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SRZ Digs into Details of Tillis Bill

By John Freund |

Sen. Thom Tillis’s Tackling Predatory Litigation Funding Act, now folded into the Senate Finance Committee’s draft reconciliation package, would graft a stand-alone Chapter 50B onto the Internal Revenue Code and impose a punishing 40.8 percent flat levy on “qualified litigation proceeds.” The Schulte Roth & Zabel (SRZ) alert warns that the proposal overrides flow-through taxation, sweeps in virtually any entity—from partnerships and S-corps to sovereign wealth funds—and could chill ordinary-course lending by labeling collateralized credit facilities as “litigation financing agreements.”

A LinkedIn post from SRZ partner Boris Ziser underscores the breadth of the draft: the tax would hit domestic and foreign investors alike, deny offsetting losses, and trigger a 20.4 percent withholding obligation on plaintiffs and law firms that disburse any proceeds. Exemptions are narrow—fundings under $10,000 or debt-like arrangements capped at the greater of 7 percent or twice the 30-year Treasury yield—while long-standing preferences such as the portfolio-interest exemption and sovereign immunity would be swept aside. SRZ calculates that investors routing recoveries through a corporation could face an effective federal rate approaching 65 percent after dividend taxation, and even partnership structures would see double taxation because partners’ basis would not increase for proceeds taxed at the entity level.

Beyond funders, the bill’s catch-all definition of “litigation financing agreement” risks ensnaring securitizations, DIP financings, subrogation purchases, and other credit instruments whenever a borrower is a named litigant. By applying to taxable years beginning January 1, 2026—without grandfathering—it could retroactively erode returns on capital already deployed.

What it means for the market: If this language survives reconciliation, funders may rethink U.S. deployment models, while credit investors could demand covenants shielding them from inadvertent 40.8 percent exposure. The proposal also revives the broader policy debate: will Washington’s next move be bespoke tax regimes for other “disfavored” financial niches, or a push toward clearer, industry-wide regulation?

MAGA Influencers Support Legal Funding in Pushback Against Senator Tillis’ Bill

By John Freund |

Sen. Thom Tillis (R-NC) has sparked a fierce backlash from MAGA influencers online, who are taking issue with Sen. Tillis' newly introduced legislation that aims to slap a 41% tax on third-party litigation finance agreements. Critics warn the measure would effectively choke off capital that plaintiffs rely on to challenge deep-pocketed corporations, tilting the playing field back toward defendants.

An article in the Daily Caller argues the proposal “hogties” a tool that ordinary Americans use to combat what author Will Hild brands “woke capitalism.” By raising the cost of capital, the bill could dissuade funders from backing suits against headline-making defendants—Bank of America, Uber and Nationwide are cited as companies that stand to gain if litigation funding dries up.

The Daily Caller's article was quickly snapped up by a cadre of right-wing influencers who have begun sounding off on the alleged harms this bill would cause for ordinary Americans.

Robby Starbuck, the influential 'anti-woke' crusader, posted on X: "How does a little guy stand any chance if they go up against a woke megacorp? Nearly the only way is litigation financing where a wealthy 3rd party funds the suit. As written now @SenThomTillis’ bill is a mega corporations dream."

Jenna Ellis took things a step further, accusing Sen. Tillis of deception: "Tillis has deceptively marketed his bill as taxing “foreign” litigation funding — when in reality it subjects all litigation funders to a 41% levy — intended to drive away investors. The effect would be that Americans fighting woke corporations will lose one of the few tools needed to fight back."

Kurt Schlichter added: "Every American has a right to bring a lawsuit. It’s nobody’s business how they fund it. And lawsuits are hugely expensive. This is a way to keep people from suing - it doesn’t start bad lawsuit. It stops good ones."

It seems we have a mini-Republican civil war brewing over the issue of legal funding. Sen. Tillis is a Republican, but that hasn't stopped the MAGA faithful from backing legal funding in a bit to help them take down 'woke corporations.'

LFJ will continue to follow this story as it develops.

Burford Fires Opening Salvo Against Senate Tax Hike

By John Freund |

The world’s largest litigation financier wasted no time responding to Capitol Hill’s surprise tax gambit. Hours after the Senate draft dropped, Burford Capital issued a statement warning that taxing funding profits at ordinary rates would “make it more expensive for businesses to secure litigation financing” and could stall innovation.

Burford Capital notes that the House version of the reconciliation bill omits any mention of litigation finance and stresses that reconciliation rules limit unrelated revenue raisers, foreshadowing a procedural challenge. The firm also highlights the draft’s retroactivity, arguing that investors priced cases under existing tax assumptions and could face punitive clawbacks if rules change midstream.

