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Commercial

What is Esoteric ABS and Why Does Everyone Love it?

As the world economy inches toward some sense of post-COVID normalcy, asset-backed securities are demonstrating their resilience. Unlike traditional ABS classes like leases, car loans, student loans, or credit card debt, the term ‘esoteric ABS’ can be applied to assets that can be traded for non-recourse funding. CFO Magazine explains that the ABS market can provide low-cost funding on the basis of assets like aircraft, rental car fleets, or say—a catalog of popular music. Litigation Finance is a rapidly growing industry that aids businesses and consumers in a number of ways with the use of this ‘esoteric ABS.’ Oasis Financial, for example, provides funding for injured parties to cover lawyers and medical fees on a non-recourse basis. Its success during the height of the COVID pandemic demonstrates the desire for esoteric ABS in the capital market. Global Jet Capital and Sunnova Energy have also made use of this marketplace. During the first month of COVID-related shutdowns, court stoppages, school and business closings, financial professionals were in panic mode. But esoteric ABS markets in “niche” areas like litigation funding are largely recession-proof. In fact, investors flocked to invest in litigation funding as it is uncorrelated to the market as a whole—bolstering litigation funding to a multibillion dollar industry. It is now possible to use non-recourse legal funding to pursue litigation businesses couldn’t otherwise afford, or to monetize assets that would normally be considered illiquid. The market for esoteric ABS is maturing and expanding with no signs of slowing.
Commercial

Prairie Mining Files Energy Charter Claim Against Polish Government

Since 2018, Prairie Mining has maintained that actions committed by the Polish government deprived the company of the value of its investment in the Jan Karski and Debiensko mines. Mining News details that the mining company’s case is funded by Litigation Capital Management, an Australia-based, UK-listed funder. The case will be heard under the United Nations Commission on International Trade Law Rules. The claim for losses could reach AUD $1.5 billion. The investment made in the two mines costs an estimated AUD $1.3 billion to develop.  
Commercial

Legal Funding in Global Jurisdictions—How are They Different and What’s Next?

The acceptance and mainstreaming of litigation funding are happening at different times and speeds in different parts of the world. Much of Europe has made use of the practice for nearly two decades. Other locales, like Singapore and Hong Kong, have only welcomed legal funding in recent years. Omni Bridgeway explores how a jurisdiction that is new to litigation funding can take its cues from those who have had more time to refine their procedures and requirements. In common law jurisdictions like those in Australia, moving away from antiquated concepts like champerty was an important first step. As the practice of third-party funding grew in popularity and scope, Australia took steps to add legitimacy to the industry. First was a review by Lord Justice Jackson, which served as a precursor to new regulations and legislation surrounding the practice—as well as the formation of the Association of Litigation Funders. In Singapore, emphasis is not on the courts to clarify the roles and duties of funders, but on legislation abolishing champerty while facilitating the funding of cross-jurisdictional and multi-jurisdictional cases. Case law is also used to inform the development of legislation and policy regarding funding—particularly funding of actions other than those expressly permitted. While some countries like Australia are allowing courts greater control over approval of legal funding agreements—Singapore case law establishes that a funding agreement is not an abuse of process and that these agreements will only be found unacceptable under extreme circumstances. Meanwhile, UK governments are still loathe to formally regulate litigation funding. Looking ahead, it’s clear that third-party legal funding will continue to grow and adapt to a changing world. Recognition of pending or possible litigation as an asset is commonplace in the UK. Defense-side financing is also gaining steam. It does appear that courts, funders, lawyers, and investors can all work toward the goal of increased access to justice and financial flexibility.
Commercial

High Court Battle Imminent in Woodford Case

The collapse of the Woodford Equity Income Fund is still yet to be resolved. Leigh Day sent a letter-before-action to Link Fund Solutions in March, accusing the ACD of failing to maintain proper liquid asset levels, as well as general mismanagement of the fund. Portfolio Adviser details that Leigh Day has stated its readiness to take Link on in this case—including litigation funding already in place. Litigation funding is increasingly popular in shareholder actions and allows claimants to participate without any cost to them. Link refused to compensate the more than 7,000 investors who lost money in the collapse. Clifford Chance, attorney for Link, promises to vigorously defend against the claim. Meanwhile, Harcus Parker also sent Link a letter-before-action representing a further 6,500 clients impacted by the Woodford collapse. In March of this year, RGL Management began a formal proceeding connected to the Woodford collapse.
Commercial

