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Day One of LF Dealmakers Concludes

September 29, 2021

Day One of LF Dealmakers Concludes

Day one of the two-day 2021 LF Dealmakers conference has officially concluded. The day included a keynote address from Judge Shira A. Scheindlin, six panel discussions, and a host of networking opportunities. The initial panel discussion was titled “State of the Litigation Finance Industry: Innovations & Outlook.” The panel was moderated by Annie Pavia, Senior Legal Analyst at Bloomberg Law, and featured the following panelists:
  • Brandon Baer, Founder & CIO, Contingency Capital
  • Fred Fabricant, Managing Partner, Fabricant
  • Michael Nicolas, Co-Founder & Managing Director, Longford Capital
  • Andrew Woltman, Principal & Co-Founder, Statera Capital
The discussion began with big picture trends regarding the economic downturn, which a lot of people posited would result in a boost to Legal Services and the Litigation Funding industry. The panelists all weighed in: Brandon Baer explained that the case pipeline has been extremely robust. There is strong origination, and a lot of need from law firms for capital. Fred Fabricant explained that from law firm side, it’s been the busiest time in his career in terms of case load. More opportunities have come to his attention in last year and a half than ever before, with things being very active in the Eastern and Western Districts of Texas. And the quality of the opportunities is higher. New players are in the market, and existing players have raised more money than ever before. Michael Nicolas added that he’s seen an increase across all different sectors – law firms (both those who have used funding previously and those who have never used funding before), and clients (facing extreme demands stemming from COVID-related issues). Longford manages over $1Bn in AUM, so they have a lot of flexibility in terms of investment potential. Andrew Woltman ended the discussion by noting how comfortable law firms and clients are becoming with litigation finance. Structurally they are being more proactive about approaching fund managers than ever before. The panel all agreed that demand is strong across the board when it comes to case types. Capital deployment is not a problem here, and the panelists expressed hope that this trend would continue, and that clients will continue to recognize the value that funders bring to the table. In terms of current challenges the industry is facing, duration and collectability are obvious issues, but these are leading to certain efficiencies–like courts learning to be more efficient in order to address duration risk. So there is a silver lining here. At this point, Annie Pavia, the moderator, switched gears and asked Michael Nicolas about Longford’s $50MM funding deal with Willkie Farr. Nicolas acknowledged the longstanding relationship between the two firms, and how that developed into a $50MM financing arrangement. Willkie also brings a lot of commercial matters to the table, which helps Longford diversify away from its core focus on IP matters. Nicolas also mentioned that they went public with the deal in order to be fully transparent to Willkie’s clients, and make them aware that Longford’s funding is possible for their claims. The question of disclosure then popped up.  Will the disclosure of the funding relationship lead to unnecessary discovery sideshows in Willkie claims?  Nicolas does not believe the publicity of the relationship will hamper any Willkie claims, and that the trend line favors courts finding discovery irrelevant, where litigation funding is concerned (in most cases). While he understands this may prompt some questions, Longford isn’t particularly worried about the consequences here. Of course, most funds still keep their partnerships private, so Longford’s decision to publicize its relationship with Willkie may perhaps be a turning point for the industry—could less opacity be around the corner? Nicolas believes we will see more transparency as the asset class continues to grow. The rest of the day featured panels across a range of topics, including legal and regulatory challenges in the U.S., and changes in law firm and contingency fee models. One discussion on “How CFOs View Legal Assets: Data & Insights from a Recent Survey,” featured Kelly Daley, Director at Burford Capital, and Bruce MacEwen, President of Adam Smith, Esq. MacEwen asked an interesting question regarding law firms’ attitudes–law departments and finance departments typically don’t talk to each other. So how do conversations with law firms go, compared with conservations with corporate CFOs. Daley explained that conversations with law firms are different than those with corporations, because the assets at law firms are human labor, so it can be harder for law firms to leverage that than it is for corporations to leverage abstract assets. Law firms take their time more personally, so the conversation with law firms is more about risk shifting than with cash flows. Legal finance does both of these, but there is different value applied to each depending on what specific assets you value. MacEwen agreed, and followed up with the note that it can be tough for clients to define the value they get from a law firm, and therefore they are always looking for ways to get discounted rates. Litigation funding can play a part in that… in ameliorating the concerns clients have about overpaying for legal services. All in all, there was a lot of ground covered in the first day of the LF Dealmakers conference. And with the plethora of networking opportunities (both digitally and in-person), the event surely struck a powerful chord with all those in attendance.

