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Commercial

Ontario Makes Sweeping Changes to Class Proceedings Act

Last week, it was determined that Bill 161 would be signed into law. This bill includes several amendments to the Class Proceedings Act of 2002, which details specific guidelines for class action lawsuits. Mondaq explains that the changes were proposed to make the courts move more swiftly while ensuring that justice is served. The most prominent changes include a centralized database of class action cases in Ontario—which had never been required before. Other new rules include prohibiting overlapping cases, limiting time periods for indemnity claims, and new requirements regarding appeals, certifications, notifications of class action members, and dismissal of dormant actions. The amendments also stipulate that when a party seeks settlement, the court must be given detailed information before approving. Litigation Finance did not escape notice in the amendments. Ontario now requires that funding agreements be subjected to court approval. Courts will require that agreements be reasonable and fair and that agreements with funders will not supersede the rights of plaintiffs to make decisions regarding their case. Funders must also be willing and able to cover adverse costs—which is to say that if a case loses and the winner’s court costs must be paid—the funder will be liable to cover it. After a funding arrangement is approved by the courts, defendants can obtain their costs from funders in accordance with the indemnity clause in the funding agreement. Defendants may also get security from the funder for costs in some circumstances. These include defendants who live and work outside of Ontario, those who may not have the ability to pay, or instances when a funder owes money to a defendant or plaintiff that remains outstanding. Courts will also require reports from those who distribute funds. These reports must be filed within 60 days of funds being disbursed. This is to ensure that plaintiffs, attorneys, and funders are all appropriately compensated.
Commercial Covid-19

Law Firms Utilize Lit Fin to Meet Obligations During COVID

The financial stressors caused by the global pandemic have touched nearly every industry. Legal firms are finding it difficult to cope with remote working conditions, court stoppages, and declines in billable hours—all while trying to address a huge influx in proposed litigation. One expert is confident that Litigation Funding is the ideal way to address shortfalls and keep budgets in balance. Digi Herald spoke to funding expert Rene Perras about how non-recourse third-party funding can help. Perras points out that litigation funding has become increasingly popular, and that COVID-19 is going to propel the practice into the mainstream.  When a firm is low on operating capital, Litigation Finance can come to its rescue. Funding can allow firms to take on new cases, or help individual plaintiffs pursue legal action when needed. Funding can also improve how cases are managed, as it can cover costs for research, expert witnesses, document analysis, and more.  Class action cases in particular are dramatically supported by funders, since they allow lawyers and plaintiffs to put the issue of costs aside as they focus on pursuing the case. This is also true when portfolios of cases are funded. Risks are reduced without impacting potential awards and recovery. Ultimately, Litigation Finance is a way to ensure that justice is available to everyone, regardless of income level.
Announcements Commercial

Longford Capital Continues to Add to its Team of Experienced Litigators and Trial Lawyers with the Addition of Marc Cavan as Director

CHICAGO – July 13, 2020 - Longford Capital today announced that Marc A. Cavan has joined the firm asDirector. Mr. Cavan will assist with investment sourcing, due diligence, and monitoring of portfolio investments, supporting Longford’s Chicago and Dallas offices. Mr. Cavan is an experienced patent litigator. He has served as lead counsel for clients in the life sciences, healthcare, and technology industries and has successfully handled patent cases in federal courts throughout the United States. Mr. Cavan’s experience includes jury trials, ANDA Hatch-Waxman litigation, arbitrations, and proceedings before the Patent Trial and Appeal Board (PTAB). He is registered as a patent attorney with the U.S. Patent & Trademark Office, and his clients have ranged from start-ups to leading multinationals. Mr. Cavan is also experienced with trade secrets, commercial litigation, and licensing, and he has advised on intellectual property issues for significant mergers and private equity investments. Mr. Cavan’s litigation and counseling expertise has included a range of technologies, including medical devices, pharmaceuticals, health care technology, electronic health records, nanotechnology, software, wireless and internet technology, automotive components, energy, and consumer products. Prior to joining Longford Capital, Mr. Cavan was a partner in some of the most prestigious law firms in the country. Mr. Cavan started his career at Sidley Austin LLP (associate 1998-2006; partner 2006-2011) and was also a partner in the Chicago offices of Ropes & Gray LLP (2011-2015) and Baker McKenzie LLP (2015-2018). Most recently, Mr. Cavan served as the chair of the intellectual property practice at Harrison Law LLC, a Chicago litigation boutique. During his career in private practice, Mr. Cavan earned recognition as a leading lawyer in Chambers USA, International Asset Management, and SuperLawyers. For several years, Mr. Cavan served as a co-chair the Patent Law Institute’s Patent Boot Camp, presenting on strategic patenting issues. Mr. Cavan graduated with honors from Harvard Law School, where he taught legal writing as a member of the Board of Student Advisers and served on the editorial board of the Harvard Journal of Law & Technology. Mr. Cavan graduated magna cum laude and Phi Beta Kappa from DukeUniversity with a B.S. in Biology. After graduating from Duke, Mr. Cavan taught as an Annenberg Fellow and master at Eton College in Windsor, England. Mr. Cavan has been admitted to practice before the United States Patent & Trademark Office, the U.S. Court of Appeals for the Federal Circuit, the U.S. District Court of the Northern District of Illinois, and the U.S. District Court for the Eastern District of Wisconsin. Mr. Cavan has also been a member of the Trial Bar for the U.S. District Court for the Northern District of Illinois. “The current economic climate of uncertainty and volatility has resulted in a jump in demand for our capital and we are expanding our team in response. Before joining Longford, Marc assisted us in the investment selection process evaluating the strength of patent claims; we know his talent as a patent litigator, and we are fortunate to have Marc join our team,” stated Michael A. Nicolas, Managing Director of Longford Capital. About Longford Capital Longford Capital is a leading private investment company with more than $1 billion in assets under management that provides capital to leading law firms, public and private companies, universities, government agencies, and other entities involved in large-scale, commercial legal disputes. The firm manages a diversified portfolio, and considers investments in subject matter areas where it has developed considerable expertise, including, business-to-business contract claims, antitrust and trade regulation claims, intellectual property claims (including patent, trademark, copyright, and trade secret), fiduciary duty claims, fraud claims, claims in bankruptcy and liquidation, domestic and international arbitrations, and a variety of others. For additional information about Longford Capital, please visit www.longfordcapital.com.
Commercial

UK Legal Industry Drops to Four Year Low

The UK's Legal industry generated revenues of £2.35bn in May 2020, 12% down on May last year. May 2020 was the lowest-earning month in four years, according to Office of National Statistics data released on 14th July.

May is traditionally the weakest month of the year for the Legal profession, with April being one of the most lucrative. Industry revenues fell 29% between April 2020 and May 2020, with April having remained relatively robust as the impact of lockdown had likely not yet fully washed through.

In comparison, the overall Services sector (including Legal) which had been harder hit and was at its lowest level in a decade, grew by 2% in May, similarly to the UK’s overall economy which increased by 1.8% month on month.

Louis Young, MD at Augusta said: “May’s revenue data demonstrates the significant negative impact the pandemic has had on the UK’s Legal industry. But as such data reflects work that would have commenced before the crisis, which is in line with how law firms operate, the true final impact is likely to be greater. As the wider economy begins to show signs of recovery, many law firms continue to look for options to control costs and strengthen their balance sheets with the expectation that they are not yet out of the woods”.

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About the ONS Data

  • ONS Monthly Business Survey data shows Legal Activities revenue as £2.35bn in May 2020 compared to £3.32bn in April 2020 and £2.67bn in May 2019.
  • The legal industry had been on course for a strong year before the crisis with March 2020 being the third highest month in history for the UK legal industry and April 2020 showing only a 5% decline on March 2020.
Commercial

Can Litigation Funding Mitigate the ‘Death of the Billable Hour?’

