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Commercial

Legal Funding for Liquidation Approved in British Virgin Islands

Last month, a commercial court in the British Virgin Islands officially recognized the use of third-party legal funding by liquidators in an insolvency case. The practice had been going on for some time, but this first written ruling on the matter is considered an overt approval of the practice.

Omni Bridgeway writes that the ruling approves the practice of third-party funding, affirming that outdated champerty prohibitions lack relevance in modern court proceedings. Maintenance & champerty, after all, have not been official laws in most of the world since the dark ages.

Justice Adrian Jack, who made the ruling, explained that legal funding is not contrary to existing public policy. In fact, without the funding that allows liquidators to obtain recoveries for creditors, justice would be left unserved. As usual, litigation funding fulfills its promise to increase access to justice.

Several factors might have led to the ruling. In BVI, public policy was already accepting of the practice of legal funding in other matters. No public policy exists that would negate or invalidate the use of litigation funding, or any specific funding arrangement. There’s also the argument that funding, if available to court-appointed managers, should also be available to commercial litigants.

The recent ruling is hardly an outlier. Other jurisdictions are similarly disposed to recognize the value of third-party funding in insolvency cases—including Jersey, the Cayman Islands, and Bermuda. At the same time, Hong Kong, normally welcoming toward the practice of litigation funding, has been reticent to grant approvals for the practice in insolvency cases.

It appears that while courts are essentially welcoming to third-party litigation funding in a variety of circumstances, there will be subtle differences in some jurisdictions.

Commercial

Institutional Investors in Omni Bridgeway

Omni Bridgeway is considered a smallish company, despite a market capitalization of nearly a billion AU dollars. Still, institutional investors are buying in. To some minds, institutional buy-ins validate a stock’s overall value. Others caution against putting too much faith in how institutions invest. A recent analysis looks at investor data for the previous 12-month period. Simply Wall Street details that Perpetual Investments Management Limited is the largest Omni Bridgeway shareholder, at 8.8%. Greencape Capital (6.5%) and Eley Griffiths Group (5.2%) are next. Collectively, nearly 50% of the company is owned by the top 25 shareholders—indicating that no individual investor has a majority interest. But what about insiders? Roughly AU $37MM worth of Omni Bridgeway shares is owned by insiders. Generally speaking, insider ownership is a sign of a strong company and a prediction of future growth. These numbers seem reasonable and do not indicate an over-concentration of power—which can sometimes present itself with too much insider stock ownership. Most interestingly, retail investors own a 49% stake in Omni Bridgeway, which gives them a great deal of influence even if they can’t outright control company policy. Shareholder groups are a vital influence, especially in smaller companies because of their collective impact.
Commercial Investor's Corner Slingshot Capital Special Features

Operating Costs inherent in the Commercial Litigation Finance Asset Class (Part 1 of 2)

