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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
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.
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.
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.
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.
Commercial

Litigation Funding in UK Hits GBP 2 Billion

Since the 2016/17 financial year, the size of the Litigation Finance market has doubled—bringing total assets under management to a whopping GBP 2 billion. Why is that? Global Legal Post points out the obvious correlation between financial unrest and increased litigation. But there’s more. Investors are increasingly seeking out investments that are uncorrelated with global markets, owing to the continued uncertainty caused by COVID. Insolvencies, insurance cases, and IP disputes are all growing in number as businesses seek out ways to shore up balance sheets and weather the pandemic. As global markets become more friendly toward third-party legal funding, the practice shows no signs of slowing. New funds are popping up regularly—including a new fund from TheJudgeGroup and Thomas Miller Group—Erso Capital.
Commercial

Litigation Funding Proves its Value in UK Post Office Scandal

Those who remain skeptical of the benefits of Litigation Finance need look no further than the recent UK Post Office case. Last week, 30 criminal convictions were vacated in an action that would not have proceeded were it not for third-party legal funding. And make no mistake—that would have been a grave injustice. Financial Times details that decades of injustice befell sub-postmasters in the UK when errors in the Post Office IT system led to accusations of widespread misappropriation of funds and false accounting. Not surprisingly, this in turn, led to ruined lives and livelihoods. These sub-postmasters were clearly wronged but lacked the means to pursue a case. Paula Vennells, former post office chief executive, refused to consider that the Horizon accounting system was to blame, and fought fiercely to drag out litigation meant to clear the names of hundreds of wronged employees. Those employees eventually received help from Therium, a third-party legal funder. Therium funded the case on a non-recourse basis, which eventually resulted in a settlement of GBP 58 million. After costs and Therium taking their share, claimants will split the remaining GBP 12 million. It may seem like the funders get the lion’s share of the settlement. Consider though, that funders take the most financial risk. The non-recourse nature of funding necessitates a higher payout, because if the case had not resulted in a payout, Therium’s investment would be a total loss. What we see in this case are ordinary citizens wronged by a corrupt system, seeing their day in court, and being compensated—thanks to Litigation Finance.
Commercial Covid-19

Trade Secrets Expert: Stephanie Southwick

There are a number of reasons for the spike in IP cases experienced in recent years. These include the passage of the Defend Trade Secrets Act, as well as increased use of litigation funding—which has allowed small and medium-sized businesses the funds they need to pursue IP claims. To better serve clients in this area, Omni Bridgeway brought in Stephanie Southwick in September 2019. Omni Bridgeway details that Southwick’s experience and expertise make her an ideal choice to assist and advise clients with IP disputes. Southwick was a litigator for more than fifteen years and was the former Managing Partner of Greenfield Southwick LLP (an IP litigation firm) before joining Omni Bridgeway. In addition to expertise in intellectual property matters, she is also well-versed in contract and founder disputes, business torts, and employment law. In her current role, Southwick assesses cases for investment, about a third of which are related to trade secrets. When clients seek advice on preparing for a trade secrets case, she suggests three areas of focus:
  • Clearly outlining the exact trade secret at issue
  • Defining and demonstrating its value
  • Presenting evidence of the defendant’s actions regarding the use of trade secrets
According to Southwick, Omni Bridgeway can work with clients who have their own legal team in place. And it may behoove them to get their case analyzed by a specialist before hiring counsel. With IP claims set to soar even further alongside the broader legal sector, funders are wise to invest in IP expertise now, to capitalize on the continued growth.
Commercial

Trends in Litigation Finance Include Increased Corporate Use

Last year, the UK saw a sharp decline in the number of commercial litigations. This happened due to the combination of economic shortfalls, and corporations opting not to pursue litigation during a pandemic. EY research shows that nearly a third of survey respondents opted not to pursue litigation during the pandemic. That implies a backlog of meritorious claims.  Burford Capital details that while litigation is expected to increase this year, many businesses might find themselves unprepared for how expensive that litigation can become. With that in mind, EY suggests a rise in the use of Litigation Finance. As one EY partner told Law.com, the UK business community has been cautious about taking advantage of third-party funding. But as the pandemic amplifies financial uncertainty, businesses are increasingly willing to make use of the practice. As in-house lawyers grow more amenable to the concept of third-party legal finance, more are opting to use legal funding to manage risk and costs associated with litigation. In addition, there are options that funding offers which can generate income streams without pursuing additional litigation—such as monetizing existing awards or cases. So expect a litigation funding boom post-pandemic--perhaps an even larger one than we've experienced over the past few years.
Announcements Commercial