Market reaction was swift: Burford’s London-listed shares dipped 3 percent before recovering as analysts handicapped the bill’s prospects. Rival funders privately debate strategy—some push for a technical carve-out, others want the clause scrapped entirely. Defense counsel predict a burst of settlement offers aimed at closing cases before any rate hike can bite.

Burford’s rapid intervention shows the industry cannot afford silence while its business model is rewritten. Expect funders to beef up government-relations teams, demand wider tax indemnities from claimholders, and explore non-U.S. opportunities should Washington decide their profits look more like wages than capital gains.

CANDEY Taps Former Burford Exec to Bolster Funding Offering

By John Freund |

Boutique disputes firm CANDEY has made a strategic addition to its partnership ranks, bringing on former Burford Capital executive Robin Ganguly. With a career that spans high-stakes litigation and cross-border insolvency work at Linklaters and Bryan Cave Leighton Paisner, Ganguly also brings deep expertise from the litigation funding and insurance sectors—making him a key hire as CANDEY expands its risk-sharing capabilities.

A press release from CANDEY highlights Ganguly’s trajectory through Burford, where he led the global insolvency practice, followed by litigation risk roles at Aon and The Fidelis Partnership. At Fidelis, Ganguly underwrote high-value legal risk and managed transactional insurance solutions, further honing his understanding of bespoke risk mitigation in complex disputes.

His arrival coincides with the firm’s recent launch of CANDEY CAPITAL (BVI) Limited, a litigation fund dedicated to financing claims arising from insolvency and distressed situations. This latest addition rounds out CANDEY’s offering, which already includes CFAs, DBAs, and litigation insurance. Ganguly’s hire, coupled with the insolvency expertise of CANDEY partner David Harby, signals a deliberate effort to deepen the firm’s footprint in asset recovery and contentious insolvency.

“CANDEY is a firm that has risk-taking in its DNA,” said managing partner Ashkhan Candey. “Robin’s experience in funding and insurance significantly enhances our offering.”

Geradin Partners Expands into Germany with Key Hires from Hausfeld and Osborne Clarke

By John Freund |

Marking a significant expansion of its European footprint, Geradin Partners has announced the opening of new offices in Berlin and Cologne, bolstered by the arrival of Thomas Höppner from Hausfeld and Thomas G. Funke from Osborne Clarke.

According to a press release from Geradin Partners, this move positions the boutique competition firm to deepen its pan-European practice and strengthen its presence in Germany’s critical antitrust and tech regulation landscape. Höppner, who was Hausfeld’s first German partner in 2015, played a leading role in establishing the firm’s German operations. He brings with him a team that shares his “challenger mindset,” a hallmark of both his time at Hausfeld and his vision for the future at Geradin.

Funke, previously a partner at Osborne Clarke and well-regarded for his litigation prowess, joins to co-lead the German offices. Together, the two lawyers are expected to expand Geradin’s work on complex antitrust litigation and regulatory matters, particularly as European enforcement ramps up in the tech sector. Founding partner Damien Geradin said the hires “solidify our ability to offer top-tier competition and regulatory advice across Europe.”

As Europe’s legal and regulatory landscape continues to evolve, the German expansion of Geradin Partners may point to broader shifts in the litigation and legal funding ecosystem—where cross-border capability, strategic litigation, and competition expertise are becoming essential assets.

Tillis Plan Would Tax Litigation Finance Profits at 41%

By John Freund |

The U.S. litigation finance sector may soon face a substantial tax hike under a proposal folded into the latest version of Senate Republicans’ tax and healthcare legislation. The provision, championed by Senator Thom Tillis (R-NC), introduces a 41% levy on profits from litigation finance investments—a move projected to raise $3.5 billion over a decade.

An article in Bloomberg Law details how the measure was added to President Trump’s budget bill (H.R. 1) and could significantly deter investor interest in the $15.2 billion industry. Investors, who back lawsuits in exchange for a cut of potential settlements or verdicts, value litigation finance for its uncorrelated returns. But critics, including the U.S. Chamber of Commerce, argue the practice inflates settlement values and prolongs litigation timelines.

The International Legal Finance Association (ILFA), the industry’s leading trade body, is actively opposing the Tillis proposal. ILFA argues that the measure would stifle access to justice by disincentivizing critical funding for claimants unable to afford litigation. The tax plan, while currently included in the bill, is far from finalized: Senate negotiations remain ongoing, and any final version must still be reconciled with the House’s earlier passage.