The legal field has not escaped the financial uncertainty plaguing the rest of the world. Even before COVID-19 changed nearly everything, firms were already lamenting the ‘death of the billable hour.’ Some might say that billable hours, while low risk to firms, are not a good model for clients—especially those of average or modest means. Bloomberg Law details how the current financial conditions have encouraged firms to return to the billable hour. But is that tenable? Big business clients will probably expect better as the global spike in litigation continues to increase. Alternative fee agreements can be more attractive to clients, but carry higher risks for firms—leaving them to weigh the risks of sticking to billable hours versus losing big clients. Surely there’s a way to mitigate risk while keeping clients happy? Joining forces with a litigation funder can propel firms into better litigation outcomes while improving relationships with clients large and small. It’s a proactive move that reduces financial risk while allowing practices to grow despite the current economy. Unlike traditional lit fin where plaintiffs are provided capital to pursue a case, law firm funding works a bit differently. These funds can offer non-recourse capital to attorneys and firms, collateralized against a portfolio of cases. This is generally more affordable and timely for law firms that need money in a hurry. According to one survey, more than 60% of law firms broadened their use of alternative funding arrangements. Over 90% of these firms reveal that they are changing their billing structure in order to gain new clients or to better accommodate existing ones. Of course, Litigation Finance is typically reserved for those whose cases can survive careful vetting. Funders, lawyers, and plaintiffs all have a stake in the ruling—and thus a strong incentive to work together to seek a fair outcome.
Commercial

Nanoco Signs Funding Deal in Case Against Samsung

Some continue to debate the need for Litigation Finance. Yet every day we see more examples of the practice working as it should, increasing access to justice for those who might not otherwise have it. One such case involves Nanoco, a business associated with Manchester University. The small business recently filed a patent infringement case against tech giant Samsung. The Business Desk reports that the case against Samsung was filed against multiple entities within the company. Nanoco designs and manufactures TV screens and computer monitors. They signed an agreement with a prominent US litigation finance firm. While the firm has not been named, reps from Nanoco have said that the funders have extensive experience in IP matters as related to tech. . The legal firm handling the case is Mintz, Levin, Cohn, Ferris, Glovsky, & Popeo, a Boston-based law firm. Local counsel includes a Longview, Texas firm. While the exact terms of the funding agreement are not known, it is presumed that Nanoco will retain the bulk of any award judgment or settlement amount.
Commercial

Takeaways from the 2020 Litigation Finance Survey Report

Across the board, Litigation Finance has become a powerhouse industry—one that has shown remarkable growth since its inception just over a decade ago. Since 2017, the industry has seen at least a 10% annualized increase in requests for funding. This year, a 30% increase accompanies a greater acceptance of the practice in the legal world. Lake Whillans reports that in the last year at least 10% of lawyers surveyed had first-hand experience with lit fin. Of those who have worked with third-party funders, over 99% of them said they would do so again. That’s a stunning endorsement. How often do 99% of lawyers agree on anything? The efficacy of Litigation Funding is hardly news—last year more than 80% of respondents who had used litigation funding in a case said they would do so again. The survey, co-authored with Above the Law, featured 418 respondents in 53 cities. About ¾ of those surveyed said that Litigation Finance is now more relevant to their work than it was at this time last year. About 2/3 of respondents had first-hand experience working with a lit fin firm—way up from 41% last year. Survey results show that larger firms tend to have fewer staffers working directly with funders. Firms with between 50-100 staffers appeared to use funding with the greatest frequency. The industries that use third-party funding the most include telecommunications, technology, the automotive industry, energy, defense, healthcare, and entertainment. When asked, more than 88% of in-house counsel without lit fin experience claimed that budgetary shortfalls are a key reason they would seek funding. Meanwhile, nearly 75% of respondents say that litigation funding has become a bigger part of their practice since this time last year. Ultimately, the future of Litigation Finance looks bright. It’s a respected, well-funded industry that remains attractive to the legal community.
Announcements Consumer

Legal-Bay Pre-Settlement Funding Announces Updates to Essure Lawsuits

PHILADELPHIA, July 8, 2020 /PRNewswire/ -- Legal-Bay LLC, The Pre-Settlement Funding Company, announced their renewed commitment to assisting the many victims who've filed Essure Birth Control lawsuits, and are hoping for presettlement payouts despite court delays. The Essure brand birth control device is put out by Bayer, who is accused of knowingly distributing a faulty product. More than 32,000 plaintiffs have claimed serious pain and suffering from broken devices including device migration and perforated organs. In some instances, clients have resorted to surgical removal. After numerous delays, the first Bellwether jury trial was set to see the inside of an Alameda County, California courtroom earlier this month, but due to COVID-19, has been postponed yet again. Bayer continues to deny liability on their part for the popular birth control product, and intends to fight the cases in front of juries in California and Pennsylvania where most cases are filed.  Bayer has consistently denied any wrongdoing and stands by their safety standards in respect to Essure, even though they pulled their product from the shelves over two years ago. Chris Janish, CEO of Legal-Bay, commented, "Legal-Bay is discouraged to see further delays with Essure litigation, which is sure to drag out any resolution hopes.  While there are no imminent settlement amounts or potential Essure settlement values on the near horizon, we nevertheless remain committed to assisting plaintiffs with their cash advance needs." If you are involved in an Essure birth control lawsuit and are looking for a pre-settlement cash advance now, fill out an application HERE or call 877.571.0405 for more information. Legal-Bay assists plaintiffs in all types of product liability lawsuits, including medical malpractice, wrongful death, 3M, Hernia Mesh, IVC Filters, Roundup weed killer, personal injury, premise liability, car and truck accidents, and more. All of Legal-Bay funding programs are risk-free as you only repay the advance if your case is successful. The non-recourse advance is not a lawsuit loan, lawsuit loans, pre settlement loan, or presettlement loans. You can be approved for a cash advance in as little as 24-48 hours.
Commercial Special Features

Litigation Finance is Cheaper Than You Might Think!