Delta Capital Partners Management Launches Delta Credit Solutions

Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, is pleased to announce the launch of a new venture, Delta Credit Solutions ("DCS"). DCS will offer an array of litigation finance credit solutions that satisfy the needs of claimants, respondents, law firms and businesses across the globe. Delta believes that traditional lenders do not treat litigation or arbitration claims, judgments or awards as valuable assets, and that Delta's experience providing equity-based litigation funding allows the firm to recognize the value behind these types of claims. Accordingly, Delta now seeks to provide a suite of credit-based financing options to individuals, businesses, law firms and other professional service firms, financial institutions, investment funds, and other parties with direct financial interests in the outcome of litigation, arbitration, or asset recovery. Delta intends to offer several types of financing products through DCS, including:
  • recourse financing for claimants, respondents, businesses, law firms and other professional service firms;
  • non-recourse portfolio financing for larger portfolios of diverse pre- and/or post-settlement claims, judgments or awards;
  • non-recourse financing for the enforcement of court judgments and arbitration awards that have already been rendered, but which have not yet been collected or are otherwise time delayed;
  • non-recourse capital facilities for law firms and other professional service firms, as well as for insolvency practitioners; and
  • non-recourse financing in a senior priority credit tranche of an otherwise equity-based litigation finance investment.
Delta believes that such an array of litigation finance credit solutions will offer many benefits by providing capital on favorable terms which can be used for a variety of purposes, including:
  • funding new or ongoing litigation, arbitration, investigations, asset recoveries or enforcement projects;
  • expanding business operations;
  • financing operating expenses and/or capital expenditures;
  • risk management and diversification; and
  • distributions or dividends to partners, shareholders and/or employees.
By combining the credit underwriting process, capacity, and cost of capital of a traditional lender with the flexibility and due-diligence expertise of a litigation funder, Delta believes it will be able to deliver optimal, customized financing solutions.   Moreover, the bespoke nature of DCS's products will enable law firms, other professional service firms, and businesses to gain liquidity by utilizing their claim portfolios and contingency cases as assets against which they can borrow. Christopher DeLise, Delta's Founder, CEO and CO-CIO, stated, "As the litigation and legal finance market continues to evolve, Delta has perceived an increased demand for credit-oriented financing arrangements for professional service firms, businesses, financial institutions and governmental entities to access cost-effective, credit-based capital for a variety of purposes, including funding, growing and de-risking their operations.  We are pleased to now be able to offer such solutions due to Delta's expertise in sourcing and underwriting that will enable us to put significant capital to work in this exciting and burgeoning area of litigation and legal finance.  By launching DCS, Delta believes that it will be able to remain a funder of choice for sophisticated parties across the globe." 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.
Announcements Commercial

Litigation finance specialists partner to provide funding and ATE cover

Apex Litigation Finance Limited today announces a partnership with Maxima Litigation Finance Limited to provide litigation funding to a scheme generating 200-plus cases per annum.
The partnership will see Apex provide litigation funding for the scheme from an unnamed third party, with Maxima arranging comprehensive ATE cover. Working together, the two firms have won the exclusive rights to provide these services to the scheme comprising commercial litigation cases in a specialised area. This new scheme will also provide ‘spin-off’ litigation to which Apex and Maxima will have the first option on providing funding and ATE, respectively. Speaking about this new deal Maurice Power, CEO of Apex, said: “We are extremely excited to have been chosen to provide litigation funding to this new scheme. The volume and size of cases are perfect for the Apex funding model and will make Apex one the highest volume providers of litigation funding solutions in the UK.” Maxima who have brokered litigation funding and ATE since 2007 are also enthusiastic about the arrangement. Mark Andrews, Co-Founder of Maxima says: “Our client needed a litigation funding and ATE solution bespoke and built from the ground up, Apex offered that willingness and skill to work together to build a solution.” 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
Commercial

LCM Interim Results: Half Year Ending Dec 31, 2020

LCM CEO Patrick Moloney details that LCM has made strong progress in the first half of its fiscal year. Quality applications are up, and demand for legal finance is increasing as predicted. Most of the direct investment portfolio is balance sheet funded, and portfolio investments are reaching maturity. While timing remains somewhat unpredictable, that should smooth out as portfolio investments increase over time.

LCM, via Polaris, details strong increases over the period. By the numbers:

  • Total assets under management rose to AUD $322 mil by March—an increase of 92%.
  • Applications increased by 5%, totaling 266.
  • Total invested capital: AUD $99.4 million, which represents a 189% increase.
  • Gross profits: AUD $5.4 million
  • Total Equity: AUD $80.6 million.

LCM has made excellent progress in building portfolio finance agreements with a dozen resolutions in Aviation and Construction Corporate Portfolios—both of which are performing according to expectations. Partnership with DLA Piper is poised to expand reach into newer and less saturated global markets.

Chief executives remain confident of LCM’s ability to rise to the increased demand driven by the continued presence of COVID. It’s expected that financial unrest will continue until COVID is controlled around the globe. Even after a return to normalcy, the rise in insolvencies is expected to persist through the next year and beyond.

