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Commercial

Jurisdictions Expanding Funding Access for Offshore Asset Recovery

As parts of the world seek out post-COVID normalcy, a predicted spike of legal claims is en route. Insolvencies are increasing, as are claims of fraud, breach of contract, and breach of fiduciary duty. With that in mind, a group of practitioners who deal in fraud, insolvency, and enforcement held the Asset Recovery Americas Conference—focusing on enforcement law in Latin America and the United States. Validity Finance details that several prominent jurisdictions are adopting policies more welcome to litigation funding in insolvency matters. Adding needed clarity to the use of third-party legal funding is a boon to clients and lawyers—but also to investors. The newly passed Private Funding of Legal Services Act, adopted last month in the Cayman Islands, makes several important changes in the law. First, champerty and maintenance laws were stricken. Contingency fee agreements and conditional fee arrangements are now permitted—with caps on how much lawyers can be paid above their normal fees. Finally, it allows for the use of third-party litigation funding agreements, with specific stipulations on how payments are calculated. The British Virgin Islands have accepted litigation funding since the late 1990s when they abolished champerty laws. The practice of third-party funding is seen as a vital part of ensuring access to justice. Meanwhile, Brazil allows funding, but has no laws in place governing the practice. Funding has yet to become mainstream there—which means that new laws may be on the horizon as legal and financial practitioners embrace the practice. The potential for growth is enormous, though a clearer legal framework is needed. Similarly, Argentina has no legislation directly impacting litigation funding—so restrictions are minimal. Legal fees are high in Argentina, and scandals are common. As such, there’s a widely held belief that litigation funding should be mainstreamed to provide citizens better access to the legal system.
Commercial

Litigation Funding in Asia—What’s the Holdup?

Litigation Finance has long been increasing in popularity and sophistication in places like Australia, the UK, the US, and Germany among others. Yet despite this run-up, much of Asia seems slow to adopt the practice. Law.Asia suggests that now that Hong Kong and Singapore have opened their doors to the practice of third-party legal funding, other Asian jurisdictions may follow suit. Both Singapore and Hong Kong allow litigation funding for international arbitration—including mediation and enforcement. Hong Kong extends this to liquidators, affirming that liquidators do not need court approval in order to enter a funding agreement. Harbour Litigation Funding founder Susan Dunn explains that banks, big business, sovereign wealth funds, and government entities are all making use of third-party funding—believing it to be a strong solution for runaway legal budgets. Dunn details that the straightforward nature of a funding agreement is highly attractive to businesses in particular. For investors, litigation funding is a way to diversify investment portfolios with assets uncorrelated to larger markets. Of course, this kind of investment requires experienced funders with a solid track record of picking winners. Portfolio funding can help diversify the risk involved. The funding industry has been spurred toward major growth during the COVID pandemic. Financial turmoil led to business closures and cash shortages across most major markets. And alongside this development, many new players have entered the legal finance space. Robin Darton, insolvency and restructuring partner at Tanner De Witt, explains that COVID has also brought with it a glut of insolvencies, breach of contract, fraud, and breach of duty claims. This presents more opportunities for funders and investors. Litigation funding in Asia presents an array of opportunities—time will tell how Asian jurisdictions will respond.
Commercial

The Cayman Islands Refines Litigation Funding Regulation

Last month, the Private Funding of Legal Service Act 2020 (AKA the Act) became law. The Act brings codification to the rules governing the practice of third-party litigation funding—which had been addressed on a case-by-case basis previously. Like many jurisdictions, champerty and maintenance laws had to be abolished before litigation funding could be supported by the law. This was a key element of the Act. Mourant details that the Cayman Islands recognizes three types of litigation funding agreements:
  • Conditional Fee Agreements—where clients pay slightly more than standard legal fees if the case wins, and nothing if the case doesn’t.
  • Contingency Fee Agreements—where lawyers receive a set percentage of any award given, but clients pay nothing if the case is lost.
  • Third-Party Funding Agreements—where funders and clients agree on terms by which funders will cover case costs in exchange for payment after the case wins. Funding agreements are generally non-recourse, so clients pay nothing if the case is not successful.
Other vital aspects of the Act include allowing contingency fee agreements except in the case of criminal proceedings, or any case under the purview of the Children Act. Conditional fee arrangements are also permitted, with set limits imposed on how much attorneys can add to normal legal fees. Total amounts paid to lawyers may not exceed 33% of the total judgment or award. If lawyers want to enter a fee agreement with different terms, that may be possible with court approval. With regard to third-party funding agreements, the Act requires that funding agreements must be in writing, and comply with existing law. The Act leaves room for further regulation to be imposed later, as needed. Such rules could include disclosure requirements or the acceptance and regulation of new types of funding agreements. Overall, the Cayman Islands has created a welcome environment for funders and investors.
Announcements Commercial

