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Announcements Commercial

Kerberos Capital Management Named Top 3 Global Newcomer of the Year by Private Debt Investor

Kerberos Capital Management was selected as the #3 Global Newcomer of the Year for 2020 among private debt funds on a worldwide basis by Private Debt Investor, a global independent publication based in London covering the private debt and private equity industries. The Private Debt Investor Awards acknowledge leaders across an array of categories and are the culmination of a broad-based voting process among industry participants, including the private debt, private equity and institutional limited partner communities. Kerberos Capital Management is a private credit asset management firm specializing in direct lending to law firms and opportunistic private credit. Since 2018, Kerberos has provided bespoke solutions to borrowers and law firms throughout the United States and originated over $300 million in direct lending transactions. Kerberos’ investors include some of the world’s most respected pension funds, multi-family offices, and asset managers. Kerberos’ investment team is comprised of senior members from both the legal and private credit industries, including former principals of the world’s leading law firms and multi-billion dollar private credit funds. The firm is headquartered in Chicago.
Commercial

Flat 2020 Performance for Law Firm Belies New Strategy

In a sign of how law firms might be growing more cost-conscious, Trans-Atlantic legal firm Bryan Cave Leighton Paisner cut its workforce by 4% globally as part of its newly adopted strategic plan. This included closing one office in Beijing, and intensifying focus on specific areas of practice. Law.com reports that financial performance was basically flat throughout 2020—which is not as bad as it sounds given the economic impact of COVID. Gross revenue decreased about 1% to just over $860 million. Profits per partner went up by about .5% to $837,000. The firm is poised to flourish in the near future, thanks to Project Advance. This new strategic plan was developed in concert with McKinsey & Co. It focuses on three ‘growth engines:’ litigation and investigations, real estate as an asset class, and mid-market corporate and finance. Other aspects of Project Advance include reducing personnel company-wide by 118, which included staff members and attorneys. Though the Beijing office was shuttered, offices in Hong Kong and Singapore remain active. The firm currently employs 1,370 lawyers across eight countries. Early in 2020, a Paris team with 21 layers was added. To ensure focus on the main objectives of Project Advance, the firm named Sean Odendahl as Chief Transformation Officer in October of last year. It’s anticipated that staff will return to offices after June 30 of this year, depending on COVID-related factors. Some virtual work is expected, as well as open-space office plans and other steps to reduce the firm’s footprint. Determinations are currently being made as to when it makes sense to bring people together for in-person meetings, as opposed to remote meetings.
Commercial

Omni Bridgeway Expands Arbitration in German-Speaking Regions

Dr. Martin Metz LLM has recently joined the team at Omni Bridgeway as Senior Legal Counsel and Investment Manager. Formerly of DLA Piper, Metz will now be based in the Cologne office. Omni Bridgeway announced that Metz joins two new hires in German-speaking regions, expanding the company’s reach, knowledge base, and capacity for cultural awareness. Dr. Arndt Eversberg, Omni Bridgeway Germany’s Managing Director, explains that request for funding has skyrocketed in Germany of late. The specialized experience of Dr. Metz promises to strengthen the practice overall.
Commercial

Frank DeCosta Interview: Litigation Leader in International IP

Patent litigation cases have soared dramatically since the beginning of the pandemic. Frank DeCosta of Finnegan, Henderson, Farabow, Garrett & Dunner, knows that companies are leveraging IP assets with strategic litigation—which is more valuable now than ever before. Bloomberg Law recently spoke with DeCosta about how third-party litigation funding drives IP litigation, hiring a niche attorney, and more. DeCosta begins by explaining that while remote hearings and depositions have been common since COVID, jury trials are still at a dead stop. DeCosta explains that his firm was already set up for remote meetings before COVID hit, which gave them an edge while others were left updating their tech. Remote meetings also allow for more staff involvement and education because travel expenses are no longer required to bring low-level staffers into a meeting. When asked what causes the COVID-related spike in IP litigation, DeCosta explained that patent litigation is cyclical. Typically, trying economic times lead to an increase in patent filings and IP cases. Reasons to initiate IP cases vary, and might include generating revenue, leveraging assets, or justifying a previous investment in a patent. Some credit the availability of litigation funding in fueling new IP suits. Indeed, some prominent funders report a nearly untenable downpour of requests for funding. Attracting new clients is an important aspect of any legal firm. DeCosta explains that the best way to find and keep clients is to serve as a reliable, trustworthy advisor. Anticipating issues before they arise, understanding goals and caveats, and truly knowing a company and staff are all crucial—and more difficult than ever because interactions must now be scheduled and handled remotely. On the subject of diversity, DeCosta recommends seeking talent from STEM-related undergrad or graduate programs. Like many firms, Finnegan’s mission is to be intentional and fervent in seeking out a diverse and talented team.
Commercial

