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Commercial

LIDW Looks at Litigation Funding and Class Actions

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

Legal-Bay Reports Class Action Filings in Peloton Treadmill Defaults

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

UC Budget Approval Focuses on IP as a Budgetary Source

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

Morgans Agrees to $5.5 Million Settlement Payout

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

DLA Piper Looks Toward Cryptocurrency and NFTs

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

Estia Class Action Settles for $12.35 Million

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

UK Panel on Collective Actions & Litigation Funding

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

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

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

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

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

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

Consumer

California Lawyer Joseph Hoats Avoids Prison Time After Perjury

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

Tech Giant Apple Embroiled in Class Action Asserting App Store Overcharges

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

Shattercane Decision Appealed

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

India Confronts Litigation Finance

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

Nike Counterfeit Case May Define US Court Reach Against Foreign Banks

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

Australian High Court Rules on Competing Class Actions

Australian courts have had to adapt to the changes brought about by the increased use of litigation funding. The practice is a net gain for the community and clients who gain access to justice they could not otherwise afford. Still, some say that the availability of funding has sparked an untenable number of lawsuits—class actions in particular.

MONDAQ details that a High Court ruling has confirmed how competing collective actions should be handled. While this is an important confirmation, it doesn't differ markedly from the current paradigm. When there are competing class actions, courts can analyze the facts of each case to determine which should progress. Other cases would then be stayed or consolidated as appropriate.

This clarification comes after five class actions from shareholders were filed within five weeks of each other in the AMP claim. In that instance, three actions against the same defendant were stayed and two consolidated. Each case had a different legal team and its own litigation funding in place.

While there isn’t one uniform approach that will work for all competing class action situations, there is a standard approach to address that eventuality:

  • Presume that multiple cases are not needed.
  • Litigation funding should not make or break a case moving forward, but may be a relevant consideration.
  • The first-in-time rule may not apply, but timing can be a factor in determining which case should move forward.
  • Best interests of the group members should be a primary consideration.
  • Courts may consider the likelihood of success.

While legal professionals may disagree on the particulars of the High Court’s decision, adding clarity and some measure of predictability to the process is a good thing.

Will this ruling lead to express statutory power for courts to rule on which and how many collective actions should move forward? Only time will tell.

Commercial

Collective Action Against James Hardie Proceeds

A funded class-action against the group of Australian building companies known as James Hardie is about to begin. Leaks in 376 buildings led to homeowners seeking damages of roughly AUD $220 million. Harbour Litigation Funding provided support for the case early on. Stuff New Zealand details that the issue revolves around a cladding system called “Harditex.” Claimants assert that the cladding is defective, and that James Hardie knew or should reasonably have known about the defects. Instead, they continued selling and installing the product—leaving residents dealing with massive leaks, multiple repairs, and even illnesses after being forced to remain in leaky homes. The claim was originally filed in 2015. The case is expected to involve dozens of witnesses and multiple international experts to prove that the cladding was defective. In all likelihood, the case would not have continued if not for aid from litigation funders.
Commercial

Judge Agrees to Oral Hearing in Possible Revival of BHP Case

BHP is, by market value, the largest mining company in the world. In 2015, the Fundao dam, owned jointly by BHP and Vale (Samarco) collapsed—killing 19 people and contaminating the Doca river, reaching all the way to the Atlantic Ocean over 400 miles away. Reuters reports that the Court of Appeal ruled that the case could not proceed in English courts. The Appeals court agreed with the lower court that the case was, in fact, an abuse of process, as it amounted to a claim of reparations. This led to 200,000 disappointed claimants. Judge Underhill will hear oral arguments that may overturn the Court of Appeal ruling, and perhaps breathe new life back into the $6.95 billion case. Ultimately, the case could be instrumental in establishing whether companies with global reach should be held liable for the actions of their subsidiaries around the world.
Commercial