Asia Encouraged to Embrace Litigation Funding

Around the world, antiquated champerty laws are being struck down in favor of allowing third-party litigation funding. In the late-1990s, litigation funding gained popularity in Australia, England, Wales, and the United States. Since then, it has grown in acceptance and familiarity—and is now a multi-billion dollar industry. Asia Business Law Journal explains that both Hong Kong and Singapore have taken steps to invite participation from the Litigation Finance industry. Both allow for third-party funding in international arbitration proceedings, including enforcement and mediation. Hong Kong later made a clarification that court approval for funding is not required for liquidators. Harbour Litigation Funding founder, Susan Dunn, has seen banks, corporations, and even governments leverage funding in order to pursue legal matters they could not otherwise afford. Some of the newfound growth of litigation funding can be traced back to COVID and the financial turmoil it caused. Cash-poor businesses are looking to free up operating funds and monetize legal or IP assets that are currently sitting dormant. Litigation Finance is also becoming commonplace for collective actions—though this practice continues to rankle detractors. Julien Chase, professor of law at City University of Hong Kong, feels that Asia should take steps to expand the scope of litigation funding. The industry, he says, is moving away from strict regulation toward flexibility and self-regulation. When legislation works with third-party funders instead of against them, the result is better for funders, lawyers, and clients alike. Several sectors have already experienced increased interest in obtaining funding--including insolvencies, intellectual property disputes, and patent law. Any jurisdiction looking to become a litigation destination would do well to welcome third-party litigation funding. Not everyone has a choice, but those who do will be more likely to choose a place that allows for multiple types of fee arrangements, including third-party Litigation Finance.
Announcements Commercial

Forbes Ventures Plc – Update on Litigation Funding Securitisation

Forbes Ventures announces an update to its first Litigation Funding Securitisation. The listing and closing of the GBP 40 million two-year notes (the “First Issue”), for which Forbes Ventures’ wholly owned subsidiary, Forbes Ventures Investment Management Limited (“FVIM”), acts as Collateral Agent, has been subjected to further administrative delays. Those delays have not been within the control of the Company or FVIM. The Maltese Corporate Advisors, who are also the manager of the Securitisation Cell Company which is the issuer of the First Issue, has advised the Company that they will commence the process of listing the first issue in the forthcoming days. It is expected therefore that listing and closing will occur in the next 14 days. The Directors of the Company are frustrated at the continuing delays but have been given assurances by the Maltese Corporate Advisors that there will be no further delays in completing the listing and closing of the First Issue. The listing of the previously announced second Litigation Funding Securitisation of GBP 60 million two-year notes will commence immediately after closing of the First Issue. The Company will make a further announcement upon closing of the First Issue. At that time, the Company will also provide a Corporate Update on the progress that has been made in implementing the strategy set out in the Company’s announcement of 30 September 2020. The Directors of Forbes accept responsibility for the contents of this announcement.
Announcements Commercial

Longford Capital CFO Laura P. Pearl to Retire and Transition to Senior Advisor

Longford Capital, a leader in the commercial litigation finance industry, today announced that on May 31, 2021, Laura P. Pearl will begin her retirement and transition to a senior advisor role with the firm. Ms. Pearl has been Longford’s Managing Director and Chief Financial Officer since 2016. “Laura has made an indelible mark on our firm’s growth and progress, and the leadership role it plays in the global litigation finance industry,” said Timothy S. Farrell, Co-Founder and Managing Director of Longford Capital. “The Longford team is grateful for Laura’s financial acuity, tireless commitment, and hard work, and looks forward to continuing to benefit from her advice and friendship.” As part of its succession planning process, Longford will elevate Joshua A. Leavitt to Managing Director and Chief Financial Oofficer, also on May 31. After a national search, Longford added Mr. Leavitt late last year as Chief Accounting Officer. He has worked closely with Ms. Pearl, part of a careful predetermined plan to prepare for her retirement and transition to her new role. “It’s been a privilege to contribute to the growth of Longford Capital, and by doing so also participate in a richly innovative element of our legal system,” said Ms. Pearl. “I am particularly proud of how we’ve attracted new talent and scaled our team to accommodate the growing demand for our capital. I’m grateful to be handing the CFO title to a talented leader like Josh.” “Since joining Longford, I’ve been impressed by the sophistication of its business and strong collegiality of its team,” said Josh. “Laura’s contributions are palpable. It is an honor for me to step into her shoes, and I look forward to having her ongoing counsel.” Mr. Leavitt was CFO of Math Venture Partners Management, LLC, an early-stage venture capital firm, where he upgraded and institutionalized back-office operations and investor reporting processes. He was previously a founding member of the executive team at JHL Capital Group, where as CFO and Executive Vice President for Operations, he built the middle and back-office infrastructure needed to enable the alternative asset manager’s growth from approximately $11 million to more than $2 billion in AUM. He also co-founded Zoku Technologies, a Software-as-a-Service (SaaS) secure online vault business, where he served as CEO, and held senior positions in other high-growth ventures. Mr. Leavitt earned his MBA at the University of Chicago Booth School of Business. He is a registered CPA and has held Series 7 and 63 licenses. About Longford Capital Longford Capital is a leading private investment company that provides capital to leading law firms, public and private companies, universities, government agencies, and other entities involved in large-scale, commercial legal disputes. Longford was one of the first litigation funds in the United States and is among the world’s largest litigation finance companies with more than $1 billion in assets under management. Typically, Longford funds attorneys' fees and other costs necessary to pursue meritorious legal claims in return for a share of a favorable settlement or award. The firm manages a diversified portfolio, and considers investments in subject matter areas where it has developed considerable expertise, including, business-to-business contract claims, antitrust and trade regulation claims, intellectual property claims (including patent, trademark, copyright, and trade secret), fiduciary duty claims, fraud claims, claims in bankruptcy and liquidation, domestic and international arbitrations, claim monetizations, insurance recovery matters, and a variety of others.
Commercial

Mergers Predicted for Litigation Funders

Litigation Finance is a rapidly growing and evolving industry, and has been since its emergence during the last financial crisis. The practice helps law firms accept more contingency cases, allows businesses to monetize illiquid assets, and can turn existing IP into a profit center.