Commercial Consumer

Proposed New Jersey Rule May Require Disclosure of Third-Party Legal Funding

The District of New Jersey has proposed an amendment that, if enacted, would require disclosure when a plaintiff or defendant is utilizing third-party legal funding. The proposed Rule 7.1.1 would require filed statements detailing all information about non-parties providing funding for attorney fees and expenses, in exchange for a percentage of any award. Law.com details that the comment period for the new law lasts through May 21. The new rule would only apply to legal funding that covers expenses directly related to the case—not in situations where plaintiffs receive money for household or personal expenses during a claim. If the proposed rule becomes law, New Jersey would become the 25th federal district (out of 95 total districts) to require disclosure of third-party litigation funding. Steven Richman, chairman of the District of New Jersey Lawyers Advisory Committee, cited a recent ruling as the impetus of the new rule. In a case against generic drug Valsartan, the defendants petitioned the court for information regarding third-party funders. The judge ruled that funding was not relevant, and denied the motion. A similar rule is being proposed at the federal level, owing to a negative impression of litigation funders that many say is undeserved. One professor at Cardozo Law School, Anthony Sebok, asserts that mandated disclosure is unlikely to turn litigants away from the practice. He goes on to say that disclosure rules can wind up costing everyone involved additional time and expense.
Commercial

UK Sub-Postmasters Clear Names in Legal Battle

Earlier convictions for theft, fraud, and false accounting have finally been quashed after a legal skirmish lasting more than a decade. Thanks to support from third-party funder, Therium, thirty-nine sub-postmasters cleared their names after being prosecuted by the state-owned Post Office. The employees had been charged over shortfalls in various branch accounts. It was eventually discovered that Horizon, the IT system used by the Post Office, was to blame for the perceived financial shortfalls. Financial Times explains that more than 700 other sub-postmasters were convicted of crimes based on Horizon evidence. Many convictions required defendants to pay back the “stolen” funds. Lives were ruined due to these convictions, marriages ended, bankruptcies declared, some even died as convicted criminals. Prime Minister Boris Johnson referred to the situation as “an appalling injustice” and welcomed the court’s ruling. The court determined that the Post Office ignored sub-postmasters’ complaints about the IT system and disregarded their assertions that the system was to blame. Some defendants have vowed to hold Post Office officials accountable for the damage caused by the malicious prosecutions. Lord Justice Timothy Holroyde stated that the Post Office’s egregious failures of investigation and disclosure were an affront. Were it not for legal funding from Therium, the wronged parties would still be waiting for justice. It’s predicted that this ruling will inspire a civil lawsuit for malicious prosecution, among other charges. In such cases, compensation must return the claimant back to the same financial situation they were in before the prosecution occurred. Meanwhile, the Post Office is asking for governmental help to pay the expected compensation, saying they are in no financial position to do so.
Commercial

Roger Allanson Struck From SRA Roll After Alleged Misuse of Funds

While Litigation Finance is increasingly popular as a means to manage costs, it’s not without risks. Case in point: Roger Brian Allanson has recently been struck from the roll of trusted solicitors following allegations of fraud and misuse of funds. Law Gazette details that Allanson received GBP 19 million from litigation funders in order to pursue mortgage cases. These cases did not produce a return in more than 2.5 years. Some funds were used to pay office expenses, and more than GBP 100,000 was transferred to Allanson’s personal account. He did not dispute the bank transfers but denied any breach of trust or misstatements to investors. A judge determined that Allanson’s conduct was premeditated, and that he was motivated primarily by financial gain. Funders trusted him by providing funds, and Allanson betrayed that trust. After the judgment is published, Allanson has 21 days to appeal the decision.
Commercial

Out of the Shadows: The Mainstreaming of Litigation Finance

Litigation funders provide non-recourse funding to litigants, in order to enable them to pursue a meritorious case they couldn’t otherwise afford. It’s a straightforward process with a net societal gain of increasing access to justice. So why aren’t more people making use of it? The CLS Blue Sky Blog details that a newly-published article in the Vanderbilt Law Review, The Shadows of Litigation Finance, explores how Litigation Finance can overcome barriers that have been placed in its path. In the piece, authors Suneal Bedi (Professor at Indiana University and Maurer School of Law) and Willian C Marra (Investment Manager at Validity Finance), examine the awareness problem that plagues the industry, and lay out a scholarly framework with which to evaluate the full impact of litigation funding pre-trial, during the case, and after a case is resolved. Third-party legal finance is an enormous step forward in terms of social justice. Until this industry came to be, those who lacked financial means often lacked any way to seek justice when wronged—particularly by a large business, utility, or government. Litigation funding allows average citizens to pursue valid cases while preventing frivolous claims from clogging court dockets. After all, no funder wants to invest in a frivolous case that’s unlikely to be profitable. One of the interesting points made in the article is that there’s no specific framework to measure the success and benefits of non-recourse legal funding, hence it is difficult to counter the assertion that the use of litigation funding necessitates increased regulation. The pre-claim and post-claim impact of litigation funding are some of the key measurements explored by Marra and Bedi. By examining how funding changes the behavior of litigants at these stages, the authors hope to illustrate the heretofore unseen benefits of litigation funding—such as increased compliance and more equitable bargaining.