Liti Capital launches tokenised private equity for litigation finance

Liti Capital SA, a Swiss Litigation Finance company, is launching into the world of crypto tokenisation with the goal of providing retail investors with investment opportunities previously only available to the top 1 per cent of investors.David Kay, CIO, successfully enforced what was at the time the largest international arbitration award in history, bringing in more than one billion US dollars of cash and securities. Liti Capital has already raised USD12 million in cash and litigation assets from private investors, owns a share of three cases valued at over USD200 million, and is ready to open up to a wider market. “We wanted to find a way to get everyone involved,” says Jonas Rey, Co-Founder and Managing Director of Liti Capital, “but how the financial markets are structured all but prevents that. The blockchain finally gave us the answer we were looking for.” Liti Capital uses the LITI token to represent a share in the company under Swiss law. While the LITI token gives access to voting rights and to dividend payment upon completion of a KYC process, it is not on any exchanges by design. The Company made a wrapped LITI (wLITI) for trading on Uniswap and soon other DEXes. Long-term goals include helping to protect the crypto community, prosecute scammers, and return the lost funds to the token holders with the hopes of preventing these activities in the future and ensuring a safe environment for investment and innovation. Liti Capital will spend between 5 per cent and 10 per cent of its investment capital investigating and funding litigation against these scam coins and rug pulls.
Commercial

Arkansas Teacher Retirement Fund Pursues Litigation Funding

Investments made by Arkansas’s Teacher Retirement Systems increased by a staggering $783 million. This ranks the fund in the top 5% of public pension funds in America. This comes after last year’s investments fell to only $15.1 billion as of the beginning of COVID shutdowns. Northwest Arkansas Democrat-Gazette details that trustees were asked to consider a proposed investment of $30 million into a fund focusing on third-party litigation funding. One trustee, state education commissioner Johnny Key, suggested that such an investment would be illegal according to a 2015 law regulating consumer legal lending. The committee will likely revisit the investment after due diligence is conducted. Trustees did authorize investments of up to $50 million in three different funds in a variety of industries—including real estate funding, renovation and redevelopment of commercial property, and utilities like power and telecommunications. Changes in investment policy have been voted on—albeit without the approval of the full board. New investments may require increased input from investment consultants. It’s suggested that this change might make it more difficult for the fund to invest in new areas—such as third-party legal funding. There is concern that a speedy, possibly reactionary change to an existing policy will not produce the desired result.
Commercial

Fishing Magnate Magnus Roth Settles Tugushev Fraud Claim

When Alexander Tugushev went to London in 2018, he expected to sue Magnus Roth and his former business partners for a cut of Russian fishing group, Norebo. The claim revolved around a one-third share based on informal verbal agreements made long before the founding of Norebo. Business Matters explains that counsel recently argued that Tugushev gave up his claim in the fishing industry when he accepted a position as Deputy Chair of Russian Fisheries Committee in 2003. Four years later, his career in public service ended in disgrace as he was sentenced to a six-year prison term for fraud and accepting bribes. Currently, Tugushev is facing multiple legal battles including investigations into stolen documents and a complex claim in London. Tugushev’s claim is being financed by unnamed litigation funders. Curiously, funding entity 17Arm appears to have been established solely to fund Tugushev’s claim. Roth and his partner, Vitaly Orlov, denied ever offering a piece of their business to Tughhev. Indeed, Tugushev was in prison when the company was formed. The settlement details have not been released. As the original claim was nearly GBP 350 million, it’s hard to imagine that Tugeshev and his funders won’t enjoy a nice payday all the same.
Consumer

Maxima and DAS UK Form Partnership for Clinical Negligence and Personal Injury Scheme

Optimise is a new scheme covering clinical negligence and personal injury, specifically aimed at small law firms. The partnership comes amid motor legal reforms and offers a full dedicated authority scheme for firms and sole practitioners who take on clinical negligence or personal injury cases. DAS LEI details that the partnership will offer firms fixed competitive rates, an online portal to simplify processing and case submission, and a dedicated relationship manager. There is expected to be a range of clinical negligence specialist areas like specific types of product liability or medical negligence—such as dental negligence. DAS UK is part of the world’s largest group of reinsurers. John Durbin, Sales and Business Development Manager, explains that it feels like the right time to help out smaller law firms that specialize in personal injury and clinical negligence.
Consumer

