within cryptocurrency and blockchain is rife. This year will be a record for investment fraud: 14,079 investment scams were reported to the FTC in the first quarter of 2021, and victims lost $215 million in this quarter alone. Liti Capital is bringing its expertise in picking, funding and winning court cases and inviting consumers to vote on which scams it should pursue in court next.

“The idea that scammers can freely operate in the crypto sphere without facing the consequences of their actions must end to bring trust and change the perception blockchain and crypto projects have in our society”, says Andy Christen, CVO/COO at Liti Capital.

Liti Capital commits to allocate between 5% and 10% of its yearly investment budget to finance cases that have affected its community members. Any LITI or wLITI token holder can report a purported fraud to the company.

Scambusters is a community voting event to select crypto scam cases going to be sued by Liti Capital. LITI and wLITI token holders can use their tokens without spending them to vote for the case(s) they think have the most merit. The more tokens they have the more voting power they can exercise. Voters of the winning case will share an award up to 250,000 wLITI, distributed pro-rata to their votes.

Once members of the community have submitted cases on the Scambusters website, Liti Capital instructs its team of legal experts based in 140 countries across the world to explore details of the case.

A selection of cases are then presented back to community members, with the case collecting the highest number of votes being added to Liti Capital’s portfolio. Community voting begins on 23 September 2021, with the winning case announced on 15 October 2021.

“If cryptocurrency is going to become the defacto way people take part in the Web3 world, trust, regulation and a robust legal system are all parts of that puzzle,” says Jonas Rey, CEO at Liti Capital.

About Liti Capital

Liti Capital is bringing the litigation asset class to everyone through Blockchain technology with LITI tokens, an equity token that is a share of stock in Liti Capital SA. The launch of LITI and wLITI tokens allows any investor to engage in the high-performing litigation finance market previously only available to elite investors.

www.liticapital.com

Public

Announcements Commercial Deals

GetSwift Discloses Details of Proposed Settlement of Australian Class Action

September 28, 2021

GetSwift Technologies Limited (NEO:GSW) ("GetSwift" or the "Company"), a leading provider of last mile SaaS logistics technology, today as a result of market regulatory requirements announced that has disclosed details of its previously announced Heads of Agreement (HOA) for a settlement with law firm Phi Finney McDonald and Therium Capital Management (Australia) Pty Ltd. and Mr. Raffaele Webb (the "Applicant") in connection with the class action proceedings before the Federal Court of Australia (the "Court"). GetSwift’s Board of Directors, including each independent director, believe the terms of the proposed settlement under the HOA are in the best interests of The Company and its shareholders. The HOA contains no admission of liability or wrongdoing by GetSwift Limited or Mr. Joel Macdonald, a President and Director of The Company, and neither GetSwift Limited nor Mr. Macdonald or any of its executives acknowledges any liability or wrongdoing by entering into the HOA. GetSwift expects that the HOA and the final settlement will enable The Company and its current management to focus on growth, innovation, product launches, and market capture. The terms of the proposed settlement are expected to eliminate uncertainty and expense associated with this litigation matter and ideally realize an appropriate market capitalization for The Company, enabling it to use resources that would otherwise have been devoted to litigation for continued expansion, benefitting all stakeholders including shareholders, clients, partners, the class and employees. Terms of the settlement are as follows: The Settlement Sum to be paid by The Company is the aggregate amount derived from the following Settlement Formula, with each component amount ("settlement payment"), if payable, to be paid at or by the dates and times set out below. A reference in this Schedule to an event occurring on or by a particular date means on or by 5pm in New York, New York, United States of America, on that day.

