The following is a contributed piece by Ed Truant, founder of Slingshot Capital, Part 1 of this 2-part series can be found here. 

The following is a contributed piece by Ed Truant, founder of Slingshot Capital,

Executive Summary

• EDLC Investing is a relatively new, niche market requiring highly specialized skills
• EDLC has many advantages over CLF investing, although it is not a directly comparable investment strategy due to its application to publicly traded markets
• EDLC investing requires investors to have more of a buy/hold mentality than a ‘trader’ mentality due to the ‘fundamental’ risk being assumed
• Despite EDLC ‘events’ being non-correlated, the publicly listed security aspects of their portfolios add some level of correlation which will impact fund performance, both positively and negatively

Litigation Finance Journal is well-regarded as the leading publication covering the global legal funding sector, but what is perhaps less-well known is that LFJ also serves as a digital hub for industry stakeholders to connect, via our informal introductory services. A recent example illustrates the impact that LFJs access to the global funding community can have, as Brazilian attorney and activist Daniel Cavalcante leveraged our introductory services to raise funding for a claim on behalf of Indigenous communities in the Amazon. 

Wednesday, August 9th, LFJ hosted a panel of UK-based litigation funding experts who discussed the recent UK Supreme Court decision, and the potential impacts on the funding industry. The expert panel included: Nick Rowles-Davies (NRD), Founder of Lexolent, Neil Johnstone (NJ), Barrister at King’s Bench Chambers, and Tets Ishikawa (TI), Managing Director at LionFish. The panel was moderated by Peter Petyt (PP), Founder and CEO of 4 Rivers Services.

Earlier this week, the UK Supreme Court handed down a long-awaited judgement that many believe will have a significant impact on the short-term future of the UK litigation funding market. The ruling in the case of R (on the application of PACCAR Inc and others) (Appellants) v Competition Appeal Tribunal and others (Respondents) held that litigation funding agreements (LFAs), where the funder’s remuneration is based on a percentage of the recovered damages, should be classified as damages-based agreements (DBAs).

The following article was contributed by John Hanley, Partner at Rimon Law, and Ryan Schultz, Vice President of Business Development for Woodsford Litigation Funding.

Third-party litigation funding (“TPLF”) involves financing of expenses incurred in a lawsuit (for example, expert fees and usually some portion of legal fees incurred) in exchange for a share of the final judgment or settlement. The funding is typically non-recourse (i.e., the amounts funded need not be repaid if the lawsuit is unsuccessful) and is often repaid through a financial interest in the attorneys’ fees realized by the law firm if the case is successful. These arrangements have become common in the marketplace: in 2022, $3.2 billion in capital was committed for new TPLF; 61% of that capital was deployed to law firms as opposed to clients and claimants; and 28% of the funding recipients were members of the Am Law 200.¹

The following article was contributed by Julia DiCristofaro, program administrator at The Milestone Foundation.

“I have a good client who is in need of pre-settlement funding, which I almost always advise against. But she is desperate, and this case will settle soon. Do you think you can help?”

“The emergence of legal insurance products has been a game changer in allowing both clients and law firms to lock in judgments, ring fence potentially deleterious outcomes, and provide for certainty where uncertainty used to be the rule.”

– Ross Weiner, Legal Director at Certum Group 

On Wednesday, June 7th, IMN hosted its 5th annual Financing, Structuring and Investing in Litigation Finance conference. LFJ attended the event and covered various panel discussions on topics ranging from key trends and developments, ESG initiatives and insurance products. Below are some key takeaways from the event.

Are ESG initiatives and regulations creating more tension between companies and their suppliers? Are we seeing an uptick in disputes that are arising out of ESG initiative and regulations? What impacts and pressures are ESG matters having on companies, funders, attorneys and governments? These topics and more were covered on IMN’s panel discussion “ESG Initiatives: Challenges and Opportunities.”

