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Commercial

Claim Dismissed Against Russian Oligarch Over Superyacht

A claim of over $115 million in damages, filed by Russian oligarch Farkhad Akhmedov (along with owner Straight Establishment) has been dismissed by the high court of Dubai. The claim revolved around a 115-meter superyacht, the MV Luna, which had been held as part of a divorce settlement. The National details that Mr. Akhmedov sought to recover lost earnings he would have made had he been able to charter the superyacht. However, this contradicted Akhmedov’s earlier assertion that the boat was not a commercial vessel and was not being used as a means to profit. The dismissal is considered a final decision by the courts and is not subject to appeal. The former Mrs. Akhmedova’s case was funded by Burford Capital. Akhmedov’s claim for damages was brought specifically to prevent Akhmedova and Burford representatives from taking possession of the MV Luna. However, the court prevented Akhmedova from taking the yacht—which means that this recent dismissal is a hollow victory. The ongoing injunctions mean that the superyacht is still in Port Rashid while proceedings continue to determine its rightful owner. To date, it has been in dry dock for two years—since London’s high court ruled that Akhmedov must pay 40% of his fortune to his ex-wife.
Commercial

Polish Government Sought for Arbitration in Coal Mine Action

Australian coal giant Prairie Mining has begun international arbitration proceedings that assert a breach of bilateral treaties. The action centers around Poland’s decision to block investment in the Jan Karski and Debiensko mines. The Economic Times reports that Prairie Mining secured roughly $12 million from a litigation funder in July of this year. Still, the company stated it is willing to engage in good faith discussions to resolve the dispute. As yet, the Polish government has opted not to engage. Exact amounts sought in the action have not been released. It’s unclear whether purported losses will include lost profits, damages, costs spent developing the mines, and costs associated with arbitration.
Commercial

ABA Best Practices for Litigation Finance Have Mixed Reception

When Litigation Finance was still making a name for itself, the American Bar Association was among the first organizations to write researched commentary on it. The white paper published by the ACA Commission on Ethics remains influential today. Above the Law details that simply publishing a best practices guide legitimizes Litigation Finance and affirms its widespread importance and acceptance. According to the introduction, the best practices guide is just that—guidance. It details what it considers to be the most pressing issues to consider before utilizing litigation funding for any of its most common purposes. Much of what can be found in ABA’s best practices guide is already standard operating procedure in many firms. For example, funders staying out of material decisions regarding the cases they fund is typical. Being aware of responsibilities regarding privilege, safe document handling, and the construction of litigation funding agreements are all commonplace. Some have suggested that the recommendations in the guide are too conservative and do not factor in current trends or commercial realities. For example, the guide cautions against lawyers and funders discussing the viability of a case. It’s outlandish to think such a thing wouldn’t be discussed, or that it would be in any way inappropriate to do so. Investors require information in order to make sound investment decisions, and the merits of a case are certainly relevant to that. One thing the ABA guide does well is differentiate the different types of Litigation Finance currently in use—client funding versus lawyer funding, for example. As the industry adapts to changing circumstances, these distinctions will grow in relevance. It also advises that lawyers presume that litigation funding agreements will be made public. This is not always true, but specific types of arbitration require it. Overall, the guideline recommendations are expected to lend legitimacy to an already entrenched part of the legal world.
Commercial

Key Takeaways from LFJ’s Q3 Roundup on the State of the Commercial Litigation Funding Industry

On Wednesday October 7th, Litigation Finance Journal hosted a quarterly roundup on the major issues impacting the commercial litigation funding industry. The 45-minute panel discussion was moderated by Ed Truant, founder of Slingshot Capital. Panelists included Jim Batson, Senior Investment Manager of Omni Bridgeway, Nick Pontt, Managing Director of Affiniti Finance, Mick Smith, founder of Almatura, and Paul Haskel, partner at Richards, Kibbe & Orbe, LLP. Below are some key takeaways from the event: Ed Truant: On the issue of Burford's dual listing, is this about providing the US market with an option to invest in litigation finance, with the benefit of improving Burford’s stock price, post-Muddy Waters? And given the Muddy Waters issue, is a dual listing in the more litigious US market a good move? Paul Haskel: I should say first that I don’t represent Burford and I have not spoken to anyone at Burford about this. I think my view is that in some sense this is a response to the Muddy Waters short selling incident that occurred to them. I guess in the fall or the spring, that as a retort to Muddy Waters, they’re saying we’re going to be transparent, we’re going to be much more transparent than we’ve been historically. No more sort of black boxes which is what Muddy Waters has complained about. And we’re going to be very open, we’re going to have quarterly SEC filings, far beyond what was required by them for their AIM listing. Part of it may also be a marketing ploy, so it may be that customers looking for funding, many of which, may feel more comfortable coming from a public company that’s subject to public disclosure. Obviously, it provides liquidity to their investors, but I do point out that it also provides liquidity to short sellers as well, which is interesting. Mick Smith: Like Paul, I haven’t had the inside scoop from anyone at Burford about what was driving the listing, but in my experience you’ve got to go to the US market because it’s probably the deepest capital market around. So you have to assume that Chris is seeking a US listing because it gives them access to more capital and they’ve always been interested in raising money from different pools of capital, so this seems like a logical extension to the biggest capital market of all.  Ed Truant: IMF Bentham at the time, made a big acquisition of Omni Bridgeway, and so probably no one better suited to this question than Jim. Jim, maybe you can give us some insights in terms of the strategic compulsion to do the acquisition. How has the acquisition benefitted formerly IMF, now Omni more broadly, and have there been benefits both ways to this merger?  Jim Batson: We really do view it as a merger whether or not it’s technically considered an acquisition. Yes, the first obvious benefit was the geographic scope that the company now has, so with the merger we have 18 offices in 10 different countries. And if you think about how litigation has gotten so global, and the litigation finance industry really needs to adapt to that. We want to be able to serve corporations that are international in scope and also law firms in the same respect, but also when we’re working with corporations that have offices in multiple jurisdictions, the lay of the land in each particular region is different. And being sensitive to that, we’re doing more than just providing a single product and providing it globally, but rather we're able to provide litigation finance solutions in all these different regions that have very unique attributes. The class action regime in Australia is very different from that in the US, and yet we support it very heavily in Australia and through law firm portfolios here in the US. By the same token, we’ve got offices now in Singapore and Hong Kong, where international arbitration is becoming more and more popular and readily accepted, and litigation finance is becoming readily accepted in the international arbitration sphere.  The second sort of big picture benefit that it provided was giving us a comprehensive beginning-to-end support for litigants and lawyers and corporations in the litigation finance sphere. Ed Truant: What about the surging demand for portfolio funding? Paul, is that something you’ve noticed in the marketplace as COVID struck? Paul Haskel: Will there be litigation specifically related to COVID? I’m not sure we’ve seen a flood of business interruption insurance or business interruption litigation yet. But I do think that law firms have become increasingly accepting of litigation finance as being a source of not just financing but actually their ability to get more work, because it’s just generally becoming more accepted. And I think the fear of COVID and the slowdown has driven many firms to seek that type of financing, and where previously they had contingency work, were comfortable just simply waiting to get paid, they’re seeing an advantage of accelerating that capitalization from that work. So I do think there’s been increased demand from law firms that we’re seeing. I also am seeing a trend where some of the big New York corporate firms, which traditionally might have stayed away from this type of arrangement, have started doing a little more contingency work to boost profits, so that does lend itself to litigation financing. So yes, it’s definitely a trend we’re seeing in the market. Ed Truant: From the panelists perspective, what do you think should be the first course of action for the ILFA? Jim Baston: It’s really not so much that litigation funders have been objecting to regulation as a concept. The problem has been more, ‘Who’s supporting it?’ and ‘What type of regulation are we talking about?’ and so forth. I’ve always thought it was ironic that the Chamber of Commerce purports to want to increase regulation and to minimize the use of litigation finance, when at the end of the day, some of their members are the biggest users of litigation finance—and it really is to the detriment of the smaller companies. Paul: I think it’s a great idea, the ILFA. It is an industry that is unregulated, trying to prevent regulation. It has a “bad reputation” among some, and I think the need to have an organization that can lobby for the asset class, be an advocate for the asset class, perhaps come up with best practices and codes of conduct to prevent outside regulation and to work with regulators which I think is a great step.
Announcements Commercial

