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CIO Roundtable: Art of the Deal from Terms to Returns

CIO Roundtable: Art of the Deal from Terms to Returns

A panel consisting of Sarah Johnson, Senior VP and Co-Head of Litigation Finance at D.E. Shaw, Aaron Katz, Co-Founder and CIO of Parabellum Capital, David Kerstein, Managing Director and Senior Investment Officer at Validity Finance, and Joe Siprut, CEO and CIO of Kerberos Capital Management, discussed the various investment aspects of litigation funding as an asset class. The panel was moderated by Steven Molo, Founding Partner of MoloLamken. The conversation began with new trends in the industry. Price compression came up early. Joe Siprut of Kerberos Capital Management noted he has witnessed price comparison over the past couple of years, including having seen multiple term sheets that were mis-priced. Litigation finance has always been about attractive risk-adjusted opportunities, yet if the risk remains the same and price compression remains, that reduces the attraction of the asset class. Moderator Steven Molo was surprised there hasn’t been more fallout in this regard. Aaron Katz of Parabellum pointed out how things are opening up after COVID, and that helps a lot, given that a pipeline of cases awaiting trial quickly burns through ROI. Katz countered the price compression argument, stating that he hasn’t witnessed real price compression and hasn’t found his firm to be competing on raw price. Of course this depends on which segment of the market you are looking at. The conversation then steered toward ESG, and David Kerstein of Validity noted how there are green shoots of funders getting involved in impact litigation. Yet for most commercial funders, ESG would maintain the same type of analysis as any other case–that said, funders like to have a ‘good story’ for the case, and ESG can bring that to the table. Aaron Katz mentioned Parabellum is very cautious about ESG in particular. “We think people need to be careful about labelling things incorrectly,” said Katz. There are real impact players out there, and litigation funders should be careful about loosely claiming the mantle. The next question was pretty blunt: Is there a secondary market right now? Aaron Katz thinks not “I pray for it daily.” There is a network of well-resourced institutional players who like to look at claims, but the transactions are laborious (DD challenges, information asymmetry). The secondary participant is not going to be in a direct conversation with the counter-party, and that could cause complications. One final point: Joe Siprut noted that the evolution of a secondary market is one of the main things that can really unlock a lot of investment for the industry. One of the main barriers to investment is the long lockup period investors are staring at, and if a secondary market were to materialize, that would make fundraising a much easier sell.
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Bar Warns Repealing Collective Actions Could Empower Big Business

By John Freund |

The Law Society of England and Wales has sounded the alarm that scrapping the UK’s opt‑out collective actions regime would invite a surge in unchecked anti‑competitive conduct by multinational firms.

An article in the Law Society Gazette explains that the UK government is reviewing its collective redress regime—introduced in 2015 under the Competition Appeal Tribunal (CAT) framework—to determine whether it remains appropriate for businesses and consumers alike. Above all, the bar warns that eliminating or substantially reducing the ability of groups of consumers to act together would remove a key check on large firms’ power.

According to the bar’s statement, collective actions provide a vital counterbalance: they allow individuals with smaller claims (often against powerful enterprise defendants) to combine resources, reduce costs, and obtain meaningful relief. Without that mechanism, the risk is that dominant players may routinely engage in cartel‑type behaviour, abuse market position or otherwise infringe competition law with little fear of private litigation.

The review highlights that the regime has evolved faster than anticipated: the original design assumed most cases would follow a finding by the competition authority, but in practice around 90% are now “stand‑alone” claims brought without a prior regulatory decision.

For the legal funding and litigation finance sector, this development is especially consequential. Were collective actions to be scaled back or abolished, the landscape for financing competition‑law claims would shift markedly: fewer aggregated opportunities, higher individual‑case risk, and potentially lower investor appetite. It raises key questions about the future viability of funding models that rely on class‑style litigation in the UK market.

Mass‑Tort Funder Sues Lake Law Firm After $5.3 M Investment Collapse

By John Freund |

A healthcare‑turned‑litigation investor has taken legal action against Lake Law Firm and its partner Ed Lake, alleging a sweeping investment failure in the mass‑tort financing space. According to the complaint filed in New York State Supreme Court on October 22, the investor pumped around $5.3 million into programs tied to hernia‑mesh, Bayer AG’s RoundUp, 3M Co., and Johnson & Johnson talcum‑powder claims — only to find that fewer than the promised number of cases ever materialized.

An article in Bloomberg notes that per the suit, the law firm had committed to signing up 113 hernia‑mesh cases, 100 3M cases, and 50 RoundUp matters, but delivered only 15, 40, and 8 respectively. Separately, Lake Law pledged submission of 8,000 applications under the federal Covid‑era Employee Retention Credit program, yet managed only 2,655. The complaint characterizes the structure as “more akin to a Ponzi scheme than a legitimate litigation‐finance program.”

The investor also alleges that the law firm defaulted on a “case‑replacement agreement,” and is now demanding $6.2 million in damages, plus rights to any mass‑tort profits and tax‑credit claims that “rightfully belong” to him. According to the filing, his wife had separately invested $2.5 million and likewise filed suit last week claiming non‑repayment.

Group & Collective Action Market Positioned for Growth Following UK Reforms

By John Freund |

The latest chapter of the Global Legal Group’s Class and Group Actions Laws & Regulations 2026 report titled “In Case of Any Doubt – The Group and Collective Action Market is Here to Stay” provides a clear signal: the group and collective litigation landscape across the UK and Europe is evolving, and legal funders should take notice.

An article in ICLG highlights several key moves in the UK: the Civil Justice Council (CJC) issued its final report in June 2025 on private litigation funding, recommending “light‑touch” regulation of third‑party litigation funding and reiterating support for funding as a tool of access to justice. It follows the PACCAR Ltd v Green & others decision by the United Kingdom Supreme Court, which classified certain litigation funding agreements as damages‑based agreements (DBAs), raising regulatory scrutiny on opt‑out collective proceedings before the Competition Appeal Tribunal. The CJC recommends reversing that classification via legislation, permitting DBAs in opt‑out class actions, and regulating funders’ capital and AML compliance.

Meanwhile, the UK’s opt‑out collective action model under competition law is under review. The government’s call for evidence flagged the high costs and shifting case mix as areas of concern.

On the European front, the Representative Actions Directive has spurred changes in France and Germany. France’s new law allows third‑party funding of group actions and broadens access and scope. Germany’s implementation enables qualified consumer associations to bring collective redress for both injunctive and monetary relief across a wide range of sectors including ESG, data‑protection and tort.

For legal funders, these developments signal both opportunity and risk. On one hand, enhanced regulatory clarity and expanded access points strengthen the business case for collective‑action funding. On the other, increasing scrutiny over funding arrangements, roles of funders, and capital adequacy impose compliance burdens.