Battle Over Zhunus Judgement Continues

A $300 million judgment known in legal circles as “The Zhunus Judgement” is still being scrutinized by the parties involved. Harbour Litigation Funding brought several charges against Kazakhstan Kagazy JSC with relation to the judgment. LittletonChambers details that Rupert D’Cruz of Littleton Chambers defended KK JSC against claims made by Harbour. Issues in the case included the execution of multiple versions of the Funding Agreement meant to increase Harbour’s share, an accusation of ‘unjust enrichment,’ and whether the new versions of the agreement were created and executed with proper authority. Justice Moulder, in a 72-page judgment, ruled in favor of KK JSC late last week.
Announcements Commercial

Apex Litigation Finance are recruiting for growth

Less than 18 months since launching the company, Apex Litigation Finance has committed to a growth strategy that is creating career opportunities within its team. Following the company’s success in attracting applications and achieving positive outcomes for clients, a significant increase in case numbers is emerging. With that growth comes a need to bring further talented individuals into the business. CEO Maurice Power says: “We are about to see a new injection of capital into the business, with significant additional funding for cases. We also recently signed a contract to provide commercial litigation funding to a scheme generating 200-plus cases per annum. This will make Apex of one the highest volume providers of litigation funding solutions in the UK. “With the increase in case volume in mind, we are looking to grow our team. It’s a superb opportunity for anyone with an interest in a career in litigation funding to join Apex in our journey. It’s a fresh and exciting place to work, especially with our innovative use of artificial intelligence breaking new ground.” The company is taking a flexible approach to its initial recruitment drive. Rather than advertising specific roles at this time, it is keen to hear from interested individuals from across various disciplines including legal, insolvency, litigation funding, AI development and business development. Specific litigation funding experience is not essential, and Apex says it will look at an individual’s skill set and identify those who can make a contribution to their success. Interested candidates are invited to contact Apex via enquiries@apexlitigationfinance.com by sending a current cv and details of why they would be ideal for Apex. About Apex Litigation Funding: Apex Litigation Finance Limited brings together experts from the legal and finance sectors to provide third party litigation funding to litigants (corporates, liquidators and individuals) who are unable to pursue a claim due to the prohibitive cost of litigation. Although the claim may have merits, uncertainty over the total costs and the potential risk of being ordered to pay the defendant’s cost, should they lose the claim, prohibits access to justice for many claimants.  Our process is augmented by artificial intelligence systems to assess risk. As a professional litigation funder, Apex will make available funds to pay legal and other costs associated with a claim in return for an agreed share of any successful return. If there is no recovery, or if the claim is lost, there is nothing to repay. For details, please see www.apexlitigation.com
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Announcements Commercial

Delta Capital Partners Management Hires Jonathan Sablone as Managing Director and Global Director of Originations

Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, has announced the addition of Jonathan Sablone to the firm as Managing Director and Global Director of Originations. Mr. Sablone is based in Boston and will be leading the firm's Boston presence and overseeing all aspects of deal originations for Delta. Prior to joining Delta, Mr. Sablone served as a Partner at DLA Piper where he created and co-chaired the firm's Private Fund Dispute Group. Mr. Sablone's law practice focused on commercial and financial services litigation involving investment funds and disputes between or among alternative asset funds and investors in those funds. Prior to DLA Piper, Mr. Sablone served as a Partner and Practice Group Co-Chair for Nixon Peabody's Complex Commercial Disputes Group and also led the firm's Private Fund Disputes practice and chaired the eDiscovery and Digital Evidence practice, both of which he created during his tenure. Mr. Sablone has over 25 years of commercial litigation experience, during which time he has represented a cross-section of the funds industry, including offshore liquidators, managers, limited partners, and institutional investors. Additionally, Mr. Sablone has represented companies in the technology, pharmaceutical, manufacturing, and financial services sectors. Mr. Sablone has been ranked in Chambers, Best Lawyers and Superlawyers, selected for the "40 Under 40" award in the Boston Business Journal, and speaks and writes regularly on hedge funds and private equity funds, litigation, due diligence, compliance, and regulatory issues. Christopher DeLise, Delta's Founder, CEO and Co-CIO, stated, "Delta is pleased to welcome Jon as a Managing Director and the firm's Global Director of Originations, and to have him lead Delta's Boston presence. Jon's tremendous experience in commercial litigation and client relationship management, as well as the extensive recognition he has received for his work in the legal community, will enable him to contribute greatly to Delta's global originations. The launch of several new business ventures for Delta this year makes this an exciting time for Delta's Boston expansion and we are proud to be adding such an esteemed legal professional to Delta's team in order to continue the firm's worldwide growth and development as a funder of choice for sophisticated litigation and legal finance solutions across all markets and verticals." About Delta
Delta Capital Partners Management LLC is a global private equity firm specializing in litigation and legal finance, judgment enforcement, asset recovery, and related strategies. Delta provides capital and related services to individuals, businesses, private investment funds, law firms and other professional service firms across the world that seek to hedge their financial exposure, reduce legal spending, enhance the probability of a successful and timely resolution of claims, and maximize the effectiveness of their core businesses.
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Announcements Commercial