Apex Litigation Finance brings Artificial Intelligence development in-house to drive funding activity and further promote access to justice

Apex Litigation Finance (Apex) has today announced that it has cemented its position in the legal technology space by bringing its Artificial Intelligence (AI) capacity inhouse, building on an already innovative approach to case outcome predictive analytics. The deployment of AI is enabling the company to speed up the delivery of litigation funding to its client base of solicitors, liquidators, individuals and corporates. Apex now have the means to fully control the development of AI technology to meet evolving requirements. The company believe this will greatly enhance the predictive analysis of risks and outcomes and increase its success in selecting which cases to fund. The move to in-house technology follows a successful relationship with legal AI specialist CourtQuant, which saw Apex fully test and scope the capacity of AI tools in the litigation funding space. The inhouse solution will build on this experience and expertise, whilst creating value for Apex by building a best in class database The AI development will be supervised by project manager Lukas Ruttkay, who brings extensive experience of tech project leadership and AI development to the company, having brought three successful online ventures to market. Commenting on the move, Maurice Power, Apex CEO, said: “We are excited to bring the AI inhouse. Our development of AI will further inform our decision making, offer greater value funding solutions to clients, and provide comfort for investors. I am confident this capability will ensure that Apex maintains its position as a market leader in the sector.” Apex specialises in providing funding for small to medium-sized matters where litigants may not have the means to pursue meritorious claims. Legal and other costs associated with a claim are funded, in return for an agreed share of any successful outcome. If there is no recovery, or if the claim is lost, there is nothing to repay as Apex offers non-recourse funding, taking on all the risk to protect claimants. About Apex Litigation Funding Apex Litigation Finance Limited brings together experts from the legal, technology 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. As a professional litigation funder, Apex makes available funds to pay legal and other costs associated with a claim in return for an agreed share of any successful return. If the claim is lost, there is nothing to repay. The process is augmented by artificial intelligence systems to assess risk. Apex’s service addresses the issue of claims, that may have merits, not proceeding due to uncertainty over costs and the potential risk of being ordered to pay the defendant’s cost, should the claim be unsuccessful. Apex promotes its service as enabling access to justice for all, not just those with deep pockets.
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Commercial

Legal Finance as a Path to Corporate Trust Recovery

The rise in bankruptcies and business insolvencies due to COVID cannot be denied. One side effect of this involves the exploration of how best to facilitate recovery and refinancing. Ultimately, legal funding may provide the best risk/reward ratio. Burford Capital’s recent roundtable discussion parses out how these developments are affecting the industry. With regard to bankruptcy litigation, it’s clear that all parties are growing more assertive in protecting their interests. This means assets are being locked down sooner, and assets that should go to creditors are being siphoned. The increase in bankruptcy litigation also means an increase in the use of Litigation Finance. In the context of bankruptcy, legal finance is straightforward. A funder pays the legal fees and expenses associated with the case. If the case ends favorably, the funder would be refunded along with an agreed-upon percentage of the recovery. If the case isn’t successful, the non-recourse nature of funding means they lose their investment. Can legal finance be used as a business development tool? Legal funding for bankruptcy offers a viable alternative to contingency arrangements. This gives trustees more freedom in selecting bankruptcy lawyers without having to dip into estate funds. Some would say that trustees now have an obligation to investigate legal finance options in their cases. Part of acting in the best interest of creditors is to make the savviest financial decisions. In many cases, legal finance is more cost-effective than hiring counsel on a contingency basis, and can offer a tactical advantage, as it displays to the opposition that the claimants are financially capable of seeing a case to completion.
Commercial

IAG Class Action Settlement Tops $138 Million

A settlement in the IAG class action is currently under review after preliminary hearings. The proposed $138 million settlement comes after the company was ordered by ASIC to refund customers for add-on products that were essentially without value. Insurance News explains that the class action was brought regarding six add-on products impacting 673,000 unique transactions by hundreds of thousands of policyholders. Last year, IAG asserted that the case could involve sums of up to a billion dollars during a hearing on the litigation funding arrangements. Balance Legal Capital funded the action, which ultimately allowed litigants to recoup much of their financial losses.
Commercial

Litigation Funding Opportunities are Here to Stay

It’s no secret that when the economy is tough, litigation increases. As the CEO of LexShares, Jay Greenberg, explains--even those who don’t normally use litigation funding are reaching out. Businesses are more anxious than ever to collateralize existing lawsuits and take steps to ensure that any impending claims can be litigated effectively. Alpha Week details that both investor interest in litigation funding and inquiries by potential plaintiffs are on the rise. Earlier this year, the market saw drops in both bonds and equities, yet investments in litigation funding were unaffected, as they only correlate to cases. At the same time, the ROI of lit fin is dependent on making savvy choices backed up by solid underwriting and extensive legal expertise. Former litigators often make the most effective underwriters, as they have the most intricate understanding of the legal process and are best able to parse the risks inherent to a given case. Ideally, an investment in litigation finance requires vetting the merits of each individual case, and/or taking on a diverse array of cases that ultimately diversify risk. Jay Greenberg details that while litigation funding has gained traction during COVID, the opportunities it presents aren’t going anywhere any time soon. While public data isn’t made available on funding overall, the filing of new commercial cases was down from last year. This may mean that litigation funding has barely made a dent thus far—and that opportunities for funding are only expected to rise.
Announcements Consumer

Multi Funding Is Named Preferred Litigation Finance Provider for Total Trial Solutions