Percent Announces Partnership with Mustang Litigation Funding

Alternative Investment specialist Percent recently announced a strategic partnership with Mustang Litigation Funding. Mustang, founded in 2018, focuses on portfolio litigation funding and personal injury case funding. This includes product liability, auto accidents, and premises liability. The partnership is expected to expand investment options and grow the companies' network of partners. Percent explains that litigation finance is now a well-established alternative asset class that’s gaining global acceptance. Non-recourse funding is provided to pursue meritorious legal matters, with remuneration to the funder coming out of any settlement or award in the case—often calculated based on how long the case takes to be resolved. Jimmy Beltz, Co-Founder and Managing Partner of Mustang Litigation Funding, stated that this partnership will be a boon to investors who can now benefit from this uncorrelated asset class. Alex Pirro, VP of Capital Markets at Percent, details that Mustang’s impressive relationships with partners and firms speak well of the funder's ability to source and manage cases.
Commercial

Tyro Payments Class Action Investigation

A potential class action against Tyro Payments Limited is being investigated by Bannister Law Class Actions. Tyro is Australia’s largest non-bank provider of Point of Sale Electronic Fund Transfer services. Service outages in January of this year impacted hundreds of businesses—causing loss of sales revenue, service fees that provided poor or no service, customer dissatisfaction, and general damage to businesses as they sought to compensate for Tyro’s outages. Bannister Law Class Actions explains that the claim alleges breach of warranties, breach of contract, and that the services provided by Tyro were not of reasonable quality. Further, Tyro allegedly fraudulently claimed that its service worked 99.9% of the time. This potential class action will be funded by Court House Capital. As such, claimants will not endure any out-of-pocket costs. Fees and costs will be deducted from any settlement or award. Eligibility requires the following conditions to be met:
  • Businesses contracted with Tyro payment services before January 5 of this year.
  • Businesses endured connectivity issues beginning in January 2021.
  • Losses were endured due to Tyro connectivity failures.
Potential compensation will be based on loss of revenue, terminal and rental fees, and any damages caused by finding replacement services. Interested parties may contact Bannister Law Class Action Tyro Team.
Commercial

Peking University Founder Group Seeks Litigation Funding

Liquidators of Nuoxi Capital and Kunzhi Ltd are presently engaged in negotiations with potential litigation funders. Multiple sources claim that it will be very expensive to recover various inter-company claims—not to mention the need for a Beijing court to accept a previous keepwell ruling originating in Hong Kong. LinkedIn details that the proceedings are expected to generate recoveries for offshore bondholders. Claims stem from PK Founder allegedly breaching EIPU deeds, as well as the alleged breach of keepwell assurances. Nuoxi Capital focuses on issuing debt securities for credit, refinancing, and acquisitions. Founded in 2017, it operates as a ‘special purpose entity’ in the Tech industry.
Commercial

Former Client Sues Legal Team for Damages for ‘Gross Overpayment’

Law firm King & Spaulding, along with partners Craig Miles and Reginald Smith, are being sued by former client, Trinh Vinh Binh. The firm is accused of failing to follow client instructions, and of ‘erroneous allocation’ of funds. Claims include breach of fiduciary duty, fraud, and negligence, as Binh seeks fee forfeiture in addition to damages. Law.com details that Binh, a resident of The Netherlands, hired the firm in 2015, and entered a fee agreement with litigation funder Burford Capital. King & Spaulding would represent Binh in arbitration with The Socialist Republic of Vietnam. Burford agreed to provide up to AU $4.678 million. All told, more than AU $3.5 million was available for legal expenses. The legal team assured Binh and Burford Capital that this would be enough to effectively resolve the arbitration. As of May of the following year, Binh’s legal team had been paid nearly $2 million, with slightly less than that remaining in the team's coffers. According to the filing, Miles and Smith allegedly colluded with Burford to seek ways to impose more fees. Burford Capital is not a named defendant and declined to comment on the case.
Commercial

Northern Territory Stolen Wages Class Action Seeks Claimants

Shine Lawyers is seeking claimants for a newly launched class action on behalf of indigenous Australians whose wages were stolen. Wage control legislation led to wages being withheld in the period between the late 1800s and the early 1970s. This may include farmworkers, domestic staffers, laborers, stockmen, and others. Shine details that to join the class action, the following conditions must be met:
  • Impacted parties must be Aboriginal or a Torres Strait Islander.
  • Claimants or their families must have worked in the Northern Territory prior to the law change in 1972.
  • Claimants or their family members were not paid all owed wages.
Thanks to third-party legal funding from Litigation Lending Services, there is no cost for claimants to sign up for the case. Fees and costs will be deducted from any settlement or award. Shine Lawyers estimates that millions in unpaid wages may be owed to claimants. The case seeks to reconcile payments with everyone who was shorted.
Announcements Commercial

Apex Litigation Finance are delighted to announce the appointment of two new Advisors to its team.

