Opt-in or opt-out, that’s the issue at the center of an appeal in the case of Southern Response v. Ross. In New Zealand, where the case was heard, opt-in class actions are the norm. The case, supported by third-party legal funding, began with an allegation that Southern Response did not provide complete and accurate information about repairing earthquake damage to homes.
Trends in the legal or business world often begin as adaptations to some outside event or circumstance. The early stages of COVID brought about a trend of firms moving away from billable hours and toward contingency fees. Another growing trend is the use of Litigation Finance to manage balance sheets and continue to pursue viable litigation without tying up liquid assets. When law firms opt to ignore trends, they can miss out on advantageous developments.
It cannot be denied that insurance for directors and officers is skyrocketing, whether it’s for private or public companies or even non-profits. The market is expected to remain hardened, as pressure to raise rates grows exponentially. COVID and its impact are only adding to the problem. What can be done?
The Court of Appeals recently upheld last year’s Supreme Court ruling regarding a litigation funding agreement in a case against the Gladstone Ports Corporation. That case is being funded by Litigation Capital Management. The SCQ ruling rebuffed allegations that litigation funding agreements may be unenforceable due to champerty restrictions, or because such agreements are contrary to existing public policy. Yesterday’s appeals court ruling ensures that the judge’s order stands.
Even as the industry grows and adapts to changing times, some folks still question the staying power of Litigation Finance. It’s here to stay. Third-party legal finance is well-funded, having raised over a billion dollars in 2020. This may be because of its attractiveness to savvy investors seeking opportunities that are not correlated with the market at large.
Litigation Finance has exploded since the pandemic spurred massive shutdowns and kickstarted a flurry of litigation. The practice of third parties funding meritorious legal action in exchange for a share of the award is expected to become better understood and more utilized in 2021.
Investor interest is high and funders are raising massive capital even amid the global COVID crisis. That’s a great sign for an industry that barely existed 15 years ago. The pandemic has brought with it massive shutdowns, layoffs, court delays, and lockdowns all over the world. Yet, litigation funding continues to prove its worth.
The rise in litigation owing to the COVID-19 pandemic cannot be overstated. A spike in claims relating to the virus, as well as renewed interest from litigation funders has led to widespread changes in the legal and business world. This trend follows a previous drop in litigation as courts scrambled to adapt to remote work, Zoom meetings, and other COVOD-related factors.
The legal landscape is always changing, and watching for trends is vital for savvy firms and investors. Currently, a convergence of two forces is leading to widespread changes in the industry. First, class actions and other types of collective redress cases are increasing in popularity and validity. Also, corporations are becoming increasingly responsible toward communities, the environment, and stewardship of investor interests.
Alleged underpayment was at the crux of a recently-overturned precedent ruling in Federal Court. UK-based legal funder Augusta Ventures had been ordered to pay more than $3 million in costs before it could proceed with a class action for underpayment at the Mount Arthur coal mine.
Pending legal claims and potential awards are considered uncertain. They lack liquidity and a surety of success, but they’re also vital corporate assets. With the effective use of monetization capital, these assets can be used to access quick cash.
Around the world, litigation funding is growing at a fast pace. The economic impacts of the pandemic are one of several contributing factors that also include recent legislation that’s increasingly inviting to the practice. Africa is the newest bastion of growth for the industry. As companies face pressure to conserve funds, legal departments scramble for new ways to manage budgets effectively.
Several large awards for damages levied against tech giants like Apple and Cisco are turning industry heads. Centripetal Networks was awarded nearly $2 billion by a Virginia district court, representing just one of several awards of over $100 million for patent infringement.
A recent legal finance report suggests that nearly ¾ of lawyers anticipate that their firms will look into building contingency practices in the coming years, and that almost 90% say their firms will begin to increase options for alternative fee arrangements. How should contingency practices be implemented?
A recent Medicare False Claims Act suit involving an outside funding agreement has caught the attention of the legal community. Specifically, the case calls into question the FCA’s current public disclosure provisions, and the authority of the government to dismiss FCA actions.
A working group has been formed to develop model contracts for litigation funders. Chaired by Elana Rey of London-based firm, Brown Rudnick, the working group also includes funders Omni Bridgeway, LCM, Augusta Ventures, Therium, and several insurers and asset recovery professionals.
It’s no secret that big law firms are enjoying growing revenue during the COVID pandemic. The top 50 firms have grown by more than 7% during the first half of 2020, while the next 50 biggest firms have grown roughly half that. Larger firms are handing out bonuses and hunting for new talent in numbers that pandemics would normally preclude. How is this possible?
Sometimes, the various stakeholders involved in bankruptcy cannot come to terms with how assets should be divided. This can lead to inter-creditor litigation—which is costly and can take months, even years. Consequences of failing to litigate this type of dispute can be high—but creditors may feel they have no choice but to litigate further.
State courts face an array of challenges, only some of which are related to COVID. Budget cuts, ever-growing backlogs, logistical concerns, even constitutional challenges are impacting the legal world in myriad ways. Meanwhile, lawyers, judges, defendants—everyone is looking for ways to get back to some semblance of normalcy.
There are a multitude of ways to structure an affirmative recovery program, but the central guiding principles remain the same. It’s vital to make any new initiatives company-wide so everyone is involved and participating in the same goals. It’s equally important to know that focusing on the legal department doesn’t have to mean enlarging your staff.
In today’s uncertain financial climate, investors are seeking non-correlated investments and higher returns. As the need for an independent class of assets grows, so do the investments in the Litigation Finance war chest. Litigation funding is insulated from larger financial tides—regardless of what happens in the stock market, with interest rates, etc., litigation assets are not impacted by outside factors.
German payment processor Wirecard has filed for insolvency as of June 2020. This comes after a startling admission that over $2 billion in cash listed on its balance sheets did not actually exist. Unsurprisingly, this led to a share price drop of over 90% over the course of a week—disastrous for those whose pension funds were invested in it by default.
International litigation funder Milberg Ltd has been fined GBP 21,000 for allegedly mishandling GBP 3MM intended for a class action the firm was not involved in. Initially, the money was meant for a Milberg subsidiary, Ferguson Funding Limited, for a class-action suit against a car manufacturer in a scandal involving emissions.
Last month, a commercial court in the British Virgin Islands officially recognized the use of third-party legal funding by liquidators in an insolvency case. The practice had been going on for some time, but this first written ruling on the matter is considered an overt approval of the practice.
Omni Bridgeway is considered a smallish company, despite a market capitalization of nearly a billion AU dollars. Still, institutional investors are buying in. To some minds, institutional buy-ins validate a stock’s overall value. Others caution against putting too much faith in how institutions invest. A recent analysis looks at investor data for the previous 12-month period.