The following was contributed by Matthew Pitchers, Head of Investment Valuation at Augusta Ventures.  I was in conversation the other day with a prospective user of our finance - a law firm who will remain nameless. The conversation was going well, very well in fact, until those seven words came up: “what is it going to cost me?”. I replied that our fee would be based on the higher of a multiple on the funds deployed or a set percentage of damages awarded. After a few seconds of silence which felt like an eternity, the response I got back was “that is very expensive, and I don’t think my client will go for it”. This left me bemused because whilst there is a general misconception that litigation funding is expensive, when compared to other sources of secured and unsecured funding available on the market, it is in fact very competitive and sometimes even cheap. This left me thinking about how best to explain this to the enquirer at the other end of the phone who would be left explaining all available options to his client. What is litigation funding? What I wanted to say was: Sir, in considering how expensive litigation funding is, one needs to first analyse what litigation funding is. This is easier to think about when considering what litigation isn’t. It isn’t a traditional debt product. There are no guaranteed cash flows. There is no obligation on the user of the debt to repay it. Any returns that the funder makes are payable from what the defendant pays if the claim is successful, not from the finance user. Furthermore, the entire financial risk of the case is transferred to the funder, and if a case loses, the risk of adverse costs falls to the funder and not the claimant. Therefore, an amount invested upfront in a legal case in order to share in the same risks and rewards as the claimant, feels more akin to a purchase of an equity participation in a start-up than a one-step-removed loan. To put it another way: If you were going on Dragon’s Den and your great idea was to ask the Dragons for an upfront investment in a legal case for a future share of any available returns which may or may not occur, how much of the case do you think the Dragons would want? What the market says In haggling over the value of your idea, the Dragons would probably consider the availability of unsecured loans, and the returns expected from venture capital start-up funding. If you, as an individual, were to go into the market today and look for an unsecured loan you might find APR’s that range from 10.3% per annum, for those people with excellent credit scores, up to 32.0% per annum for those with poor credit scores, and that is only on amounts up to £25,000. A good benchmark for the percentage of cases a litigation fund might win, despite all the due diligence that is performed, is around 70%. Loaning out money with only a 70% chance of getting any of it back is not similar to loaning money to a person with an excellent credit score, so litigation funders are firmly in poor credit score territory, where an APR could typically be between 28.5% and 32.0%. And remember, that is only on amounts up to £25,000, an investment in a legal case more-often-than-not, is many multiples of this size. A such, the IRR that the funder aims for is more akin to those expected by venture capitalists, who might typically look for 30-40% annual returns on a start-up investment. The tenor of investments A classical case tenor for litigation funding is usually two to four years. In the interim period the funder will have not received any payments. Their risk exposure goes up over time as more money is deployed as the legal case progresses, and there is limited availability to claw back any investment if the case looks like it isn’t going to win. It is, to all intents and purposes, an investment with a binary outcome and once invested there is no going back. An investment with an annualised return of 40% over three years would expect to achieve a 2.74X money multiple for the investor at the end of the life of the investment. Over four years the money multiple would be expected to be 3.84X. This would be at the upper end of what a litigation funder might achieve. A normal equity investment in a company has fewer downsides regarding the capital locked up, as covenants would be in place to claw back any investments if the company were mismanaged in the interim period. Summary In short, litigation funders are able to make worthwhile returns through rigorous diligence, investing in  cases that they expect to win and which meet their internal criteria, whilst building up a large enough portfolio that the effect of the unsystematic binary risk of losing an individual case is diluted. In return, a competent litigation funder should expect to achieve on their portfolio a rate of return that is better than a correlated investment, but lower than that achieved in the start-up markets. A claimant, in using litigation finance, should expect all their costs to be covered, and any risk of adverse costs to be transferred to the funder. In effect it becomes a risk-free investment for the claimant, whilst they still take the larger share of any return. This would be the dream scenario for any owner of a start-up company, selling a small stake in the company and removing all future down-side risk to themselves, whilst removing the burden of future costs. In summary Sir, this is a great opportunity for your client and it is highly competitive. Instead, I said to the man on the other end of the phone: ‘I’m sorry yes, it does sound expensive, let me see what we can do’.
Commercial

Legalist Founder Explains Unique Funding Model

When we think of Litigation Finance, our impulse might be to envision well-capitalized funders assisting large companies. The founder and CEO of Legalist, Eva Shang, sees the business differently. Her model is one of David v. Goliaths—helping the little guys that other funders may overlook. Above the Law recently interviewed Shang about how she has achieved such incredible success. The Harvard dropout was one of Forbes Magazine’s 30 under 30 back in 2018. Inaugural funding for Legalist was just over $10 million. Two years later, Legalist boasted a fund of $100 million. Interestingly, Legalist began with no lawyers on staff managing funds. When they first started, Shang had never even drafted a Litigation Finance agreement. What’s more—they had no real connections in the legal world. The firm was literally built from the ground up. Shang credits other litigation funders who offered guidance when her company was just beginning. Legalist uses machine learning and AI to find cases and underwrite them. This tech gives Legalist an edge in finding small and medium-sized claims—the sort that larger funders tend to pass on. What many firms find too labor-intensive, Legalist seizes on to brilliant effect. These cases may only see awards of a few million dollars and require a few hundred thousand in investment. This model requires a lot more work, but is filling a much-needed niche in the industry while providing tidy profits. More importantly, Legalist does what Litigation Finance was always designed to do—increase access to justice for those who could not otherwise afford it.
Commercial

Advice from a Litigator Turned Litigation Finance Executive

The most successful Litigation Finance firms are those that act as partners, not merely funders. Funders can join a team at any point in the case and still make a positive impact. John Garda has recently made the move from full-time litigator to assessing funding opportunities for Longford Capital. Above the Law conducted a three-part interview with Garda. Part two discusses how clients can best avail themselves of the opportunities that litigation funding has to offer—particularly in the time of COVID and beyond. Corporate clients may find themselves in need of relief during these financially trying times. Traditional litigation funding can cover attorney fees and existing expenses for a claim. Lump-sum payments may also be available to cover expenses incurred previously. It’s not unusual to find even the most successful businesses in need of working capital on occasion. Third-party funding can provide financial wiggle room so that legal claims can still be pursued effectively, without impacting other areas of the business. Intellectual Property is another area in which litigation funding can pose a benefit. Before approaching funders, an IP lawyer is expected to prepare a whitepaper detailing key facts of the case, and a proposed budget for pursuing the claim. The likelihood is that it will be up to the IP lawyer handling the case to explain it fully to any potential funders. This includes a full analysis of damages caused by the infringement—something many cases fail to outline clearly. Litigation funders will often take a ‘damages first’ approach to evaluating a case for potential funding. Obviously, the merits of the case are important, but if the object is to pursue financial damages, those damages must be verifiable and clearly defined. Ultimately, Garda confirmed that litigation funding is a solid option for corporate clients and IP cases. The increase in requests for litigation funding, however, means attorneys may find themselves competing for attention.
Announcements Commercial

Delta Capital Partners Management Expands its Global Marketing Team

CHICAGO, Illinois, July 1, 2020 -- Delta Capital Partners Management LLC, a global private equity firm specializing in litigation and legal finance, today announced the hiring of a Chief Marketing Officer and a Marketing Associate.

Kim Fine has been hired as Chief Marketing Officer to closely work with Delta’s Chief Executive Officer and senior management to advance Delta’s strategic marketing and business development objectives and further develop Delta’s brand.

Prior to joining Delta, Ms. Fine was a Managing Director at ALM, formerly American Lawyer Media, where she worked closely with the editors for The American Lawyer, Corporate Counsel magazine, IP Law & Business, and Law Firm Inc. to create events to grow their brands and materially enhance their editorial content. In addition, Ms. Fine has served as a Project Manager at Marsh FINPRO and was a Senior Vice President of Executive Liability for Beecher Carlson. Prior to her role at Marsh, Ms. Fine co-founded Fulcrum Information Services, which produced over 300 conferences annually.

Christopher DeLise, Delta's Founder, CEO and CO-CIO, stated, “We are excited to have someone with Kim’s experience and enthusiasm joining Delta’s team. Her background in marketing within the legal and financial services industries will enhance Delta’s efforts to market to prospective claimants, law firms, professional service providers, and other end-users of litigation and legal finance.”

Additionally, Megan Bradley has been hired as a Marketing Associate to assist Ms. Fine and other members of Delta’s marketing department. Ms. Bradley is a recent graduate of the University of Illinois Urbana-Champaign, where she was a President’s Award Program Honors Scholar and obtained a bachelor’s degree in Global Studies.

Mses. Fine and Bradley join Delta as the firm continues to its global expansion efforts to meet the evolving needs of law firms, businesses, private investment funds, and individual claimants.

About Delta

Delta Capital Partners Management LLC is a US-based, global private equity firm specializing in litigation and legal finance, judgment or award enforcement, and/or asset or collateral recovery.  Delta works with law firms and other professional service firms, private investment funds, businesses and individual claimants involved in litigation, arbitration or recoveries across the globe.

