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

The recent LF Dealmakers conference in NYC highlighted several key issues facing the funding industry. And there exists a clear overlap between litigation funding and IP, given that IP is the most-funded legal sector at the moment (additionally, the organizer of LF Dealmakers, Wendy Chou, hosts an annual IP Dealmakers event). So naturally, one of the topics discussed at LF Dealmakers is how IP lawyers should interact with the funding market. 

Burford Capital has commissioned a study by Joshua Mitts of Columbia Law School which found that there is indeed evidence to back the funder’s claim that it was the victim of market manipulation in the wake of the Muddy Waters attack which shed 50% of the stock’s valuation in a single day. Burford is presenting the study in court to compel the London Stock Exchange to release the names of the short-seller sho it says manipulated the trading. 

Third party funding is taking off in India, thanks in part to a robust construction and infrastructure sector that is asset and debt-heavy, yet encumbered with the prospect of litigation. 

New Zealand government insurer Southern Response wants to eschew a Court of Appeals order that  a portion of its settlement go to litigation funder Claims Funding Australia. Maurice Blackburn and Claims Funding took over representation for 3,000 claimants after a New Zealand court allowed an opt-out class action for only the second time in history. Southern Response is weighing an appeal to the decision, preferring to deal with the claimant pool directly. 

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.