Asertis explains that third-party litigation funding has demonstrated its worth many times over. A Post Office scandal in the UK was finally brought to light when funders allowed 39 sub-postmasters who had been wrongfully convicted of financial crimes to seek access to justice. The Dieselgate scandal against several German automakers was also aided by third-party legal funding.

It’s expected that even more new entrants to the litigation funding market will present themselves in the near future. While this may increase competition among funders, its great news for law firms and potential claimants who need funding to pursue legal action.

Will litigation funders see an explosion of mergers the way banks have in recent years? Some say so, especially after the merger of IMF Bentham and Omni Bridgeway in 2019. In addition to mergers, many funders—both established and upcoming—are developing specialized and niche areas of focus, offering them an edge over funders with less specific knowledge.

Litigation funding has been mainstreamed and is here to stay. As the practice continues to grow and adapt, all eyes are watching how access to legal capital benefits lawyers, businesses, and clients.

Commercial

Findings From the Hong Kong Law Reform Commission

In Hong Kong, attorneys are not allowed to charge fees based on the potential award for a case. Increasingly, however, some types of flexible fee arrangements are allowed. In Hong Kong’s quest to become a destination for multi-jurisdictional litigation, the Law Reform Commission of Hong Kong has developed a subcommittee that will make recommendations regarding ‘Outcome Related Fee Structures.’ Omni Bridgeway explains that the purpose of the committee is to review current laws regarding ORFSs and make recommendations for reforms as needed. With that in mind, several recommendations were published by the subcommittee in December of last year. These are not final recommendations and were meant to encourage discussion in the legal community. Omni Bridgeway has had a business presence in Hong Kong since 2018. As such, they have provided a response to the subcommittee’s suggestions. The firm agrees that bans on conditional fee arrangements and damages-based agreements should be lifted. This suggestion includes the implementation of laws that, among other things, require lawyers taking on CFA or DBA cases to avoid asserting control over decision-making for issues that should be decided by the client. These lawyers should have to abide by the same standards that third-party funders do. Other client protections include:
  • A tribunal can order disclosure of ORFSs as pertains to conflicts of interest, security for costs, or the impartiality of counsel.
  • Tribunals can order costs against lawyers it believes are facilitating meritless claims.
  • Requirements for adequate capital, and proof therein.
  • Clients must be provided with clear information on ORFSs, as well as advice from those who have no financial stake in the matter.
  • Procedures in place for complaints and reporting non-compliance.
Omni Bridgeway joins a chorus of funders who support ORFS regimes to allow fee-sharing in single cases and portfolio agreements.
Commercial

Is Litigation Funding a ‘Debt’ Under FDCPA Guidelines?

As Litigation Finance grows in popularity, questions arise as to proper use cases. For example, courts are tasked with determining how laws should apply to litigation funding transactions and the agreements that outline them. Holland & Knight detail how the Fair Debt Collection Practices Act (FDCPA) defines a debt, and how that pertains to litigation funding. Until recently, courts focused on litigation funding as pertains to disclosure, champerty, and ensuring that funders do not unduly influence case strategy or decisions best left to clients. Recently, the Third Circuit US Court of Appeals offered some guidance on how or when litigation funding is a debt under FDCPA. An early case on the enforceability of a litigation funding agreement involved Christopher Boling. Litigation went on for years, and ultimately a judge determined that the funding agreement could not be enforced. But the case didn’t end there—the funder’s legal team (Callagy Law) filed a breach of contract action against Michael Breen, the lawyer for Boling. Breen then filed suit against Callagy, accusing it of violating FDCPA law. Ultimately, the Third Circuit stated that although litigation funding obligations may constitute a debt for the client, the same does not hold true for attorneys. The FDCPA defines a debt as an obligation to pay a creditor for monies used for personal or family needs. Because the Boling family used litigation funding to cover personal living expenses, the court stated that this money ‘may’ be defined as a debt under FDCPA guidelines—but the court stopped short of declaring that the funds were a debt in this context. Litigation funding agreements are typically made between funders and clients, or funders and legal teams/firms. In agreements with clients, funds may be used for personal or legal expenses, as needed. The same is not true for funding agreements made with lawyers or law firms.
Announcements Commercial

Litigation funder Asertis announces: new Commercial Disputes funding division backed by a €1.7bn (approx. £1.46bn) fund; financing of Mercedes group action; and new CIO and lateral hire from Harbour