Woodstock, NY—October 6, 2020 —Multi Funding, a leading provider of pre-settlement funding serving law firms and attorneys, has been selected as the preferred litigation funding partner for Total Trial Solutions. A provider of comprehensive litigation support services, Total Trial Solutions will offer Multi Funding’s cloud-based litigation finance services to its extensive client base of law firms and attorneys across the United States. Headquartered in Woodstock, New York, and with an office in Lynbrook, New York, Multi Funding offers the legal community proven, fast, and reliable pre-settlement and other litigation financing solutions. Established in 2007, Multi Funding is recognized by its clients for maintaining a high standard of excellence, and is one of the few providers in the industry to earn coveted NMLS (Nationwide Mortgage Licensing System) certification. Through its advanced technology, attorneys can easily apply for litigation financing on Multi Funding’s secure website. Within minutes, attorneys can leverage the company’s full capabilities, such as automated workflows, instant notifications, document management, reporting, and funding updates. Multi Funding eliminates the manual tasks associated with funding, and provides litigants with much needed financial resources during the pre-settlement phase of their trials. In many instances, Multi Funding’s resources can change the trajectory of a case by giving plaintiffs the leverage to weather the longer negotiation periods that are often required to maximize results. “We are very pleased to partner with Total Trial Solutions and bring Multi Funding’s proven services to its network of law firms and practitioners. These attorneys recognize that access to pre-settlement funding can make the difference between accepting a quick, diminished settlement or pursuing a case to full value,” explained Michelle Fuoco, Multi Funding’s chief financial officer. “We are confident that the organizations that access our services through Total Trial Solutions will be very pleased with their results.” Based in Kingston, New York, Total Trial Solutions has provided resources for 8,000 cases, and has helped attorneys recover hundreds of millions of dollars for their clients. The company provides a wide range of litigation support services to attorneys pursuing judgements in civil cases. These services include focus groups, jury analysis, forensic animations, medical illustrations, video production, forensic biographies, and expert matching and vetting. “Giving our attorney partners access to fast litigation expense funding in a reliable and secure environment will be extremely well received. Savvy attorneys will realize that financial support during the often-lengthy pre-trial process can change the entire complexion of a case and allow them to significantly drive up the value for their clients while conserving their own out of pocket case flow,” said Michael Earner, Esq., president and chief  executive officer of Total Trial Solutions. “We’re proud to work with Multi Funding, which has a proven track record, as well as the resources and technology to fund a broad array of cases. Our partnership with Multi Funding will absolutely enable attorneys to produce better outcomes for their clients.” About Multi Funding Headquartered in Woodstock, New York, and with an office in Lynbrook, New York, Multi Funding is a major provider of specialized legal funding, attorney funding, and law firm funding services. With decades of lawsuit funding, business, and legal experience, the company’s founders have made it their focus to provide simple and fast services while maintaining a high standard of excellence. Multi Funding has provided millions of dollars of legal funding to plaintiffs and attorneys across the United States. www.multifundingusa.com
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Announcements Commercial

Tetragon Financial Group Limited To Pursue Litigation Finance Venture with Brandon Baer

Tetragon and its diversified alternative asset management business, TFG Asset Management, have entered into an agreement with Brandon Baer to invest in his newly-created company, Contingency Capital, a multi-product global asset management business that will sponsor and manage litigation finance related investment funds.  Contingency Capital will have its formal launch on 1 November 2020. Mr. Baer formerly worked at Fortress Investment Group where he was a Partner and Managing Director in the Credit Funds business.  He was also the Co-Founder and Co-Head of its Legal Assets group. TFG Asset Management will receive a significant minority equity interest in Contingency Capital and Tetragon will provide Contingency Capital with, among other things, working capital and a $50 million commitment to Contingency Capital's first commingled investment fund, with Tetragon retaining the option to invest further amounts.  TFG Asset Management, which owns majority and minority private equity stakes in asset management companies, will also provide Contingency Capital with operating infrastructure – encompassing critical business management functions such as risk management, investor relations, financial control, technology and compliance/legal matters. Fortress and Contingency Capital have entered into co-investment arrangements pursuant to which Fortress may invest up to $500 million in Contingency Capital's opportunities.  Contingency Capital has also entered into arrangements with a large fixed income asset manager relating to up to $900 million of additional co-investment opportunities. Reade Griffith, a Founder of Tetragon's investment manager and the Chief Investment Officer of TFG Asset Management, commented: "We think there are significant opportunities in litigation finance related investing, and gaining exposure to this asset class is very appealing.  We are also particularly excited to partner with Brandon, who is a leader in the space with extensive experience."  Stephen Prince, the Head of TFG Asset Management, noted: "We believe Brandon continues our efforts of partnering with exceptional asset managers." "I am excited to partner with Tetragon and its asset management platform," said Mr. Baer.  "The Contingency Capital business seeks to provide access to high-quality litigation finance assets in an increasingly expanding market.  Our focus will be on investments whose primary outcomes are driven by legal, tax or regulatory processes and are intended to be generally uncorrelated to the markets.  I am also pleased to be able to continue collaborating with Fortress, where I spent almost a decade focused on credit and legal assets." "As a significant shareholder in Tetragon and one of the largest investors in legal assets globally, Fortress is very excited to work with Tetragon and Brandon on this new opportunity," said Jack Neumark, Head of Legal Assets at Fortress.  "We have a long history of providing capital in a variety of forms to litigation finance platforms and we believe the co-investment arrangements with Contingency Capital will be another good partnership for us in this asset class."
 About Tetragon: Tetragon is a closed-ended investment company that invests in a broad range of assets, including public and private equities and credit (including distressed securities and structured credit), convertible bonds, real estate, venture capital, infrastructure, bank loans and TFG Asset Management, a diversified alternative asset management business. Where appropriate, through TFG Asset Management, Tetragon seeks to own all, or a portion, of asset management companies with which it invests in order to enhance the returns achieved on its capital. Tetragon's investment objective is to generate distributable income and capital appreciation.  It aims to provide stable returns to investors across various credit, equity, interest rate, inflation and real estate cycles.  The company is traded on Euronext in Amsterdam N.V. and on the Specialist Fund Segment of the main market of the London Stock Exchange.  For more information please visit the company's website at www.tetragoninv.com.
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Announcements Commercial

Hausfeld invests in its product liability practice with a lateral partner hire

Today disputes-only law firm, Hausfeld, is pleased to announce that Sarah Moore has joined its London office as partner from Leigh Day. She joins Hausfeld to further strengthen its human rights and environmental disputes practice and lead and grow its product liability practice. Her expertise also complements its group actions and consumer claims work.

During her 15-year career, Sarah has focused on high profile group litigation against corporations both in the UK and overseas and developed extensive experience in product liability and environmental cases. Leading legal directories Legal 500 and Chambers and Partners recognize her expertise and talent on the product liability, claimant-side.

Throughout the pandemic Hausfeld has continued to recruit with 12 lawyers joining since January 2020 from leading UK and US law firms. With 15 partners and 36 qualified lawyers as part of its London disputes resolution team, it is similar in size to other big city firms’ litigation practices.

Commenting on the announcement, London Managing Partner Anthony Maton says: “Sarah’s practice perfectly matches a number of growth areas for Hausfeld in London: one is our undisputed expertise in managing collective redress mechanisms and another relates to our ground-breaking work in climate change litigation. Our growing product liability practice will be further strengthened by the fantastic experience Sarah brings to the table.”