Announcements Commercial

HFW, KPMG AND AUGUSTA VENTURES JOIN FORCES TO SUPPORT BUSINESSES IMPACTED BY COVID-19

HFW, KPMG and Augusta Ventures are pleased to announce a non-exclusive project to assist companies facing problems caused by the Covid-19 pandemic and lockdown. Together, they will provide a global 'one-stop shop' that can quickly support companies needing assistance by facilitating funding for supporting litigation and arbitration from Augusta, and a package of legal assistance, asset tracing and enforcement measures from HFW and KPMG. Augusta’s assistance will enable claims to be swiftly investigated and the merits established, so that clients can decide how they wish to proceed including by way of litigation or mediation. Brian Perrott, Partner, HFW: "The pandemic is the biggest disruption to business since 2008 and will give rise to countless disputes and claims, largely through no fault of either party. But companies wishing to resolve such disputes may find themselves unable to fund the costs of any litigation at this difficult time. Having Augusta on board will therefore be of great comfort to parties when they are dealing with problems caused by the pandemic that are unforeseen and for which there is no time to make any cash provision to fund the matter. "I also look forward to working with KPMG on this project, as I know how many claims do not proceed or fail because of an inability to locate and, where necessary, enforce against assets. This team will also be able to ensure matters are properly investigated, so that the clients can decide if they want to proceed to litigation or resolve their claims by mediation." Robert Hanna, Co-Founder and Managing Director, Augusta Ventures: "Collaborating with KPMG and HFW will allow us to deliver a seamless, low-risk litigation process for claimants seeking to recover funds. Together, we will level the playing field providing funds for access to justice and place our clients on the best path for success." David Standish, Partner, KPMG: "Our expertise in asset tracing and enforcement is of the utmost value to clients who wish to recover losses. Working with this team means we can tackle all aspects of the problem very quickly. The added comfort of funding means no claim need be delayed because of problems around financing the work.”

About HFW

HFW is a leading global law firm in the aerospace, commodities, construction, energy and resources, insurance, and shipping sectors. The firm has more than 600 lawyers, including 185 partners, based in offices across the Americas, Europe, the Middle East and Asia-Pacific. HFW prides itself on its deep industry expertise and its entrepreneurial, creative and collaborative culture.

About Augusta

Established in 2013, Augusta is the largest litigation and dispute funding institution in the UK by case volume. Augusta’s scale enables them to make decisions in market-leading timeframes and fund cases of any size. The business is organised into a series of specialist practice groups: Arbitration, Class Action, Competition, Consumer, Intellectual Property, and Litigation, and sectors including Financial Services and Construction & Energy. Augusta has offices in London, Sydney, Melbourne, and Toronto.

About KPMG

KPMG is a global network of professional services firms providing audit, tax and advisory services to a wide variety of public and private sector organisations. We operate in 147 countries and territories and have over 219,000 people working in member firms around the world. KPMG in the UK is one of the largest member firms of KPMG’s global network providing Audit, Tax and Advisory services. In the UK we have 631 partners and 17,600 professionals working together to deliver value to our clients across our 22 UK offices. Our vision is to be the clear choice in professional services in the UK. For our clients, for our people and for the communities in which we work.
Commercial

Is the Trucking Insurance Industry Becoming Toxic?

Trucking companies, insurers, and employees have been having a rough couple of years. Tax law changes have cheated drivers out of their per diem, making their taxes skyrocket. Insurance rates climb ever higher as large payouts cripple insurers. Some have placed the blame on Litigation Finance, claiming that enabling plaintiffs has had a negative impact on insurers. But is that fair? Fleet Owner reports that higher insurance prices show no sign of slowing. Mehdi Arradizadeh explains that insurance rates for trucking companies are typically determined by looking at accident prevention, mitigating risk, and an evaluation of safety within the company culture. Other factors, like geography, can come into play with some areas being worse for insurers than others. Now, insurers fear that any claim could quickly become a multi-million-dollar settlement or verdict. Arradizadeh went on to stoke fears that insurers might not even insure trucking companies anymore if they have to keep paying out. He claims that plaintiff-side lawyers are disregarding reasonable liability in favor of seeking a high payout by generating anger and fear from jurists. Some have suggested that Litigation Finance exacerbates this. But what reputable funder is going to bankroll a case without merit? One might be tempted to suggest that insurers worried about payouts should take that up with their underwriters rather than with those who seek to increase access to justice. Underwriter Chris Mikolay explains that proper use of algorithms and research should prevent insurers from overpromising in a policy. He points out that “problems” are really just disguised opportunities, and that insurers simply need to find ways to outsmart the market—perhaps by avoiding claims rather than complaining that the payouts are untenably large. Mikolay suggests that getting one’s house in order is the best way to avoid high settlement amounts.
Commercial

Litigation Funding Comes to the Rescue of Prairie Mining in Case Against Poland

Is the country of Poland in violation of the Energy Charter Treaty or the Australia-Poland Bilateral Investment Treaty? That’s the question being asked in a case brought by Prairie Mining. A notice of dispute was served in February of last year along with a formal request to seek a resolution. Sharecast reports that Prairie Mining and Litigation Capital Management have entered into a funding agreement. LCM, a London-listed firm, explains that the money will be used in pursuit of damages claims, and to cover operational expenses while the case plays out.   It’s rare that even a large company like Prairie Mining could take on an entire government without financial help. A funding arrangement with LCM provides enough money to get through the case—but there’s more. Securing the full legal budget from an experienced entity like LCM lends legitimacy to the claim. LCM is confident that the case will end with them recouping their investment and then some.
Announcements Commercial

District Court in Poznań, Poland rejects Mariusz Świtalski’s request to lift injunction

CHICAGO, Illinois, June 30, 2020 -- Forteam Investments Ltd., an investment company controlled by the American private equity firm Delta Capital Partners Management LLC (“Delta”), which is seeking approximately USD $86 million from Mariusz Świtalski and companies he controls, has secured an injunction against Świtalski and his assets.

A second injunction was also obtained against Świtalski and his four children, Mateusz, Natasza, Marcin and Mikołaj in relation to their ownership in the Świtalski FIZ investment fund.

Świtalski is a Polish entrepreneur that has been named one of the richest persons in Poland by Wprost Weekly.

On June 25, 2020, a Poznań, Poland court rejected a request to lift the first injunction against Świtalski in a decision that is unappealable.

Delta’s CEO Christopher DeLise said, “This decision bodes well for the success of our legal case against Mariusz Świtalski. The court’s choice to deny Świtalski’s appeal underscores the judges’ confidence in the merits of our legal arguments. Moreover, the attempt to conceal expensive cars at the Świtalski family residence by changing their number plates ahead of our bailiff’s visit demonstrates desperate tactics to avoid fulfilling clear legal obligations. We understand that this matter with supporting evidence has been referred to the appropriate criminal prosecutor in Srem. We are also reassured by statements made last week by the Polish President and Prime Minister regarding the security and attractiveness of US investments in Poland. We are aware that this matter is being carefully observed by the American investment community.”

The two injunctions related to Forteam’s civil suits against Świtalski have been widely reported in the press, with outlets such as Gazeta Wyborcza and Puls Biznesu detailing Świtalski’s history of evading contractual obligations.

By way of background, on May 8, 2015, Forteam purchased from Czerwona Torebka, a 100% stake in Małpka, the owner of the Małpka Express chain. Forteam eventually sold its 16.18% stake in Czerwona Torebka. The parties to that transaction were aware of Małpka’s challenging situation and thus acknowledged in the agreement that additional considerable financing would be needed in order for Małpka to remain afloat.

Accordingly, Mariusz Świtalski and Sowiniec Group contractually agreed to guarantee that Forteam would make a profit from its investment when it eventually exited the business. In connection with the issuance of the guarantee in favor of Forteam, Mariusz Świtalski submitted a written declaration that his personal assets were sufficient to enable him to honor his obligations under the guarantee agreement.

Despite having engaged a well-respected independent investment bank in 2018 to run a robust sales process for it, Forteam was only able to sell Małpka Express for an amount well-below the minimum set forth in the definitive transaction documents and related guarantee agreement.

On December 28, 2018, Forteam notified Świtalski of its obligation to remit the monies owed to Forteam pursuant to the guarantee agreement. Notwithstanding, Świtalski and his companies have failed to pay any amounts due and owing to Forteam, which necessitated the filing of the injunctions and civil lawsuits.