Litigation funder Asertis today announces the launch of a new commercial litigation and arbitration disputes funding division backed by a well-known fund with available capital of over €1.7bn (approx. £1.46bn), as well as their financing of the Slater & Gordon Mercedes group litigation, and their new CIO and a further lateral hire from Harbour Litigation Funding. Known for their insolvency litigation funding, Asertis’s new service will focus on funding commercial disputes, including those relating to general commercial, competition and corporate, consumer and group action litigations and infrastructure. With €1.7bn (approx. £1.46bn) of funds available through an affiliate of European fund Arrow Credit Opportunities SCSp, Asertis is able to make funding decisions quickly at its own discretion, from its own balance sheet. Led by Chief Investment Officer Harshiv Thakerar, formerly of Global Growth Capital and Augusta Ventures, Asertis is positioned to fund commercial disputes across England and Wales, offshore markets, other common law jurisdictions and the EU. J-P Pitt, formerly a Director of Litigation Funding at Harbour Litigation Funding, also recently joined Asertis as an Investment Manager. J-P brings with him extensive expertise in commercial disputes funding, asset recovery and enforcement, drawing on his previous experience at Harbour and as a qualified solicitor. Asertis also announces today that it is financing the Mercedes Group Action led by Slater and Gordon. The claim centres around allegations that Mercedes, similar to other carmakers embroiled in the dieselgate scandal, installed software in their diesel engines to cheat emissions tests. Slater and Gordon are the joint lead solicitors in the Volkswagen Emissions group action, which is thought to be the largest group action in British legal history. Mercedes owners may be eligible to join if they have purchased or leased, whether new or second hand, a diesel Mercedes made between 2008 and 2018. Harshiv will head the commercial disputes funding division, working with J-P and CEO Ian Madej to build on Asertis’s established insolvency funding division and spearhead the growth of the new commercial disputes service. Commenting on the launch of the commercial disputes funding division and his appointment, Harshiv said: “I am delighted to have joined Asertis, working with the team to develop and grow our new commercial disputes funding service. Although a relatively new entrant into the increasingly crowded commercial litigation funding market, we are in the enviable position of being nimble and able to make funding decisions with certainty, autonomy and speed.” J-P said: “I am thrilled to have joined the Asertis team at such an exciting time in their development. I look forward to using my experience in litigation funding to deliver agile funding decisions, rapidly, under this very significant credit line.” Asertis CEO Ian Madej commented: “Harshiv and J-P both have an extensive understanding of complex disputes, particularly those with a multi-jurisdictional dimension. Asertis has grown rapidly since its launch last year and we have already funded and purchased several significant cases, including the Mercedes group action litigation. Coupled with our new membership of the Association of Litigation Funders, Asertis has fast established itself in the market and we look forward to working with Harshiv and J-P to continue our rapid growth.”
Commercial

DAS UK Forms Partnership With Maxima

Risk solutions specialist Maxima is joining forces with ATE insurance provider DAS UK to take on matters relating to personal injury and clinical negligence. Insurance Business UK details that the partnership comes after legal reforms, and is brokered by Maxima. Vanessa Andrews, head of operations, explains that smaller firms should have access to the same benefits as their larger counterparts. Andrews is confident that firms that have been rejected or have no insurer will welcome this change. John Durbin of DAS UK stated that this was the right time to help smaller firms who specialize in clinical negligence and personal injury—since insurers exiting the market has created a need.
Commercial

Hausfeld to File Antitrust Case Against Amazon

Hausfeld, a law firm that includes connections to the DC Attorney General’s office, has been chosen to file an antitrust lawsuit against retail giant Amazon. The case is said to be so potentially lucrative that the contingency fee agreement states that the firm may not accept more than $55 million in fees. Paul Gallagher will lead the litigation. Gallagher has a long history in antitrust cases, and once worked for the Department of Justice and the DC Attorney General. Legal Newsline reports that AG Karl Racine selected Hausfeld after filing the lawsuit on May 25th. Hausfeld will receive up to 15% of the recovery, though not more than $55MM. This stipulation seems to portend an astronomically high award. Hausfeld has multiple claims against Amazon in several Federal courts. Allegations include anti-competitive requirements and fees by Amazon that impact customers and sellers. Amazon allegedly utilizes a complex scheme of fees and extra charges that can comprise nearly half of a listed product’s price, while also preventing third-party sellers from selling items elsewhere at a lower price. The high fees and charges Amazon imposes on third-party sellers are often passed down to consumers. Using private legal firms to sue businesses is unusual for an AG, but not unheard of. In 2020, AG Racine also used private law firms to file climate change actions against Shell Oil, BP, Chevron, and Exxon. A motion to dismiss, filed by Amazon lawyers, stated that Amazon’s approach is common and not unreasonable.
Commercial

Claimants Sought for Possible Tyro Payments Class Action

An investigation of claims is underway as Bannister Law Class Actions determines whether a class action against Tyro Payments Limited is warranted. Tyro is a powerhouse provider of payment acceptance logistics, currently serving more than 32,000 businesses in Australia. Bannister Law details that in January of this year, many businesses have been unable to utilize Tyro’s services due to connectivity issues on Tyro’s end. This left businesses unable to accept credit or debit card payments—drastically reducing revenue and depleting consumer confidence. Those whose businesses have been impacted by Tyro are being asked to sign up as potential claimants in the class action. There is no cost to potential claimants as Court House Capital is funding the action. Compensation may include damages for:
  • loss of sales revenue
  • losses and damages suffered when seeking replacement services
  • loss of service fees for services not provided
  • loss of goodwill and customer satisfaction
Eligible parties include those who had business contracts with Tyro before January 5th, 2021. Those who had connectivity issues from January of this year onward, and those who endured business losses due to Tyro issues. The claims in the potential case are as follows:
  • Tyro breached statutory warranties, which imply that services will be provided with appropriate skill and care.
  • The services provided are unacceptable and do not achieve their intended purpose.
  • Any reasonable consumer would be dissatisfied with the services provided by Tyro, and that the company is in breach of contract.
  • Tyro stated that its services have less than .1 percent of downtime, which was not accurate for many impacted customers.
Court House Capital is an Australian litigation funder located in Sydney. They focus on insolvency claims, commercial litigation, and class actions in Australia and New Zealand. Court House Capital is currently investigating multiple potential class actions.
Announcements Commercial