“Sarah’s appointment reflects our broader ambitions. Two years ago, we predicted a rise in group actions which has materialized. We expect this trend to continue, and with the current movement of the public wanting to hold corporates to account, this is unlikely to go away. Our US colleagues are considered market leaders when it comes to product liability claims and we want to bring that expertise into the European market. As early adopters of flexible fee structures and the use of litigation funding, we are in an excellent position to do so.”

Sarah adds: “Hausfeld has a remarkable reputation in the market as specialist litigators. I am delighted to be joining this excellent team and am looking forward to drawing on my experience in further growing the environment and product liability practices and supporting the firm’s reputation as a leading litigation boutique.” Notes to Editors For further information or to arrange interviews in the US, please contact:

Deborah Schwartz Media Relations (240) 355-8838 deborah@mediarelationsinc.com

About Sarah Moore

Sarah commenced her career at Freshfields Bruckhaus Deringer where she trained in both their London and Paris offices. Most recently, she practiced as an associate solicitor at Leigh Day in London, where she was involved in high profile litigation against British corporations concerning a range of product liability and environmental issues. Her cases have involved defective medical devices, pharmaceuticals and mass torts – often committed overseas by UK multinationals. The legal directory Chambers UK highlights: “Sarah Moore is a developing force in the market who has been involved in significant litigation involving medical device defects.”

For more information about Sarah, please visit her bio.

About Hausfeld

Hausfeld is a leading global law firm with offices in Amsterdam, Berlin, Boston, Brussels, Düsseldorf, London, New York, Paris, Philadelphia, San Francisco, Stockholm, and Washington, DC. The firm has a broad range of complex litigation expertise, particularly in antitrust/competition, financial services, sports and entertainment, environmental, mass torts, consumer protection, and human rights matters, often with an international dimension. Hausfeld aims to achieve the best possible results for clients through its practical and commercial approach, avoiding litigation where feasible, yet litigating robustly when necessary. Hausfeld’s extensive experience with alternative and innovative fee models offers clients a diverse menu of engagement options and maximum flexibility in terms of managing their cost exposure.

Hausfeld is the only claimants’ firm to be ranked by the Legal 500 and Chambers & Partners as a top tier firm in private enforcement of antitrust/competition law in both the United States and Europe. For more information about the firm, including recent trial victories and landmark settlements, please visit www.hausfeld.com.

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Commercial

Burford Capital Capitalizes on Claims Monetization

Litigation Finance has been slowly growing since it first gained acceptance during the last financial crisis. In addition to a funding model that pairs funders with a single case, litigation funding can also come in the form of claims monetization. Bloomberg Law details that Burford Capital has made a pretty penny in claims monetization. One main draw in this type of funding is lawyers not being required to risk contingency returns. Within this model, investors buy a stake in a claim or judgment directly from clients.   Burford Capital made great use of this model, which brought in spectacular results. During the first half of 2020, portfolio investments of $145 million paid out nearly $425 million. Last week, Burford shares rose over 7%. Dai Wai Chin Feman, director of commercial litigation at Parabellum Capital, explains that claim monetization allows for more capital to be used for claims that have more value. Better still, this type of funding agreement is simple because legal fees and expenses do not have to be calculated or estimated beforehand. Currently, Burford’s value is more than 4x its nearest publicly traded-competitor. That gives it more financial wiggle room, allowing it to better weather the risks associated with larger claims. At the same time, single case litigation is still expected to be part of Burford’s core areas of focus. According to Christopher Bogart, Burford chief executive, what Burford is developing is a multi-product line approach to finance. By diversifying the types of funding provided, they increase their potential client base by offering services that fulfill a variety of needs. While the number of new cases has fallen, cash outlay is also lower due to COVID-related slowdowns in the courts.
Commercial

Canadian Insurers Sound Alarm over Litigation Finance

Litigation funding is growing in popularity all over the world. The practice of third parties funding cases in exchange for a share of the rewards is a lucrative business model. Better still, it increases access to justice for those who couldn’t otherwise afford it. So why are insurers in Canada speaking out against the practice? Canadian Underwriter explains that litigation funding is still in its infancy in Canada. The fear, according to insurer Bernard McNulty, is that social inflation might become a problem. But would it? Some might say that insurers dislike the practice because it empowers class actions with sizable payouts. It is true that some funded cases have come away with high rewards. As McNulty detailed, one traffic accident led to an $18 million verdict, while another auto-related case brought in $17 million. According to McNulty, verdicts of this size are a good reason to limit the use of litigation funding—even though these plaintiffs may have never had their day in court without it. The problem for insurers is that these large payouts have led to them raising their rates to offset costs. High rates mean clients may take their insurance needs elsewhere. One might think that rather than passing expenses down to consumers—that insurers might improve their underwriting and employ the kind of ethical business practices that don’t lead to lawsuits in the first place. Or they could just blame litigation funding...
Commercial

Burford Capital Profits Down—but Not Out

A new report from Burford Capital reveals that profits were down 15% during the first half of this year, as it reported to the London Stock Exchange. Much of this is due to fallout from Coronavirus, which led to group-wide commitments ending down a startling 74% to roughly GBP 152 million. Law Gazette reports that Burford remains confident that the funding landscape has stabilized. Chief executive Christopher Bogart stated the expectation that a spike in litigation claims spurred by the pandemic is coming. Sir Peter Middleton, Burford chair, explains that the current numbers showcase the earning power of the litigation portfolio. Next up for Burford, an impending listing on the NYSE.
Consumer Special Features

California Bar Issues Formal Opinion on Third-Party Litigation Funding

This article was contributed by Eric Schuller, President of the Alliance for Responsible Consumer Legal Funding (ARC). On October 1, 2020 the California Bar Association published Formal Opinion NO. 2020-204 on Third-Party Litigation Funding. The bar’s opinion states that attorney and consumer must be fully informed as to the terms and conditions of the contract. Additionally, the lawyer must ensure competence in advising on any litigation funding agreement, and is obligated to obtain a client’s permission before discussing any confidential information with the funding company. During the comment period of this opinion, the Alliance For Responsible Consumer Legal Funding (ARC) weighed in on the issue by submitting a letter to the review committee. In the letter ARC stated: “The Proposed Formal Opinion properly establishes that a lawyer is under an ethical obligation to decline to represent a client in legal funding negotiations if the lawyer does not have sufficient knowledge and expertise to help the client avoid being exploited in the legal funding relationship.” In addition, it was stated that this opinion will give consumers additional confidence in the industry: ”By requiring adequate representation in the legal funding negotiation, bad actors will be less likely to survive. As those bad actors are driven out, consumer confidence in legal funding services will rise and the resulting increase in demand for legal funding services will draw even more reputable funders into the market. This, in turn, will create stronger incentives for funders to cater to the price and quality preferences of individual plaintiffs.” The California Bar Association and the American Bar Association have each released a recent opinion on Litigation Funding. In both opinions, the bars acknowledge a need for the product, and propose best practices for how consumers and attorneys should work with companies that offer financial assistance to consumers in their time of need. ARC and its member companies continue to ensure that both consumers and their attorneys are fully-informed on the terms and conditions of the contract, and that the only parties that have a say in the prosecution of the case are consumers and their attorneys. These are enforced in the most recent set of Best Practices that ARC and its companies have released. ARC is very pleased the California Bar Association, the largest State Bar Association in the United States with over 242,000 members, has taken this position on the issue and put forward these important guidelines.
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Commercial