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Family Offices Turn to Litigation Finance as a Portfolio Diversifier

Family offices are increasingly treating litigation finance as a diversification tool, drawn by returns that are largely uncorrelated with public markets at a time of rising inflation and interest rates.

As reported by Bloomberg Law, the appeal rests on three characteristics: appetite for risk, patience for investments of uncertain duration, and the absence of correlation to other holdings. Kelly Daley, founder of Celsia Capital, described family offices as a "uniquely good fit" for the asset class, noting that most operate on evergreen horizons with few external constraints — unlike LP-backed funds, pension plans and endowments working to fixed terms.

Thomas Mellor, a partner at Morgan Lewis, said insurance-backed structures, in which an asset is insured and then borrowed against, have widened the pool of capital available to the market. Over the past seven to eight years the ecosystem has expanded to the point where family offices are "just one of the many other market participants who became part of" it.

The scale of that capital is substantial. More than half of the 351 respondents to Citi Wealth's Global Family Office Report 2026/2027 manage over $500 million, and Deloitte projects roughly 75% growth in the number of family offices between 2019 and 2030, against $9.5 trillion in family wealth.

The interest arrives as institutional fundraising remains slow. Corbin Capital's $342 million litigation finance fund took nearly two years to close, underscoring why funders are looking to capital sources that can commit without a fixed exit date.

Commercial

Federal Court Appoints Contradictors to Test Funder’s $244M Cut of Toyota Settlement

Justice Michael Lee has appointed two barristers as contradictors to scrutinise the commission a litigation funder is seeking from a record A$750 million settlement of two Toyota class actions — the largest funder commission ever sought in an Australian class action.

As reported by Lawyerly, the appointment marks a change of heart by the judge, who will now have independent counsel test Balance Legal Capital's proposed A$244 million share before deciding whether to approve it. Contradictors are appointed precisely because a commission application would otherwise go unopposed, with both the applicants and the respondent supporting approval.

The proceedings concern allegedly defective diesel particulate filters and have already produced significant precedent. In Williams v Toyota Motor Corporation Australia Limited [2022] FCA 344, the Federal Court made the first aggregate damages award under section 33Z(1)(e) of the Federal Court of Australia Act in favour of a funded litigant, with roughly 260,000 vehicle owners in the class. At that stage the funder had sought a commission of up to 25%.

The contradictor mechanism has materially reduced funder returns before. In the Robodebt class action, a contradictor argued that A$23 million was the appropriate commission against the funder's A$71 million request from a A$548.5 million settlement — a reduction of close to two-thirds.

The outcome will be closely watched by funders active in the Australian market, where commission approval has become the principal point at which courts exercise control over the economics of funded class actions.

Commercial

Litigation Lending Services Funds Landmark Australian Class Action Against Meta

A funded class action filed in Australia's Federal Court alleges that Meta Platforms exposed children to harmful content on Facebook and Instagram and kept them engaged through addictive design features. It is understood to be the first Australian case to attribute harm to social media platforms.

As reported by Al Jazeera, the action is funded by Litigation Lending Services and was filed by MinterEllison on behalf of eight plaintiffs who say they were harmed while under the age of 18. The funder said it was backing the claim for Australian families who "would have no practical means of pursuing these claims against a global technology giant."

The Federal Court in Sydney has issued a suppression order restricting publication of the statement of claim and the identities of the applicants. A Meta spokesperson said the company is "aware of this claim and we will defend ourselves vigorously," with HSF Kramer acting for the defence. MinterEllison partner William Nolan said the proceeding "raises important questions about the design and operation of social media platforms and their impact on children and teenagers in Australia."

The funding structure reflects standard Australian practice, where class actions are typically backed by third-party funders taking a percentage of any recovery rather than run on contingency by the firm itself. The case follows Australia's December 2025 minimum-age rules, which require platforms including Facebook and Instagram to take reasonable steps to prevent children under 16 from holding accounts, and Meta's agreement in August to pay up to $17.1 billion to resolve claims brought by a coalition of US state attorneys-general.

The matter returns to court on November 3.