Pathfinder Minerals books annual loss as it pursues Mozambique claim

Mining company Pathfinder Minerals booked a full-year, as it continues to pursue a legal claim over ownership rights in Mozambique. Pre-tax losses for the year through December amounted to £0.67 million, compared to a year-on-year loss of £0.87 million. 'With a new chief executive appointed during 2020 and fundraises during the first half of 2021, Pathfinder is in the strongest position it has been in for several years to recover value through a substantial claim against the government of Mozambique under the Mozambique-United Kingdom Bilateral Investment Treaty,' chairman Dennis Edmonds said. 'With estimated losses in connection with the diversion of its licence, including lost profits, exceeding $621 million, a legal opinion from counsel in the company's favour, and the means to progress a claim to the point of securing third-party litigation funding, the opportunity for Pathfinder is clear.' 'Pathfinder has also broadened its horizon to actively consider exploring additional opportunities in advance of, in parallel with, or subsequent to, a resolution of the expropriation.'
Announcements Commercial

Flight PS752 Class Action Certification Order

The Honourable Justice Glustein signed the Flight PS752 Class Action certification order for the class action arising from the downing of UIA Flight PS752. On January 8, 2020, UIA Flight PS752 was shot down moments after takeoff from Iran on its way to Canada via Ukraine. There were no survivors.
The class action is on behalf of the passengers and the passengers' families. It alleges the Islamic Republic of Iran, the Islamic Revolutionary Guard Corps (IRGC) (collectively the Iran Defendants) and Ukraine International Airlines PJSC (UIA) are legally responsible for the downing of Flight PS752. Previously, the Court found the class action is "the preferable procedure for the resolution of the common issues in an action and provides a fair, efficient, and manageable method for advancing the class members' claims." "We are grateful the court made another order in our favour" said representative plaintiff Vahid Hezarkhani, whose sister-in-law and brother-in-law were on Flight PS752. "This is another major litigation milestone as we prosecute the class action for the passengers and their families. We will continue to work with the various stakeholders as we seek justice and compensation" said Tom Arndt, of TWA Law, class counsel representing the class members. The class action was commenced January 20, 2020. In September 2020 the court approved the third-party litigation funding agreement with Galactic Litigation Funders. In November 2020, the court determined that the Class Action and TWA Law were the best class action and best law firm positioned to advance the interests of the victims and their families, permitting this class action to go forward, staying similar actions commenced by other counsel. Formal notice of certification will be published shortly. Class Members and interested individuals are encouraged to consult the case specific website regarding progress of the litigation: www.flightps752.ca
Commercial

Litigation Finance Can Help GC’s Maintain Control

Is an existential threat to the legal world looming? A survey of over 1,000 GC’s suggests that many of them fear the future promises smaller budgets, heavier workloads, and more pronounced risk for in-house legal teams. For many businesses, litigation funding can be a vital part of the solution. Omni Bridgeway details that legal funding can be used for a variety of fiduciary benefits, including reduction of outgoing expenses, mitigating risk, monetizing IP or ongoing litigation. What’s more—an experienced funder is likely to have new ideas, strategies, and tech that companies can use to gain a competitive advantage. GC’s are often tasked with reducing risk and costs simultaneously. That’s a tall order in the best of times, but can seem impossible after a pandemic. Reducing expenses relating to outside counsel is something with which an experienced litigation funder can assist. Funders can also evaluate potential litigation to determine how they can best be managed. After all, funders have as much motivation to manage cases as effectively as GC’s, because their goal is, of course, successful litigation that leads to profit all around. Funders are, therefore, experienced in evaluating the merits and potential of a case. Any GC can tell you that pursuing litigation is expensive, and a drain on resources. But when that litigation is funded by a third party, the balance sheet shows lower expenses and higher income, even when recovery or awards aren’t especially high. Portfolio funding of curated cases can also bring in capital on a predictable basis, so balance sheets aren’t impacted by the speed of the court. The non-recourse funding that third-party litigation funders provide can be a valuable resource for businesses feeling the COVID crunch. No matter what financial catastrophes loom on the horizon, a litigation funder can help GC’s manage capital, mitigate risk, and provide a steady income stream for the future.
Commercial