Stonewood Case Stay of Proceedings Lifted

Questions about litigation funding led to a stay of proceedings during the liquidation of Stonewood Homes. That stay has been lifted by Associate Judge Owen Paulsen on September 25th. In August, a ruling stated that the liquidators, Rhys Cain and Rees Logan, could submit a request to lift the stay once concerns regarding the funding arrangement could be addressed. Otago Daily Times reports that Queenstown Mayor, Jim Boult, was the director of Stonewood Homes prior to February 2016. At that time, Stonewood was put into receivership as it owed money to unsecured creditors. According to the liquidators, Boult and another defendant allowed for trading while insolvent. Allegedly, this went on for nearly two years, during which time Stonewood lost even more money—to the tune of millions. Boult ostensibly took issue with the funding for the case, which was provided by developer Chris Meehan. Through his company, PLF Services, Meehan agreed to cover court costs, legal fees, investigator fees, and witnesses. Boult asserted that Meehan's funding was part of a vendetta intended to interfere with the coming mayoral election. Ultimately, Judge Paulsen determined that there was no satisfactory evidence of a vendetta. Part of this ruling was based on the fact that Meehan was approached about funding, as opposed to having sought it out.  A hearing for the case has not been announced but is expected soon.
Commercial

Insolvencies Lead to More Disputes—Says Litigation Capital Management

While COVID takes a toll on businesses around the globe, Litigation Finance is experiencing boom times. As the number of insolvencies increases, funders are readying for an influx of new requests. In preparation, Litigation Capital Management has created an asset management division. This is Money explains that LCM is on track to grow its global presence through the use of increased capital. As chief executive Patrick Moloney has stated, LCM has experienced major growth so far in 2020, and that’s expected to continue. Like many litigation funders, LCM is counter-cyclical. When businesses are in turmoil and markets are in flux, opportunities to fund cases abound. As Moloney explains, LCM anticipates ‘a huge volume of opportunity’ in the global marketplace. LCM relies on two basic funding models. Some disputes are funded directly from its balance sheet. Others go through a third-party fund managed by LCM. These funds are used to invest in individual cases, a portfolio of multiple cases, or to purchase claims in cases that have already been adjudicated. The current LCM share price suggests that investors are still cautious about the growth potential of the company. Moloney remains optimistic. He explains that LCM is not just focusing on current markets—but looking ahead to global opportunities for growth. Once the market grasps the full potential of LCMs portfolio funding model, the true value of the company will become readily apparent.
Commercial

Asia-Based Companies Have Their Eye on US IP Litigation

Litigation regarding intellectual property is undergoing a transformation. Judicial and legislative reform has led to changes that have made IP cases more complex and time-consuming, and therefore even more expensive to see to completion. Interestingly, companies based in Asia are looking toward US monetization strategies despite the inherent challenges of doing so. Burford Capital explains that for some, the potential rewards inherent to US patent litigation outweigh the potential risks. Huawei, for example, has been on the affirmative side of IP cases irrespective of the significant expenses involved. Nichia and Sharp are also among those with active IP cases in US courts. Since the beginning of last year, US patent cases led to at least half a dozen litigation awards of more than $200 million. These cases include companies like Cirba Inc, KAIST, and Motorola. There was also the notable Caltech verdict in its case against Broadcom and Apple—where Caltech was awarded more than a billion dollars. Even after a verdict is given, it may still take months before the award money is actually seen. Moreover, large awards can lead to bankruptcy and insolvency, which means recovery can take even longer. That aside, these award amounts suggest that the murky waters of US IP litigation may well be worth wading into. Since early last year, Asia-based tech companies have filed several dozen IP infringement complaints in US courts, including Maxell, LG, Epson, Seiko, and more. While Asia-based plaintiffs in American courts is not new, the size and scope of the cases suggest that innovation in tech is bringing change to Asia’s economy. In fact, Chinese startups currently attract almost 30% of venture capital around the globe, so it's likely this is a trend that will continue well into the future. 
Announcements Commercial

LexShares Further Expands Investments Team with Strategic Hiring of Kenneth Harmon

LexShares, a leading commercial litigation finance firm, today announced the addition of Kenneth Harmon as Director of Risk & Deputy General Counsel. Drawing on a 28-year background prosecuting white-collar criminal matters and whistleblower-related litigation for the federal government, Mr. Harmon will be evaluating and servicing a growing pipeline of legal claim investment opportunities as a member of the firm’s Investments Group. Prior to joining LexShares, Mr. Harmon served as an Assistant U.S. Attorney in the District of Colorado for 19 years and in the Southern District of Florida for nine years, primarily leading investigations into tax and accounting fraud, insider trading, and counterfeit pharmaceuticals trafficking. He has also practiced at Denver-based litigation firm Springer & Steinberg, focusing on a wide range of commercial and white-collar criminal matters. Mr. Harmon began his career as a litigation associate with Paul Weiss and holds a Juris Doctor from Harvard Law School. “Ken’s impressive track record and diverse skill set make him a tremendous asset to our firm,” said Max Volsky, LexShares’ Co-Founder and Chief Investment Officer. “Investing in our underwriting and servicing team is critical. We are confident Ken will bolster our efforts to provide an efficient funding process to an expanding network of attorneys and plaintiffs.” “As a close observer of the litigation finance market, I have long admired LexShares’ approach to investing in legal claims and relished the opportunity to work alongside such a dynamic, experienced team,” added Mr. Harmon. “Mastering new and complex subjects fueled me throughout my career as a federal prosecutor. I find myself similarly energized joining a rapidly-growing firm that provides a critical product to the legal industry.” The hiring of Mr. Harmon marks the latest milestone in a significant year of expansion for LexShares. He joins an investment team that has collectively underwritten $3 billion in funding opportunities to date, including $921 million in the past year alone. Powered by the firm’s proprietary Diamond Mine origination technology, alongside veteran legal underwriters, LexShares’ average investment size has grown 60% year-over-year as of Aug. 31, 2020, to $1.63 million. To support this growth, shortly after its 100th investment, the firm launched its second dedicated litigation finance fund. With a $100 million target size, LexShares Marketplace Fund II opened on June 10. About LexShares LexShares is a leading litigation finance firm, with an innovative approach to originating and financing high-value commercial legal claims. LexShares funds litigation-related matters, primarily originated by its proprietary Diamond Mine software, through both its online marketplace and dedicated litigation finance fund. Founded in 2014, the company is privately owned with principal offices in Boston and New York City. For more information, visit www.lexshares.com. This release may contain “forward looking statements” which are not guaranteed. Investment opportunities posted on LexShares are offered by WealthForge Securities, LLC, a registered broker-dealer and member FINRA / SIPC. LexShares and WealthForge are separate entities. Investment opportunities offered by LexShares are “private placements'' of securities that are not publicly traded, are not able to be voluntarily redeemed or sold, and are intended for investors who do not need a liquid investment. Investments in legal claims are speculative, carry a high degree of risk and may result in loss of entire investment.
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Announcements Consumer