Indiana Resources Ups the Anti in Tanzanian Government Action

Indiana Resources is still pursuing its case against the government of Tanzania. The case deals with the alleged expropriation of the southern African Ntaka nickel project. Indiana’s claim now exceeds $95 million, with the first hearing scheduled for next month. Business News explains that the International Center for the Settlement of Investment Disputes (ICSID), a part of the World Bank, has formed an Arbitral Panel that will hear the first procedural hearing on April 22. Panel members include representatives from Singapore, the US, Botswana, and Tanzania. Chairman of Indiana Resources, Bronwyn Barnes, stated that the company is glad to hear that the panel has been formed and that Indiana is well prepared to move forward with the claim. She goes on to explain that the case is being funded with non-recourse litigation funding, so shareholders will not have to bear the cost of pursuing the case. The case itself revolves around the Tanzanian government changing mining laws in 2018. Despite assurances to the contrary, Ntaka Hill was expropriated in 2019, leading to IR requesting arbitration the following year. Indiana asserts that the Tanzanian government was obligated to compensate companies for any investments that were nationalized or expropriated. The value of the mining project is about $212 million, though recent rises in metals pricing suggest that estimates may be on the low side. Nickel, copper, and cobalt have all risen in value in recent years. Litigation Capital Management, a London-based legal funder, is footing the bill for the arbitration costs with a cap of nearly $5 million. Indiana Resources is being represented by LALIVE, a Europe-based specialist international arbitrator.
Commercial

PGMBM Raises Over GBP 100 Million to Fund Litigation

International firm PGMBM has formed a partnership with alternative investment firm North Wall Capital. This brings PGMBM’s total capital raised to more than GBP 100 million. Law Gazette asserts that the money raised will be used to fund alternative dispute resolution, antitrust litigation, and class-action suits. This is good news for PGMBM, whose class action was thrown out by the High Court last year. The court called the action an ‘abuse of process.’ PGMBM Chairman Harris Pogus stated that the firm's goal is to keep fighting for those who were wronged by large corporations. The firm continues to grow and attract top talent from around the world.
Commercial

Woodford Equity Class Action Moves Forward

Law firm Leigh Day is on its way to getting justice for the roughly 4,000 investors in the now-defunct Woodford Equity Income Fund against Link Fund Solutions. In fact, the corporate directors could find themselves in High Court within the next few months. Portfolio Adviser explains that Leigh Day sent an LBA to Link on behalf of investors who lost money due to the Woodford Equity collapse. The letter asserts that the fund was mismanaged, and that Link did not maintain reasonable levels of liquidity. It went on to say that the failure was avoidable had proper diligence taken place. Link has been given three months to respond to charges that they used shady tactics to circumvent rules meant to prevent this type of failure. These include listing unquoted securities on the ISE in Guernsey, improper trades with other funds managed by Woodford, and unquoted companies canceling and then reissuing shares. Leigh Day is using third-party litigation funding, which means claimants won’t have to foot the bill for legal representation. This is precisely the sort of case litigation funding is meant to aid. Ordinary citizens defrauded by Link will now see their day in court. Leigh Day spokesman Boz Michalowska stated that Link failed to take the steps needed to protect investor interest.
Commercial

Does Third-Party Legal Funding Carry National Security Risks?

Influence. It’s one of the key concerns that lawmakers have about third-party litigation funding. The fear is that funders, who do not have a direct connection to a legal dispute, yet fund it in the hopes of earning a share of the award, may unduly influence decisions about the case that may adversely impact courts, plaintiffs, or defendants. So what happens when funded cases involve one or more federal governments? Defense One details that in some instances, litigation isn’t used strictly to address grievances. Litigation can also be used unscrupulously to cause delays, for harassment, to publicly humiliate someone, or to gain access to confidential information that can’t be obtained by other means. There are laws against malicious litigation, but some say that the increase in access to the global legal theater may render these laws insufficient to prevent grievous harm. As litigation funding grows in popularity, so do the cries to regulate and control the practice. Some say it’s time to look at the impact this practice can have on national security. For example, as transparency laws come into effect, disclosures once kept private may now be widely shared. These waters are murky, as jurisdictional inconsistencies lead to confusion on a global scale. While the legal funding industry has done a commendable job of self-regulating, their guidelines for conduct and best practices are not legally binding, nor are they accepted industry-wide or worldwide. Now, industry and government leaders are questioning how transparency provisions should be altered in order to protect national security interests. Therein lies the issue. We cannot know if foreign or malicious interference is happening without meaningful transparency laws. Foreign lobbying, global connections, and jurisdictional discrepancies all engender the need to amass data, as well as gain input from industry leaders, and find ways to mitigate the risks inherent to disclosures and transparency among third-party funders in multinational cases.
Commercial

Adam Silverman Joins Omni Bridgeway Singapore

A new, Singapore-based Investment Manager has joined Omni Bridgeway.  Omni Bridgeway details that Adam Silverman is a former dispute resolution lawyer with global expertise. His solicitor qualifications span England, Wales, and Hong Kong. Silverman spent six years on the dispute resolution team of Freshfields Bruckhaus Deringer and in the Litigation and Regulatory Department of Bank of American Merrill Lynch. Silverman is expected to be responsible for sourcing and vetting investment opportunities and overseeing cases funded by Omni Bridgeway. His experience with arbitration, insolvency, litigation, claims monetization, and portfolio funding makes him a valued addition to the team. As global demand for legal funding grows, Omni Bridgeway remains an industry leader, having funded the first financed insolvency claim in Hong Kong. The Aussie-based funder was an early supporter of arbitration cases in Singapore and Japan, and also helped found the Indian Association for Litigation Finance.
Commercial