Ford’s Powershift Clutch is Still Not Up to Snuff

Auto giant Ford is back under scrutiny for its powershift clutch system. After one couple received compensation from Ford to replace their transmission—nearly three dozen other car owners reported similar problems to Fair Go. TV New Zealand details that a car’s transmission is expected to last roughly 200,000 km, provided it is properly cared for and serviced. Initially, Ford told Fair Go that it would address the powershift clutch issues even for cars that were no longer in warranty or had been serviced by non-Ford shops. However, car owners stated that they did not receive any help. Some customers were told to seek legal advice.  After Ford made several public statements that failed to address the issues, Fair Go attempted one more time to reach Ford—which ultimately claimed that its database of service records differed significantly from the information provided by disgruntled customers. One mechanic, Lyall Bennet, stated that the real problem may not be the powershift clutch, but rather with plastic parts that disintegrate and break down over time. That means that regular servicing and fresh oil won’t impact the problems customers are having. Meanwhile, Ford maintains that it won’t compensate customers who did not have their cars properly serviced. Of course, the issues with Ford’s powershift clutch are neither new nor undocumented. In every likelihood, a class action against the automaker is on the horizon. Potential claimants are being assembled, and the legal team at McLean Law is seeking out litigation funding so the action can move forward without cost to claimants.
Commercial

Wirecard Insolvency Class Action Grows More Complex

The aftermath of Wirecard’s insolvency has grown even more complicated since the payment company liquidated with nearly $2 billion in the red. Over 20,000 people impacted by the Wirecard collapse plan to sue the company. The plaintiffs are backed by litigation funder, Litfin. Accounting Web details that Wirecard, just prior to the declared insolvency, revealed that capital supposedly in Asia did not actually exist. Some management personnel were arrested, while Jan Marsalek, former COO, remains at large and is wanted by Interpol. Now, a special report is pointing the finger at Ernst & Young, which was tasked with evaluating the business. The report suggests, among other things, that Wirecard may have violated reporting standards with regard to its Asian business dealings. The confidential report also found evidence suggesting that EY audits between 2014-2016 were lax and missed several common indicators of fraud, and that auditors often took managers at their word on compliance issues. EY denies wrongdoing, claiming that they too were victims of fraudulent conduct by Wirecard and others. David Parker, a payment tech expert, asserts that the report shows what could be crippling failings by EY. As Arthur Andersen was taken down in the Enron scandal, so may EY be hit hard by the revelations coming out of this investigation and the subsequent collective action. It’s unclear whether the full report will be published publicly, as German lawmakers have yet to decide. The findings are no doubt an embarrassment to lawmakers, as they reveal woeful lapses in professionalism that are likely to impact public trust. At the same time, a successful collective action could go a long way toward restoring public perception that fraud will be punished and investors protected. Just another way that litigation funding protects victims and results in net gains for the communities it serves.
Announcements Commercial

Boies Schiller Flexner forming international investor group to recover losses – Greensill / Credit Suisse Supply Chain Finance Funds

Boies Schiller Flexner (UK) LLP ("BSF") is building a group of investors across Europe and Asia who invested in Credit Suisse's US$10bn Supply Chain Finance Funds ("SCFFs").  It is intended that the group will pursue Credit Suisse, including through litigation if necessary, to recover losses suffered with respect to the investments made in or with Greensill Capital. The firm takes the view that investors have credible claims against Credit Suisse for misrepresentation and mis-selling, which should be brought in a co-ordinated manner across jurisdictions. Investors should contact greensill@bsfllp.com for further details. Background Credit Suisse entities pro-actively marketed and sold investments in the SCFFs as cash-equivalent and low risk investments.  In fact, the SCFF assets were notes backed by existing and future trade receivables originated and structured by Greensill Capital. In March 2021, Greensill Capital, the main trading entity and treasury company for the Greensill group, ceased trading and went into administration. Whilst facts continue to emerge, there appear to be multiple failures which led to the collapse, including an over-exposure to certain businesses, financing of risky future (as well as current) receivables, and an inability to maintain insurance coverage. The SCFFs were closed by Credit Suisse on 1 March 2021 and the funds are being liquidated.  It is anticipated that there will be a significant shortfall in recoveries for investors into the funds. The Investor Group BSF is putting together a group of international investors to pursue a cohesive and proportionate litigation strategy to recover losses, namely the shortfall that will not be met through redemptions from the Greensill estate.  This litigation strategy is anticipated to span relevant jurisdictions across Europe and Asia, with BSF acting as global litigation counsel. Investors will be eligible to join the investor group if they held (as at 1 March 2021) or hold (at the time of participation in the group) shares or interests in shares in the SCFFs, being: (i) Credit Suisse (Lux) Supply Chain Finance Fund, (ii) Credit Suisse Nova (Lux) Supply Chain Finance High Income Fund, (iii) Credit Suisse Nova (Lux) Supply Chain Finance Investment Grade Fund, and (iv) Credit Suisse Supply Chain Finance Investment Grade. There is no jurisdictional restriction: investors across Europe and Asia are able to join the group. The Litigation Strategy A cohesive investor group acting together will be well-placed to maximise recoveries with respect to the SCFFs, and protect interim value. Whilst there is uncertainty as to recoveries via the Greensill estate and losses have not yet crystallised, the litigation strategy is designed to recover losses for which Credit Suisse is responsible – both through the sale of the securities as well as its management of the portfolio.  The litigation will focus on mis-selling claims against Credit Suisse entities involved in the structuring and sale of investments, mis-management claims regarding the SCFFs investments, and, potentially, broader conspiracy and other tortious claims. It is anticipated that litigation will be brought in England and potentially Luxembourg and/or Switzerland, making use of case management procedures to maximise the efficiency of a group of investors acting together. BSF can provide detailed advice once an investor is a member of the group (and subject to diligence of the investor's interests in the SCFFs). Risk / Secondary Trading There is significant interest in both third party funding of litigation and of secondary trading in the shares and litigation rights.  BSF is working with various parties in this regard.  Investors interested in secondary trading should take advice to ensure rights and claims are transferred.  BSF can provide further details to interested parties. The BSF team can also arrange third party funding for interested investors, creating zero economic risk in the bringing of proceedings to recover their losses. BSF BSF is an elite litigation practice with significant experience in creditors' rights, class actions and strategic litigation in restructuring and insolvency matters.  It has a track record of delivering value for its clients through strategic litigation in England and across Europe.  BSF and its lawyers have created value for investors through cohesive litigation strategies in respect of the Icelandic banks (Kaupthing, Glitnir, Landsbanki), Lehman (US and UK), bank restructurings and collapses in the UK, Ireland, Cyprus, Greece, Spain, Portugal and Austria, and multiple corporate restructurings. It is currently litigating against Credit Suisse before the English Courts, with respect to the Proindicus debt. The BSF team will be led by Natasha Harrison, Deputy Chair and Managing Partner of BSF, and Fiona Huntriss, Partner.  BSF is working with Luxembourg, Swiss and other local counsel.
Commercial