Forbes Ventures : Update on Litigation Funding Securitisation

Forbes Ventures is pleased to announce that, further to the announcement of 2 March 2020, it has established a wholly owned UK subsidiary, Forbes Ventures Cell 1 Limited (the 'UK Cell'). The UK Cell has been established to acquire UK-issued litigation funding loans, through the assignment of the related receivables - i.e. the litigation funding loans themselves and the interest thereon ('the Securitised Assets') - to Forbes Ventures CC 1 (the 'Maltese Cell'). The Maltese Cell is a Securitisation Cell Company in Malta, which is held in a bankruptcy remote structure and as such is not owned by the Company. To finance this securitisation, the Maltese Cell will shortly be issuing a prospectus relating to the proposed offer (the 'Offer') of 2-year bonds (the 'Bonds') and their admission to trading on the Malta Stock Exchange. The Offer has an aggregate value of EUR 35 million. A further announcement will be made at the time of closing of the Offer, which is expected later in September 2020. The net proceeds of the Offer will be paid to the UK Cell as consideration for the assignment of the Securitised Assets to the Maltese Cell, and will provide the funds for the UK Cell to acquire litigation funds in the UK. Forbes Ventures' wholly owned subsidiary, Forbes Ventures Investment Management Limited ('FVIM'), acts as originator and collateral agent for the UK Cell and is responsible for the selection and oversight of the Securitised Assets. FVIM will receive a cash fee for this transaction, upon closing, equivalent to 2% of the funds raised in the Offer. It is the Company's intention that the infrastructure which it has established for this securitisation will also be used to facilitate the securitisation of both further litigation funding and other assets across a range of industries. The Company confirms it is in discussion with multiple prospective counterparties from whom it may purchase assets for this purpose. Further announcements will be made upon the Company entering into any such arrangements. The Directors of Forbes accept responsibility for the contents of this announcement.
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Announcements Commercial

Therium Makes Case for Monetization of Corporate Litigation Assets in New Publication

Therium, a leading global provider of litigation, arbitration and specialty legal finance, is pleased to announce the launch of a new publication aimed at educating corporations and their legal departments on the importance of monetizing their litigation assets through structured affirmative recovery programs. A Good Offense: The Therium Guide to Creating an Affirmative Recovery Program, is available as a progressive eBook, beginning today with the release of chapter 1, which introduces the concept of affirmative recovery and delves into its history. New chapters will be released during the last week of each month moving forward.

The legal departments of the world’s corporations were created out of necessity. Legal has always been viewed as a cost center, defending potentially costly claims against the company as efficiently as it can, and ensuring that transactions and other contractual matters are structured properly. Legal departments, however, regularly bypass potentially valuable litigation claims because the financial and other risks required to monetize litigation assets are viewed as too steep. That was already the case in a strong economy, let alone the current downturn. COVID-19 and the subsequent economic downturn are causing corporations to lose value each day, leading to tighter budgets and greater pressure on all departments. At the same time, they must find revenue wherever they can.

“Corporate legal departments have the potential to become drivers of revenue if they can successfully monetize litigation claims,” said Eric Blinderman, CEO of Therium US and one of the publication’s co-authors. “In this economy it is more important than ever that they do just that. We developed this eBook to assist in-house counsel in identifying potential high-value claims and mitigating a broad range of internal and external risks as they formalize a program for initiating plaintiff-side litigation.”

After using the first chapter to lay the groundwork for the story of affirmative claims, future chapters will include:

  • Structuring an affirmative recovery program
  • Identifying claims
  • Selecting claims and managing risk
  • Financing litigation
  • Managing outside counsel
  • Making settlement decisions
  • Achieving buy-in (and maintaining it)

Chapter 1 Abstract 

In 2004, the legal department of E.I. du Point de Nemours and Co. launched an initiative to maximize its recoveries and contribute to the company’s bottom line. “When a certain amount is at stake,” DuPont’s then-assistant general counsel Tom Sager said, “we have an obligation as counsel to the company to pursue claims.”

To those outside the legal profession, this posture may sound unremarkable. But historically, recovering such funds has not been a priority. DuPont’s strategy changed all that. In 2004, its law department recovered $100 million for the company. Within a decade, it had recovered more than $2.6 billion. That figure is enough to establish the obvious benefit of a program like DuPont’s, known as “affirmative recovery programs.” And they have many additional advantages. Among them is the satisfaction of achieving the oft stated but rarely realized goal of making a legal department a profit center rather than a cost center.

Which raises an obvious question: why aren’t more companies following their lead?

In recent years, corporate legal departments have taken tentative steps toward adopting a more aggressive mindset. Three-quarters of the Fortune 500 have filed lawsuits as plaintiffs in what could be called “affirmative recovery” matters. But a much smaller portion of the Fortune 500 have created their own programs.

Complacency and tradition are the two most basic forces that have kept legal departments from asserting legal claims. Conventional wisdom has long held that it’s not the general counsel’s job to make money for the company. Instead, lawyers served the singular function of defending the company from legal risk. And the generally defensive orientation of in-house legal departments made a comfortable fit with the risk-averse nature of its lawyers.

Despite the forces keeping legal departments from bringing lawsuits, they have gradually begun to adopt a plaintiff’s mentality. We can trace the origins of the movement as far back as the 1980s, when a financial crisis led Texas Instruments and IBM to turn to their legal departments for patent licensing revenue. These and similar efforts revealed that legal departments could do more than protect companies from risk. They could become strategic actors generating meaningful revenue.

With the Great Recession of 2008, companies came under great pressure to reduce costs, and legal departments were no longer immune. The field of “legal operations,” devoted to imposing discipline on the spending of corporate legal departments, was born. Corporate legal budgets now needed defending, and previously untouchable decisions came under scrutiny. In short, corporate legal departments began to be judged on business terms. Today, the timing is right for another leap in the adoption of affirmative recovery programs. The impediments to bringing affirmative claims have largely eroded, and the riddle of funding affirmative cases has been addressed by the use of litigation funding. And the thirst for revenue from corporate legal departments has not been this palpable since the Great Recession.

About Therium

Therium is a leading global provider of litigation, arbitration and specialty legal finance active in England and Wales and internationally since 2009.  Over that period, Therium has funded claims with a total value exceeding £34 billion including many of the largest and most high profile funded cases.  The firm has investment teams in the UK, USA, Australia, Spain, Germany and Oslo, supplementing its resources in its corporate headquarters in Jersey, Channel Islands.

Therium has established a track record of success in litigation finance in all forms including single case litigation and arbitration funding, funding law firms and funding portfolios of litigation and arbitration claims.  This track record enabled the firm to raise the then single largest investment into litigation finance of £200 million in 2015. Therium has raised over $1 billion since its foundation, which includes the latest £325 million fund raised in February 2019.