The widespread adoption of insurance products within the litigation finance space has been one of the hot topics recently, as it opens the door to a range of opportunities for funders and LPs. IMN’s panel discussion on insurance explored how funders can use these products to lower their rates and hedge investments, the solutions available to de-risk and monetize litigation and arbitration, what is covered and how much coverage is needed, and more.

How are inflation and rising rates impacting the litigation funding market? How can funders attract more institutional capital in today’s economic environment? What new products are emerging to disrupt the market? IMN’s 5^th Annual Financing, Structuring, and Investing in Litigation Finance event kicked off with an opening panel on “The State of the Market: Where is the Litigation Finance Market Headed?”

Executive Summary

• Consumer legal funding is a much more consistent and predictable asset class
• Headline risks, while real in the earlier days of the industry’s evolution, are now consistent with more mature consumer finance asset classes
• Consumer legal funding has a strong ESG component through the social benefits provided to the segment of society that relies on it the most

The following piece was contributed by Tom Davey, Co-Founder and Director at Factor Risk Management.

News of another class-action lawsuit against Ticketmaster comes as little surprise, given the company’s long history of legal disputes both in the UK and North America. Described by US senator Richard Blumenthal as a “monopolistic mess”, the company has been beset with criticism and legal action ever since merging with events promoter and venue operator Live Nation in 2010. The combined entity controls around 70% of the live venue and ticketing marketplace, a situation which many believe it exploits at the expense of its customers.

Daniel Cavalcante is an experienced Brazilian lawyer, and seeks partners to structure partnerships in disputes involving indigenous and socio-environmental rights against large global companies that have business activities in Brazil.

On Thursday March 23rd, Litigation Finance Journal hosted a special digital event: Mass Torts and Litigation Funding. Panelists included Michael Rozen (MR), Founder and Managing Partner at TRGP Investment Partners, James Romeo (JR), Managing Partner at Greenpoint Capital, Brian Roth (BR), Chief Executive Officer and Chief Investment Officer of Rocade Capital, and Michael Guzman (MG), Partner at Kellogg, Hansen, Todd, Figel and Frederick. The discussion was moderated by Ed Truant (ET), Founder of Slingshot Capital.

The following piece was contributed by Boris Ziser and John Schneider of law firm Schulte Roth & Zabel.

As famed British-American author and journalist Christopher Hitchens astutely observed, “exceptional claims require exceptional evidence.”^[1] Alas, the U.S. Chamber of Commerce’s Institute for Legal Reform (“ILR”) overlooks Hitchens’ directive in its November 2022 paper “A New Threat: The National Security Risk of Third Party Litigation Funding” (“ILR Paper”). The ILR Paper, in short, makes an exceptional set of claims about the bad faith of American lawyers, the implied ineptness of our judges and the way our legal system functions, without providing the requisite evidence to back it up.

Last week, Brown Rudnick hosted its second European Litigation Funding Conference, which brought together a crowd of international thought-leaders from across the industry, and provided attendees with an agenda filled with insightful discussions on a wide array of issues. The conference proved to be a beneficial experience for all, with Augusta Ventures co-founder Robert Hanna describing it as ‘the pre-eminent litigation funding conference in Europe, if not the world’.

The following article was contributed by Lionel Martin (Partner, August Debouzy), Pierre-Olivier Ally (Counsel, August Debouzy), Ben Quarmby (Partner, MoloLamken LLP) and Jonathan E. Barbee (Counsel, MoloLamken LLP). 

Europe’s Unified Patent Court (UPC) is on the cusp of launch, confirmed for this June 1, 2023.  It has been eagerly anticipated by the patent litigation community across the member states—starting with 17 European countries, but expected to extend rapidly to all of Europe minus Poland, Spain, Croatia, and, most notably, the UK.

The UPC has been long in the making: over ten years have passed since the agreement was first signed.  What is to be expected of this new court, and what opportunities does it present for litigation funders?

The following article was contributed by Valerie Blacker, a commercial litigator focusing on funded litigation, and John Speer, a lawyer in the Dispute Resolution and Litigation Team at Piper Alderman.