What makes the Tillis approach noteworthy is its departure from previous regulatory efforts focused on disclosure requirements. Instead, it leverages the tax code to curb litigation funding indirectly—prompting alarm across the industry. According to attendees at a recent litigation finance conference in New York, the proposal has already triggered coordinated responses among major funders, including efforts to boost ILFA membership and advocacy.

The proposed tax underscores a renewed push to rein in litigation finance via unconventional channels. As political winds shift, funders may need to rethink their strategies—not only to protect investor returns, but also to defend the sector’s role in enabling access to the courts.

LitFin Launches Action for Belgian Security Cartel Victims

By John Freund |

Thousands of Belgian businesses may be eligible for compensation following revelations of a sweeping price-fixing scheme involving the country’s top private security providers. From 2008 to 2020, industry giants Securitas, G4S, and Seris colluded to inflate prices and carve up the market, depriving clients of competitive rates. The Belgian Competition Authority confirmed the scheme in July 2024, levying a landmark €47 million fine and acknowledging widespread harm to companies and institutions relying on security services.

An article in LitFin outlines how the litigation funder is spearheading a class action to secure damages for affected parties. LitFin estimates total damages could exceed €800 million, with any organization that contracted private security during the cartel period—whether for routine guarding or specialized services like airport security—potentially eligible to join the claim.

LitFin’s approach eliminates financial barriers by covering all legal and procedural costs in exchange for a share of any recovery. With 21 competition class actions already underway across the EU, the firm brings established expertise to this ambitious claim.

Innsworth Challenges Mastercard Settlement Terms in CAT Judicial Review

By John Freund |

A brewing legal rift in one of the UK’s largest consumer class actions has escalated, as litigation funder Innsworth Capital seeks judicial review of the £200m Mastercard settlement approved by the Competition Appeal Tribunal (CAT). Innsworth, which financed the long-running Merricks v Mastercard case, is contesting the tribunal’s distribution structure, claiming it unjustly limits the funder’s return to less than half its investment, while allocating over £30m to a third-party charity.

An article in the Global Legal Post reports that Innsworth’s challenge centers on the May ruling, which capped its return at £22.8m—just 0.5× its £45.6m outlay—while setting aside the remaining balance of a £54.4m discretionary fund for either top-up class member payments or donation to the Access to Justice Foundation (ATJF). Innsworth alleges the tribunal made legal and procedural missteps, including misapplying Australian case law and failing to account for the commercial risk it bore in a case once valued at £14bn.

The funder argues that a return of 1.5× was both contractually contemplated and supported by precedent, and that the tribunal denied it a fair chance to respond to the proposed settlement mechanics. Its filing calls attention to what it deems an “arbitrary and irrational” allocation that favors a charity over the party that funded the claim’s pursuit.

The timing of Innsworth’s action is notable, following the Civil Justice Council’s June 3 report urging statutory regulation of funders and a legislative fix to PACCAR. The outcome of this judicial review could influence how courts and legislators assess funder profits—and reshape expectations around post-settlement fund allocations in collective redress cases.

Victory Park Expands Legal Credit Leadership with Maleson Promotion

By John Freund |

Victory Park Capital (VPC), a global alternative asset manager specializing in private credit, has announced that Justin Maleson will expand his role to Managing Director, co-heading the firm’s legal credit investment strategy. The promotion underscores VPC’s ongoing investment in its legal finance capabilities and follows Maleson’s initial appointment in 2024 as Assistant General Counsel.

An announcement from Victory Park Capital details Maleson’s new responsibilities, which include sourcing, analyzing, and managing investments across legal assets, while maintaining oversight of the firm’s legal operations. He joins Chad Clamage in co-leading the strategy, working alongside team members Hugo Lestiboudois and Andrew Pascal, under the continued oversight of VPC CEO and founder Richard Levy.

Maleson brings a strong background in litigation finance and commercial law to the position. Before joining VPC, he served as a director at Longford Capital, where he specialized in originating and managing litigation funding transactions. His earlier tenure as a litigation partner at Jenner & Block further deepened his exposure to complex legal matters, equipping him with the expertise needed to navigate the nuanced legal credit space.

VPC’s legal credit team emphasizes an asset-backed lending model, prioritizing downside protection and predictable income streams. The firm aims to capitalize on inefficiencies within the legal funding market by leveraging its internal expertise and broad network of relationships. With Maleson’s appointment, VPC signals its intent to further scale its legal credit strategy, positioning itself as a key player in the evolving legal finance sector.