Deminor supports businesses in France to recover losses suffered due to COVID-19 lockdown measures

Deminor is pleased to announce that it will be joining forces with Lincoln Avocats Conseil, a Paris-based law firm, to support business owners in France in their pursuit of indemnification from insurance companies for losses suffered due to lockdown measures. Due to the COVID-19 epidemic, the French authorities ordered the closure of non-essential businesses (such as restaurants, bars, and hotels) from 15 March 2020 to 15 June 2020. Then, the French authorities imposed a further partial closure of non-essential businesses from 16 October 2020. This became a full closure from 29 October 2020 onwards in order to combat the second wave of COVID-19 infections. This second period of forced closure remains in force and it is expected to end in June 2021. Businesses which saw their activities interrupted because of these lockdown measures have suffered a significant loss of revenue. This loss of revenue is often covered by professional risk insurance taken out by business owners. However, insurance companies have so far largely refused to indemnify their policy holders (click here for more information). Based on external legal advice received by Deminor, business owners may be entitled to indemnification pursuant to their business interruption insurance. Therefore, we will be teaming up with Lincoln Avocats Conseil to support businesses in the pursuit of their indemnification claims against selected insurance companies. Deminor will provide third-party funding to eligible businesses to claim business interruption indemnification. Deminor will pay Lincoln’s fees and all legal expenses related to the court proceedings, making it possible for businesses to claim compensation on a ‘no cure, no pay’ basis. Deminor will only be entitled to a return if the claim is successful. To learn more about our ‘no cure, no pay’ funding solution for business interruption claims, please read our Q&A (only available in French). About Lincoln Avocats Conseil Lincoln Avocats Conseil is a Paris-based law firm specialising in insurance law and dispute resolution. Me Guillaume Aksil, a partner at the firm, has successfully litigated business interruption claims against AXA France and other insurance companies. About Deminor Established in 1991, Deminor is a litigation funder with expertise and a proven track record in collective recovery actions. Deminor currently represents c. 330 victims of the truck cartel, c. 8,000 shareholders of Fortis/Ageas, and c. 5,000 investors impacted by the Madoff fraud. We have built an unmatched track record over the past 25 years. We have been able to obtain an average recovery ratio of 42.6% for our clients, and we have achieved a positive outcome in 81% of our concluded recovery cases.
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Announcements Commercial

Sundance Resources Secures Litigation Funding from Burford Capital

Sundance Resources Ltd (“Sundance” or the “Company”) is pleased to announce it has signed a binding Capital Provision Agreement (“CPA”) with Burford Asia Investments Pte. Ltd. (“Burford”), an affiliate of Burford Capital Limited, the world's leading global finance and asset management business focused on law. Under the CPA, Burford will provide Sundance with non-recourse funding to cover legal fees and other costs of arbitration against the Government of the Republic of Congo and, if required, the Government of Cameroon. The terms of the CPA need to remain commercial in confidence. In parallel with the negotiation of these funding agreements, Sundance has progressed its claim against Congo, which is now the subject of active international arbitration proceedings in London under the rules of the International Chamber of Commerce. In these proceedings, Sundance's subsidiary Congo Iron SA is claiming damages of USD 8.76 billion plus other relief. Sundance Resources CEO Giulio Casello commented: “Whilst it is unfortunate that we have had to resort to litigation to protect the rights of our shareholders, we are confident that, with this funding from Burford and the legal support of magic circle firm Clifford Chance, we will deliver justice and the best possible return for our shareholders. Arbitrations of this kind can take several years to be completed and we thank shareholders for their patience.”
Commercial