A first settlement payment of AU$1.5m, to be paid in instalments as follows:
1. AU$500,000 within 7 days of the date of execution of the Deed;
2. AU$500,000 due by 7 October 2021; and
3. AU$500,000 due by 7 January 2022.
During the term of 3 years from the date of the parties executing a Deed of Settlement ("Fundraising Term"), settlement payments equaling 8% of any funds raised by The Company by way of capital raising, with each such amount to be paid within 6 weeks of the amount being collected by The Company.
During the Fundraising Term, The Company is to raise capital equivalent to 10% to 20% of its pre-raising market capitalisation at the point in time that:
1. it first hits any of the following market capitalisation levels (in CAD):
  1. $100m;
  2. $250m;
  3. $400m; and
2. the market capitalisation remains at the level in 3.a.i – iii (as applicable) on average for 4 weeks following the date it first hit that market capitalization.
In any of the three 12-month periods comprising the Fundraising Term, if no funds are raised by capital raising:
1. the Respondents and/or The Company will be required to make a settlement payment equal to 5% of The Company Group’s revenue from contracts with customers ("revenue") during the 12- month period ending on the most recent quarterly reporting date prior to the conclusion of the relevant 12-month period ("revenue percentage") within 4 weeks of expiry of the period; however
2. if 4(a) applies in respect of the first year of the Fundraising Term, the required settlement payment under 4(a) will be not be payable until the conclusion of the second year of the Fundraising Term.
Subject to clause 6 below, during any of the three 12-month periods comprising the Fundraising Term, for any capital raising undertaken by The Company where the amount of funds raised is less than 20% of The Company’s pre-raising market capitalisation, then:
1. the Respondents and/or The Company will be required to make a settlement payment calculated on the same revenue percentage basis as clause 4 above within 4 weeks of expiry of the relevant 12-month period; however
2. the amount payable will be discounted based on the amount of funds raised applying the following formula:
  1. the revenue percentage payable will be the percentage equivalent to 25% of the percentage amount by which the relevant capital raising is less than 20% of The Company’s market capitalisation; such that (by way of example);
  2. if the capital raising is 10% of The Company’s market capitalisation, the revenue percentage payable is 2.5%; whereas
  3. if the capital raising is 15% of The Company’s market capitalisation, the revenue percentage payable is 1.25%.
If The Company conducts more than one capital raising during any of the 3 twelve-month periods comprising the Fundraising Term, then for the purpose of the calculation of any revenue percentage settlement payment for that period, the two or more capital raisings will be treated as one capital raising. For instance, if:
1. The Company conducted two capital raisings during a single 12-month period for amounts of 5% and 10% of The Company’s market capitalisation at the relevant times;
2. The Company’s market capitalisation was CAD200m at the time of the first capital raising and CAD250m at the time of the second capital raising; and
3. this resulted in raisings of CAD10m and CAD25m respectively; then
4. the weighted average revenue payment would be calculated premised on the extent to which CAD35m (the combined amount raised) fell short of being 20% of CAD225m (the weighted average market capitalisation); and
5. the relevant percentage per (d) would be about 15.5%, such that the revenue percentage payment for that 12-month period would be a single payment of about 1.11% of annual revenue.
All payments are to be made in Australian dollars. The rate of exchange to be used in calculating the amount of currency equivalent in Australian dollars is the closing exchange rate reported in The Australian Financial Review on the preceding Business Day before payment is made.

Forward-Looking Statements Certain statements contained in this news release constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to matters disclosed in this news release and to other matters identified in public filings relating to the Corporation, to the future outlook of the Corporation and anticipated events or results and may include statements regarding the future financial performance of the Corporation. In some cases, forward-looking information can be identified by terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts. Forward-looking Statements in this press release include statements related to the process of obtaining Court approval of the terms of the Settlement, the likelihood of entering into the Deed on terms acceptable to the parties, and the impact of the proposed settlement on the Corporation. Forward-looking Statements involve various risks and uncertainties and are based on certain factors and assumptions. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Corporation's expectations include, without limitation, the availability of the Court to approve the terms of the settlement, the determination by the Court or any party to the HOA that the terms of the settlement are not acceptable, the ability of the Corporation to negotiate the final terms of the settlement with the parties to the HOA, and certain other risk factors set forth in the Prospectus under the heading "Risk Factors". The Corporation undertakes no obligation to update or revise any Forward-looking Statements, whether as a result of new information, future events or otherwise, except as may be required by law. New factors emerge from time to time, and it is not possible for the Corporation to predict all of them, or assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any Forward-looking Statement. Any Forward-looking Statements contained in this press release are expressly qualified in their entirety by this cautionary statement. About GetSwift Technologies Limited Technology to Optimize Global Delivery Logistics GetSwift is a technology and services company that offers a suite of software products and services focused on business and logistics automation, data management and analysis, communications, information security, and infrastructure optimization and also includes ecommerce and marketplace ordering, workforce management, data analytics and augmentation, business intelligence, route optimization, cash management, task management shift management, asset tracking, real-time alerts, cloud communications, and communications infrastructure (collectively, the "GetSwift Offering"). The GetSwift Offering is used by public and private sector clients across industries and jurisdictions for their respective logistics, communications, information security, and infrastructure projects and operations. GSW is headquartered in New York and its common shares are listed for trading on the NEO Exchange under the symbol "GSW". For further background, please visit www.getswift.co.

Commercial Regulatory Issues

September 28, 2021

Australia’s requirement for third-party legal funders to hold an Australian Financial Services License took effect in August of last year. From that point forward, funders were subject to rules regarding managed investment schemes under the Corporations Act. HFW explains that of the ten leading funders in the country, only six have obtained the AFSL. This may indicate that funders are joining forces to form joint ventures, or that some have left the space altogether. No conclusions can be drawn about the impact of MIS laws, as none have yet been brought to court. In the meantime, several relief instruments are in place to help funders transition to the new regime. This includes relief from some product disclosure requirements and the release of a consulting paper implying that further relief is coming. One significant impact of the new requirements is a sharp reduction in the number of class actions supported by third-party funding. In 2019, nearly 60% of collective actions received some funding. Last year, less than a third of cases did. The decrease in funded class actions may be offset by funded cases in Victoria—where contingency fees are legal. It’s safe to say that Australian legal requirements for funders are still in a state of flux.

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