Are There Caveats to the Widespread Embrace of Litigation Funding?

Third-party litigation funding has grown significantly in recent years. This relatively new industry got its start during the last financial crisis, and has expanded and adapted to meet the needs of lawyers, plaintiffs, and businesses during COVID. The practice has its share of detractors, but overall it’s viewed by courts as a net gain for the community, as it increases access to justice for those who could not otherwise afford it. International Business Times recently dissected what they see as the most significant concerns about Litigation Finance as an industry. In the UK, champerty restrictions were abolished in the 1960s, provided that funders are restricted from having control or influence over the cases they fund. Transparency is a major facet of instilling confidence in legal funding, along with assurances that the practice won’t result in court dockets clogged with frivolous cases. Of course, no funder wants to bankroll a case without merit. While it may be true that funders might take on a risky case with a potentially high ROI, those funders risk losing their entire investment if the case is not won. Litigation funders currently follow a code of conduct formed from the output of various working groups. This was encouraged by Lord Justice Jackson in 2013, during his endorsement of third-party litigation funding. Joining a professional funding association like ALF or ILFA requires signing a Code of Conduct. However, following the code is not legally mandated, and there are no legal penalties for deviation from it. Self-regulation of the industry may soon give way to increased legislation, as has already happened in Australia, for example. As litigation funding is clearly here to stay, the hope is that the industry itself will continue to cooperate with legislators to formulate a legal structure through which funding can thrive and plaintiffs in need can reap the benefits.
Announcements Commercial

Augusta Ventures completes new £250m fundraising as investors back strong market surge in legal and corporate sectors

Augusta Ventures, a specialist asset manager focussed on the litigation and dispute funding sector, has closed its third pool of funding with £250m of new commitments (including Augusta Ventures co-investment), bringing the firm’s AuM to £585m and enabling the firm to fund an unprecedented pipeline of opportunities in high value litigation and dispute scenarios. The fundraising, which was oversubscribed, was supported by Beach Point Capital Management, the anchor investor in the previous Augusta Ventures funding, and two new investors, Magnetar Capital, who will act as anchor in this funding, and Northleaf Capital Partners. Louis Young, Chief Executive Officer of Augusta Ventures, said: “We are delighted to announce this new £250m capital raising as Augusta seeks to expand its capital resources to meet the increased demand for legal related finance across all sectors and geographies. We have never seen so many strong opportunities.    It is particularly satisfying to see both the continued support of existing investors as well as the addition of two new institutions who have deep experience in the sector. This validates the quality of our investment platform and the amount of the new commitments reflects the depth of the investment pipeline.”  Hitesh Patel, Non Executive Chairman of Augusta Ventures, said:  “Augusta’s largest capital raising initiative signals its intention to rapidly expand its portfolio of investors and funding cases. Augusta has deep expertise in the litigation funding market, and this new funding will enable us to provide Claimants and law firms with even greater access to funding that de-risks litigation for Claimants and facilitates access to justice”. I am excited about working with a talented team at Augusta and its investors and the future prospects of expanding the company’s operations and assets under management.”   
Commercial

Auckland Cladding Case: Defective Product or Incompetent Builders?

