London Court of Appeals Clarifies DBA Laws
- Could a solicitor recover funds if the DBA is terminated before the case ends?
- If a partial payment is made, such as in a hybrid agreement, could the DBA then become unenforceable?
The number of litigation finance providers in the United States, their assets under management (AUM), and the dollars they committed to new financing deals, all grew over the last year, according to a new report from litigation finance advisory firm, Westfleet Advisors. According to The Westfleet Insider: 2020 Litigation Finance Market Report, between June 2019 and June 2020, 46 active funders managed a combined $11.3 billion in assets allocated to US commercial litigation investments, an 18% increase from the previous year. Despite the onset of a global pandemic and resulting disruption to the justice system, the total dollars committed to new investments by funders also grew by 6% – to $2.47 billion.
For the second year, Westfleet analyzed data collected directly from litigation funders to calculate the size of the U.S. litigation finance market. The most complete and revealing picture ever painted of the sector, The Westfleet Insider features data and commentary on the size, scope and focus of U.S. commercial litigation finance. This year’s report builds on the 2019 edition by adding historical context and new metrics that contribute additional depth to the overall market analysis.
“One of our core beliefs is that reasonable industry transparency serves to educate the public and increase comfort with, and ultimately utilization of, litigation finance,” said Charles Agee, founder of Westfleet Advisors. “Because of the aberrational nature of 2020, we are wary of drawing sweeping conclusions about the trajectory of the market, however, it is quite clear that investors continue to be drawn to the sector, attracted by equity-like, non-correlated returns.”
It remains to be seen whether the pandemic and the dramatic slowing of the U.S. economy that followed will be an intermediate-term boon to the litigation finance industry. As highlighted in this year’s report, the disruptions in global business operations likely created a lag in litigation funders’ investment processes that caused deals to extend just outside Westfleet’s data collection period. Regardless, the report’s findings make clear that those who predicted a massive growth year for the litigation finance sector may have underestimated the impact COVID-19 would have on the efficient operation of the nation’s litigation infrastructure.
“Time—and hopefully a rapidly-approaching return to normalcy—will tell what the litigation finance industry’s precise trajectory is,” Agee added. “The challenges of the last year have brought into sharp focus the myriad inefficiencies and opportunities to improve, across the sector, which should drive growth and innovation for a long time to come.”
Additional significant findings from the 2020 edition of the Westfleet Insider include:
About Westfleet Advisors
Westfleet Advisors is the leading litigation finance advisor in the United States. It was founded in 2013 to bring greater transparency and efficiency to the litigation finance market by equipping users of litigation financing with expertise and resources. Our core mission is to ensure claim holders and lawyers have all the information they need to be successful with litigation financing. Our senior leadership has been active in the litigation finance industry since 1998.
What’s being described as the biggest energy action in Australia’s history is now underway. A class action against two Queensland energy generators was filed in Federal Court on Wednesday. Allegations include manipulating the wholesale pricing system and artificially inflating energy bills for thousands of customers.
LCM, which is funding the action, explains that the claim is brought on behalf of registered Queensland customers who paid for electricity between Jan 2015 – Jan 2021. Class members are mainly residential customers, though over 1,600 businesses are registered as well. Only registered parties are eligible, and affected parties will have an opportunity to sign up if they so desire.
Because the action is being bankrolled by Australian funder LCM, interested class members can join the action at no charge.
A recently filed case in the US Court of Appeals 8th Circuit regarding Timothy Parker and Parker Law Firm has been forced into arbitration. Seeking leave to litigate, the appeals court determined that the dispute in question was addressed by the arbitration clause in the formal agreement between parties.
Leagle details that the case in question is one part of a battle over whether Parker Law Firm was obligated to remit payments to litigation funder PS Finance LLC. The disagreement stemmed from Parker Law Firm’s representation of Eureka Woodworks. Eureka sought funding from PS Finance in exchange for proceeds from a claim against BP relating to the Deepwater Horizon spill. As is common in funding contracts, the agreement affirmed that PS Finance would be paid from monies received via settlement, verdict, or ordered judgment. The contract further detailed that any disputes relating to the contract would be subject to binding arbitration. Hence, the court ruling to disallow litigation.
Appellants recovered two payments in 2012 on behalf of Eureka. According to the contract, PS Finance should have received a portion of the payment after legal fees and costs. However, no portion of the payment was given to PS Finance. Parker and the law firm maintain that the money did not come from a settlement, verdict, or judgment and therefore they are not required to transfer any funds over.
In 2019, Parker and Parker Law sought a declaratory judgment affirming that they owed nothing to PS Finance. Parker made allegations that PS Finance breached its contractual obligations when it brought a lawsuit against Parker. The district court dismissed claims against PS Finance.
Arkansas law regarding policy interpretation is firmly on the side of policyholders. It states that when language is ambiguous, courts will construe the policy dictates in favor of the policyholder and against the insurer.
Given the impact of COVID, insolvencies are on everybody’s mind--how to avoid them or how to navigate them. Knowing what to do when you find yourself in the middle of a business or personal insolvency is crucial. Litigation funding may be one of the most valuable tools in the insolvency toolbox.
Harbour Litigation Funding director Charles Jeffrey has some predictions for 2021. He explains that in the UK, insolvencies were actually down in 2020 despite the ravages of COVID on numerous industries. This is because government assistance has been plentiful. Most programs helping small businesses have been extended through March of this year. After that, things become more unpredictable.
Jeffrey details that businesses in the most danger of insolvency are those that were already struggling. But he stresses that few businesses are pandemic-proof. He also notes that when any business goes under, it has the potential to impact supply chains, creditors, and others that might set off an insolvency chain reaction.
Common claims often pursued in insolvency cases include:
1. Unlawful dividends 2. Undervalued transactions 3. Malfeasance 4. Breach of Duty 5. Wrongful trading
Litigation funding can be a key part of successfully navigating insolvency. Legal costs can add up fast, and insolvent businesses or estates are generally not flush with liquidity. Insolvency practitioners are duty-bound to look into legal funding if funds aren’t available to bring appropriate claims. Jeffrey details that IP’s can assign claims to a funder in exchange for payment upfront. This can be used to cover legal fees and the IP’s fees during the liquidation. Monetizing claims are not allowed in all jurisdictions, but become a valuable financial tool when available.
A conversation with a litigation funder can increase understanding of one’s options during an insolvency situation. Experienced funders will be adept at navigating the process, and explaining one's options in a way that allows one to make informed decisions on how best to proceed.