Commercial

PFAS Pollution Case Settles, with Some Claimants Upset

An Australian case involving contamination from firefighting foam has settled with what the judge called a “fair and reasonable” amount. The class action over PFAS contamination in three Australian towns has been underway for years, involved multiple law firms and over 500 claimants. World Socialist Website explains that while the judge was pleased with the decision, many members of the class were not. Individual settlement amounts call into question whether the amount taken from the award for costs is excessive. The final settlement amount was $212 million. From that figure, litigation funder Omni Bridgeway will take $53.1 million in profits plus nearly a million more for costs. Lawyers will get just over $30 million, and a further $2 million will be taken for administration. Does taking nearly one-quarter of the settlement in exchange for providing funding seem fair? Legal minds may disagree, but the truth is, that without litigation funding, the case would probably not have moved forward at all. Most ordinary citizens or even small business owners lack the resources needed to sue the federal government. Still, it’s easy to see why there were objections to the settlement—75 of them all told. One farmer who reported a $2 million loss will receive a mere $152,000. Another lost $200,000 and will receive less than $33,000. Those who objected to the settlement determined that the money offered wouldn’t come close to covering their actual losses. The offer presumed a figure of 21.5% property devaluation. Many residents though, were shown to have suffered much larger losses than that. The judge accepted the settlement, saying that a trial might still end with a loss and would take years to resolve. Meanwhile, PFAS chemicals are still found in sites all over Australia.
Commercial

Scottish Courts Feeling the Dearth of Litigation Funders

Scotland, like much of the world, is bracing for a spike in litigation related to the Coronavirus. Business closures, insurance disputes, non-payment of rent, and other common types of litigation are expected to rise at least three-fold. Once courts are up and running again, the backlog of cases and filings is expected to take 1-3 years to completely clear. The Scotsman reports that Scottish courts were already struggling to keep up with cases before COVID-19 reared its ugly head. Between 2017-18, Scotland saw a staggering 81,000 cases. With the impending increase in cases, it’s expected that there will be a shortage of courtrooms, judges, available attorneys, and litigation funders. Unfortunately, opportunities to acquire litigation funding in Scotland are limited. Unlike places like the US, UK, and much of Asia—Scotland has been slow to get onboard with litigation funding. That may change as investors get wise to diversification opportunities and lack of correlation that litigation finance provides as an investment. By providing funds to plaintiffs for legal fees, expert witnesses, and other essentials during a case, litigation funders provide increased access to justice. By carefully vetting the cases they take on, funders also ensure that courts are not overburdened by frivolous litigation. It’s a win for plaintiffs and for the community at large.  
Commercial

What You Should Know Before Investing in Litigation Finance

Litigation is more popular than it’s ever been. With a predicted spike in litigation just around the corner, plenty of investors are wondering whether or not they should get involved. This rapidly growing industry has gone from just six dedicated lit fin firms in 2008, to over 40 commercial litigation funding entities as of last year. Together, they manage assets of nearly $10 billion. CNBC explains that the potential to invest in the Litigation Finance industry also comes with important caveats. First of all, litigation funding is an opportunity generally extended to accredited investors. Accredited investors must have a net worth of at least $1 million, and an annual income of at least four times the national average—so the current threshold is $200,000 per year. Litigation finance firms employ a team of attorneys to vet cases and determine which are strong investments. This includes the merits of the case, the size of the potential award, and the likelihood of recovery. In commercial cases, litigation funding often helps pay for expert witnesses, and the research involved in complex patent or IP law. In other instances, funding helps plaintiffs hire more and better attorneys than they could otherwise afford.   Litigation funding is an attractive investment because it’s not impacted by the rest of the market. The drawback is that funders get paid only when a case is successful, and the award collected. This is why investors might prefer to diversify into a portfolio of litigation rather than investing on an individual case basis. Portfolio investments can carry steep minimums, but this is a net gain, as investors can invest in a fund that is diversified among multiple other investors, thus lowering risk overall. Once the risks are fully comprehended, Litigation Finance remains an attractive option for investors.
Commercial

John Garda Makes the Switch from Litigator to Litigation Funder

Last year, former law firm managing partner John Garda was recruited by Longford Capital to head up their new Dallas office. This includes underwriting in addition to investment sourcing and monitoring. With more than 25 years of litigation experience, his expertise includes complex commercial and securities litigation, investment banking disputes, real estate, and construction disputes, healthcare contracts, and more. Above the Law writer Gaston Kroub talks to Garda about his passion for Litigation Finance. When asked why he made the decision to move from litigation to lit funding, Garda had much to say. Garda’s introduction to Litigation Finance came when Longford Capital involved his then-firm, K&L Gates, to help vet potential investments. Garda was impressed by Longford's two-stage diligence policy. This means Garda has been involved with Longford Capital since they started funding cases way back in 2013. Longford, of course, has been growing by leaps and bounds since. Due diligence in vetting cases can be a difficult issue for any funder. Firms approach these efforts in myriad ways, with varying degrees of success. Longford uses both internal and external resources when determining the merits of a case and its suitability for funding. This ensures investors that their investment is safe, and assures parties involved in cases that they’re receiving careful attention. Due diligence can give funders a huge competitive advantage in acquiring funding and new clients. When Longford Capital announced that they’d be opening a Dallas office, it made sense to hire someone who was experienced in the finer points of litigation funding. And Garda’s belief in the ability of third-party funding to increase access to justice had already been illustrated through his work with the firm. Garda explains that the opportunity to combine his passions was simply too good to pass up. Fortunately, he also believes Longford to have the best management team in the lit fin industry.
Commercial

Is Litigation Finance a Viable Option in Bankruptcy Cases?

Bankruptcy cases are expected to increase in the coming months, as companies struggle to recover from pandemic-related losses. It’s been reported that firms across the world are looking desperately to hire more bankruptcy lawyers to help handle the expected flood in new cases. Above the Law explains that bankruptcy law is another field that could benefit from increased use of litigation funding. For creditors and debtors alike, third-party funding can increase the value of claims, improve chances of recovery, and help keep expenses off the balance sheet. Small or medium-sized businesses in financial distress can use litigation to cover the costs of bringing a claim. Litigation and recovery take time, which is often in short supply when companies are already struggling. DIP financing cases are also well-placed to make use of litigation funding. Sometimes an estate’s pending litigation claims are its most valuable asset. Lit funding can keep a troubled company on its feet until it can be sold—thereby creating more profit than a simple liquidation. In some cases, utilizing a litigation funder makes more sense than investments from the involved parties—if only because experienced funders can better evaluate risks and may even offer funds at lower rates. Litigation assets can also be sold in the event of a bankruptcy, just like any other asset being liquidated. The value of a litigation claim may be more difficult to determine than traditional assets. Selling off litigation claims can reduce financial pressure on the rest of the estate. The same applies to liquidation trusts—which can take years to complete. Litigation funding can make more sense than traditional contingency arrangements with a law firm. We’re about to see a massive increase in bankruptcy filings. Businesses will scramble to restructure while creditors look to recover losses. Regardless of how the chips fall—litigation funding may be able to help.
Announcements Commercial

Validity Finance Welcomes University of Chicago Law Student for 2020 Equal Access Fellowship

NEW YORK (June 24, 2020) – Leading litigation funder Validity Finance has selected University of Chicago Law School law student Amber S. Stewart for its 2020 Equal Access Fellowship. The program, launched last year, provides a 10-week paid summer fellowship to first-year law students of diverse backgrounds to spend the first half of their summer at Validity learning the basic principles of litigation funding before spending the second half working at the non-profit of their choice. Validity is one of the only funders to provide such a program for first-year law students.