The following article is part of an ongoing column titled ‘Investor Insights.’  Brought to you by Ed Truant, founder and content manager of Slingshot Capital, ‘Investor Insights’ will provide thoughtful and engaging perspectives on all aspects of investing in litigation finance.  EXECUTIVE SUMMARY
  • Article draws comparisons between commercial litigation finance and private equity (leverage buy-out) asset classes
  • Similarities and differences exist between private equity and litigation finance operating costs, but there are some significant jurisdictional differences to consider
  • Value creation is front-end loaded in litigation finance vs. back-end loaded in private equity
  • Litigation finance can be a difficult investment to scale while ensuring the benefits of portfolio theory
INVESTOR INSIGHTS
  • The ‘2 and 20’ model is an appropriate baseline to apply to litigation finance, but investors need to understand the potential for misalignment of interests
  • As with most asset classes, scale plays an important role in fund operating costs
  • Deployment risk and tail risk are not insignificant in this asset class
  • Investor should be aware of potential differences in the reconciliation of gross case returns to net fund returns
  • Up-front management fees may have implications for long-term manager solvency
My overarching objective for Slingshot is to educate potential investors about the litigation finance asset class and to improve industry transparency, as I believe increased transparency will ultimately lead to increased investor interest and increased access to capital for fund managers.  In this light, I was asked to write an article a few months back about management fees in the commercial litigation finance sector, and my immediate reaction was that it would be a controversial topic that may not even be in my own best interests—and so I parked the idea.  However, the seed was germinating and I began to think about an interesting discussion of the various operating costs, including management fees, inherent in and specific to the asset class, including geographic differences therein. While I always attempt to provide a balanced point of view in my articles, I should first point out my conflict of interest as it relates to this article.  As a general partner of a commercial litigation finance fund-of-funds, and being in the design stages of my next fund offering, my compensation model is based on a combination of management fees and performance fees no different than litigation finance fund managers.  Accordingly, my personal bias is to ensure that I structure my own compensation to strike a balance between investor and manager so that each feels they are deriving value from the relationship.  If I overstep my bounds by charging excessive fees, I believe that a competitive market will recognize the issue and prevent me from raising sufficient capital to make my fund proposition viable.  I am also kept in check by a variety of other managers in the same and similar asset classes who are also out raising money which help to establish the “market” for compensation. I further believe a smart allocator, of which there are many, will know what fee levels are acceptable and appropriate based on the strategy being employed and the resources required to deploy capital into acceptable investments (they see hundreds, if not thousands, of proposals every year, and are focused on the compensation issue).  On the other hand, the litigation finance market is a nascent and evolving market with many different economic models, specific requirements and unique participants, and so a ‘market standard’ does not exist, therefore it is common to look at similar asset classes (leveraged buy-out, private credit, etc.) to triangulate an appropriate operating cost model. At the end of the day, the most compelling philosophy of compensation is rooted in fairness.  If a manager charges excessive fees and their returns suffer as a result, that manager will likely not live to see another fund. However, if  a manager takes a fair approach that is more “LP favourable” in the short-term (as long as the compensation doesn’t impair its ability to invest appropriately), it can move its fees upward over time in lock-step with its performance as there will always be adequate demand to get into a strong-performing fund.  There are many examples in the private equity industry of managers who have been able to demand higher performance fees based on their prior performance.  So, if you have a long-term view of the asset class and your fund management business, there really is no upside in charging excessive fees relative to performance, but there is clear downside. With my conflict disclosed, let’s move on to the issues at hand which are more encompassing than just fees. Litigation Finance as a Private Equity Asset Class For fund managers operating in the commercial litigation finance asset class, many view themselves as a form of private equity manager, and for the most part, the analogy is accurate.  Litigation finance managers are compensated for finding attractive opportunities (known as “origination”), undertaking due diligence on the opportunities (or “underwriting”, to use credit terminology) and then stewarding their investments to a successful resolution over a period of time while ensuring collection of proceeds. Similarly, Private Equity (“PE”) investors (for purposes of this article I refer to “Private Equity” as being synonymous with “leveraged buy-outs”, although use of the term has been broadened over the years to encompass many private asset classes) spend most of their time on origination and diligence on the front-end of a transaction, and increasingly, on value creation and the exit plan during the hold period and back-end of the transaction, respectively. In the early days of the PE industry, the value creation plan was more front-end loaded and centered around buying at X and selling at a multiple of X (known as “multiple arbitrage”), usually by taking advantage of market inefficiency, and accentuated through the use of financial leverage and organic growth in the business.  Over time, the multiple arbitrage strategy disappeared as competitors entered the market and squeezed out the ‘easy money’ by bidding up prices of private businesses.  Today, PE firms are more focused on operational excellence and business strategy than ever before (during the hold period of the transaction).  Having been a private equity investor for two decades I have seen a significant change in the PE value creation strategy.  While organic and acquisition growth still feature prominently in PE portfolio company growth strategies, the extent to which PE managers will go to uncover value opportunities is unprecedented. This highlights a key difference between private equity and litigation finance.  In PE, the majority of the value creation happens after the acquisition starts, and ends when a realization event takes place.  In litigation finance, the fund manager, in most jurisdictions, is limited from “intermeddling” in the case once an investment has been made, so as to ensure the plaintiff remains in control of the outcome of the case and that the funder does not place undue influence on the outcome of the case.  Nonetheless, some litigation funders add value during their hold period by providing ongoing perspectives based on decades of experience, participating in mock trials, reviewing and commenting on proceedings to provide valuable insight, reviewing precedent transactions during the hold period to determine their impact on the value of their case, case management cost/budget reviews, etc. Accordingly, it is easy to see that relative to private equity, the litigation finance manager’s ability to add value during the hold period is somewhat limited, legally and otherwise.  One could use this differential in “value add” to justify a difference in management fees, but a counter-argument would be that in contrast to private equity, litigation finance adds value at the front-end of the investment process by weeding out the less desirable prospects and focusing their time and attention on the ‘diamonds in the rough’.  Of course, private equity would make the same argument, the key difference being that in private equity there is much more transparency in pricing through market back-channeling (many of the same lenders, management consultants and industry experts know the status and proposed valuations of a given private equity deal) than what is found in the litigation finance industry. An argument can be made that inherent in litigation finance is a market inefficiency that is predicated on confidentiality, although I don’t believe that has been tested yet. The other issue that differentiates litigation finance from PE is the scale of investing.  PE scales quite nicely in that you can have a team of 10 professionals investing in a $500 million niche fund and the same-sized firm investing $2B in larger transactions, while your operating cost base does not change much, which is what allows PE operations to achieve “economies of scale”.  In litigation finance, the number of very large investments is limited, and those investments typically have a different set of return characteristics (duration, return volatility, multiples of invested capital, IRR, etc.), so even if you could fund a large number of large cases, you may not want to construct such a portfolio, as large case financings will likely have a more volatile set of outcomes, so the fund would have to be large enough to allow diversification in the large end of the financing market during the fund’s investment period.  Accordingly, litigation finance firms typically have to invest in a larger number of transactions in order to scale their business, and doing so requires technology, people or both.  At this stage of the evolution of the litigation finance market, scale has been achieved mainly by adding people.  Accordingly, as the PE industry has been able to achieve economies of scale through growth, it is reasonable for investors to benefit from those economies of scale by expecting to be charged less in management fees per dollar invested.  The same may not hold true for litigation finance due to its scaling challenges, although there are niches within litigation finance that can achieve scale (i.e. portfolio financings & mass tort cases, as two examples) for which the investor should benefit. The Deployment Problem A third significant issue that litigation finance and investors therein have to contend with is deployment risk.  In private equity, managers typically deploy most of their capital in the investment on ‘day one’ when they make the investment.  They may increase or decrease their investment over time depending on the strategy and the needs of the business and the shareholders, but they generally deploy a large percentage of their investment the day they close on their portfolio acquisition.  Further, it is not uncommon for a PE fund manager to deploy between 85% and 100% of their overall fund commitments through the course of the fund. Litigation Finance on the other hand rarely deploys 100% of its case commitment at the beginning of the investment, as it would not be prudent or value maximizing to do so.  Accordingly, it is not uncommon for litigation finance managers to ‘drip’ their investment in over time (funding agreements typically provide the manager with the ability to cease funding in certain circumstances in order to react to the litigation process and ‘cut their losses’).  The problem with this approach is that investors are being charged management fees based on committed capital, while the underlying investment is being funded on a deployed capital basis, which has the effect of multiplying the effective management fee, as I will describe in the following example.  This, of course, is in addition to the common issue of committing to a draw down type fund that has an investment period of between 2-3 (for litigation finance) and 5 (for private equity) years, for which an investor is paying management fees on committed capital even though capital isn’t expected to be deployed immediately.  Litigation finance adds a strategy-specific layer of deployment risk. For purposes of this simplistic example, let’s contrast the situation of a private equity firm that invests $10 million on the basis of a 2% management fee model with that of a litigation finance manager that also invests $10 million, but does so in equal increments over a 3-year period.   Private Equity (PE) Model (based on a $10 million investment)
 Year 1Year 2Year 3
Capital Deployed1$10,000,000$10,000,000$10,000,000
2% Management Fee$200,000$200,000$200,000
Expressed as % of deployed capital (B)2%2%2%
  Litigation Finance Model (based on a $10 million investment evenly over 3 years)
 Year 1Year 2Year 3
Capital Deployed1$3,333,333$6,666,666$10,000,000
2% Management Fee$200,000$200,000$200,000
Expressed as %1 of deployed capital (A)6%3%2%
  Differences in Fees in relation to Capital Deployed
Absolute Difference(A-B)4%1%0%
Difference as a multiple of fees in PE ((A-B)/2%)2X0.5X0X
1 Calculated assuming the capital is deployed at the beginning of the year. The difference highlighted above can be taken to extremes when you have a relatively quick litigation finance resolution shortly after making a commitment.  In this situation, you have deployed a relatively small amount of capital that hasn’t been invested for long, but has produced a strong return – this typically results in large gross IRRs, but a relatively low multiple of capital (although the outcome very much depends on the terms of the funding agreement).  While this phenomenon produces very strong gross IRRs, when the investor factors in the total operating costs of the fund, the negative impact of those costs can significantly affect net IRRs.  Accordingly, investors should be aware that this asset class may have significant ‘gross to net’ IRR differentials (as well as multiples of invested capital), and one could conclude erroneously that strong gross IRRs will contribute directly to strong Net IRRs, but the ultimate net returns will vary with capital deployment, case duration. extent of operating costs and timing thereof. I wouldn’t want this observation to discourage anyone from investing in litigation finance, but awareness of this phenomenon is important and very much dependent on the strategy of the manager, the sizes and types of cases in which they invest, and of course, is in part a consequence of the uncertain nature of litigation.  As an investor, I do think it is appropriate and fair where a fund manager obtains a quick resolution, that the commitment underlying the resolution be recycled to allow the Investor a chance to re-deploy the capital into another opportunity and achieve its original portfolio construction objectives  - recycling is beneficial to all involved. However, I would argue that it is not necessarily fair to charge the investor twice for the same capital, as that capital has already attracted and earned a management fee. Stage of Lifecycle of Litigation Finance Perhaps litigation finance is at the same stage of development as private equity experienced 20 years ago in terms of finding the “multiple arbitrage” opportunities, but a key difference is that the success rates in litigation finance are lower and the downside is typically a complete write-off of the investment, whereas private equity has many potential outcomes between zero and a multiple of their initial investment.  Of course, the home runs in litigation finance can be quite spectacular.  The quasi-binary nature of the asset class does present a dilemma in terms of compensation for managers and the costs inherent in running the strategy. The scale and deployment issues raised above are other issues that need to be addressed by fund managers and their compensation systems. Notwithstanding the aforementioned, it takes highly competent and well-compensated people to execute on this particular strategy which sets a floor on management fee levels. A well-run and diversified litigation finance fund should win about 70% of their cases, and if they underwrite to a 3X multiple for pre-settlement single cases, then they should produce gross MOICs of about 2X (i.e. ~70% of 3X) and net about 1.75X (after performance fees and costs).  This would be the type of performance that is deserving of a ‘2 and 20’ model as long as those returns are delivered in a reasonable time period.  Conversely, if the majority of a manager’s portfolio is focused on portfolio finance investing, there may have to be a different compensation scheme to reflect the different risk/reward characteristics inherent in the diversification, scale and cross-collateralized nature of this segment of the market. One size does not fit all. Let’s also not forget that litigation finance is delivering non-correlated returns, and one could easily assess a significant premium to non-correlation, especially in today’s market. In Part 2 of this two-part series, I will explore the application of the ‘2 and 20’ model to litigation finance in comparison to private equity, the implication of the private partnership terms of some of the publicly-listed fund managers, and other operating costs specific to litigation finance. Investor Insights Any fund operating model needs to be designed taking into consideration all of the operating costs inherent in the manager’s operational model in the context of expected returns and timing thereof.  Investors care about being treated fairly, sharing risk and sharing the upside performance in order to foster long-term relationships that reflect positively on their organizations’ ability to perpetuate returns.  Professional investors rely on data to make decisions, and in the absence of data which might get them comfortable with a manager’s performance, they will default to mitigating risk. Tail risk in this asset class is not insignificant, which makes investing that much more difficult.  A performing manager that does a good job of sharing risk and reward with investors will have created a sustainable fund management business that will ultimately create equity value for its shareholders beyond the gains inherent in its performance fees.  Edward Truant is the founder of Slingshot Capital Inc., and an investor in the litigation finance industry (consumer and commercial).  Ed is currently designing a new fund focused on institutional investors who are seeking to make allocations to the commercial litigation finance asset class.
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Commercial