Enhanced Damages Award Granted in IP Case

Treble damages have been called the white whale of IP and patent law. For contingency lawyers, treble damages—an award where the damages are multiplied by three because of willful infringement—can be a dream come true.  Above the Law details that in reality, only a tiny percentage of patent cases end with an enhanced damages award. When one does, it’s generally of interest to the entire legal community. Sometimes, the details are entertaining as well. A patent case involving EagleView and Xactware Solutions is one such example. Both tech companies compete with similar products and an overlapping customer base. EagleView amassed a large portfolio of patents, and in late 2019, was awarded a $125 million verdict in a case involving five different patents. Rather than taking the money and running, EagleView noted the discovery of willful infringement and used that to try to secure treble damages. The trial judge agreed, awarding damages in the maximum allowable amount. In the end, EagleView wound up with the original award, incidentals, costs, and an additional $375 million in enhanced damages. It is possible that this number will be reduced on appeal, or perhaps via settlement. While the court decision is long, it can be boiled down to a few points:
  • Defendants acted with the express intent to lure EagleView’s customers and decrease their reach.
  • Enhanced damages in this case are a punitive measure, meant to chastise and to dissuade others from similar tactics.
  • The court was put off by the acrimonious and borderline underhanded nature of the trial itself, and the unnecessarily nasty discovery process.
Given the conduct described, it’s understandable how the court could make the enhanced damages award. If the award survives a Federal Circuit court appeal, it could set a precedent that’s likely to be repeated.
Commercial

Burford Roundtable: COVID-Inspired Changes in Litigation Finance

Burford Capital is in the midst of assembling a study of how CFOs can make better use of legal funding. Finance professionals Amanda Parness, Michael Curran, and Jim Kilman lend their thoughts to the discussion. Burford Capital begins by gauging the interest in financial products that mitigate risk from claims that might not otherwise be litigated. Parness: CFOs and corporate advisors have a responsibility to look into innovative alternate sources of monetization. Looking at the value of pending litigation or awards should be standard. Curran: Lending certainty to cost estimates is a big deal, and can have a direct and immediate impact on the finances of a business. When operating funds are low or COVID has taken a toll, legal funding becomes even more attractive. Burford: Is COVID spurring the changes we’re seeing now in terms of legal departments thinking more commercially? Kilman: While COVID is accelerating the momentum of these changes, many were already underway long before. Legal departments are generally a cost center for businesses. But funding can reduce cost, lower risk, and bring in spendable income at a time when funds are low. Curran: The changes we’re seeing now will likely be long-lasting, and will almost certainly be more creative and commercially minded for the foreseeable future.
Commercial

A New Resource for Litigation Funding Fundamentals

Litigation Finance began as a way to expand access to the legal system for those who could not otherwise afford it. Funders could provide non-recourse cash to a promising case in exchange for a percentage of any award. If the case fails, the funder loses its investment. Third-party legal funding is still used this way, but has also expanded to portfolio funding, claims monetization, and more. Omni Bridgeway explains that once legal and business professionals understand the basics of legal funding, they’re more likely to see the many possible benefits. With this in mind, the firm has developed a primer on the industry. The resource material includes a brief history of litigation funding and its relation to champerty laws that may still impact its implementation in some jurisdictions—though that’s becoming rarer by the year. It goes on to discuss how legal funding is defined, and the various forms it can take. Benefits discussed include the flexibility of legal funding, and how it can level the playing field between ordinary claimants or plaintiffs versus huge corporations or even governments. Explanations of non-recourse funding, risk-sharing, and what one should expect when inquiring about funding for a case are all detailed. Ultimately, Omni Bridgeway is committed to ensuring that the public and private sector grow mindful of the benefits that can be realized through the use of Litigation Funding.
Commercial

After CIO Departs, Partners Capital Plans for Future

Partners Capital has been through a lot in the last year. Arjun Raghavan became the CEO in July of last year. Since then, the firm has hired a new managing director and a head of ESG. Last month, Colin Pan departed as CIO. Despite the internal reshuffling and the impact of COVID, Partners Capital reportedly enjoyed its best year ever. Institutional Investor details that Pan will stay on at PC for a further six months before he departs to begin his own investment startup. Partners Capital is known for making investments in third-party legal funding, a legal service that expands access to justice for those who could not otherwise afford it. Raghavan expressed regret at Pan’s departure, but is quick to assert that PC maintains a wealth of talent that together, can fill the chasm left by Pan.
Announcements Commercial

