The story of Lionheart Capital begins with John Ruiz and Ophir Sternberg (real estate developer and founder of Lionheart). Sternberg joined forces with hedge fund Elliott Management, turning Heart Hospital into a spate of luxury villas. This past May, Ruiz and Sternberg bought Cigarette Racing Team together.
The financial uncertainties brought about by COVID are one driver for the increased use of third-party legal finance. Businesses are becoming insolvent in record numbers. Even those with strong cash reserves are burning through them at unprecedented rates. How does legal funding help?
It’s been said that non-pharma-related patent litigation tends to focus on a few big companies. Most are consumer-facing brands with their own retail outlets, though certainly not all. Those who make a career out of being a non-practicing entity (NPE) know who they are and how to target them.
It’s no secret that litigation funding has its share of detractors. Some are still suspicious of the increasingly regulated practice, despite evidence that it’s a net gain for clients, legal teams, investors, and those who have been harmed by a well-monied entity.
It’s estimated that a class action in Australia may assist developers with their restoration and replacement costs. This case is expected to be the largest in the nation in 2021, as it involves more than 3400 apartment buildings now deemed unsafe.
Complaints against third-party litigation funding tend to focus on a few oft-repeated points. Increased litigation, class actions in particular, ostensibly cause insurance rates to rise. Funders aren’t always required to disclose their funding agreements, ostensibly hiding a potential conflict of interest. Finally, funders are blamed for a supposed increase in frivolous actions—even though no funder wants to take on a case without merit.
Litigation Capital Management maintains that its team has performed admirably in what has been a difficult and unusual year. On that note, LCM announced its second specialist litigation fund is on track to close this quarter, owing to explosive investor interest.
The divorce settlement between Farkhad Akhmedov and Tatiana Akhmedova has been in contention since it was first ruled on in 2016. London’s High Court determined that Akhmedova should receive over GBP 453 million of his more than GBP one billion estate. According to her, that judgment was not enforced.
Seth Lovis, former managing director of Seth Lovis & Co, has been struck after admitting to failing to meet his obligations to various lenders. An investigation by the SRA determined that the personal injury lawyer accepted funding from multiple lenders for the same case more than a dozen times.
As litigation funding expands and adapts to the needs of consumers, it is becoming known by an increasing array of names: lawsuit loans, car accident loans, pre-settlement funding, etc. That’s because third-party funders are always developing new ways for non-recourse legal funding to help those in need.
Prominent third-party litigation funder LCM (Litigation Capital Management) has secured a trio of major legal funding agreements in the last seven weeks. These include cases against rail services giant Govia, French electrical retailer Darty, and former Carillion auditor KPMG. As expected, investors have noticed LCM’s success; share prices rose 25%. Many analysts, including Simon Thompson, are lauding the stock and calling it a ‘buy.’
A newly formed SPAC (special purpose acquisitions corporation) unveiled a plan to take MSP Recovery public. Lionheart Acquisition Corp II is valuing MSP at around $32 billion, or roughly 10.5 times the anticipated 2023 revenues. Some are calling this a new high in financial wizardry. If the market jibes with Lionheart’s predictions, CEO John Ruiz would hold a stake worth more than $20 billion, with Frank Quesada (Ruiz’s partner) holding a $7 billion stake.
A new government proposal has been met with strenuous objections from litigation funders, lawyers and company directors alike. The proposal would mandate that at least 70% of any payout in a class action must go to the members of that action. Some find it telling that the Law Council of Australia stated that such a limit would make claims financially untenable for litigation funders.
Litigation Finance has experienced tremendous growth in recent months—owing to the pandemic among other factors. It’s increasingly popular among investors seeking an uncorrelated asset class. However, few mechanisms exist to allow investors to select the cases they fund directly—one of those, is AxiaFunder.
It’s been fascinating to watch the progression of litigation funding happening around the world. Territories each develop their own regulations based on specific goals, when welcoming the practice. Some are positioning themselves as litigation destinations, while others seek ways for the practice to benefit citizens with the greatest need.
Two recent court rulings are being touted as a death knell for a controversial litigation funding model involving whistleblowers. The Justice Department has never downplayed its opposition to investors profiting from government lawsuits. Whether the practice is an innovation in identifying wrongdoing while profiting financially, or heretical to the idea of whistleblower protections—it does seem that the involvement of litigation funders in whistleblower cases may be on its way out.
The legal services industry in the UK is one of the largest on Earth. One side effect is that commercial courts are often used in cases involving no British citizens. The super-rich are largely coming from the Soviet Union. Some may be avoiding taxes or political persecution, while others have kept their ties to the Kremlin.
When we think of a class action, we think of ordinary citizens seeking compensation for wrongdoing by a large, often commercial or governmental entity—usually with the support of third-party funders. So what led to a group of insurers filing suit against the owners of a cargo vessel?
Litigation funders and insurers may never see eye to eye. After all, third-party litigation funders make it their business to hold insurers accountable—literally. By funding cases for average citizens against corporations, legal funding helps average citizens who would not otherwise have their day in court.