Burford Capital and the Future of Legal Finance

Burford Capital’s 2020 legal finance report is teeming with useful information on the state of the industry and where litigation funding is headed. Featured are managing director Greg McPolin and CMO Liz Bingham. Some key highlights of the video below, with answers from Greg McPolin: Question: Most significant or surprising finding? “One, the notion that the pandemic that we’re dealing with globally right now and the corresponding economic contraption that we’ve all witnessed will sort of providing lasting changes…all of our respondents concluded that there are gonna be big changes that come, and those changes will be lasting. Among them are how lawyers think about litigation finance and funding matters and monetizing legal assets. The other is…the notion that they can access the value of these—what one respondent brilliantly called-- dormant legal assets…litigation and arbitration claims, judgments that are sitting on appeal, or awards that remain uncollected. These are dormant assets that corporations have not typically assigned value to and monetized in ways that are meaningful to them.” Question: Are you seeing a shift in how legal teams are using legal finance? “Absolutely we’re seeing a shift in how corporate legal departments are looking at litigation finance and legal finance. I think they’re finally understanding that litigation finance is just another flavor of corporate finance. We say that a lot at Burford and I think that notion is beginning to take hold. There are some corporate legal departments that are really harnessing that notion. And they’re doing it to do what we think of as two main things:
  1. Manage their money-out problems--the litigation budgets, the legal budgets, to assert their claims and defend themselves in litigation. They can do that by accessing our capital to fund their affirmative claims, and then on a portfolio basis to fund and finance the defense side claims.
  2. The second way corporations are looking at legal finance is to manage their money-in problems. I think corporate legal departments…are thinking about ways to be more creative in terms of budgets…if there’s a way to get closer to being budget neutral, that’s meaningful.”
Consumer

Car Accident Loans – An Option You May Not Know About

No one plans for a car accident. By definition, they come as a surprise. When they happen, the result can range from mild inconvenience to life-changing physical, emotional, and financial consequences. If you’re not already well-monied, a car accident loan might be a viable option. We-Heart explains that car accident loans are not subjected to the rules and restrictions of traditional loans. Cash advances are provided on a non-recourse basis with the expectation that the funder will receive a portion of any settlement awarded. If there is no settlement, the funding does not have to be paid back. This funding structure means that it’s the funder who takes the financial risk, not the plaintiff. That’s key for anyone who is dealing with the aftermath of an auto collision, especially if they aren’t at fault. Sometimes if a case takes an especially long time, a small interest rate is added. Accidents may keep people unable to work for months or longer, while normal expenses and medical bills can pile up. Car accident loans can be a boon to those for whom traditional bank loans are not a feasible option. Some say it’s probably better to avoid taking a loan if you can weather an accident without it. At the same time, financial wiggle room may be crucial to some families and this type of risk-free loan can be exactly what’s needed. The extra time can be used to get a full medical diagnosis of injuries sustained in the accident. That can lead to a larger award down the road. Car accident loans are technically a type of legal funding—which means you’ll need to have an attorney in order to obtain one. Your lawyer may also have resources to help you find a funder for a car accident loan.
Commercial

