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ESG and Litigation Funding

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.”

Panelists included Viren Mascarenhas, Partner at Milbank, Nikos Asimakopoulos, Director of Disputes at Alaco, and Rebecca Berrebi, Founder and CEO of Avenue 33, LLC. The panel was moderated by Collin Cox, Partner at Gibson Dunn.

Rebecca Berrebi began the discussion by noting that ESG is a huge space. Even with firms concerned about ‘green-washing,’ and not classifying every type of investment as ESG, the space is still enormous. One area she sees a strong ESG connection with is whistleblower claims—she has seen bundles of SEC whistleblower claims get underwritten by funders, despite the fact that the case type is a bit of a black box with limited visibility into the details of the case. Yet funders are pursuing these types of claims, which have a strong ESG component.

Collin Cox noted how particular these types of cases are, which must make the diligence extremely difficult. Berrebi concurred, explaining she has seen cases where the whistleblower is actively involved, which of course is a huge help, but otherwise there is a large diligence hurdle to overcome. The flipside is that these are not expensive cases, and when bundled, can become a worthwhile investment.

Viren Mascarenhas highlighted the arbitration space. On the commercial front, he noted that he is getting calls from corporate partners, and there is concern about how to address the human rights principles of the U.N., which are becoming more popular with the public-private partnerships on offer. On the investor-state front, issues are arising in investor treaties which have carve-outs, or provisions where parties must comply with national laws and with U.N. principles. These are examples where an ESG focus is having an impact.

Nikos Asimakopoulos spoke to obscure issues such as claims against foreign supply chain operators. He has a claim in an African state, where the claimant must demonstrate that the government behaved improperly. This is very difficult, of course. You must go to the specific locale and investigate the exact regulations in place at a local level, because this is what is driving the decision making.

Zooming out, the theme of this panel seemed to be how ESG clearly affords opportunities to litigation funders, but is not a panacea. The emerging sector also presents diligence challenges and confusion around how multinational ESG initiatives might impact state and local laws. So right now we appear to be in a gray area where there is much uncertainty around the intersection of ESG and litigation funding.

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Community Spotlight: Guillermo Ruiz Medrano, Attorney, CUATRECASAS

By John Freund |

Guillermo Ruiz Medrano is a Spanish lawyer based in Barcelona, specializing in advising local and international clients on litigation finance deals and restructuring transactions, with a focus on international and cross-border deals, and engaged in the implementation of cutting-edge litigation funding structures.

Company Name and Description: CUATRECASAS - a leading multi-disciplinary Spanish law firm, providing comprehensive legal services to clients across various industries. With a strong presence in Spain, Portugal, and Latin America, among others, the firm is recognized for its innovative solutions and commitment to excellence.  

Company Website: https://www.cuatrecasas.com/en/spain/

Year Founded: 1917

Headquarters: Barcelona and Madrid (Spain).

Area of Focus: Litigation Funding and Restructuring

Member Quote: Litigation funding in Spain is experiencing a dynamic transformation, making it an exciting jurisdiction for both national and international players. With the market expanding rapidly and new regulations on the horizon, particularly for consumer cases, Spain offers a fertile ground for innovative funding solutions. This burgeoning landscape ensures that litigation funding here is not only robust but also poised for sustainable growth, making Spain a premier destination for legal investment.

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Pegasus Managing Director, Alexander Khanas, expressed, "With the successful completion of this transaction, Pegasus will expand its business in the personal injury market while upholding its industry-leading service standards."

GreensLedge Capital Markets LLC played the role of Placement Agent for Pegasus. GreensLedge Senior Managing Director, Douglas Lipton, added, "We are delighted to continue expanding Pegasus' investor base through their second securitization issuance and assisting them in creatively developing their platform."

Headquartered in Deerfield Beach, Florida, Pegasus was founded in 2008 as a pre-settlement litigation finance company. Since its inception, the company's management team has successfully sourced, underwritten, and serviced over half a billion dollars through more than 30,000 advances. While Pegasus has traditionally focused on the New York market, it has established a strong presence in the Southeast and Texas markets as well.

Pegasus is a proud member of the American Legal Finance Association (ALFA), a national organization comprising companies that provide non-recourse funds to personal injury victims. ALFA's primary objective is to establish industry standards for transparency in legal funding transactions, ensuring upfront and clear disclosure to consumers.

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In her own post on LinkedIn, Colantonio provided the following comment: “Excited to step into the role as Chief Investment Officer at Litigation Lending Services Limited! A big thank you to the leadership team for their trust and support. Looking forward to driving our mission forward and exploring new opportunities in litigation funding.”As LFJ reported in August of this year, Colantonio was recently appointed to the board of The Association of Litigation Funders of Australia (AALF) as a non executive director, replacing LLS’ own Stephen Conrad in that position.