Leveling the Playing Field with Litigation Finance

It is well understood that Litigation Finance offers plaintiffs a means to pay legal teams, experts, researchers, and others who can make or break a legal matter. But what else does third-party litigation finance accomplish? Hedgeweek explains that when third-party legal funding is used by plaintiffs, its presence can change the way that case strategies are formulated by the defense. In a David v Goliath-style case, a well-monied defendant may choose to drag a case out until a plaintiff of low means runs out of funds. Litigation funding prevents that scenario, by creating a level ground for a more fair legal proceeding. Ultimately, litigation funding is a net gain for the community at large since it holds corporations responsible when they’re not meeting environmental standards. This is true regardless of jurisdiction—though the venue in which a case is tried can have a significant impact on how litigation funding is viewed. Disclosure and transparency, security for costs, and even the funding agreements themselves may have different applicable laws depending on where a case is being heard.   For investors, returns from a legal finance investment can be very high. At the same time, time frames are unpredictable and there’s always the risk of losing a case—and therefore one's entire investment. Despite these risks, Litigation Finance remains a profitable and socially responsible investment.
Commercial

Litigation Funding a Decade From Now—What Can We Expect?

Litigation Finance has changed dramatically in the last decade-plus. Boosted by a global health and financial crisis, third-party legal funding has risen to the occasion with spectacular adaptability. But as regulations evolve and societal understanding of the practice grows—how will that impact the industry in the years to come? Validity Finance shares several viewpoints on what we can expect in the next decade of Litigation Finance. Managing Directors of Berkeley Research Group suggest that law firms will increasingly have their own funding arms. These are likely to include single case funding as well as portfolio arrangements. It’s likely that future cases will inspire new regulations that will impact the industry in several jurisdictions. Erika Levin of Fox Rothschild suggests that advancements in legal technology and expanded use of AI will lead to greater sophistication in the industry. She anticipates increased uniformity across jurisdictions regarding disclosure, fee-sharing, conflicts, and security for costs. What about case size? As more people discover the benefits of third-party funding, and with boutique funding entities popping up all over the globe—cases that were once considered too small to fund are now receiving interest from funders. Lucian Pera of Adams and Reese expects that trend to continue. No doubt, smaller cases being funded could lead to an explosion of new requests for funding. Validity Finance Investment Manager William Marra anticipates even more widespread use of legal funding in the coming years. While a decade ago, most people hadn’t heard of the practice—ten years from now it will be an expected feature of the legal system. Marra expects that even large firms still clinging to the hourly fee model are likely to make more use of legal funding. Will litigation funding gain wider acceptance, or be subjected to increased regulations in the next decade? The correct answer is likely a combination of both.
Commercial

Therium Funds Norwegian Class Action

A class-action lawsuit against Sector Alarm and Verisure accuses the companies of over billing customers to the tune of NOK 1-2 billion. Norway Today explains that the suit, with support from third-party funder Therium Group Holdings, could represent about 400,000 consumers. The case comes after both companies were fined NOK 1 billion by the Norwegian Competition Authority. Therium has been operating in Scandinavia as Therium Nordic AS since 2016.
Announcements Commercial

Delta Capital Partners Announces the Expansion of the Global Asset Recovery Consortium into India

Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, has announced the expansion of the Global Asset Recovery Consortium (the "GARC" or "Consortium") to provide bespoke litigation finance and asset recovery solutions for projects having an India nexus ("GARC India"). Building on its experience providing a solutions-based funding approach for such claims, Delta has formed GARC India and is adding Darshan Hiranandani of the Hiranandani Group, a leading Indian company with expertise in large-scale technology, real estate and investment projects to the Advisory Board of GARC.  Through GARC India, the members of the Consortium will be able to better service the needs of claimholders in India and elsewhere that desire to pursue asset recovery or litigation with an India nexus. GARC India will offer state-owned enterprises, government agencies, banks, investment funds, and businesses a complete solution to enable them to pursue asset recovery projects and/or litigation having an India nexus, including:
  • In-Bound Work - Claimholders outside of India that seek to recover assets within India and/or pursue litigation against parties in India; and
  • Out-Bound Work - Claimholders in India that seek to recover assets outside of India and/or pursue litigation against parties outside of India and/or in foreign jurisdictions.
The Consortium will typically be engaged by claimholders to undertake work on a purely success fee basis, meaning that such claimholders would pay nothing unless and until a successful outcome is achieved, in which case the Consortium receives a negotiated percentage of the fair market value of the successful recovery or litigation.  In connection with such engagements, the Consortium will work with prominent Indian law firms for the provision of legal services to claimholders on a case-by-case basis, with such arrangements and the professional fees paid thereunder being separate from success fee arrangements between the Consortium and the claimholders, consistent and compliant with Indian law. In addition to Delta, GARC India is comprised of top tier professional service firms, including law firms, investigators, forensic accountants, public relations professionals, government relations specialists, and consultants, each of which have many years of experience pursuing litigation, arbitration, and/or enforcement actions across the globe, and all of whom are respected leaders in their field.  GARC India consists of the following members:
  • Aarna Law LLP – a boutique Indian law firm that delivers quality and excellence in specialized areas of the law. The firm works on litigation and transactions within India that the Consortium undertakes.
  • Delta Capital Partners Management LLC – is the lead funder and project manager for the Consortium.
  • DLA Piper LLP – is the Global Lead Legal Counsel for the Consortium.
  • FTI Consulting (SC), Inc.– is the Global Lead Media and Public Relations Firm for the Consortium.
  • KPMG Assurance and Consulting Services LLP – is the Global Lead Forensic Accounting Firm for the Consortium.
  • Mintz Group LLC – is the Global Lead Investigative and Intelligence Firm for the Consortium.
  • Shardul Amarchand Mangaldas – a full-service law firm that is one of the largest in India, known globally for its work in dispute resolution and arbitration and regulatory litigation. The firm handles Indian litigation and transactional work for the Consortium.
  • WestExec Advisors LLC – the Global Lead Geopolitical Firm for the Consortium.
Christopher DeLise, Delta's CEO and Co-CIO, stated, "Delta is very pleased to be launching the India initiative of the Global Asset Recovery Consortium, where extensive regulatory change has led to the encouragement of third-party funding in-country.  Litigation finance is a young industry in India, and Delta believes that the Consortium will be able to service a relatively untapped and growing litigation finance market, as well as other markets across Asia, and thereby allow claimholders within and outside of India to pursue their claims having an Indian nexus with much greater confidence.  The Consortium's work will be invaluable in enabling Indian and non-Indian claimholders alike to obtain fully-funded, bespoke recovery and litigation solutions for projects having an India nexus.  This should in-turn materially increase the likelihood that their projects will be successful and that they will obtain justice for the harm caused them." For additional information about the Consortium, GARC India, or its members, please visit www.theglobalarc.com or call +1(312) 414-0840. About Delta Delta Capital Partners Management LLC is a global private equity firm specializing in litigation and legal finance, judgment enforcement, asset recovery, and related strategies. Delta provides capital and related services to individuals, businesses, private investment funds, law firms and other professional service firms across the world that seek to hedge their financial exposure, reduce legal spending, enhance the probability of a successful and timely resolution of claims, and maximize the effectiveness of their core businesses.
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Commercial