Nigerian Oil Skirmish Continues as Eni and Shell Ramp Up Attacks

A case between the Nigerian government and oil giants Eni And Shell is still underway. The issue is OPL245, and an allegedly corrupt deal made in 2011. While everyone involved maintains that their actions were legal, prosecutor Fabio de Pasquale and the Federal Republic of Nigeria are looking to prove otherwise. Finance Uncovered details that time is of the essence. Eni and Shell hold a prospecting license that is due to expire in May 2021. To expedite things, Eni has made an issue of Nigeria’s acceptance of funding from Drumcliffe Partners, a litigation funder based on Delaware. A leak of the funding agreement suggests that the government lacked transparency in not making the agreement public sooner—even though they are not obligated to do so. Eni has suggested that the funding agreement indicates ‘undisclosed interests’ which may be a throwback to outdated champerty laws. Eni’s tactic has been called an attempt at delegitimizing the Nigerian government’s claim. It seems unlikely that a court would conflict out a funder at such a late point in the case—some have speculated that Eni may be setting up grounds for appeal. Meanwhile, Drumcliffe has maintained that there is nothing untoward happening. Meanwhile, Eni accuses the Nigerian government of stonewalling efforts to convert OPL245 into an OML while threatening international arbitration. But is Nigeria obligated to do their bidding simply because a known money-launderer said so? Reports indicate that a dispute resolution consultant was hired in June of this year—though no one has said whether or not talks are actually underway. Should the parties manage to settle out of court, criminal sanctions could still be on the table for both energy giants. It might, however, stave off the ticking clock that threatens to lose them the rights altogether. A lot is riding on Eni’s efforts to wear down the Nigerians.
Commercial

Do Aussie Insurance Rate Increases Foretell the Same in the US?

Commercial trucking insurance rates have climbed steadily over the last decade. Despite price hikes, the industry has underperformed for the last nine straight years. The problem? According to some, Litigation Finance coupled with ‘nuclear verdicts’ is helping losses far outpace profits. Fleet Owner explains that commercial fleets are seeing rate increases as high as 300%. Ryan Erickson, EVP at insurance brokerage McGriff, Seibels & Williams, stated that the lack of profits leads to increased difficulty in any attempt to turn the market. Litigation Finance is touted as being a central reason for rising insurance rates. While it is true that third-party funding does lead to more cases—it’s not reasonable to paint the pursuit of justice as a negative. Litigation funders don’t invent cases. They empower citizens who have been wronged with an ability to have their day in court. Sometimes this leads to high awards, and sometimes it doesn’t. As litigation funding is offered on a non-recourse basis, funders are taking a substantial risk when they bankroll legal actions. In the wake of insurance industry struggles, tort reform is sometimes suggested. But will that have an impact? Tort reforms are meant to cut down on frivolous actions, which is not something funders are interested in. Funders are looking to fund cases with merit, for reasons financial and ethical. Australian government officials have been taking steps to restrict and regulate the use of Litigation Finance. Around the world, it seems like countries are taking sides on the practice. Singapore, for example, has introduced legislation more welcoming to the practice. Can the US expect similar changes in regulation? Possibly. With industry opinions forming on many sides of the issue, we would all do well to keep an eye on how increased regulation may impact Litigation Finance in the future.
Commercial

California Bar Opinion May Supersede ABA Recommendations

A recently released California State Bar opinion on ethics is likely to hold sway in the legal world despite differing markedly from the NYC Bar and ABA recommendations. The opinion covered legal finance and the ethics in utilizing it, and involved multiple rounds of public commentary—including funders like Burford Capital. Bloomberg Law details that California, as the second-largest community of legal professionals in the US, felt that the existing guidelines were lacking. But like the ABA guidelines, the California opinion is merely a suggestion and does not indicate new law. First, the opinion affirms that a lawyer’s duty is to the client, first and foremost. Funders absolutely do not control litigation, strategy, settlements, or any other decision-making. Lawyers are required to provide competent advice and are encouraged to educate themselves on litigation funding. Burford Capital has stated that nearly 80% of in-house counsel believe the firms they work with should provide basic information about legal funding. As to the champerty question, the California opinion affirms that champerty law does not apply and that Litigation Finance is a legal and ethical practice. Champerty, or funding a suit in return for financial gain from the outcome, is a medieval term that has been largely dismissed. Litigation Finance continues to grow and evolve as its popularity increases. The California opinion is one more way to add transparency and consistency to the industry.
Commercial Covid-19

Former Vannin MD Scott Mozarsky Talks Legal Tech During COVID

As the COVID pandemic continues to impact every area of business, legal professionals are finding ways to transition, diversify, and combat the challenges that face them. Legal tech in particular has had to adapt to the pandemic with lighting speed—with firms forced to discover new means of remote working, virtual meetings, and paperless filing.   ABA journal speaks with Scott Mozarsky, managing director with the Jordan, Edmiston Group Inc, about potential lasting impacts of COVID. After some remarks about his career, which included a stint in Vannin Capital's NY office, Mozarsky explains that the legal tech market has become increasingly active within the last few years. Mergers and acquisitions were up, though deals tended to take longer. There’s also been a shift in managing styles at larger law firms, which are now run according to standard business principles.   Investors are attracted by a solid business foundation and strong management teams with an eye on the future. Legal tech, Mozarsky explains, is coming into its own after spending years under the shadow of finance technology. Firms are using data and analytics to attract and grow client relationships. They’re also connecting on Zoom, sharing documents via virtual drives, and some are holding socially distanced meetings responsibly. The interview affirms that some changes adopted during COVID are likely to stay in place. These include online engagement and collaboration, virtual meetings, cutting down on office space, utilizing cloud services, and encouraging remote working. Currently, most courts are experiencing a backlog of cases and are using remote working tech to catch up. Ultimately, Mozarsky concluded that the future promises an expansion of legal tech, backed by investors and interest in the legal community. As the legal markets grow with the predicted spikes in litigation, avenues for legal and financial partnerships are on the rise.
Commercial

