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.
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.
One would think that if new laws are being created to regulate an industry, prominent members of that industry would be consulted. That doesn’t seem to be the case regarding Australia’s proposed law that would place an arbitrarily determined cap on fees for law firms and litigation funders in class action cases.
Nanoco Group recently released an update in their legal action against tech giant Samsung. The suit alleges the willful infringement of Nanoco IP. The patent infringement suit was filed against multiple Samsung entities in February of last year. Nanoco has accepted financial assistance from a third-party litigation funder in order to pursue the case.
Remember the lawyer from Erin Brockovich? He married a former cocktail waitress. They bought multiple luxury houses and two private jets. If that sounds like the sensationalized stuff of reality TV, that’s because it is! The Girardis eventually wound up on The Real Housewives of Beverly Hills. So what happened?
Critics of Litigation Finance appear to be celebrating Australia’s proposed cap of 30% on potential returns for litigation funders. It’s hard to argue that such a move would not have enormous, industry-wide consequences. Some say it’s ‘unfair’ for funders to reap high profits while claimants, who were actually damaged by the factors in their cases, receive a paltry sum. But who is really taking on the most risk?
We already know that litigation is expensive. We also know that even if a claimant can technically afford a lawyer, they can easily be outspent by corporations and other big spenders who may be practiced in avoiding responsibility. That’s why litigation funding was developed—to level the playing field between the Davids and Goliaths of the legal world.
As of yesterday, the Singapore Ministry of Law is extending the third-party legal funding framework in order to cover more types. These include domestic arbitration proceedings, some cases heard at the Singapore International Commercial Court—and related mediation proceedings.
Nicky Foulston inherited the racing circuit Brands Hatch when she was a mere 19 years old. In just over a decade, she had taken a loan of GBP 6 million and used it to turn Brands Hatch into a powerhouse circuit. She ultimately sold it for a staggering $195 million in 1999.
LegalTech company, Disputed.io, has increased investment to over £1.5m from its latest round of investment. The latest funding follows on the back of significant growth for the business after the launch of its first product, CaseFunnel, an automated claims solution 13 months ago. Eighty per cent of the investors followed-on, on the back of the soft-launch of the business’ latest product, FinLegal the first online marketplace for litigation funding.
The regulations surrounding the practice of third-party legal funding are ever-changing. As the practice becomes more popular as a product and an investment—interest in legislating litigation funding grows. Recently, Roy Strom discussed what we can expect in the coming months.
A recent case involving gambling license jurisdictions and online gaming has gained the interest of Advofin, the oldest litigation funder in Austria. Advofin is seeking EU 40 million to recoup funds lost by more than 2,000 Austrian citizens who gambled online.