Maleson’s elevation comes at a time of increasing sophistication in litigation finance, where experienced legal minds are playing a pivotal role in portfolio construction and risk management. As VPC bolsters its leadership, the move may foreshadow further institutionalization of legal asset investing and heightened competition in a maturing market segment.

TV Ad Targets Litigation Funders Amid 41% Tax Proposal

By John Freund |

A shadowy new television ad has thrown fresh fuel on the fire surrounding third-party litigation funding, signaling a sharp escalation in efforts to reshape the industry’s tax treatment. The 60-second spot, airing nationally, takes aim at litigation financiers and the plaintiffs’ bar, aligning with a Republican-backed push to impose a steep 41% tax on litigation finance profits through an upcoming federal appropriations bill.

According to Bloomberg Law, the ad features dramatic visuals and pointed messaging designed to raise public concern about the role and influence of litigation funders in the civil justice system. While the ad does not disclose its sponsor, its timing and tone suggest it is part of a coordinated campaign to build momentum behind proposed tax reforms that would treat funder profits as ordinary income rather than capital gains.

At the heart of the policy debate is whether litigation funders should continue to benefit from preferential tax rates typically reserved for long-term investment income. Proponents of the tax hike argue that funders are not passive investors but active participants in the legal process who should face a higher tax burden. Critics, meanwhile, warn that the proposal would discourage funding for meritorious claims and restrict access to justice, especially in costly litigation where plaintiffs cannot afford to proceed without external financing.

The ad spot represents a new front in the political battle over litigation finance, which has faced increasing scrutiny from lawmakers, regulators, and industry opponents. It follows recent moves by groups like the American Property Casualty Insurance Association, which have endorsed similar tax reforms aimed at reining in the sector.

APCIA Pushes for Tighter Tax Treatment of Litigation Funders

By John Freund |

The American Property Casualty Insurance Association (APCIA) has thrown its support behind the “Tackling Predatory Litigation Funding Act,” a proposed bill aimed at increasing tax and regulatory scrutiny of third-party litigation funders. APCIA is advocating for the legislation’s inclusion in the federal reconciliation package, underscoring the insurance industry’s mounting concern over the financial and legal impact of third-party litigation funding (TPLF).

An article in Insurance Business Magazine reports that the APCIA is backing the measure as part of its broader efforts to rein in what it views as predatory funding practices. The association argues that TPLF arrangements can distort the legal process by incentivizing unnecessary litigation, driving up settlement costs, and fostering conflicts of interest between funders and claimants.

The proposed legislation would require litigation funders to pay taxes on returns previously treated as capital gains, thereby classifying their profits more akin to business income. This shift could significantly affect the financial calculus for funders, particularly those operating in high-volume, high-return sectors of mass tort and class action litigation.

The APCIA’s stance aligns with a broader pattern of resistance from the insurance industry, which has increasingly blamed litigation funding for contributing to “social inflation”—the rising costs of claims due to expanded legal theories and larger jury awards. With the insurance lobby stepping up its pressure, this bill could serve as a litmus test for how the federal government chooses to address the growing influence of litigation finance.

If passed, the legislation could reshape the risk-reward profile for funders and usher in a new era of compliance obligations. The legal funding industry will be watching closely to see whether this signals the start of a more aggressive regulatory push from Washington.

Google Faces £1B UK Trial Over App Store Fees, Funded by Bench Walk Advisors

By John Freund |

A landmark collective action against Google has cleared a key legal hurdle in the UK, with the Competition Appeal Tribunal (CAT) certifying a £1.04 billion lawsuit brought on behalf of thousands of UK app developers.

The class action, spearheaded by Strathclyde University competition law professor Barry Rodger and backed by litigation funder Bench Walk Advisors, accuses Google of abusing its dominant position by imposing excessive commissions on app sales through its Play Store.

The case filing outlines that the CAT has issued a collective proceedings order, allowing the case to move to trial. The claim targets exorbitant commissions, alleging these charges unfairly burden UK app developers—many of them small- and medium-sized enterprises—by effectively locking them into the Play Store ecosystem through restrictive contractual and technical practices.

The case adds to mounting regulatory and legal scrutiny of Google’s Play Store practices worldwide. The European Commission recently issued preliminary findings under the Digital Markets Act, the UK’s CMA is assessing Google’s “Strategic Market Status,” and U.S. courts have already found the tech giant in breach of antitrust laws. The timing of the CAT’s ruling puts further pressure on Google, particularly as similar legal actions, including a new suit by Korean developers, continue to emerge globally.