Australian Arbitration Week 2020

How exactly is international arbitration changing? The International Arbitration Conference set out to answer that very question. This year’s conference shined a light on how Australia became a favored destination for funded arbitrations around the globe. Omni Bridgeway participated in the event, which was held virtually. One hot topic was how third-party funding is changing international arbitration. In Australia, for example, the government has enacted legislation viewed as too restrictive by some funders. But in Singapore or Hong Kong, rules governing third-party funding have been welcoming to the practice. This lack of uniformity around the world has led to confusion, sometimes leaving meritorious cases unfunded. Other issues discussed included conflicts of interest and disclosure. Increasingly, new legislation requires disclosure of at least some aspects of litigation funding agreements. Some say that increased disclosure will reduce the appearance of conflicts of interest. ACICA Rule 53 is of particular interest because it includes the costs of obtaining legal funding as a recoverable expense. This rule would be especially impactful in Australia, where large class actions against big businesses are common. Cost was another hot topic. Specifically, how legal funding impacts security-for-cost orders. Also discussed was the changing relationships between contingency, conditional fee arrangements, and funding. This included portfolio arrangements and different ways to share risk. This led to a discussion of the newly-formed ILFA, and its push for greater transparency in the industry. Other topics included diversity in the industry, specifically the Arbitral Women diversity initiative. This Brisbane-based group publishes news, facts, and statistics, while engaging in various online diversity initiatives. The ‘Equal Representation in Arbitration’ pledge is a call-to-action and rallying cry. Soon, it will also be a set of guidelines to help corporates and firms pursue diversity in a productive way.
Commercial

Burford Launches on the NYSE

Burford Capital is turning heads with its newly-minted listing on the New York Stock Exchange. This NYSE listing is the first of its kind for a Litigation Funding firm. Business Insider explains that the NYSE listing is a clear sign that this type of legal funding has entered mainstream consciousness. It cements the industry as one that’s here to stay, rather than a temporary fix for trying economic times. Burford specializes in funding legal action against large corporations in exchange for a share of any reward. This type of third-party funding is offered on a non-recourse basis, allowing for different rules than are applied to traditional loans.
Commercial

Work Product Ruling Stymies Google’s Request to See Funding Contract

A California judge ruled this week that a litigation funding agreement between Impact Engine Inc and an unnamed funder is work product and therefore protected by privilege.  Law.com explains that concerns over the relevance of the agreement to a patent infringement suit against Google have been raised by lawyers at Quinn Emanuel. Judge Cathy Ann Bencivengo agreed that the funding agreement may have some impact on the case. This stands true even though Impact Engine’s lawyers did share information with the funders, work-product privilege was never waived. Bencivengo explained that the documents show an expectation from both parties that the information contained would not be released. This case could have far-reaching implications for litigation funders. Rules regarding disclosure remain vague.
Commercial

Africa’s Largest Class Action Targets Anglo American

A case representing roughly 100,000 women and children targets African mining company Anglo American. With litigation funding provided by Augusta Ventures, the case will pursue claims that those living near the Kabwe lead mines were poisoned. Law.com details that South African firm Mbuyisa Moleele and international firm Leigh Day brought the suit against the Anglo American subsidiary, Anglo American South Africa. Those impacted are seeking that the toxic land be cleaned up, that medical screening of children and pregnant women is funded, and financial remuneration. One lawyer involved with the case referred to the situation as an ‘ongoing public health disaster’ brought about by ‘flagrant disregard’ for the community. 
Commercial

Therium Access Named Finalist for ‘Best Pro Bono Initiative’ by The Lawyer Magazine

Therium Access has been named a finalist for ‘best pro bono initiative’ by The Lawyer. The program was launched to provide increased access to justice through investment—providing needed capital to the most vulnerable. Founded in 2009, Therium began as a funder who worked with clients pursuing cases against commercial businesses. It soon became obvious, however, that there were many clients in need of help even though their cases were not against businesses with deep pockets. Co-founder Neil Purslow explains succinctly, “Justice should be available to everyone, but the reality is that it isn’t. This can lead to devastating consequences for families and for the most vulnerable in our society.” He goes on to explain that while lawyers often donate their time, monetary support is also needed to pursue cases—especially those that are large and time-consuming. 
Commercial

Aussie Billionaire Funding Anti-COVID Lockdown Claim

A source has revealed that controversial billionaire Jonathan Munz is funding a challenge to the Victorian government’s recent COVID lockdowns. While not the sole financier, Munz is reportedly sinking at least $1 million into the case. That shouldn’t break the bank, as Munz’s reported assets top $1.5 billion. Sydney Morning Herald reports that two Brisbane court dates have been set to hear the case via video link. The case was filed by Julian Gerner, who owns a popular restaurant and bar. The claim revolves around parts of the Public Health and Wellbeing Act, and the emergency powers it provides. Plaintiffs have suggested that lockdowns are unconstitutional because the constitution implies freedom of movement. A planned defense from Solicitor-General Christine Walker has been postponed. A demurrer is expected to be filed instead. This means that while the constitution may affirm a right to freedom of movement, that is immaterial to the lockdown provisions and the government’s right to impose them. The resolution of this case may determine whether the Public Health and Wellbeing Act is rendered invalid. If that were to happen, a government’s ability to protect citizens during emergencies will be effectively crippled. A separate claim has been filed by Michelle Loielo as of September. She is a restauranteur and is reportedly an aspiring liberal politician. Further submissions are expected to be made to the High Court later this week.
Commercial

Roundtable Discusses Litigation Finance in Offshore Jurisdictions

The use of legal finance is increasing in several important offshore jurisdictions. But how well is that going? Burford Capital’s recent roundtable discusses the effectiveness of legal finance in maximizing recovery in insolvency cases around the globe. Burford’s panel includes Matthew Richardson, director at Grant Thornton (BVI), Ulrich Payne, lawyer at Kobre & Kim, and Ian Lambert, head of litigation, restructuring, and insolvency at HSM. Lambert explains that as always, the purpose of Litigation Finance is to increase access to justice. Legal funding allows for the pursuit of meritorious cases that might otherwise not be possible. This is of particular importance in the wake of COVID-19. Ulrich Payne further notes that liquidators now have a set precedent allowing them to enter into litigation finance agreements—thanks to two recent cases in the Grand Court of the Cayman Islands. What about the overall dearth of case law regarding litigation funding and insolvency? Richardson details that the British Virgin Islands has not heavily relied upon legal funding in insolvency cases. He explains that in his firm, most creditors and shareholders have the funds needed to pursue their case without additional funding. A proposed ‘Private Funding of Legal Services Bill’ is underway, and is expected to clarify specific issues relating to legal funding--such as appropriate rates of return or whether or not funders should have a say in decisions impacting the case. Without additional clarification from BVI courts, British law is the prevailing standard. Ian Lambert details his concern that the bill’s progress is slow, and that overzealous restrictions could make it more difficult for those with legitimate need. Payne sums up the situation, saying that the bill, if passed, would lead to sweeping changes in how litigation funding is addressed and managed in the Cayman Islands. The hope is that the changes will improve access to justice, rather than restrict it.
Announcements Commercial