Validity elected to maintain its full 10-week summer program, notwithstanding the logistical difficulties presented by the COVID-19 pandemic. Ms. Stewart will work with the team at Validity for the first five weeks of her fellowship, beginning mid-July. She will assist in analyzing potential case investments, participating in meetings with claimants and lawyers, drafting articles and conducting legal research on topics related to litigation and dispute funding. Like the rest of the Validity team, she expects to be working remotely during these five weeks. For the second part of her fellowship Ms. Stewart has elected to work at the Corporate Accountability Lab, a Chicago-based international human rights organization that develops legal tools for holding corporations accountable when they commit human rights and environmental violations. “We’re looking forward to having Amber join us this summer as our 2020 Equal Access Fellow,” said Validity founder and CEO Ralph Sutton. “Despite constraints the pandemic has placed on businesses across the country, we’re happy to convene our program for a second year. Our team is enthusiastic about working closely with Amber, who has a remarkable academic resumé and background.” A Florida native, Ms. Stewart had stiff competition from over three dozen applicants from top-tier U.S. law schools. Candidates were asked to submit academic transcripts, and submit essays addressing their interest in litigation funding and describing how they have overcome personal challenges. As a rising 2L, Ms. Stewart is part of the University of Chicago Law School’s Doctoroff Business Leadership Program — a certificate-granting track for high-achieving students that blends an MBA curriculum into a three-year law school degree. She is also Vice President of the school’s Black Law Students Association (Earl B. Dickerson Chapter). Ms. Stewart obtained an A.B. in Art History and Gender & Sexuality Studies from Princeton University in 2015. “I was motivated to apply for the fellowship program in part because of Validity’s mission of making the civil justice system more accessible and equitable, which especially resonated with me,” said Ms. Stewart. “I’m hoping the summer will help me better understand the economic and business case for litigation funding, and what kinds of disputes can best benefit from third-party finance solutions.” Equal Access Fellows work an initial five weeks at Validity and have the option of spending the balance of the summer at the firm or a public service organization of their choice. Validity pays the fellows’ salary for the entire 10-week program. Last year's inaugural fellows, Jarrett Lewis and Amanda Gonzalez Burton, remain in touch with the Validity Finance team, and will be connecting with Ms. Stewart as part of her orientation. Mr. Lewis is a rising 3L at Georgetown University Law School and managing editor of operations for the Georgetown Journal of Legal Ethics; he will be participating in Debevoise & Plimpton LLP’s summer associate program. Ms. Burton, a rising 3L at the NYU School of Law, will be summering at Cooley LLP. For more on last year’s fellows, visit: https://validity-finance.com/news/summer_fellowship_2019/ Mr. Sutton commented, “As our corner of the legal profession continues to evolve, we want to draw new entrants from diverse communities, who can bring important perspective on disparities in access to justice. Our fellowship program provides law students an excellent grounding in the fundamental best practices of litigation funding and an opportunity for our team to maintain a mentoring relationship as the fellows continue their path in the legal profession.”

About Validity Validity is a commercial litigation finance company that provides businesses, law firms and individuals with non-recourse financing for a wide variety of commercial disputes. Validity was founded in 2018 with $250 million in committed capital, one of the largest first-round capital raises in the U.S. market. The firm announced an additional $50 million in committed capital in 2019. Validity believes that capital and legal expertise combine to help solve legal problems on behalf of clients. Validity’s mission is to make a meaningful difference for clients by focusing on fairness, innovation, and clarity. Validity is committed to developing a diverse and inclusive workforce in its own offices and within the legal profession as a whole. Validity embraces a broad definition of diversity, encompassing race, gender, ethnicity, disability, and LGBTQ background, as well as individuals from underrepresented social, economic, religious, and geographic backgrounds. Equal access to justice; equal access to opportunity— this is what Validity believes is fair and right. For more, visit www.validity-finance.com.

Commercial Investor's Corner Slingshot Capital Special Features

Asset Recovery, Collectability and the Uses of Intelligence in Litigation Finance

