News and analysis dedicated to the commercial litigation funding sector including regulatory issues, case developments, funding activities, and more.

Defunct New Zealand firm Felted Carpets – which collapsed just two years after its IPO – is being sued on behalf of over 3,000 investors. Harbour Litigation Funding had funded the claim up through 2015, with ‘Stage 2 Funding’ coming from a group of investors including Joint Action Funding. Now, the Supreme Court has ordered a $1.65MM security for costs order, which the plaintiffs are contesting. 

The latest issue of Harvard Law School’s Center on the Legal Profession’s ‘The Practice’ magazine features a robust examination of the litigation finance industry, including how the industry operates, who the major players are, how deals get done, and what law students should do to secure a career in legal finance. 

Well, how often does this happen? A government agency officially declares itself unconstitutional. That’s what the Consumer Financial Protection Bureau (CFPB) just did, as director Kraninger sent letters to House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell, stating in no uncertain terms that the agency is unconstitutional given the single-director-removable-only-by-POTUS structure. 

LCM has been funding a class action against the Gladstone Ports Corporation (GPC) on behalf of local fisheries and fishermen, who claim that GPCs port expansion project led to the collapse of the fishing market there. GPC had been arguing that LCMs funding agreement is unenforceable on the basis of champerty and maintenance, but the court just upheld the agreement as not champertous. 

Legalist, the San Francisco-based AI-driven litigation funding platform, has landed a $100MM funding round. The firm will deploy the capital into 100-200 cases of at most $1MM each. 

Insurance Australia Group (IAG) is estimating that a class action being waged against it could be worth as much as $1B. Global funder Balance REV is financing the claim, which alleges that customers were sold ‘add-on’ insurance products that had little-to-no financial value. 

The hits just keep on coming for Burford Capital. First there was the Muddy Waters short, then accusations of a sex tape swap, and now allegations the world’s largest litigation funder spent loads of money on its four non-executive directors (whose responsibility is to keep management in check).

Well, not everyone is buying Muddy Waters’ claims that Burford Capital mis-represented its accounting. Investor Caro-Kann Capital is long Burford shares, and has released a lengthy and detailed report outlining the firm’s point-by-point rebuttal of Muddy Waters’ allegations. 

The case of 9354-9186 Québec inc., et al. v. Callidus Capital Corporation 2018 QCCA 632 is making its way to the Canadian Supreme Court, and with it will come an examination of litigation funding in the insolvency context. 

The case against Burford Capital has been made, and Burford’s response has subsequently been laid out. We’ve from heard from both sides on the issue, and it seems the market has spoken (said market can be fickle, however, so we’ll see what it’s saying six months or a year from now). That said, Muddy Waters’ allegations of Burford’s accounting impropriety cast a very long shadow over the industry, as illustrated by one prominent institutional investor’s decision to sell its holdings in Burford Capital. 

One of Muddy Waters’ chief allegations against Burford Capital is that the funder manipulates its financial reporting. The short-seller used the Napo Pharmaceuticals example to illustrate how Burford misreports earnings. Now, after a deluge of investor concern, Burford has released a 7-page explanation of its Napo accounting. 

In the case of WAG Acquisition, LLC v. Multi Media LLC, Civil Action No. 2-14-cv-02340, a New Jersey court has reaffirmed that the pursuit of litigation funding by a plaintiff – in this case a partnership with Woodsford Litigation Funding – does not harm standing. 

Study after study shows that General Counsel are growing more and more interested in the product of litigation finance, yet the adoption rates remain low. There are numerous hurdles, not the least of which is cultural: many GCs simply retract from the idea that their role and responsibility should transform from cost container to revenue producer. That said, given the shifting economic climate, it’s worth taking another look at how litigation funding can benefit GCs and the balance sheets they are entrusted to safeguard. 

The average IRS whistleblower claim takes more than eight years to pay out, if they pay out at all. That’s a huge gamble, but one that isn’t stopping one new litigation funder, whose brand new fund is solely devoted to funding IRS whistleblower claims.

New questions have arisen over payouts to top Burford executives, including CEO Christopher Bogart and co-foudner Jonathan Molot. Despite founding the company, the pair were not actually employees of Burford Capital until 2012. Prior to that, they formed an advisory firm – Burford Group Limited – and charged Burford Capital fees for their advisory work. In the wake of the Muddy Waters allegations, the pair are facing questions about the complex financial structure, as well as their current salaries which remain undisclosed, given the fact that neither is on the company’s board.