Therium has consistently been at the forefront of innovation in litigation finance, pioneering the combined use of insurance tools alongside funding vehicles, and introducing portfolio funding products into the UK.  The firm’s ability to develop innovative funding arrangements and bespoke financial solutions for litigants and law firms complements its unmatched experience and rigorous approach to funding a wide range of commercial disputes throughout the world.

www.therium.com

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Commercial

Majority of Insolvency Professionals Consider Using Litigation Finance

Dispute finance is catching on all over the world. That’s not surprising, given the global economic impact of COVID-19. To wit, a whopping 87% of those polled in a recent survey said they’d seriously consider using dispute finance. Omni Bridgeway shares perspectives from a company partner, as well as a managing associate at Simmons and Simmons. According to Ruth Stackpool-Moore, investment manager at Omni Bridgeway, “Litigation funding really aims to do two things. The first is to leverage the contingent value of your claim, and the second is to reduce the cost and risk to you, in pursuing it.” Stackpool-Moore continued, “In terms of the role that the funder plays, there are three different parts to it. In addition to providing the capital, to pursue the claim…funders can bring some valuable expertise to the table, both in terms of experience on the litigation side…but also bring expertise in identifying and quantifying avenues of recovery. At the end of the day, what it all boils down to is what money is there to be recovered at the end of the proceedings. And then the third part is to assist in investigations if there’s further work that needs to be done.” Silvia Yuen, managing associate in Simmons and Simmons' Hong Kong office, commented on the kind of insolvency claims she sees: “I’m usually on the defense side acting opposite liquidators. … Often we see liquidators going after directors of the insolvent company for breach of duty, and also connected parties or counter-parties for unfair preference to avoid transactions that the company entered into in the run-up to liquidation." Yuen continued, "The other type of cases in which liquidators and funders are often involved in are claims against professional advisers… This could involve financial advisors, accountants, valuers, and even lawyers. And if the company had only recently been listed, then it could also involve claims against the sponsors." For a full recording of the webinar, visit here.  
Announcements Consumer

Alliance for Responsible Consumer Legal Funding (ARC) Updates its Best Practices

On August 3, 2020 the American Bar Association House of Delegates passed resolution 111A by a vote of 366-10, regarding the “Best Practices for Third-Party Litigation Funding”. The Best Practices addressed Consumer Legal Funding, Commercial Litigation Finance and Attorney Funding. In reviewing the Best Practices for Consumer Legal Funding, ARC and its members made the decision to update the set of Best Practices our companies will follow. By following the guidance of the ABA, ARC and its members are setting a new high standard that others in the industry should follow. The updated Best Practices can be found on the ARC Website
  • Each member agrees the funding agreement will be in writing.
  • Each member agrees the written funding agreement will make clear the non-recourse nature of the investment the funder is making in the claim.
  • Each member agrees the funding agreement will state who is responsible for paying the funder, from what source (e., the recovery after trial or settlement), and when (g., after receipt by the attorney of judgment or settlement funds).
  • Each member agrees the funding agreement will be structured so that the consumer, not the funder, retains the right to control the conduct and litigation of their claim.
  • Each member agrees the funding agreement will state: the amount of funding to be provided to the consumer, the future amounts owed or method of calculating the amounts owed to the funder, and provide an independent dispute resolution process.
  • Each member agrees the funding agreement will include a recommendation that a consumer obtains legal advice before entering into the funding agreement.
  • Each member agrees that they will not intentionally provide the consumer funding in excess of the consumer’s needs at the time of such funding.
  • Each member agrees that they will not intentionally over-fund a case in relation to their perceived value of the case at the time of such funding.
  • Each member agrees that they will not advertise false or intentionally misleading information.
  • Each member agrees that they will not offer or pay commissions or referral fees to any attorney or employee of a law firm for referring a consumer to the member.
  • Each member will strive to achieve a rating of B or better with the Better Business Bureau.
On November 16th 2020, ARC will participate in a CLE Webinar with the ABA titled “Consumer Litigation Funding: The Basics, Current Regulatory, Ethical and Confidentiality Issues,” in which these Best Practices and other issues that affect the industry will be discussed. When consumers and their attorneys are dealing with Consumer Legal Funding companies, they should look for the ARC Logo and ensure they follow the Best Practices of the organization. Any questions on this or other issues regarding Consumer Legal Funding can be addressed to info@arclegalfunding.org
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Announcements Commercial

UK leading litigation funder, Affiniti Finance, Has Agreed to a £10 Million Funding Line to Top 100 UK Law Firm Hugh James

The initiative will support Hugh James across all services with the initial launch focusing on their niche Military Personal Injury claims, including military deafness and cold related injuries.

Affiniti Finance, who recently announced a £250 million capital raise for litigation and dispute claims, will provide funding for a variety of claims. This deal will support access to justice for thousands of Hugh James clients, as the funding under this facility will be used to finance expenses incurred in pursuing their claims. 

The litigation funding market experienced an unprecedented rise in Firms seeking sustainable and innovative solutions that give claimants access to capital to pursue meritorious claims and allow law firms to fully support their clients.

Ian Cunningham, CEO commented ‘Affiniti Finance are delighted to have partnered with prestigious law firm Hugh James. I am extremely proud of my team and the team at Hugh James for successfully completing this deal during these challenging times. We look forward to strengthening this partnership further into the future and providing additional clients greater access to justice.’

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Commercial

Got Tax Disputes? Litigation Funding to the Rescue

Tax disputes are common, yet notoriously difficult to complete. They’re also expensive, complex, can take years to fully resolve and even longer to complete structured payments. When large businesses and corporations are involved, existing rules make the situation even more complicated. Litigation Finance is commonly sought in class actions and other large litigation. But now some suggest that there’s a place for litigation funding in the world of tax disputes. The Northern Miner explains that as COVID impacts large industries like mining, the need for liquidity is of the essence. When a business with over $10 million in capital disputes its owed taxes, they’re required to pay half of the disputed amount upfront. In some instances, businesses will prepay the entire tax bill to avoid late fees and penalties should they lose the dispute. That, of course, can leave businesses cash poor. For funders, tax disputes are a pretty safe investment. There’s typically a monetary payout, and the defendant is always able to pay. Tax disputes are also less likely to endure setbacks like summary judgments and preliminary motions to dismiss. In Canada, successful litigants can be eligible for cost awards that cover most, or all, litigation costs. In the coming months, COVID-related economic response plans will come into effect in Canada. This will likely lead to more audits of businesses, and therefore an increase in tax disputes. With that in mind, Litigation Finance is expected to grow even more in the Canadian markets. That’s good news for anyone expecting a tax dispute, as third-party funding is well-poised to help manage the risks and potential cost of seeing tax disputes to completion.
Commercial