The appointment of Jan Buza and Jozef Maruscak provides key support for Apex’s growth strategy, strengthening resources to meet a significant increase in case numbers. Jan Buza led Business Development at Exponea, a data company that raised over £30m and was later acquired by Bloomreach, the leader in Commerce Experience. He then worked on employing AI (artificial intelligence) and predictive analytics in litigation at CourtQuant and was part of Deloitte’s Legal Tech accelerator program. Most recently, he co-founded and heads product development at Trama, a Legal Tech company that is building an AI-powered trademark registration service. Jan says: “It is great to be on board with Apex. I have watched them over the past eighteen months or so as they established themselves as a leading provider of litigation funding solutions. Their innovative use of AI in this field mirrors my own background and I look forward to making a valuable contribution to their capability.” Jozef Maruscak co-founded various Legal Tech projects while studying law at Cambridge University. He then continued as the CEO of CourtQuant, a start-up specialising in predicting key attributes of legal cases using AI and predictive analytics. He is now a partner and Head of Business Development in Sudolabs, a company building software products for Silicon Valley start-ups and Y-Combinator founders. Jozef says: “The legal market is increasingly driven by AI, and I wanted to bring my experience in this area to a company that fully embraces its potential, and that’s definitely true of the senior team at Apex. There is a bright future for AI as a tool to support better decisions by litigation funders and I am confident that Apex is in the best place to disrupt the market.” Commenting on these appointments, Apex CEO Maurice Power expresses confidence in the company’s strengthened resources: “We recently announced that we were looking to expand our team with talented individuals and Jan and Jozef exceed our expectations. “They both have a CV and skillset that fits perfectly with our continuing journey of employing AI in litigation finance to drive up efficiency and performance for our clients and investors. Jan and Jozef will both combine their contribution at Apex with exciting commitments in complementary roles.” 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  
Litigation Finance News
Announcements Commercial

Special Digital Event — Australia: The Evolution of a Litigation Finance Market

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

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

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

This is a can’t miss digital event!

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

This 1hr and 15min event will be recorded, and all ticket holders will receive a recording of the event. So if you can’t make the time, you can still access the conference! The event will be moderated by Ed Truant of Slingshot Capital. 

For more information and tickets, please visit this link.

We hope you enjoy! – The LFJ Team

Commercial

Austria May Now Allow Pacta de Quo-ta Litis

As more countries allow the use of third-party funding, more courts are tasked with clarifying how the practice should work with existing law. In Austria, questions regarding ‘pacta de quo-ta litis’ arose with regard to Austrian Civil Code section 879, and section 16 of the Austrian Attorney’s Code. Lexology explains that these laws exist to maintain the independence of counsel, and protect clients from potentially unscrupulous legal counsel. Generally speaking, an agreement to share a portion of a recovered debt with the specialist tasked with its recovery is frowned upon in Austria. But this ‘pacta de quo-ta litis’ is not technically illegal. Recently, the Austrian Supreme Court ruled that ‘pacta de quo-ta litis’ does not apply to litigation funders in the following circumstances:
  • Funders do not provide legal advice to counsel or clients.
  • Clients remain in charge of decision-making at all times.
  • Litigation funders follow normally expected business procedures.
  • Client’s free choice of an attorney is implied—but not specifically affirmed in the ruling.
The court further found that so long as these provisions are followed, there is no unfair competitive advantage.
Commercial

Australia Considers Arbitrary Price Cap for Class Actions

It’s no secret that the Australian government is concerned about class actions—especially those with potentially high awards. In recent months, a law requiring third-party litigation funders to hold specific licenses came into effect. Disclosure obligations were formalized and may become permanent. Now there is talk of imposing a 30% cap on how much claimants can be charged by funders in collective actions. Burford Capital explains that it’s very likely that the figures used as the impetus for these changes are being misinterpreted--specifically, data published last month by Professor Vince Morabito regarding Australian class actions. For example, the study shows that 54 class actions were filed in one year, and 69 filed the next. That seems to suggest that class actions are rising in number. Except that many of the filings happened in a rush before new funder regulations were instituted in August—11 cases were funded in the two days leading up to the deadline. The study also did not control for duplicate class action filings, which are common. It’s also been suggested that shareholder class actions are up—but in fact, they’re roughly half of what they had been since 2017. Not only that, but the actual number of funded class actions is down as well. Class actions backed by funders were roughly 75% in 2017; that number has fallen to around 46% this year. With that in mind, why focus on funding and class actions? When using data to dictate public policy, it’s essential that the data is properly interpreted by industry insiders. There’s nothing to support the idea that 30% is the appropriate amount for a funder’s share, nor is there evidence that courts need more power to evaluate and approve or reject funding agreements. Here’s hoping there’s more discussion before an arbitrary, and potentially harmful, regulation is passed.
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.