While large class actions receive the lion’s share of media attention, litigation financiers also regularly fund litigation involving a single plaintiff. Given that solicitors are required to maintain professional indemnity insurance, they can be, in instances of negligence, an attractive prospect for financiers: they are well-resourced and have the capacity to satisfy any judgment awarded against them.

Hedonova is a hedge fund that was established in 2020, and it specializes in alternative investments. The company has offices located in various parts of the world, making it accessible to investors from different regions. Alternative investments are unique investment opportunities that do not conform to the standard categories of investments such as stocks and bonds. Hedonova’s portfolio of alternative investments encompasses a diverse range of assets, including startups, real estate, fine art, wine, and cryptocurrencies.

The following article is a contribution from Ben Quarmby and Jonathan E. Barbee, Partner and Counsel at MoloLamken LLP, respectively. 

Litigation funders have trade secrets on their minds.  Since the introduction of the Defend Trade Secrets Act (DTSA) in 2016, trade secrets litigation has been on the rise.  Over a thousand trade secrets cases were filed in federal court in both 2021 and 2022.  By all accounts, that trend is set to continue.  Big verdicts have followed, with some trade secrets verdicts now rivaling the biggest patent verdicts.  In the information age, a company’s most valuable intellectual property may not be its patents after all, but the wealth of non-patented, proprietary information surrounding its ideas—its trade secrets.

One of the holy grails of litigation funding has long been for funders to convince CFOs to view litigation through a commercial lens, and unlock the value of their legal assets. While straightforward and practical, the evolution of the CFO mindset on this issue has been slow to materialize. Many in the litigation funding community blame cultural norms—old habits are simply hard to break, which is especially true when things are going swimmingly. But with inflation upon us and a recession looming, the time is ripe for CFOs to reconsider their firm’s relationship to litigation funding.

On January 25, 2023, Litigation Finance Journal hosted a special digital event: Key Trends and Drivers for Litigation Funding in 2023. The hour-long panel discussion and audience Q&A was live-streamed on LinkedIn, and featured expert speakers including William Farrell, Jr. (WF), Co-Founder, Managing Director and General Counsel of Longford Capital, Laina Hammond (LH), Co-Founder, Managing Director and Senior Investment Officer of Validity Finance, and Louis Young (LY), Co-Founder and CEO of Augusta Ventures. The discussion was moderated by Rebecca Berrebi (RB), Founder and CEO of Avenue 33, LLC.

IMN’s inaugural International Litigation Finance Forum brought together a crowd of international thought-leaders from across the industry, showcasing perspectives from funders, lawyers, insurers and more across a packed day of content.

On Wednesday October 5th, LFJ hosted a panel discussion and audience Q&A covering various aspects of ESG within a litigation funding framework, including how funders consider ESG claims, how serious LPs are when it comes to ESG-related criteria, and the backlash swirling around the topic itself. Panelists included Andrew Saker (AS), CEO of Omni Bridgeway, Neil Purslow (NP), CEO of Therium Capital Management, and Alex Garnier (AG), Founding Partner and Portfolio Manager of North Wall Capital. The event was moderated by Ana Carolina Salomao, Partner at Pogust Goodhead.

Day 2 of the LF Dealmakers conference kicked off with Roy Strom, a reporter at Bloomberg Law, interviewing Adam Gerchen, CEO of Gerchen Keller Partners and Keller Postman LLP.

The following article is part of an ongoing column titled ‘Investor Insights.’ 

Brought to you by Ed Truant, founder and content manager of Slingshot Capital, ‘Investor Insights’ will provide thoughtful and engaging perspectives on all aspects of investing in litigation finance. 

The following article is part of an ongoing column titled ‘Investor Insights.’ 

Brought to you by Ed Truant, founder and content manager of Slingshot Capital, ‘Investor Insights’ will provide thoughtful and engaging perspectives on all aspects of investing in litigation finance.