India Clarifies Law on Readily Realizable Assets in Liquidation

Generally speaking, a corporate liquidation shouldn’t take longer than a year. Yet it often does. There are myriad reasons for this, but one of the most common is the existence of NRRAs, or Not Readily Realizable Assets. India Business Law Journal explains that the Insolvency and Bankruptcy Board of India is taking steps to address this. NRRAs can include disputed or contingent receivables, disputed assets, or anything deemed potentially undervalued, fraudulent, or extortionate as defined by law. What is a liquidator to do with a limited amount of time and multiple parties waiting for their share? The challenges faced by liquidators are being considered by IBBI, which has led to multiple proposals. One of which includes the use of third-party litigation funding to realize the full value of NRRAs. The current proposal is for liquidators to assign these assets to third-parties for a fee. These third-parties would then fund the court proceedings needed to gain their full value. The thinking is that third-parties could focus on one specific asset, cutting down the time it takes to bring legal action to completion. The goal then would be for assignees to recover a larger sum than they paid to gain the assignment of assets. This scheme would shorten liquidation processes while still allowing the full value of assets to be realized. Liquidators would be required to seek out maximum value for assets, and there would also be a provision for an early exit for those creditors in immediate need of liquidity. While stakeholders might benefit from this arrangement in the beginning, it’s possible that they’d lose out on larger payouts later on.
Commercial

Burford CEO Q&A: The Future of Litigation Funding

A trade group comprised of Litigation Finance entities was a long time coming. Over the last decade, the industry has evolved from a niche service used in very specific circumstances to a multi-billion-dollar industry spanning the globe. The formation of the International Legal Finance Association (ILFA) is a welcome addition to the litigation funding landscape.  Westlaw Today offers commentary from Christopher Bogart, CEO of Burford Capital—one of the founding members of the ILFA. He comments on where he sees the industry headed over the next few months, and what we can expect moving forward, through COVID and beyond. Bogart explains that the main focus of the ILFA is to advocate for industry-friendly legislation, and to educate lawmakers and the public about Litigation Finance. He points out that clients don’t always like to discuss litigation, making it less well-understood than other aspects of law or finance. Bogart details that getting into Litigation Finance requires extensive knowledge and a well-developed infrastructure that is best accomplished by experienced legal or financial professionals. In the future, Bogart predicts that funders will present themselves as financial service pros rather than members of an upstart industry. Further, the trend of corporate clients monetizing litigation and using it as capital, rather than simply to resolve disputes, will only accelerate. Bogart also points to how laws are changing around the world. In the US, some states are now allowing non-lawyers to own legal firms—a trend already growing in Europe. This opens the door to big changes and potential collaborations, not to mention expansion. As of this writing, Burford has an equity interest in multiple law firms throughout the UK.
Commercial

Singapore Legislation Welcoming Litigation Funders Goes into Effect

As the Litigation Finance industry has grown, some parts of the world have met the practice with suspicion. Some countries have suggested or enacted legislation designed to encumber and restrict the process of third-party funding in litigation. In the wake of COVID-19, however, the need for the practice has been affirmed. Omni Bridgeway explains that Singapore is one country whose newest legislation is welcoming to the practice of litigation funding, and cognizant of the good it can do. The Insolvency, Restructuring, and Dissolution Act was passed in 2018, and went into effect in July of this year. Provisions of the IRDA include consolidation of personal and corporate insolvency, as well as debt restructuring laws. It also expands the powers of judicial managers and liquidators as they relate to dispute funding. Judicial managers are a softer option than liquidators, in that the appointment of an external judicial manager will protect the company from legal proceedings during the process—at least temporarily. This gives the company a better chance to get its finances in order for a potential recovery. When action is taken against an insolvent business, a third-party funder may be used in several specific situations, such as fraudulent trading, unfair or undervalued trades, and damages against individual delinquent officers. That said, the new IRDA provisions are not intended to impact existing funding arrangements or laws regarding them. Class actions and other types of third-party funding against companies are still permissible. Singapore also enacted a Temporary Measures Act, which came into law in April of this year. It offers temporary financial relief for individuals and businesses—and will remain the law until October 2020. Some speculate that extensions may be granted, depending on the COVID situation at that time. The act increases the thresholds for bankruptcies, and extends the deadline for businesses and individuals to respond to demands from creditors.
Commercial

Keeping Corporations Honest with Class Actions

Unless you are new to the world at large, you know that corporate misconduct happens. And sadly, it’s not always appropriately consequenced. In Australia alone, over a billion dollars has been paid or offered to customers as part of awards or settlements for misconduct.   Omni Bridgeway explains that the numbers on corporate misconduct are staggering. Almost $900 million has been recovered for shareholders thanks to class actions that took place tween 1992-2019. This doesn’t seem like much when compared to the nearly $2 trillion in the ASX market. But when calculating the human portion of the equation—class actions can make a major difference in the impacts of corporate crimes. What can be done to hold banks and other institutions accountable before they can cheat ordinary citizens? The first line of defense is effective regulation that is reviewed often. Consumer protection laws are often lax, despite their importance. ASIC Commissioner Sean Hughes has stated that ASIC recognizes that it’s on them to inspire conduct that will restore public trust. He followed by affirming ASIC’s intention to be ‘strategic and forceful.’ Next is voter power within the organizations themselves. If shareholders can agree to put ethical values before profits, there wouldn’t be a need for the third option—class actions. Class actions are sometimes the only way regular people can seek redress when they’re wronged. Except that when someone has just undergone a financial disaster—loss of home or income, lost life savings, even death—they may not be able to afford to file a legal claim. That’s where Litigation Finance comes into play, and in many cases, saves the day. By providing the means for class actions to move forward, wronged citizens have access to the justice they deserve.
Commercial

Litigation Finance Valuation: An Antitrust Case Study

Understanding how to assess the value of claims is an essential part of Litigation Finance. Any reputable funder will have their own in-house team of analysts and experts in a variety of disciplines. One way to better understand the process, is with case studies. Burford Capital offers this case study to demonstrate its vetting and valuation process for potential cases. The antitrust case presented, involves price-fixing within the dairy industry. The action alleges a conspiracy to reduce the supply of milk to drive up prices. In antitrust cases, there are three main things to consider: overcharges, single damages, and potential settlement value. Overcharges are exactly what they sound like—how much extra buyers were forced to pay due to the alleged price-fixing. Market data is used to show patterns in pricing and elasticity (elasticity refers to how much a product’s pricing is impacted by supply and demand). In the case of dairy products, elasticity would be significant. Once the overcharge amount has been estimated, the single damages must then be calculated. This formula is basically the amount the buyer should have paid (or would have paid, but for the conspiracy to drive prices up,) subtracted from what they actually paid. In the US, federal antitrust laws require awards of three times the single damages amount. Settlement value refers to the amount—usually, a percentage—of the single damages claim that can likely be collected. This can be impacted by the stage of litigation when a settlement is proposed (before discovery, after a motion is denied, etc.). Whether the buyer is a direct or indirect purchaser might also impact settlement value, as would any related criminal proceedings. Settlements tend to be higher when there are criminal charges pending in connection with the case. As one can see, a funder's calculation doesn't conclude at whether or not the case is winnable. Settlement value is a key tenet of investment valuation.