ANGLO AMERICAN SUED ON BEHALF OF CHILDREN AND WOMEN POISONED BY THE WORLD’S BIGGEST TOXIC LEAD MINE

Lawyers from Mbuyisa Moleele and Leigh Day today announced that a class action lawsuit has been filed against Anglo American South Africa Limited (“AASA”), a subsidiary of London-headquartered multinational mining company Anglo American Plc (LSE: AAL, JSE: AGL), in the Gauteng Division of the High Court of South Africa. The action has been filed on behalf of a class estimated to comprise more than100,000 individuals in the Kabwe District of Zambia who are believed to have been poisoned by lead. The application is brought by 13 representative plaintiffs on behalf of children under 18, and girlsand women who have been or may become pregnant in the future. The claimants – principally young children – are suffering from alarming levels of lead poisoning which, depending on various factors including the blood lead level (“BLL”), causes a range of significant conditions, from psychological, intellectual and behavioural damage to serious and permanent physical damage to their bodily organs, neurological systems and fertility. In extreme cases, serious brain damage and deaths occur. In pregnant women, lead they ingested as children is absorbed into their bones and released during pregnancy. Women are also exposed to lead during pregnancy from the surrounding environment. Lead is known to cross the placenta, resulting in the unborn child being subjected to the same concentration of lead as the mother. Notonly can the baby’s health be damaged, lead causes pregnant women to have a higher risk of pre-eclampsia; gestational hypertension and miscarriage. Generations of children have been poisoned by the operations of the Kabwe mine, originally known as Broken Hill, which caused widespread contamination of the soil, dust, water, and vegetation. The main sources of this poisonous lead were from the smelter, ore processing and tailings dumps. The BLLs of the vast majority of children in Kabwe exceed the BLL limit of 5 micrograms per decilitre set by the U.S. Center forDisease Control. A substantial proportion of the children have BLLs in excess of 45 ug/dl, the limit at which medical treatment is required. There are numerous cases of young children (including among the representative plaintiffs) with BLLs in excess of 100 ug/dl, at which serious brain damage and death may occur. The Kabwe mine was part of AASA group from 1925 until 1974 and was one of the world’s most productive lead mines during this time. It is alleged in the class action that AASA is liable, including for the following, because of AASA’s role in controlling, managing, supervising and advising on the technical, medical and safety aspects of the mine’s operations:
  1. a) Substantial emissions of lead into the local environment were due to deficiencies in the design and systems of operation and control of lead, which AASA failed to ensure were rectified;
  2. b) AASA failed to ensure the clean-up of the communities’ contaminated land; and
  3. c) Accordingtoexperts1, aroundtwothirds of the leadcurrently inthe local environment is likely to have been deposited there between 1925 and 1974 when the mining operation was transferred to ZCCM, a Zambian state-owned company, in 1974.
The class action seeks to pursue remedies in the form of compensation for these children, as well as girls and women with lead poisoning who have or may become pregnant in the future. Also sought is (a) blood lead screening for children and pregnant women in Kabwe, and (b) clean up and remediation of the area to ensure the health of future generations of children and pregnant women is not jeopardised. Richard Meeran, Partner & Head of the International Department at Leigh Day, said: “From the 1950s, Anglo American publicly committed to making a lasting contribution to communities in which it operated. Its current human rights policy is to contribute to remediation when its business has contributed to adverse human rights impacts. This ongoing public health disaster is the result of a flagrant disregard for the health of the local community, which is totally at odds with those grand public pronouncements.” Zanele Mbuyisa, Partner at Mbuyisa Moleele, added: “AASA is considered amining giant that has been instrumental inbuilding theeconomies ofvarious countries, but it also has to be acknowledged that their operations have caused the decimation of communities and long-lasting damage to the health of those communities.” Mbuyisa Moleele is a Johannesburg-based law firm led by Zanele Mbuyisa, and Leigh Day is a leading international law firm specialising in human rights and mass environmental tort claims. Both firms have a proven track record of litigating complex international class actions on behalf of victims from disadvantaged backgrounds. The case is being funded by Augusta Ventures, the UK’s largest litigation fund by volume of claims. More information about this matter can be found at www.childrenofkabwe.com.
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Commercial

Law Firms and In-House Counsel Predict Spike in Litigation Funding

A recent study of in-house counsel and private attorneys affirms that the use of litigation funding is up more than 100% since 2017. Burford Capital released the study of roughly 500 legal professionals, which confirms the explosive popularity of the practice. Law.com explains that in-house counsel respondents are reporting tens of millions in unenforced judgments. Using legal finance to turn dormant value into liquid assets makes sense, especially when economic conditions necessitate savvy bookkeeping. Strikingly, over half of lawyers surveyed stated that their companies have abandoned solid claims because of potential litigation costs. This means that a need for third-party funding is widespread and ongoing, especially as pricing options dwindle in the wake of COVID. In the coming months, it’s clear that risk-sharing will be the order of the day.
Commercial

Burford Capital Makes NYSE Debut

Law firms and businesses alike are making even greater use of Litigation Finance in the wake of COVID. That’s good news for Burford Capital, whose listing on the New York Stock Exchange went live this week. Recent reporting on the popularity of the practice, combined with this new NYSE listing and the formation of the ILFA, makes it clear that litigation funding is on the rise. Westlaw explains that the NYSE listing represents an important milestone for Burford, indicating a company that has grown by leaps and bounds in the last decade. The industry is growing and adapting as well. The International Legal Finance Association is a newly formed coalition of funders that now has over a dozen members. David Perla, co-COO at Burford, explains that the term ‘legal finance’ might be more accurate than ‘litigation finance,’ as the practice has become more versatile in recent years. When asked about the Muddy Waters short-selling attack, Perla affirmed that a listing on the NYSE was the best answer to that question.
Commercial