Shariah Compliance in Litigation Finance

The use of third-party legal funding is gaining acceptance around the world. In the Middle East, both civil and Shariah jurisdictions exist. This implies various concerns in regard to ensuring that legal funding is Shariah-compliant. Omni Bridgeway explains that transferring legal risk in a Shariah-compliant manner is something participants and the institutions that serve them will need to be aware of when investing in this region of the world. So, what are the essential principles of sharia-compliant finance? Islamic Business Transactions must meet these conditions:
  • The transaction cannot involve charging or paying interest.
  • A valid contract must contain an offer, an acceptance of that offer, a record of the parties involved, and the stated purpose of the contract.
  • ‘Uncertain’ transactions must be avoided—which can include allegations of fraud.
  • The matter at hand must be lawful in accordance with Islamic law.
Because litigation funding is a net gain for the communities it serves, the Shariah law “Maslahah” can apply to its use. This law determines whether or not something is permissible based on whether it is beneficial to the Muslim community. Of course, Shariah Law prohibits gambling—which it defines as the gaining of wealth by chance or financial gain without effort that comes at the cost of another. This facet of Shariah impacts how funding agreements can be worded to keep them compliant. This can involve two structure types for agreements:
  1. Mudarabah, in which capital is provided, and then a strategy is developed for its recovery.
  2. Musharakah is similar, but involves both parties making an investment in the outcome.
By taking these structures into account, and carefully wording a funding agreement to avoid violating any of the aforementioned conditions, litigation funding can become Shariah compliant.
Commercial

Kenneth A Brause Becomes New CFO at Burford Capital

Kenneth A Brause, a 35-year veteran of the financial services industry, has been appointed the new CFO of Burford Capital. He’ll be fulfilling his duties in the New York office after a three-month period where the current CFO, Jim Killman, will aid in the transition. Monitor Daily details that Brause emerged as the best candidate after a months-long search to replace Killman. Brause’s previous experience includes executive positions at CIT Group, OnDeck Capital, American General, Bankers Trust, and Bank of New York. Christopher Bogart, CEO of Burford Capital, expressed confidence in the hiring choice. He stated that Burford is sure to benefit from Brause’s wealth of expertise.
Commercial

Wivenhoe Dam Class Action Impacts Omni Bridgeway Stock Price

Speculation is rampant that a recent 5.6% drop in Omni Bridgeway stock was precipitated by a partial settlement in the Wivenhoe class action. The funded case, which involved over 6,500 claimants, sought damages of roughly $880 million. Defendants included the Queensland government, and two state-owned companies: Seqwater, and Sunwater. The Motley Fool explains that the announced settlement represents half of the case. State of Queensland and Sunwater have settled, while Seqwater has not. That portion of the case is expected to go to court later this month. New South Wales supreme court approved the settlement, which is now unconditional. While appeals could still be made, a spokesperson for Omni Bridgeway stated that this was unlikely. As the funding provider for the class action, Omni Bridgeway will receive $30 million from the settlement. Depending on what happens with the other half of the case, Omni Bridgeway’s share may change. The funder remains optimistic that the case will come to a favorable conclusion. Shares of the ASX-listed company are down roughly 20% on the year.
Commercial

Key Takeaways from The LFJ Podcast with Ben Moss, Portfolio Advisor at Orchard Group