The High Court case surrounding James Hardie and its “cladding systems” appears to hinge on whether the products themselves were defective, or if the installers simply erred in their duties.  Radio New Zealand discusses the $250 million case with Victoria Young, a business reporter who has covered the story. In short, the case is expected to last about four months and involve over 1,000 plaintiffs and a multibillion-dollar multinational company. Third-party litigation funding secured from a British funder has enabled the case to move forward. While the case itself may come down to a question of incompetence versus a faulty product, the implications for the legal world lie elsewhere. Some have suggested that litigation funders who bankroll class actions like this are emboldening other plaintiffs to file similar actions. When misled shareholders or other allegedly wronged parties feel they have nothing to lose, signing on with a litigation funder on a non-recourse basis is a sensible option.  This may be worrisome for unscrupulous business owners. But a public perception that chicanery will be met with a well-funded class action may keep a lot of businesses honest.
Commercial

A New Alternative Asset Class: Patents

Patent monetization is a rapidly growing alternative asset class. Fund managers, private equity firms, and hedge funds are all looking toward patents and patent portfolios as key non-correlated investments. The largest patent-focused fund currently active in the industry belongs to Fortress—with $900 million under management and a further $400 million in IP Fund 2. Middle Market Growth explains that firms are raising big capital for litigation funding—with plans to deploy much of it toward various patent cases. Litigation Funders commonly invest in IP enforcement programs or by entering portfolio funding agreements with law firms specializing in IP and patents. Parabellum Capital, for example, raised $450 million for litigation funding just last year. Some of that is already earmarked for patent litigation. Why are financial sponsors reticent to invest in IP litigation? The complexity of cases, low appetite for risk, duration, and the involvement of multiple parties may all be reasons for investor caution. At the same time, working with experienced litigation funders and IP advisers can mitigate many of those risks. IP advisors are an invaluable resource for financial sponsors looking toward patent-related investments. Their ability to source or identify beneficial opportunities, or to set up a framework for monetization, is essential. Depending on investment criteria, an IP advisor can create deals that ensure preferred dividends on investments. In the tech world, patents are as vital as they are neglected as a source of income. However, when financial sponsors and IP advisors work together, these patents can become a source of predictable income. One strategy may be to identify patent assets that aren’t essential to the business, yet can be sold to generate funds that can then be reinvested in the company. Another is leveraging patent portfolios to maximize returns. Ultimately, patent monetization offers flexibility and the potential for impressive returns.
Commercial

Bondholders Seek Crowdfunding for LCF Appeal

Is crowdfunding a good way to finance a case against the FSCS? That’s what LCF bondholders are asking themselves as they look for ways to fund an appeal. Four LCF bondholders are representing the rest of the investors in the class. After the High Court ruled against them, they received permission to take their case to the Court of Appeal. P2P Finance News details that the bondholders may not have the financial means to move forward with the appeal. While attorneys for the bondholders are working pro-bono, lawyers for the FSCS aren’t. FSCS has refused to extend an existing costs agreement to appeals, nor have they provided cost information. A target for the potential crowdfunding drive has not yet been set, according to bondholders. Still, an informal Facebook poll suggests that roughly half of the impacted investors support crowdfunding the appeal. Third-party funding seems like the ideal solution here. Yet the case did not secure funding—owing largely to the logistics of determining the damages for thousands of individual bondholders. A successful appeal could be worth GBP 25 million to LCF investors, and a further GBP 70 million to taxpayers. The judge called on FSCS to reconsider, as not allowing the appeal to move forward for financial reasons would not be in the interests of justice.
Commercial

Evaluating Duration in Commercial Litigation

For investors, duration is both extremely important and commonly underestimated. Assessing how long it may take for a case to go from filing to conclusion to payout is essential when considering funding any litigation. It can take two or more years for a case to reach completion—and even then, there is no guarantee of a speedy payout. Burford Capital explains that 16 months is considered a short period of time for arbitration to run its course. Commercial matters can take two years to reach trial in the United States, while a US District Court case might take more than 35 months to go through the appeals process. Firms and businesses must ask if it’s worthwhile to tie up capital for so long—or if it’s better to monetize such cases instead. Third-party legal finance offers two solutions CFOs should consider. The first is covering fees and expenses. When companies pay these, capital is tied up—maybe for years. Allowing funders to cover fees and expenses enables companies to spend less while achieving the same legal result. The company only repays this if the case is successful. Such is the benefit of non-recourse funding. Funders can advance a portion of a meritorious claim to companies—affording them working capital on the time frame that works best. Litigation funding can be used in these ways to lend flexibility and security to a company’s balance sheet by turning invisible assets into working capital.
Commercial

An Impassioned Defense of Litigation Finance

After a recent article lambasting the industry, Tets Ishikawa of LionFish Litigation Finance penned an impassioned response. Financial Times ran Ishikawa’s defense of litigation funding as a means to allow everyone to seek justice when they’re wronged. Funding helps vulnerable people at times in their life when they need it most. The hard truth is that seeking justice is expensive, and many people cannot afford it. Litigation funding exists to help those people, and increase confidence in the justice system. Ultimately, only those looking to use their money to avoid consequences have reason to fear the growth of the litigation funding industry.
Commercial

ASC Ordered to Produce Patient Billing Records by Florida Appeals Court

Sand Lake Surgery Center was ordered to produce billing records for two patients. A Florida appeals court made the ruling despite Sand Lake selling its stake in the case to American Medical Funding. Becker’s ASC Review explains that Sand Lake refused to provide confidential information about the funder or payments made. The initial ruling did not require Sand Lake to disclose the information. The appeals court determined that the party who declines to produce information must establish how and why the information should not be shared.
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.