The following article is part of an ongoing column titled ‘Investor Insights.’  Brought to you by Ed Truant, founder and content manager of Slingshot Capital, ‘Investor Insights’ will provide thoughtful and engaging perspectives on all aspects of investing in litigation finance.  EXECUTIVE SUMARY
  • Collectability risk has moved to the forefront of litigation finance as a result of the Covid-19 induced financial crisis
  • Asset recovery and enforcement is a niche area within litigation finance that requires a unique skill set to be successful
INVESTOR INSIGHTS
  • Asset recovery and enforcement is a component of any piece of litigation, but certainly more prominent in certain case types and during times of financial stress
  • There are many risks associated with asset recovery and enforcement actions which give rise to different investor return characteristics – higher volatility, higher potential returns, and longer durations, to name a few.
Expanding on a recent article I wrote about defendant collectability risk in the context of the current Covid-19 induced financial crisis, I have reached out to AVVISO, a firm specialising in enforcement and collection, to discuss some of the challenges litigation finance managers may face in the current environment. The Covid-19 pandemic is forcing many industries to adapt to new realities. The litigation finance industry is no different. As new realities emerge, so do new opportunities, and as the dust settles, we anticipate the following developments:
  • Collectability risk will be assessed as rigorously as legal risk before any commitments are made against sovereigns and commercial counterparties affected by the crisis.
  • A growth in demand for asset recovery and enforcement funding.
This article explores how to effectively assess collectability and maximise returns on asset recovery investments. Key to both is a multidisciplinary approach to supplement the traditional legal one. COLLECTABILITY RISK Let us take a closer look at what it means to assess collectability in the context of the broader litigation finance underwriting process. Woodsford Litigation Funding provides an overview of the assessment process it employs, which is broadly representative of the wider industry. “The funder will focus on six fundamental criteria when evaluating a claimant-side litigation funding opportunity”:[1]
  1. Merits of the claim
  2. Claimant (e.g. motivations for seeking funding and prior litigation history)
  3. Strength of claimant’s legal representation
  4. Litigation budget
  5. Expected damages
  6. Respondents and recovery
Litigation funds are well-equipped to address the first five criteria. Between the formidable in-house legal knowledge of most funds, input from external law firms which are retained to provide opinions on the merits, and input from claimant’s counsel and other experts, funders have this covered. However, fund managers without internal expertise may be on comparatively shakier ground when it comes to that final sixth point, which is concerning at a time when the importance of effectively assessing collectability risk has perhaps never been greater. So why is this? Assets…but not only A sophisticated methodology to properly assess collectability is not just about assets. It is also about humanising problems which are predominantly viewed through a legal lens. Whether the opposition is a state, corporation or individual, we would explore: Key stakeholders
  • Profile and motivations of the main decision-makers
  • What is their level of resource and resolve?
  • How entrenched is their position: are they likely to settle or fight a protracted legal battle?
  • If the former, what do they perceive to be an acceptable settlement range?
  • How politicised is the dispute and how would a change of government impact a state’s attitude towards it?
Modus operandi: disputes
  • Are they currently or have they in the past been involved in other major disputes?
  • If so, what lessons can be gleaned from the experiences of others who have faced them?
  • Do they have a history of avoiding payment of judgment/award debts?
  • Could we face a scenario where we are competing with other creditors over a limited pool of assets?
Assets
  • What assets does the defendant/respondent hold directly in jurisdictions amenable to enforcement?
  • How leveraged are these assets? How has the current financial crisis impaired asset values?
  • What is their asset profile more broadly and how is their ownership of these assets structured (if not held directly)?
  • Would these structures impede our ability to attach key assets if we needed to?
  • Are there any indications that the defendant is actively dissipating assets or otherwise making themselves ‘award proof’?
  • Has the defendant been forced to sell off assets previously thought available for collection as a result of liquidity needs stemming from the financial crisis?
Commercial activities
  • What is the nature and extent of their ongoing commercial operations?
  • How viable are these operations long-term and how concerned should we be about any commercial vulnerabilities (e.g. high customer concentration)?
  • Are there any commercial vulnerabilities which could be exploited as part of a legal or enforcement strategy (e.g. unreported allegations of bribery)?
Enforcement plan
  • What is the proposed enforcement plan if no voluntary payments are made at the conclusion of the litigation/arbitration?
  • Is the proposed enforcement budget realistic?
And so on. These kinds of questions are answered by means of specialised open source research, human intelligence gathering and other investigative means. In short, collectability is at its heart an intelligence problem – not a legal one. This explains why funds are comparatively weaker at addressing this problem – because the underwriting process they employ is mainly underpinned by legal analysis. There are of course powerful legal tools (e.g. discovery to identify bank accounts internationally) which can and should feed into the process of assessing collectability. As long as someone then takes the time to understand the data generated by legal means, and answers the ‘so what?’ question by placing it in the context of the broader intelligence picture. One final point on collectability: it is fluid. Once litigation finance commitments are made, funds would be well-advised to thoroughly monitor how the answers to the above questions evolve over the duration (often years) of major legal disputes. In the same way that investment banks, private equity firms, and major corporations routinely use intelligence to inform their investments and operations, so too will the litigation finance industry, as it becomes more competitive and established. ASSET RECOVERY  We are frequently asked why asset recovery problems are so common. One reason is the ease with which judgment and award debtors can avoid paying what they owe – if they so choose – which must represent one of the most profound shortcomings of the legal process. And it is easy. If a sophisticated fraudster, sovereign state, or hostile corporate makes a commercial or political decision not to pay a debt, then it is fairly straightforward for them to structure their affairs in such a way that makes it difficult, time consuming and costly for creditors to pursue them. The Covid-19 pandemic will only increase the propensity of debtors to follow this path. Another reason is the failed enforcement approach adopted by many creditors. Typically, the legal team which secured an award or judgment goes on to inherit the enforcement problem if the other side refuses to pay. Often, this team is ill-suited to tackle what is a very different problem than winning the legal argument. Indeed, it is not uncommon for legal teams to inadvertently trigger this problem by adopting a process-driven ‘get the judgment’ approach, while failing to engage sufficiently throughout the lifetime of the dispute with the question their clients care about most: how will we get paid? This creates enormous investment potential in the asset recovery space, especially now, yet it remains on the frontier of the litigation finance industry. We anticipate an increase in opportunities to invest in asset recovery and enforcement matters, and for more funds to develop the knowhow to maximise their returns on these investments. For example:
  • Monetising awards and judgments against sovereign states and/or state-owned enterprises
  • Funding and coordinating enforcement efforts against fraudsters and other recalcitrant commercial debtors
  • Providing capital and expertise to governments to assist with their efforts to repatriate proceeds of corruption (e.g. post regime change)
  • Investing in the non-performing loan (NPL) portfolios of financial institutions in emerging markets
  • Funding cross-border insolvencies and restructurings
So, how will we get paid? Major asset recovery situations are complex problems requiring a flexible, coordinated and multi-disciplinary approach. If funds want to play this game well and maximise their returns on investments, then they need to retire the tired lawyer-investigator trope. Below is a sample of the methods in a multidisciplinary asset recovery playbook: Legal
  • Relevant civil legal work in appropriate jurisdictions (e.g. for the purpose of discovery and to attach assets)
  • Criminal remedies (e.g. private criminal prosecutions and confiscation orders)
  • Insolvency tools
Intelligence
  • Open source intelligence (e.g. to map complex offshore structures and identify revenue streams or personal assets)
  • Human intelligence (identifying and developing relationships with individuals who have access to information of potentially critical importance to the recovery)
  • Surveillance (e.g. to establish a debtor’s pattern of life, identify key associates, or to serve documents)
  • Financial intelligence and forensic accounting
  • Software and other tools (e.g. eDiscovery and proprietary asset tracing software)
Stakeholder engagement
  • Diplomatic approaches (e.g. working with ambassadors to facilitate negotiations with governments)
  • Backchannel negotiations with opposition decision makers
  • Well-timed media and PR strategies (e.g. prior to elections in a sovereign enforcement case)
Secondary market solutions
  • Post-settlement monetisation
  • Identifying non-traditional buyers of awards and judgments. Examples include: hedge funds with existing country exposure seeking to strengthen their hand during sovereign debt restructurings; or global commodities companies which can use a sovereign award to offset their tax liabilities in-country.
This list is not exhaustive and every bullet point merits its own separate discussion. The point is that as with collectability, asset recovery is not just about identifying (and in this case pursuing) assets. It is also about creative problem solving and recognising that there are people on the other side of the equation whose commercial or political calculus needs to change. Asset recovery situations should be overseen by asset recovery specialists – professionals who have an awareness and understanding of the uses and limitations of all the tools in the box and are able to deploy the right ones at the right time. Their individual specialisation matters less than their ability to coordinate international teams and provide overall strategic oversight. If funds embrace the complexities of asset recovery and the need for a multidisciplinary approach, then the new frontier will be bountiful. If they follow too narrow a path, then it may prove unforgiving. Investor Insights For investors in the litigation finance asset class, there should be an appreciation that enforcement and asset recovery represents a niche within a niche. Accordingly, these types of investment exposures have a different risk-reward profile than traditional litigation finance as they are much more about collection risk than litigation risk.  Consequently, proficiency in this area requires a different skill set from a fund manager perspective, and that capability can either be internalized or outsourced depending on the frequency of these opportunities. Concerns in this segment of the market are around ultimate collectability and the timelines involved with collection, both of which may be difficult to assess at the outset. Edward Truant is the founder of Slingshot Capital Inc., and an investor in the consumer and commercial litigation finance industry.  Ed is currently designing a product for institutional investors to provide unique access to the asset class. [1] See https://woodsfordlitigationfunding.com/wp-content/uploads/2019/01/A-Practical-Guide-to-Litigation-Funding_ROW.pdf
Commercial

The Power of GCs to Improve Equity

Despite improved awareness, the issue of gender inequity in law has not been satisfactorily addressed. It’s difficult to say precisely where the problem lies. What we do know is that General Counsel can be doing more to close the gender gap. Burford Capital explains the findings in the Equity Project Study report that they commissioned to better understand the issues. What they found was that GCs have the means to turn a whole company toward closing the gender gap, and ensuring that equitable opportunity is the norm. Firms with formal programs to measure diversity in the workplace are still in the minority. In fact, more than 75% of GCs reported that their companies did not have a diversity-forward policy. GCs can address this by requiring firms to provide data on diversity in hiring, partnerships, and other aspects of law. This sends a strong message that diversity is valued and vital to a firm’s bottom line. In-house legal departments should only work with firms that are meeting expectations in terms of gender diversity. As Caren Ulrich Stacy, CEO of Diversity Lab explains, GCs are able to reward firms with diverse teams and refuse to work with those who don’t. Never underestimate the power of the carrot and the stick. Asking about origination credits and their application is essential to GCs who are looking to support diversity efforts. As one managing lawyer asks, ‘Who gets the relationship credit in big firms?’ In some firms, it’s typical for a senior lawyer (almost always male) to retain credit for new cases they aren’t involved in, or clients they’ve never spoken to. The Equity Project has set aside over $50MM in capital to finance commercial cases where litigation or arbitration is female-led, or for women-owned firms.
Commercial

New York Court Sets Champerty Precedent

Champerty is a word we hear often in connection with Litigation Finance. Despite the term being coined in the middle ages, champerty remains a reasonable issue to take precautionary measures against. The original purpose of champerty laws was to keep litigation from becoming a commercialized business. The National Law Review details that a recent New York decision has clarified the champerty doctrine and how it may be applied. Specifically, the court ruled on the separation of champerty versus standing to bring an action—saying that these two are separate and distinct. On June 3 of this year, the court went on to declare that if a champerty defense isn’t raised during the responsive pleading, it is waived and may not be brought up again later. The doctrine of champerty disallows purchasing a stake in a lawsuit with the intent of bringing an action. That can apply to some types of litigation funding agreements. More commonly though, funding agreements with third-parties provide the means to pursue litigation with the promise of giving the funder a percentage of monies awarded. So long as the funders aren’t actively involved in decision making, champerty rules are not violated.
Announcements Consumer

Pre-Settlement Lawsuit Funding Company Tribeca Capital Launches COVID-19 Program

NEW YORK, June 17, 2020 /PRNewswire/ -- In an effort to use its resources to bring relief and hope to those affected by unprecedented global circumstances, Tribeca Capital Group, LLC, an industry leader in pre-settlement lawsuit funding, announces that it has developed an initiative to reach lawsuit plaintiffs who have been touched by COVID-19 or have been negatively impacted by the sharp downturn in the economy.