Stolen Wages Lawsuit Filed by Indigenous Workers in Western Australia

As many as 8,000 people are believed to have been directly impacted by Western Australia’s practice of kidnapping and enslaving children in the 1940s and beyond. A class action has been filed to collect wages that were never paid to the workers. So far, at least 1,000 of those affected have registered their intent to seek remuneration. News.com AU explains that the stolen children were forced to work the mines in unbearable conditions, without proper equipment, wages, or proper food. Workers are represented in the case by Shine Lawyers, who received litigation funding from Litigation Lending Services. Litigation Lending funded a similar case in 2019 that settled for $190 million. Jan Sadler, head of class actions at Shine, explains that while the harm done cannot be erased with money, workers deserve compensation for the inhumane treatment they endured. The case is expected to go through mediation. The WA government appears to appreciate and acknowledge the effect that government policies have had on Aboriginal people.
Commercial

Maximizing Liquidity Through Litigation Portfolios

The COVID pandemic has led to the need for creativity, quick thinking, and adaptability for many legal firms. Roughly half of all firms and in-house counsel alike are expecting drops in revenues (and consequently, budgets) within the next year. But this doesn’t have to be dire news. Burford Capital explains that while things may look bleak, many firms and companies have legal assets that they aren’t looking at. Savvy GCs know to identify assets and find ways to maximize their value. Legal finance is one way to heighten liquidity while reducing the risk associated with taking on new cases in uncertain times. A recent legal finance report shows that more than half of in-house counsel affirms that their companies have ignored meritorious claims for financial reasons. Some GCs even support this. But offloading both costs and risks onto a third-party funder can transform a struggling legal department into a profit generator. Monetizing pending claims to generate liquidity is a smart move for businesses and law firms alike. As many as ¾ of in-house counsel cite liquidity as one of the main benefits of using legal funding. Other benefits include: --Non-recourse nature of the funds. This eliminates risk and adds certainty to budgets. --Accelerate incoming cashflow. Rather than waiting years for a case to be resolved, legal funding brings cash in without delay. --Experienced legal funders can help assess risk and pinpoint the most profitable cases and highest potential returns. --Maintaining control of cases can be a worry to those who are new to Litigation Finance. But third-party funders do not supersede the client or attorneys when it comes to making decisions about the case at hand. --Options. Funding allows clients to choose from a wider pool of attorneys without worrying about who is willing to work on contingency—or about cost in general.
Announcements Consumer

CONSUMER LITIGATION FUNDING: THE BASICS, CURRENT REGULATORY, ETHICAL, AND CONFIDENTIALITY ISSUES.

On November 16, 2020 at 1 PM Eastern, the American Bar Association’s Center for Professional Responsibility will present a 60-minute CLE webinar on consumer litigation funding. The presenters are Anthony Sebok, Professor of Law, Benjamin N. Cardozo School of Law; Ronnie Mabra, the Mabra Firm; and Eric Schuller, President, Alliance For Responsible Consumer Legal Funding (ARC). They will discuss the history and structure of the market and the ethical rules at issue with moderator Lucian T. Pera, a partner in Adams and Reese LLP. The conversation will also explore ABA Resolution 111A addressing best practices for third-party litigation funding.  ARC has separately adopted their own best practices some of which mirror the ABA’s Resolution 111A. To find out more and how to register click here
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Commercial Covid-19

COVID Litigation in Europe

Even before the pandemic gained a foothold, European courts felt the impact of COVID. Litigation over insurance, safety precautions, employment, and business interruption was rampant. Such litigation is only expected to grow—even after COVID is under control. Law.com International explains that disputes in France, Netherlands, and Germany all bear close examination. In France, for example, businesses were besieged by lawsuits almost immediately. Amazon, Airbus, and multiple companies that stayed open during lockdown were accused of not properly protecting employees’ safety. In France, employers are under more pressure to treat employees fairly. Parisian employment partner Emmanuelle Rivez-Domont explains that at the end of the day, it’s simply not feasible to keep everyone happy. But employers should still be held to the highest standards. Shockingly, many parties in France decided to remove COVID-related effects from the legal definition of force majeure. This is a heavy blow to those impacted, who were counting on their insurers to make good. In the Netherlands, everyone from insurers to event organizers are taking steps to test the waters. One hospitality industry group sought to vacate or relax social distancing in restaurants and bars. A judge denied the request, affirming that the government is allowed to make even drastic choices in the public’s best interests. Insurance had been a straight-forward matter in the Netherlands until COVID. Now cases are plentiful, leading to four insurers losing a claim over cancellation payouts due to COVID. As in the rest of the world, insurers may need to brace for impact as claimants use legal means to seek what they’re owed. In Germany, a “klagewelle” or ‘litigation wave’ is on the horizon. Germany’s lockdowns included bars and restaurants, hotels, clubs, and theaters—all of which led to industry-wide losses in the tens of billions. It’s only now that these businesses are learning that their insurance doesn’t cover loss of business due to a pandemic.
Commercial

Eni Attacks Third Party Funders in Nigerian Oil Claim

Italian energy giant Eni has requested documents relating to a $1 billion case involving the government of Nigeria and investment firm Drumcliffe—the principles of which are still involved in a corruption trial. Bloomberg News details that this is just the latest facet of an ongoing dispute which puts two prominent energy companies against Africa’s largest producer of crude oil. In this most recent claim, Eni holds that the Nigerian government is influenced by interests that they have not publicly disclosed. To support this claim, Eni is seeking documents from Drumcliffe Partners LLC. Eni now claims that the Nigerian government is in league with third parties who are attempting to reap “illicit” profits. This is a common complaint against third-party litigation funders and is often brought up by parties who have much to lose if the opposition is well-funded. Jim Little of Drumcliffe was unimpressed by the accusations, saying that Drumcliffe looks forward to discrediting the accusations, which he called ‘wild innuendo.’ Nigerian media published the funding agreement with Drumcliffe, which revealed Drumcliffe taking a potential share of 35%. Not uncommon in non-recourse funding agreements. Nigeria has joined the case as a civil party. They are also asserting that both Eni and Shell owe a penalty of $1.1 billion. Still, both companies have denied the charges, affirming that their agreements with the government of Nigeria are legitimate. Also denying wrongdoing are Eni CEOs Claudio Descalzi and Paolo Scaroni. The court is expected to rule later this year.
Commercial

Third-Party Funding Disclosures in Court—What’s at Stake?

