It’s been fascinating to watch the progression of litigation funding happening around the world. Territories each develop their own regulations based on specific goals, when welcoming the practice. Some are positioning themselves as litigation destinations, while others seek ways for the practice to benefit citizens with the greatest need.
Two recent court rulings are being touted as a death knell for a controversial litigation funding model involving whistleblowers. The Justice Department has never downplayed its opposition to investors profiting from government lawsuits. Whether the practice is an innovation in identifying wrongdoing while profiting financially, or heretical to the idea of whistleblower protections—it does seem that the involvement of litigation funders in whistleblower cases may be on its way out.
The legal services industry in the UK is one of the largest on Earth. One side effect is that commercial courts are often used in cases involving no British citizens. The super-rich are largely coming from the Soviet Union. Some may be avoiding taxes or political persecution, while others have kept their ties to the Kremlin.
When we think of a class action, we think of ordinary citizens seeking compensation for wrongdoing by a large, often commercial or governmental entity—usually with the support of third-party funders. So what led to a group of insurers filing suit against the owners of a cargo vessel?
Litigation funders and insurers may never see eye to eye. After all, third-party litigation funders make it their business to hold insurers accountable—literally. By funding cases for average citizens against corporations, legal funding helps average citizens who would not otherwise have their day in court.
Liti Capital SA , the blockchain litigation finance company, announces an investment of $5 Million. This $5m will be used to purchase assets worth up to a potential $50m. Of the initial private raise of $12m, $10m was used to secure assets worth up to $100m of potential asset value. Once this new $5m is deployed in an asset purchase, the combined $150m potential value dwarfs the current market cap of $25m. Those assets are what back the LITI equity token.
Litigation funders may purchase claims from liquidators, keeping a portion of the recovery. But there are practical questions that need answers here—such as whether funders may use evidence from previous examinations of the insolvent company’s affairs. In the instance of LCM Operations Pty Ltd; 316 Group Pty Ltd, LCM bought claims from a liquidator, who would receive 15% of any proceeds collected.
It’s clear that the COVID pandemic has changed the way we communicate around the globe. Still, international disputes are still happening and need resolution. Third-party litigation funding is becoming an increasingly mainstream practice that addresses new and ongoing issues alike.
The following article was contributed by J-P Pitt, Investment Manager at Asertis.
Stating the obvious, the principal reason a funder chooses to fund enforcement, as with every aspect of litigation funding, is to receive more at the end than is paid at the beginning. In practical terms, enforcement extends beyond being purely a legal process. Much of it involves practical project management, where litigation is one of two key workstreams. The other is influence or persuasion – communications or PR. These two elements are entirely complementary and complimentary.
Despite existing for more than a decade, Litigation Finance is considered a relatively new asset class. The market for litigation funding is enormous—as global law firm fees reach $860 billion annually. According to a recent study from Ernst & Young, the market is set to expand even more as post-pandemic litigation is expected to sharply rise.
In the UK, the litigation funding market has reached maturity as an asset class, and as a facet of the legal system. A new report from RPC states that litigation funding assets (both deployed and held by funders) topped GBP 2 billion as of 2020. There’s no reason to believe this won’t continue to increase.
Around 400 companies are breathing a little easier now that insurer Hiscox has reached a settlement agreement with the Hiscox Action Group. The amount of the settlement will remain confidential, according to both sides—though a recent test case in January 2021 suggests that the total payout from the six largest insurers should be around GBP 1.2 billion.
Are claimant-focused legal firms and litigation funders intentionally creating a rise in class actions? That’s one assertion of CMS’s European Class Actions Report 2021, which claims that even powerhouse corporates should be wary about litigation funding’s impact.
Litigation Capital Management Limited, a global provider of disputes funding, publicly listed on the London Stock Exchange’s AIM market, is pleased to announce the hire of William Panlilio as an Investment Manager based in Singapore.
Less than two years since launching the company and its first investor fund, Apex Litigation Finance has begun marketing its second fund. The firm is inviting commitments from investors keen to add an asset class alternative investment to their portfolio.
On the latest episode of the LFJ Podcast, Ben Phi, Partner at Australian class action law firm Phi Finney McDonald, discussed his recent response to the Senate Economics Committee in regard to the proposed regulation of class actions. Ben outlined his response to the ‘rising D&O insurance’ and ‘social inflation’ arguments being made by Big Insurance, and the negative consequences that could emerge if large class actions are over-regulated.
The concept of ‘conscious uncoupling’ was widely mocked when actor Gwyneth Paltrow mainstreamed it during her divorce from musician Chris Martin. In short, conscious uncoupling is a five-step process that helps couples separate and divorce in a less acrimonious, more amicable way.
Book building has begun in two class actions against Lloyds and QBE—accusing them of failing to pay on valid business interruption policies during the COVID pandemic. Both claims are being underwritten by Omni Bridgeway, a leading litigation funder.
On June 21st, Local Civil Rule 7.1.1 went into law. Signed by Chief Judge Freda Wolfson, it requires disclosure of third-party funding in New Jersey. Currently pending cases will be given 45 days to submit disclosure that includes names and addresses of third-party funders. If they are legal entities, their place of formation is required as well.
A decade ago, all eyes were on hedge funds as they were believed to be the most shrewd investors. After a decade of sub-par returns, that reputation has soured somewhat. Still, hedge funds currently maintain over $3.5 trillion in assets under management.
