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

The pandemic, financial unrest, and now global protests are changing the ways we organize, communicate, and do business. What does this mean for the future of Legal Services?

Like much of the world, Canada is seeing an influx of insurance disputes connected to COVID-19. As more and more insurers insist that their business closure contracts don’t provide protections during a pandemic—businesses and private citizen alike are seeking access to justice.

A growing economy can also lead to growth in litigation disputes. That means an increasing need for great lawyers, and a means to enforce awards. After all, a good judgment doesn’t do much if it cannot be enforced. This can be a particular issue in Asian markets, where legal disputes have risen sharply in recent years.

The idea that clients may be able to pursue a claim without a large initial investment may seem too good to be true. The reality is that litigation funding exists for just that reason—so ordinary people have the means to seek justice when they are wronged.

The legal field experienced record-setting business in 2019. Alas, this year much has changed. Despite many firms seeing a large influx of cases and inquiries, financial tensions loom. COVID-19 has led to worry, late payments, furloughs, court delays, and even outright insolvency for some.  

Unrest in the world of investment is nothing new. But current pandemic conditions have led to a wave of class-action lawsuits, many of which come from investors who feel that they were misled on relevant issues. In response, the Australian federal government has announced a rolling back of disclosure rules to protect large companies from class-action suits.

COVID-19 does more than sicken people. It’s brought with it a recession that may take years to mitigate. Businesses across the board are enduring hiring and wage freezes, furloughs, layoffs, and even outright closures. Even the legal community is not safe from the financial ravages of the pandemic.

It’s no secret that lawyers and firms anticipate a slew of new cases as a result of COVID-19. The Litigation Finance industry in particular is preparing for a future full of contract breaches, insolvency, and failed insurance payouts. This leads some to suspect that betting on court cases will be popular among investors in the coming months.

Therium is a household name in the world of Litigation Finance, and with good reason. As a prominent funder, they’ve expanded access to justice for countless ordinary citizens. Now, Therium has teamed up with five foundations to establish the Community Justice Fund. Its purpose is to provide grants in support of social welfare during and after the Coronavirus pandemic.

Everything we know about the business world is changing, in no small part due to the Coronavirus. Retail outlets, restaurants, bars, theaters, and even insurance companies are feeling the crunch caused by stay-at-home orders, supply shortages, and staffing woes. Yet through it all, Litigation Finance is enjoying a surge of opportunity.

Tail Risk is a term used to describe a situation that’s unlikely to happen, but would have a profound impact should it take place. The current COVID-19 pandemic certainly qualifies. The disruption caused by the Coronavirus outbreak is affecting markets around the globe, yet despite the upheaval – or perhaps because of it – Litigation Finance is thriving.

Litigation Finance is a complex and growing industry for good reason. It’s a boon to potential plaintiffs of limited means, as it increases their access to the pursuit of justice. It’s helpful for legal firms keeping the balance sheets tight while still pursuing a heavy caseload. Litigation funding is also good for the court systems at large, as funders only want to fund meritorious cases—cutting down on frivolous litigation clogging courts.

The Australian government plans to move forward with its inquiry into class-action lawsuits. This inquiry was originally planned for March of this year, but has been slow going thanks to the current pandemic. Concerns over COVID-19 have also raised questions about how class actions might hurt Australian small businesses.  

A recent settlement involving Sydney telecom giant Vocus is raising questions about third-party funding arrangements. The debate between common fund orders (CFOs) versus funding equalization orders (FEOs) reached its apex, when Justice Moshinsky’s ruling resulted in a lower payout to litigation funder Woodsford.

This week, the Supreme Court of Canada publicly released the reasoning behind its January decision in a case involving third-party litigation funding. The ruling provides clarity for an earlier act known as CCAA—the Companies Creditors Arrangement Act. The unanimous ruling found that a gaming software company may use third-party funding to pursue a $200MM lawsuit against Callidus Capital Corporation.

The contentious divorce of Putin ally Farkhad Akhmedov and his wife, Tatiana, has produced escalating divorce proceedings for nearly two decades. Lawyers for each party have asserted multiple claims of previous divorces that can’t be corroborated, requests for personal emails between father and son, and now—an accusation of champerty regarding Burford Capital’s funding of Tatiana Akhmedova. Technically, the backing of claims by third-party funders in exchange for profit has been illegal in Russia since feudal times.

The global financial crisis of 2008 brought with it a flood of class action litigation against big banks. A similar wave of litigation is expected in the post-COVID world. Indeed, it might be even more widespread. In recent years, the rules and procedures surrounding the formation of class action suits have become more sophisticated. Advances in the understanding and use of Litigation Finance make pursing class actions less complicated.

The pandemic is far from over, but the steps that legal firms are taking to mitigate it have only just begun. Third-party funders are already seeing shifts in the way firms are approaching them. It’s not surprising that law firms will be creative and proactive in heading off financial woes before they occur—but it is startling how quickly things are changing.

An Australian class-action suit against prominent online entities has taken major strides forward in recent weeks. Targeting Facebook, Google, and Twitter over their refusal to accept cryptocurrency advertising, the case has amassed over one billion Australian dollars. This staggering number makes it one of the largest class action cases in the country.

In her 65-page decision, Justice Jillian Mallon ruled that the case against Ross Asset Management will go to trial. This came after ANZ Bank filed to have the case thrown out before trial. Ross Asset Management has been called the biggest Ponzi scheme in New Zealand since its went under in 2012.

Last week, Dealmakers hosted a virtual event titled ‘Law Firm-Funder Partnerships in a Time of Economic Uncertainty.’ The event was sponsored by Validity Finance, and featured a panel of speakers including Alanna Clair (AC), Partner at Dentons, Jordan Goldstein (JG), Partner and GC at Selendy & Gay, Joshua Libling (JL), Portfolio Counsel at Validity, and Reed Oslan (RO), Partner at Kirkland & Ellis. The panel was hosted by Bob Robertson (BR), Strategic Advisor at Dealmakers.

Given that the stock market has fallen almost 20% in the last 30 days, securities claims are expected to surge. The need for increased operational funds and asset liquidity makes Litigation Finance an attractive option for companies facing such claims.

It’s clear that insurers and policyholders are keeping a close eye on the law as it pertains to pandemics. Clauses in contracts specifically related to viral or biological agents will take center stage in new lawsuits that are sure to spring up after COVID-19 precautions have taken a heavy toll on businesses.