Siltstone Capital Raises Initial Litigation Finance Fund

Siltstone Capital, LLC ("Siltstone"), a Houston, Texas based investment and advisory firm, announced the successful closing of Siltstone Capital Litigation Fund, L.P. (the "Fund"). Siltstone, through its affiliate Litigo Financial, LLC ("Litigo"), will invest in commercial litigation across the United States, and welcomes the opportunity to provide capital to litigants to pursue their claims fully. The Fund will focus on commercial litigation, with a unique focus on energy and patent litigation. Founded in 2013, Siltstone strives to create lasting value for its stakeholders though organically sourced alternative investment opportunities that offer downside protection with significant upside potential. Siltstone believes that its rare combination of investment and legal expertise will help solve real-world legal problems on behalf of clients, in a budgetary sensible way. Siltstone's mission is to make a meaningful difference for clients by focusing on clarity, fairness, and innovation. Robert Le, Siltstone's Co-Founder and Managing Partner, commented, "With our investment acumen, in-depth sector focus, and unique skillset to identify compelling legal cases to fund, we believe that we will be able to deliver significant value to our litigants and investors for years to come." Litigo handles all of the legal due diligence in-house and uses a proprietary software platform that integrates with AI in order to efficiently assess the merits of each case. Mani Walia, who serves as Managing Director and General Counsel at Siltstone, leads the Fund's efforts. Earlier in his career, Mr. Walia clerked for both Judge Jane R. Roth of the United States Court of Appeals for the Third Circuit and Chief Judge Hayden W. Head of the United States District Court for the Southern District of Texas. Additionally, Mr. Walia practiced law at Susman Godfrey in the Houston Office, where he litigated high-profile cases. Mr. Walia stated, "We believe that there are significant opportunities when it comes to investing in litigation finance. We are also particularly excited to bring our in-house legal expertise, investment, and technology experience to this space and are honored to help plaintiffs who need capital to pursue their claims even the playing field."
Commercial

Burford Roundtable: CFO Wish List for Legal Teams and Firms

Litigation funders already know that legal assets can be a source of revenue for businesses—especially those left strapped for operating funds during COVID. The problem? Finance departments may not realize funding is an option. To bridge this knowledge gap, one leading funder conducted an informal survey of finance professionals. Burford Capital details a range of perspectives on various subjects. Below are some key takeaways: Subject: Challenges of Affirmative Recovery Amanda Parness: A good CFO must balance cash flow, timing, and the overall impact that litigation can have. Planning for every step in the process with estimates and cost caps are essential. Michael Curran: General counsel often doesn’t consider the legal department to be a money-maker and therefore may be applying the wrong metrics when determining how to proceed with a case.  Subject: The Illiquid Nature of Corporate Legal Assets Jim Kilman: Commercial claims are often overlooked by CFOs, but if they understood how easily those claims can be turned into liquid assets—they’d probably find that option attractive. Parness: CFOs are less likely to consider that a potential award is a monetary asset, and this needs to change. Subject: Barriers to Facilitating Legal Finance Curran: Valuation can be a stumbling block if CFOs don’t have a credible person to determine the value of legal assets. CFOs must be fully informed of the facts in order to make a decision with confidence. Kilman: A partner with deep expertise or relevant niche experience can make a profound difference. Ideally, a CFO needs someone to offer unique, relevant, new ideas and can back them up with funding and experience.
Commercial Covid-19

Is Big Law Ready to Accept the Death of the Billable Hour Model?

A new survey by Blickstein Group and Legal Value Network suggests that large law firms may be more open to the idea of non-traditional fee arrangements. At the same time, more than half of the survey respondents assert that attorneys' resistance to change is the most difficult aspect of adopting new payment models. Bloomberg Law details that since 2013, lawyers at major law firms have been asked about adapting and updating the way they charge for legal services. Since that time, lawyers have indicated that they haven't been all that interested in doing so. One co-author of the survey, David Cambria, believes that COVID brought an urgency that illustrates the importance of flexibility in pricing structures. This may not be an obvious result of COVID, but the general turbulence has spurred the legal world to make changes that are likely to last even after a return to normalcy. Remote working has led to increased use of technology. In turn, the tech itself has become more advanced and specialized. Software is commonly used to hold remote meetings, facilitate collaboration, and even obtain signatures from across the globe. Partner compensation is another sticking point in some firms—even though partner payouts have increased dramatically during the pandemic. Partners who are making huge annual profits are unlikely to want to explore new pricing models that add value for clients. Will big law firms become less averse to change over time? Only time will tell. 
Commercial

Virtual Depositions Coming from Remote Legal

Remote depositions have become part-and-parcel of remote legal work during the pandemic. Now, one litigation funder has taken steps to partner with a remote deposition legal tech solution. LexShares reveals that it has partnered with Remote Legal, a legal services provider that lends expertise to video conferencing for depositions, court reporting, and arbitrations, among other proceedings. This technology differs from standard video chat applications, as it was specifically tailored to meet the needs of legal proceedings to facilitate socially distant meetings. Some of the features available include virtual exhibition of documents, live voice-to-text, a tech-enabled court reporter, and dedicated private chatrooms for privileged discussions. It’s expected that even after COVID, virtual proceedings will continue as they are a cost and time-saving measure.
Announcements Commercial

Deminor successfully raises EUR 40m to expand the growth of its litigation funding portfolio

Deminor Recovery Services announces the closing of a financing round consisting of equity, senior bank loans and mezzanine finance for an amount up to €40 million to support its rapidly growing litigation funding activities globally. 