As Litigation Finance permeates the mainstream and regulation catches up, the issue of disclosure remains contentious. At the time that a funding deal is created, there’s no real way to know whether or not courts will require disclosure of the agreement. Bloomberg Law explains that typically, this type of disclosure is not required by the courts. Funding, most judges rule, is not materially relevant. That said, determinations regarding disclosure are decided on a case-by-case basis. A recent survey on Litigation Finance shows that while legal professionals are feeling unsure—there’s nothing to suggest that disclosure will not be compelled in most instances. Recently, there have been several cases requiring disclosure of funding terms, but so far they’re few and far between.
Commercial

The Rush to Secure Funding by Year’s End

As 2020 nears its end, firms are straining to reduce the impact of Coronavirus on earnings—which for some means cutting staff even as they ensure that their best players won’t be recruited by other firms. Given that, it makes sense that firms holding strong litigation portfolios would want to consider dispute financing. Omni Bridgeway details that those who want to monetize their portfolio should not wait to get started. Portfolio funding arrangements are often large, detailed, and complex. Doing them well takes time. Waiting until December is risky, and can result in deals not being finalized by year’s end. However, beginning the process a few weeks earlier allows time to conduct due diligence, allowing funders to examine the cases in the portfolio while assessing risks against potential rewards. For many firms, portfolio funding carries less risk than funding individual cases. Overall, it allows firms to take more risks in terms of contingency casework—because the firm shares risk with funders. Non-recourse capital is provided and used to cover costs and fees, and can even be used to cover operational expenses in some circumstances. Awards are shared among plaintiffs, firms, and funders. The non-recourse nature of funding means that even if the entire portfolio is resolved unsuccessfully, the firm is not obligated to repay the funding. Dispute funding has many benefits to firms and partners—such as providing firms the ability to pay partner draws despite COVID-related losses. Funding can offer immediate cash flow when it’s needed most. Funding also gives firms more leeway in client selection and agreements. Contingency cases in particular become more viable with the inclusion of litigation funding. This means a larger pool of potential clients and cases. The advantages brought by funding provide an edge that could be used to expand staff and even recruit a rainmaker or two.
Commercial

Nanoco Shows Major Losses, Extends Cash Runway

A recent announcement from Nanoco reveals a sharp tumble in revenue. The Manchester-based tech business reported that revenue fell from GBP 7.132 million to GBP 3.856 million in the period ending July of this year. The Business Desk reports that despite these setbacks, Nanoco has managed to extend its cash runway to December of 2022. It’s hoped that this extension will allow the company to rebuild value. In July of this year, GBP 3.4 million was raised in a patent lawsuit against tech giant Samsung—thanks to support from a third-party litigation funder. A company-wide restructure is underway, which ultimately reduced monthly outlays by roughly 50%. Nanoco’s chairman, Dr. Christopher Richards, affirms that this year has been one of substantial change.
Commercial

Litigation Finance Pro Gian Kull Hired by SYZ Capital

Gian Kull has been appointed head of special situations at SYZ Capital. His investment experience spans more than a decade, making him an excellent choice to manage portfolios and handle private marketing investments. Wealth Adviser details that Kull’s past experience includes structured litigation investments at Multiplicity Partners AG, director of sourcing at Valtegra LLP, as well as opening a European office in Zurich for Brigade Capital Management. He began his career at Merrill Lynch as a research analyst. CEO of SYZ Capital, Marc Syz, explains that Kull’s contribution to the team will center on his expertise in private market investments, sourcing niche investments, and in portfolio construction. His experience with structuring litigation investments will be a boon to the team. As an investment, litigation funding is uncorrelated to the rest of the market. Kull’s expertise will be used to identify opportunities to find ways to generate capital within structural imbalances, specific niche access, or utilizing obscure information effectively.
Commercial Covid-19

Litigation Finance Evolves Through COVID and Beyond

It could be argued that Burford Capital is handling the pandemic better than most. The company transitioned to a remote working platform early on, and have adapted to what’s being called “the new normal” with aplomb. In the months that followed, courts, businesses, and even schools shifted to remote operations—meaning court cases could finally continue. Burford Capital explains that the importance of legal finance has only grown in the era of COVID. Litigation funding can make it possible for class actions, or any meritorious action, to proceed with help from investors. As the legal world forges ahead, there are three specific developments in the industry that all lawyers should be aware of. Solutions in legal finance. The idea of solutions, as opposed to mere transactions, is essential to understanding Litigation Finance. The process offers choices—far more than a simple loan/repayment structure. Litigation funding offers opportunity, peace of mind, and expertise to all parties involved. What’s more, experienced funders will provide an array of options that address specific client needs and concerns. The best funders offer more than funds, they offer years of industry knowledge and tech-fueled insights. The International Legal Finance Association. This organization recently launched as a way to protect the industry from overzealous regulation. It also informs the public about the benefits of litigation funding and does so with transparency and clarity. Welcoming the ILFA as a valuable resource is the right move for businesses, financial institutions, and legal professionals. Corporate partnerships. These are a vital part of what Burford does, especially now that interest in Litigation Finance has exploded. Because Burford is a publicly-traded company (currently on AIM, soon NYSE) functioning with obvious transparency, they’re a strong choice for in-house legal teams or finance departments that demand predictable capital and unparalleled compliance. Now that settlement activity is on the rise, and courts are slowly getting back up to speed—a relationship with an experienced funder is more vital than ever.
Commercial Covid-19

Litigation Funders Find Fewer Sure Bets Due to COVID

One of the most attractive aspects of Litigation Finance as an investment is that it’s uncorrelated with the rest of the market. Even as the Coronavirus pandemic became increasingly impactful, funders assured investors that returns would remain high. Bloomberg Law explains that while investment opportunities in Litigation Finance are plentiful, it hasn’t become the big money generator that legal professionals anticipated. Insurance disputes make up a large percentage of new litigation since the pandemic began. While these cases are plentiful, they don’t offer investors the kind of certainty they’re looking for. Rather than seeing nuclear verdicts in favor of plaintiffs, a number of significant rulings have come down in favor of insurers. This has led to even more caution among investors. Burford Capital, one of the largest funders, endured a sharp decline in business in the first part of this year. At the same time, Burford had a smaller cash outlay this year due to fewer new cases and ongoing court delays. Burford’s Christopher Bogart has stated that it’s impossible to know with certainty what’s coming. Speculation changes every week. In contrast, Ralph Sutton of Validity Finance, is encouraged by the 40% increase in investment opportunity his firm has shown this year.