"We've watched the amazing events unfolding over the last few months, and we know that there are plaintiffs who have filed suits over automobile accidents, defective products, and other wrongs, who have lost their jobs, or they are ill, caring for a sick family member, or staying home with their children. Regardless of their personal circumstances, they've seen their incomes drop, and unemployment payments just aren't covering all their expenses," explains Rory Donadio, Tribeca's founder and owner.

"We're talking about people who had previously filed a case because they've been hurt in some way and need to be compensated for it. Those cases don't necessarily have anything to do with the pandemic, but now the plaintiffs find that the coronavirus is adding insult to injury by robbing them of their ability to make a living. That's where Tribeca comes in."

Litigation funding allows a plaintiff in a lawsuit to gain access to some of their expected recovery before the case is settled or comes to trial. Anticipating that the plaintiff will receive a settlement amount or an award, Tribeca can often provide an advance that the plaintiff can use long before the case is finally resolved.

"Tribeca is willing to wait as long as it takes for the case to finish, even if that's months or years. In the meantime, the plaintiff can use the advance to pay living expenses, medical bills, rent or mortgage payments, whatever they need," says Donadio. "And, if our client doesn't win or receive a favorable settlement, they don't have to pay us back. It's a risk we're willing to take to make sure that these clients can provide for their families during this trying time."

Tribeca Capital has helped hundreds of plaintiffs in all kinds of cases, including: Auto and Truck Accidents Defective Products and Medical Devices Dangerous Drugs Labor and Employment Discrimination Premises Liability Whistleblower Jones Act Railroad Accidents Commercial and Business Litigation

If you are a plaintiff or plan to file a case in the near future, Tribeca Capital encourages you to contact Rory Donadio, Tribeca Capital Group, LLC, at rory.donadio@tribecacapllc.com, (866) 388-2288 to discuss how pre-settlement funding can help you access the funds you need to weather this outbreak.

For more information, please visit Tribeca Capital at their website.

Commercial

Channel Islands See Increase in Litigation Funding

Litigation Finance is poised to experience a boom in demand as the world tries to recover from COVID-19. Rampant financial uncertainty creates a need for the funding that insures access to justice for those of few means. Funders are well-capitalized, and preparing to sift through cases to find those with the best chances of success. This is all very similar to what the legal world experienced during the 2008 financial crisis. Mondaq explains that law firms can better meet their financial goals by accepting a hand from a litigation funder. Businesses can better pursue litigation without investing limited funds in legal matters.  The 2012 decision involving Valetta Trust paved the way for third-party funding in the Channel Islands by disregarding outdated champerty laws. This laid the groundwork for a system where huge entities no longer have the upper hand over less monied plaintiffs. Since the Valetta Trust decision, litigation funding has steadily increased. The upswing is predicted to continue, as it has in much of the developed world.
Announcements Commercial

Parabellum Capital Announces Final Close of Latest Litigation Finance Fund

Total Commitments Exceeding $465 Million

Parabellum Capital LLC ("Parabellum"), a leader in commercial litigation finance, today announced the final closing of its latest private investment fund, Parabellum Partners II, LP (the "Fund"), with over $465 million in commitments. The Fund is Parabellum’s second broadly-offered private investment fund since its founding in 2012.

The Fund’s investment strategy leverages Parabellum’s investment and risk management processes to build a diversified portfolio of single-case, portfolio, and special situations investments. Limited partners in the Fund include endowments, foundations, pension funds, and other institutional investors.

"We are delighted to have raised new capital from investors in our first fund, as well as a range of institutional and high net worth partners, resulting in a highly-diversified investor base," said Howard Shams, Parabellum Co-Founder and CEO.

"Our investment pipeline continues to grow as we expand existing relationships and the market embraces our emphasis on aligned investment structures," said Aaron Katz, Parabellum Co-Founder and CIO. "We have added new team members to accommodate increased demand for our capital and built out practice area specializations that provide added value to our investments and partners. Significantly, this Fund’s capital allows us to address urgent litigation financing needs for both clients and law firms during this period of economic distress."

About Parabellum Capital

Parabellum Capital is a leading financier of commercial and intellectual property litigation. Its principals pioneered commercial litigation funding in the US and remain on the forefront of shaping the asset class as the industry evolves. Parabellum is a trusted financial partner to claimholders and law firms for a wide array of litigation matters in the US, other common law jurisdictions, and international arbitration forums. Founded in 2012, Parabellum’s team includes legal and financial professionals with backgrounds at major law firms, investment banks, accounting firms, and the federal government. Parabellum principals previously founded the Legal Risk Strategies and Finance group at the global investment bank Credit Suisse.

Parabellum manages both separate accounts and pooled private equity vehicles for institutional and high-net-worth investors globally. Based in New York, Parabellum’s team has invested hundreds of millions of dollars in commercial litigation situations. For more information, visit www.parabellumcap.com or contact Katie Hogan at khogan@parabellumcap.com.

Commercial

Nigerian Case Exposes Weaknesses in Asset Recovery Law

Asset recovery is a tricky business in the best of times. When financial professionals misappropriate funds for their own gain, they can be remarkably clever about hiding it. Such was the case with the Federal Republic of Nigeria as they pursued a case against Shell and Eni regarding the OPL 245 deal. Premium Times details that Nigeria’s plan to recover looted funds is not ideal. Outsourcing various recovery claims to a number of private firms does not seem to be a tenable strategy. In fact, the High Court in London has rejected Nigeria’s attempt to pursue a claim of over a billion dollars from Shell and Eni. Now, FRN is even deeper in debt, having spent almost $2 million in the failed pursuit of missing funds. That’s enough money to fund over 15,000 entire families for a year--according to numbers at the National Cash Transfer Programme currently redistributing recovered funds. Initially, it was asserted by Eni that costs for the recovery would be covered by Drumcliffe, a litigation funder. But the barrister on the case stated that the Nigerian government should make the payments and gain any approvals needed to proceed. If that’s true, how might that impact the funder’s payout, not to mention the people of Nigeria? Suspicion has fallen on the Nigerian Minister of Justice, owing to the high-risk nature of their decision making. Incomprehensible documents and months-long delays in disclosure have not filled the Nigerian people with confidence. Nigeria’s asset recovery policy necessitates that all costs and risks associated with assert recovery are to be outsourced to private firms for a 5% share of recovered funds. What does seem to be clear is that a major overhaul of asset recovery law should be undertaken, focusing on clarifying financial norms, disclosure, and the opacity of funding agreements.
Commercial

Southern Response’s Desperate Attempt to Avoid Opt-Out Class Action

Government-owned entity Southern Response is engaged in a last-ditch effort to avoid an opt-out class action over allegations regarding earthquake insurance settlement claims. Policyholders have asserted that Southern Response withheld information allowing them to underpay when settling claims related to the Canterbury earthquake. Stuff NZ reports that as many as 3000 policyholders may have been misled by Southern Response, who may not have disclosed costs for rebuilding and repairs. This led to policyholders being unaware of what they were actually entitled to, and therefore accepted settlements while relying on incomplete facts and figures. Southern Response has appealed an earlier court decision to approve the opt-out. A litigation funder is involved in the case and will receive an undisclosed share of any award stemming from the class action. This is good news, as Southern Response seems willing to drag the case out for as long as possible. Understandable, since losing this class action could lead to New Zealand Government losses in the millions. In New Zealand, laws regarding funding agreements in opt-in vs opt-out cases are still poorly defined. Tuesday is expected to be the last day for the Supreme Court hearing.