The financing round is supported by the current shareholders as well as new investors including Saffelberg Investments, Finance&Invest Brussels and various other investors. The bank financing portion is provided by KBC Bank.  

Along with its current cash position and expected realizations from the existing portfolio, Deminor expects to be able to commit €90 million in new litigation funding investments over the next 2-3 years. These investments will be on Deminor’s own balance sheet, allowing the company to continue to make fast decisions and propose flexible funding terms. Crucially, Deminor’s Investment Committee retains the ultimate decision making authority as to which cases to invest in. 

Deminor’s core mission is to help investors and businesses monetise their legal claims by supporting individual and group litigation. We put our own money at stake:  we pay all legal costs and only receive a return if a case is successful and our client achieves a recovery. Originally started in the field of collective securities actions where Deminor has built and occupies a leading place in non-US jurisdictions, the business has been extended and now also includes private antitrust litigation and B2B commercial litigation.  

Deminor prides itself on providing more than just funding. We only take on good causes and we never compromise on our values. We stand by our clients and are determined to achieve recoveries for them. Clients can benefit from Deminor’s 13 year-long expertise in supporting complex international litigation and, where legally permitted, its unique claims management and back-office execution capacity. The company boasts one of the most impressive track records (over 80%) in the industry thanks to its careful selection of cases and management of litigation risks.  

To serve its growing client base in the US, UK and Asia, Deminor has opened offices over the last 3 years in New York, London and Hong Kong. The team is composed of 30 legal, finance, marketing and claims management professionals speaking 13 different languages.  

“This funding round is a milestone in the history of Deminor. We are thrilled to welcome our new investors and expand our success story thanks to their support. The additional capital will allow us to respond to the growing demand that we are seeing for litigation funding in our core markets and to achieve our mission statement: to give businesses access to the best legal representation and highest standards of justice when pursuing their legal claims.”, says Erik Bomans, CEO of Deminor. 

Commercial Special Features

Key Takeaways from LFJ’s Podcast with Louise Trayhurn of Legis Finance

Louise Trayhurn, Executive Director of Legis Finance, sat down with LFJ to discuss a broad range of industry topics, including Legis’ bespoke approach to managing client relationships, the various funding and insurance products her company offers, the growing trend of GCs and CFOs extracting more value out of their legal assets, and what trends she predicts for the future of the industry. Below are key takeaways from the conversation, which can be found in its entirety here. Q: How does Legis approach the issue of pricing transparency and consistency? A: At Legis, we share with the client, the law firm, and the funder all of the returns listed. It’s very transparent. Every party can see what’s going on. If they don’t like model scenarios...then we can adjust it. ‘Pivot’ is a word that’s used frequently in our office. We’ll constantly amend, adapt, and make changes here and there to try and get everybody comfortable. Q: In the US, contingency fees have long been used by lawyers to share risk with their clients. Can you explain the benefits of DBAs as opposed to conditional fee arrangements and the billable hour model? What has Legis specifically been doing to press for this transition to DBAs? A: We formed a working group for those interested in DBAs. The idea behind it was to...discuss the possibility of a standard damages-based agreement. I, having a background as a litigator, thought this was fairly ambitious. We got a whole group of litigators together, and as well as looking at the broader picture of a standard form document, we had a more urgent task, which was to work together to provide feedback to the team looking at amending the DBA regulations. Q: In the wake of COVID, we’re seeing a mindset shift that’s been talked about for years. What have you been noticing in terms of how GCs and CFOs are considering litigation finance? What do you see happening out there? A: GCs are sitting in their board rooms and they’re acting as cost centers. They take their seat and the first thing they’re asked is ‘okay, how much is legal spend going to be this month?’. There are numerous companies out there committed to spending a certain amount each month on their litigation. It’s just money going out the door, and it’s hard for those GCs to show their value other than reducing the amount of legal spend this month for the same results. Now, you can use litigation finance to generate revenue. Instead of being a drain on the company’s cash, you can in fact add; you can be a profit center, if you use your litigation assets to make money for the company instead of costing them money. You have funders willing to do the due diligence in an independent manner—I mean, we don’t get paid for picking bad cases—and GCs have in their hands a very powerful independent check on their cases, and that can help in all kinds of ways. Q: Broadly speaking, what predictions do you have in terms of the maturation of the Litigation Finance market. What can we expect this year and down the road? A: Certainly I’m going to say increased use of funding. And apart from that, there may well be a consolidation of existing funders, or funders standing behind funding. Increased use of different financial products to back funding—insurance or other entrants to the market. Or a secondary market of products available to funders to manage their own risk, and possibly a secondary market available to investors to package these litigation assets, standardize the documentation, and buy and sell risk. That should help open the marketplace for these institutions that want to create secondary markets.
Commercial