The latest episode of the LFJ Podcast features Ben Moss, Litigation Finance Portfolio Advisor at Orchard Group. Ben discussed the benefits of Orchard's asset manager model, how Orchard is approaching the market, the types of claims it is looking to fund, and outlined his predictions for the industry as the global legal landscape emerges from COVID-induced lockdowns.  Below are some key takeaways from the episode, which can be found in its entirety here.  LFJ: Let’s start by discussing Orchard’s foray into Litigation Funding. When did Orchard first enter this space? Why don’t you tell us what the investment strategy is, and how that strategy has evolved over time? BM: Sure. Orchard was founded back in 2005, and has a presence not only in the UK but also across North America and Singapore, and currently has assets under management of around six and a half billion US dollars. Since its inception, the business has consistently demonstrated very strong performance across its multiple funds. And that meant it really was an attractive platform from which to launch a dedicated Litigation Finance strategy as part of its existing specialty lending business. It did that in late 2015. Since then, we’ve invested in more than 100 opportunities across the UK, the US, mainland Europe, and Australia.  Our approach is really very finance-led. These are financial products to us at the end of the day, but of course this approach is then coupled with legal analysis and deal structuring expertise. What we’re committed to at Orchard, is we want to build a portfolio that is diverse, that’s granular but also that is grounded in these financially driven insights into the investment selection and the overall portfolio design. We also believe that funding these mid-market-sized claims ensures quite a highly diversified portfolio of assets. Because it consists of a large number of separate claims.  LFJ: Broadly speaking about the industry itself, this is a very crowded space right now...how is Orchard positioning itself within that market? What is the differentiation strategy?  BM: Good question. It’s definitely getting more crowded. One way of looking at it is to say that growth increases competition, innovation, they’re all linked. So new entrants don’t necessarily concern us. Actually we would say they’re symptomatic of an attractive industry and perhaps one that’s yet to reach its peak.  In any event, we hope that we are uniquely positioned in the market as a multi-strategy asset manager with its own dedicated and well-established Litigation Finance team. If I can just highlight a few elements of our offering that I think are relevant:
  • Firstly, one big differentiator is that we can point to our existing and very positive track record. Our experience in the market over the last five years or so has allowed us to establish a reputation in providing innovative financing solutions to claimants, to law firms, and also to develop very strong origination networks.
  • We lead with the finance-forward approach that I’ve spoken about in my response to the first questions. And that’s perhaps different to the strategists on the dedicated pure play litigation funders, founded by litigators rather than finance professionals. I have a financial background myself which postdates my initial legal practice.
  • We also have access to top-tier financial instruction expertise at Orchard as part of the wider business. If you combine that mindset with the legal expertise of our team, we think we can bring an unparalleled mix of both the financial and legal expertise to each case that we consider for investment.
  • Finally, repeat business is important to us. It represents roughly 70% of our claim origination. It’s so important to us to focus on these strong, sustainable, and collaborative relationships with law firm partners and also with our co-funders.
LFJ: The previous guest on our podcast, Elana Rey of Brown Rudnick, is working on standardizing documentation for litigation funding agreements for the UK and also the EU. So I want to get your take on this as a UK-based funder. What is the need for standardized documentation? How helpful will something like that be in optimizing the funding process and potentially bringing down costs as well? BM: I enjoyed listening to that episode. Of course I would absolutely support any move toward transparency to assist claimants in understanding the operation and the effect of the funding arrangement. I think Elena said that the model documents hadn’t yet been produced, that they were on call for Q2 this year. As Orchard is not part of the Working Group, I can’t comment on any working draft. But in our industry, the funding and security arrangement are typically concluded in advance of the claim, and in some cases they may not be referred to for four to five years afterward. In the most basic single case financing structure, there are already three counter-parties: funder, claimant, and lawyer. It’s just not helpful for anyone to be scrutinizing an opaque funding agreement years later. There’s plainly a requirement for clear drafting that insures that you capture the rights and obligations of each party clearly at the outset.
Commercial

Litigation Lending Funds Class Action for Stolen Generations Survivors

Survivors of the so-called “Stolen Generations” may finally see their day in court. Shine Lawyers are gearing up to file a class action against the Australian government. More than 800 claimants are asking to be compensated for the loss of culture and connection to their country, and for the trauma suffered.   ABC News Australia reports on the experiences of one artist, Healthy Alley, currently age 84. Alley details being taken hundreds of miles from her family when she was eight years old. She was then sent to a brutal school with frequent beatings and only one family visit per year. All these years later, the injustices still sting. The class action is being funded by Litigation Lending Services, a third-party legal funder that provides non-recourse funding for cases. While representatives for Shine Lawyers declined to specify the amount of compensation they’re asking for—they remain confident that a sizable payout is forthcoming. The case is expected to be filed in the New South Wales Supreme Court today. The Australian government has stated in the past that there’s no legal precedent requiring them to pay compensation to their victims. Still, Shine Lawyers is adamant that despite the expense and time involved, funders and barristers are all enthusiastically onboard. According to the funding agreement, Litigation Lending Services will take a 20% cut of any award that stems from the case.
Commercial

Westpac Life Insurance Class Action Reaches Settlement

A 2017 class-action lawsuit brought by Shine Lawyers against Westpac Group has settled. The case claimed that an estimated 80,000 customers were sold unnecessarily expensive insurance between 2011-2017. The action was funded by third-party legal funder JustKapital. Financial Standard explains that Shine alleged that the clients Westpac advised paid roughly 5-10% more than those who bought identical policies through independent financial advisers. The settlement, which still must gain federal court approval, is capped at AUD $30 million. Westpac settled the case without an admission of liability. Impacted parties are encouraged to opt-in to the action to receive compensation.