Asset Recovery Predictions for 2021

The IMF estimates that cumulative losses of the pandemic-caused downturn will surpass $12 trillion. With that in mind, creditors will have to adapt and adjust more than ever in order to enforce judgments and hold debtors accountable. Burford Capital explains that currently, debtors are more likely to hold back cash rather than pay off debts—even after a judgment. Stalling, evading, and taking a hardline stance are all done to buy debtors more time. It’s expected that there will be an increase in debtors reneging on previous agreements—necessitating more aggressive enforcement strategies. Economists tell us to expect more high-profile insolvencies in the coming year. In addition to parsing the assets of an insolvent company, creditors will likely have to investigate officers and directors for hidden assets. Indemnity clauses may also impact the creditor’s ability to locate and seize assets. This is likely to lead to a rise in debtors evading transparency measures, which were enacted specifically to hold them accountable. Several jurisdictions are pushing for greater transparency for owners and officers. The British Virgin Islands recently committed to greater transparency on beneficial ownership. If this catches on, places like Nevis and the Cook Islands may become even more popular with those wanting to hide assets. As enforcement becomes more difficult and time-consuming, more creditors will be turning to legal funding to pursue collections. Funders who specialize in asset recovery can provide an honest, unbiased assessment of the situation, and if applicable, recommend a course of action. Funders can allow creditors to pursue debt collection without taking on increased financial risk. As insolvencies increase, savvy creditors should be formulating a plan of action they can set in motion should the worst occur.
Commercial

Greenpoint Accuses Apollo of Stealing Trade Secrets

As the Litigation Finance industry expands, competition is bound to grow increasingly fierce. A new lawsuit filed by Greenpoint Capital Management may illustrate the competitive nature of the industry. Bloomberg News details that the case, Greenpoint Capital Management v Apollo Hybrid Value Management, was filed in Manhattan federal court last week. The suit claims that GCM afforded Apollo various trade secrets during talks for a proposed investment. Apollo allegedly forwarded this information to Kerberos Capital Management—a direct competitor of GCM. The information in question includes a method to evaluate new cases for risk and potential ROI before making an offer of legal funding. Both Apollo and Kerberos dispute the claims made by Greenpoint. Kerberos, which is not named as a defendant in the suit, expressed disdain for the idea that their funding model is in any way based on Greenpoint’s materials.
Commercial

The Future of Representative Actions in the UK

A recent panel discussion held by the British Institute of International and Comparative Law included partners from Hogan Lovells Matthew Felwick and Valerie Kenyon, along with Augusta Maciuleviciute of BEUC, Rhonson Salim of Ashton Law School, and Therium Capital Management’s Neil Purslow. Together, they discussed the EU Representative Actions Directive. JD Supra details the finer points of the panel, which focuses on the immediate future of representative actions (which vary in several ways from class actions) in the EU and UK. The first issue was the availability of qualified entities to bring claims under the new directive. Neil Purslow noted that litigation funders may find the qualifications too narrow for compliance. Insisting on a qualified entity may result in a bottleneck that impedes access to justice. The issue of ‘forum shopping’ was also discussed, relating to the Brussels I Regulation which is expected to limit how much forum shopping is permissible. Many speculate that data breaches and warranties will be focal areas for the new directive, and that the new directives on representative actions may see the biggest impact in places like Germany, which has no existing framework for collective cases. Most notably for litigation funding, the directive contains language meant to prevent funders from exerting influence over litigation or settlement decisions. These provisions will vary from one member state to another, but there appears to be a widespread commitment toward limiting the influence of third-party funders. Of course, funders are mainly interested in cases where a worthwhile recovery is possible. In jurisdictions where awards may only cover material damages, claimants might find a dearth of funders willing to sign on. Finally, the pros and cons of publicity on specific representative actions were discussed. Obviously, there are plusses and minuses on both sides. The main caveat being whether publicity could damage an entity whose liability has not been proven.
Announcements Commercial

Exton Advisors launches ‘special situations’ disputes finance service

Exton Advisors, a leading financial advisory firm in litigation, is launching a unique range of ‘special situations’ services designed to help companies look at their disputes in an entirely new way. The move is in response to the increasing economic uncertainty brought about by the global pandemic and sees the firm creating a range of advisory service lines designed to help corporates and their legal teams find the right funding products to support their litigation and unlock potential working capital at a critical time. Established in 2018, Exton Advisors is comprised of consultant practitioners from litigation finance, law, insurance, insolvency and financial structuring. Responding to the rapid growth of litigation funds in the UK in the past few years, the firm was created to offer financial advisory services for in-house lawyers, many of whom need real guidance when it comes to assessing the growing array of funding options available. Many corporate legal teams have significant levels of capital sunk into work-in-progress disputes, but simply don’t know where to start when it comes to funding these cases or how the transactions should be structured. Exton’s special situations advisory service is geared towards turning those disputes into assets, flowing working capital back into the business. John Astill, founder and director comments: “Litigation finance is poised to enter a golden era, but the reality is that the asset class remains opaque and complex. We’ve seen a number of recent judgements highlighting the danger companies and their private practitioners face should transactions not be structured correctly, including adverse costs protection in relevant common law jurisdictions. We’re designed to simplify that complexity and help clients make informed choices.” Whilst corporate legal teams are taking tentative steps to engage with specific funds, they currently have no means to compare options or understand the relative merits and risks locked up in the funding agreement. They also rely heavily on their roster of law firms for advice, many of whom have limited relationships with the funding community. Exton’s team provides them with an independent view on the whole market, which is increasingly seeing new and unfamiliar entrants with significant capital to deploy. Astill continues: “Working directly with one or two funders can result in cookie-cutter solutions. As a result, in-house counsel have historically deferred to their private practitioners to help them arrange funding for their business critical disputes, but that doesn’t always make sense – litigators are appointed for their ability to come out on the right side of a dispute, not their financial advice, and in some circumstances there is a risk they can have divergent interests.” The firm is now working with a number of UK corporates and private practices on new mandates, including many that are springing up as a result of group claims, post-Covid-19. Whilst the independence and insight that the firm provides is important, building trust is the key. Tom Steindler, director, concludes: “Now, more than ever, the organisations we work with require a trusted partner to help them ease balance sheet pressure and realise the asset value locked up in their portfolios of claims and awards. In many ways litigation finance is still a nascent force and we want to provide a true corporate finance advisory service to help companies expertly navigate the asset class and make the most of the opportunities it provides; for us it’s all about simplifying and improving the experience for everyone.” About Exton Advisors Exton Advisors is a specialist litigation finance and insurance advisory business. Its advisory services concentrate on the assessment of the availability of specialist litigation finance across a broad network of capital sources, advice on the preparation of proposals, price and structure comparisons, negotiation of the terms on which finance will be provided, and advice on the structure of finance agreements. This applies to single case or portfolio funding, right through to the monetisation of a claim, award or judgment. Exton provides a variety of pure advisory services too, such as second opinions on deal pricing, support on costs budgeting, pricing and even asset tracing. It also acts as a specialist litigation insurance broker, providing advisory and placement services to meet the complex and challenging needs of businesses, their private practitioners and funding partners. When it comes to disputes finance, businesses need true expertise, deep relationships and often require bespoke, game changing solutions. Exton has a unique perspective and a track record of delivering.
Commercial

Consequences vs Motivation in Litigation Funding for IP Cases

Despite Quibi’s failure to corner the short-form Netflix market, its IP dispute with Eko is still very much alive. Eko is being funded by Elliott Management—which has fought Quibi’s every attempt to get through the discovery process. In fact, Elliott tried to quash an SDNY subpoena investigating how much Elliott knows as the legal funder of the case.

Above the Law explains that this situation and its outcome should be of interest to litigation funders, as well as IP litigators and their clients. After all, the questions raised by Quibi’s opposition to Eko’s attempt to quash the subpoena could set precedent for future IP cases that are backed by third-party funding.

Some have speculated that Elliott’s decision to fund Eko was predicated on a romantic relationship involving a founder at Elliott. Others are focusing on Elliott’s unusual decision to allow Eko to run the case as if money were not an issue.

Quibi seems to suggest that Eko’s inability to demonstrate its assertions is reason enough to allow discovery into the funding agreement. The company also suggest that Eko’s claim for damages is ‘unusually aggressive’ to the point of suspicion. Earlier in the case, Quibi sought to deny that it was the giant in a David v Goliath situation. Now that Quibi had folded, the likelihood of Eko using that argument is slim.

Quibi has further suggested that Eko may be controlling litigation and settlement decisions, contrary to what ethical standards allow. Combined with accusations of Elliott’s disclosure of funding being intentionally belated, it’s a compelling argument for increased discovery.

Ultimately, Quibi asserts that Elliott’s relationship with Eko is business related, not legal in nature. How the court rules in this motion will no doubt impact discovery relating to litigation funders for some time to come.

Commercial

Freedom Foods Faces Second Class Action

Cereal and snack company Freedom Foods is still in voluntary suspension from ASX until its recapitalization is completed in April. Since then, the company sold to Arnott for $20 million. Dairy News Australia details that after a shareholder class action was filed in December, a second class action has now been served. This one, backed by legal funder Omni Bridgeway, alleges mishandling of expenses and inventory. This mishandling allegedly led to a mismanaged audit that negatively impacted investors.
Commercial

ASIC Changes Sunset Date to August 2025

The Australian Securities & Investments Commission (ASIC) has confirmed that it has changed the sunset date of the ASIC Corporations Instrument from October 2020 to August 2025. Lawyers Weekly details that the primary instrument offered exemptions from specific provisions of the Corporations Act of 2001. This was intended to give participants time to adjust to the implementation of the new regulatory rules for litigation funding schemes. This was done for several reasons. Primarily, to address overlap between the primary instrument and the conclusions of the parliamentary joint committee. As yet, the Australian government has not responded to those recommendations. The Senate standing committee also expressed concerns about the primary instrument.
Commercial

Arbitral Awards and Limitation Periods

Arbitral awards are widely enforceable, which is a bonus for the parties involved. However, this enforcement is finite. There are limitation periods which, once surpassed, can render an arbitral award unenforceable. Omni Bridgeway explains that award creditors disregard or underestimate the risk involved in failing to observe limitation periods. If a debtor is not inclined to make payment, local limitations can actually work to their advantage. Once the limit for the arbitral award passes, the award might become unenforceable in jurisdictions where available assets are located. To add even more complexity, there is no uniform regulation on time periods of arbitration awards. The time period varies from one jurisdiction to the next, and may differ based on other factors. In a 2010 case, the Canadian Supreme Court ruled that the laws on limitation periods for enforcement of an award from outside the country apply as “rules of procedure.” Differences in limitation periods between countries is substantial. In Canada, various provinces have time limitations of between 2-10 years. In the US, 3 years is standard. Russia is also 3 years, while China allows only 2. Common law jurisdictions like England and Wales state that awards cannot be enforced after 6 years from the time of the cause of action. Given these facts, a timely enforcement strategy is vital. This should include a thorough discovery process, detailing the attachable assets and a clear delineation of which limitation periods may apply. Blind enforcement is also an option, though the time consuming, complex, and comparatively expensive nature makes this an unattractive option in most situations. Surely, a creditor is free to wait for a debtor to negotiate a settlement or simply pay what they owe. But a savvy creditor will devise a strategy for enforcement and recovery in the event that a debtor does not pay up.
Commercial

Burford Capital Roundtable: Industry Research

A recent roundtable of law firm leaders featured Jason Peltz of Bartlit Beck, Frank Ryan of DLA Piper, and Jason Leckerman of Ballard Spahr. They discussed industry trends, the ongoing impact of COVID, and how to best educate the public about legal funding. Burford Capital Director Christine Azar led the discussion, beginning with the high number of law firm mergers. The panel did not agree with the notion that ‘bigger is better’ when it comes to firm size. Leckerman states that it can be more advantageous to focus on core areas that clients already want and need. It’s likely that firms will focus on attracting those clients who need their specialized expertise, rather than trying to be all things to all people. Certainly, firms will want to focus on factors other than size. The ESG initiatives being adopted are likely to attract new clients who share those values. This includes more than just donating time and money; it involves joining forces with groups that get things done. That said, attracting talent can be challenging regardless of firm size—and finding strong lawyers is vital to client growth and retention. More than 65% of lawyers assert that their firms are considering risk-based practices. Peltz notes that institutional constraints may impede the shift from billable hours to risk-based models. For the panel, it seemed unlikely that big firms are willing or able to develop risk-based practices, even though alternative fee arrangements are becoming increasingly common. Ultimately, the growth of third-party litigation funding depends on clients understanding its value. Helping clients consider this option realistically and accurately is of vital importance—especially when funding is an ideal way to meet the goals of clients.  
Commercial

UK Insurer Launches $1 Billion Litigation Finance Firm

Thomas Miller, UK Insurer, has recently acquired the litigation insurance business—TheJudge Group. This merger has launched Erso Capital, a litigation finance firm with a staggering $1 billion in capital, housed within discretionary funds, single managed accounts, and co-investment funds.  Bloomberg Law details that the litigation finance arm will be led by founders from TheJudge Group, including James Blick, Matthew Amey, and James Delaney. It is expected to provide funding in single cases as well as portfolios, and will engage in claims monetization. The Judge Group is known for offering litigation insurance as an alternative to traditional litigation finance. Litigation insurance is often used to cover lawyer fees in losing cases. CEO of Thomas Miller Group, Bruce Kesterson, explains that TheJudge is a respected entity in this industry, and has a top-notch management team.
Announcements

KBRA Assigns Preliminary Rating to Oasis 2021-1

Kroll Bond Rating Agency (KBRA) assigns a preliminary rating to one class of notes issued by Oasis 2021-1 LLC ("Oasis 2021-1"). The notes are newly issued asset backed securities (ABS) backed by litigation finance receivables. Oasis 2021-1 represents the third ABS collateralized by litigation finance receivables to be sponsored by Oasis Intermediate Holdco, LLC ("Oasis") and the first to include Oasis’ MedPort-branded ("MedPort") medical lien receivables. The previous transaction, Oasis 2020-2 LLC, closed on June 2, 2020. Oasis, through its operating subsidiaries, has a long history as an originator, underwriter and servicer of litigation finance receivables. Oasis is a wholly-owned subsidiary of Oasis Parent, L.P. which is majority owned by Parthenon Investors IV, L.P. The MedPort receivables are originated by various originators with operating histories dating back to 2003. Oasis acquired the various MedPort originators on January 5, 2021. The portfolio securing the notes has an aggregate discounted receivable balance ("ADPB") of approximately $139 million as of the statistical cutoff date. The ADPB is the aggregate discounted collections associated with the Oasis 2021-1 portfolio’s litigation funding receivables, litigation loan receivables, medical funding receivables and medical loan receivables. The discount rate used to calculate the ADPB is a percentage equal to the sum of the anticipated interest rate on the notes, the servicing fee rate of 1.50%, and an additional 0.10%. As of the statistical cutoff date, litigation receivables, Medport medical receivables and Key Health medical receivables comprise approximately 36%, 58% and 6% of the aggregate funded amount of the Oasis 2021-1 pool and have average advance to expected case settlement values of 9.5%, 31.6% and 29.5%, respectively. Disclosures Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above. A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here. Information on the meaning of each rating category can be located here. Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com. About KBRA Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.