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Key Takeaways from IMN’s 5th Annual Financing, Structuring and Investing in Litigation Finance

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.

The first panel of the day focused on broader trends and developments impacting the Litigation Finance industry. The panel consisted of Douglas Gruener, Partner at Levenfeld Pearlstein, Reid Zeising, CEO and Founder of Gain (formerly Cherokee Funding & Gain Servicing), William Weisman, Director of Commercial Litigation at Parabellum Capital, Charles Schmerler, Senior Managing Director and Head of Litigation Finance at Pretium Partners, and David Gallagher, Co-Head of Litigation Investing at the D.E. Shaw Group. The panel was moderated by Andrew Langhoff, Founder and Principal of Red Bridges Advisors.

One of the most interesting back-and-forths came on the issue of secondaries, as Doug Gruener noted that ‘There were a large number of investments made five to seven years ago, so the opportunity is ripe both on the demand side and supply side.” Andrew Langhoff, the moderator, responded that there are major hurdles involved in facilitating a secondaries market, such as questions around pricing, execution and management of the claims, to which other panelists agreed. However, Charles Schmerler pointed out that this industry is like any other capital markets industry, and to the extend that a secondaries market can provide liquidity and be a useful resource, he would be surprised if five years from now we’re not all reminiscing about how we once questioned the efficacy of a secondaries market in Litigation Finance.

Perhaps the most timely panel of the day was on insurance, and its impact on the Litigation Finance market. The panel consisted of Brandon Deme, Co-Founder and Director at Factor Risk Management, Sarah Lieber, Managing Director and Co-Head of the Litigation Finance Group at Stifel, Megan Easley, Vice President of Contingent Risk Solutions at CAC Specialty, and Jason Bertoldi, Head of Contingent Risk Solutions at Willis Tower Watson. The panel was moderated by Stephen Davidson, Managing Director and Head of Litigation and Contingent Risk at Aon.

Brandon Deme pointed to the rapid growth of the industry: “The insurance market is expanding. We’ve got insurers that can go up to $25MM in one single investment. When you put that together with the six to seven insurers who are active in the space, you can insure over $100MM. And that wasn’t possible just a few years ago.”

One interesting point of discussion was on how to engender more cooperation between insurers and litigation funders, given that the two parties are at odds on issues relating to disclosure and regulatory requirements. Jason Bertoldi of Willis Tower Watson noted that almost every carrier who offers this product will have some sort of interaction with funders, either directly or indirectly. And while there is opposition to litigation funding from insurers around frivolous litigation and ethical concerns, there are similarly concerns amongst insurers around adverse selection and information asymmetry. So the insurance industry has to get more comfortable with litigation finance, and vice versa.

The panel on ESG consisted of 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.

This discussion touched on the opportunities afforded to funders by ESG efforts, as well as the challenges this emerging sector presents, such as diligence problems and confusion around how multinational ESG initiatives might impact state and local laws. Examples were provided around whistleblower claims, international arbitration efforts, supply chain issues in foreign jurisdictions.

Other panels included discussions on the economics of the Litigation Finance market, strategies for mass torts investments, regulatory issues, and a small group meeting on women in Litigation Finance. Overall, IMN’s 5th annual Litigation Finance event highlights the growth and maturation of a nascent industry, and the range of interested parties in attendance (from funders to law firms to insurance providers to asset allocators) underscores the sector’s long-term sustainability.

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Case Developments Commercial

CAT Rules in Favour of BT in Harbour-Funded Claim Valued at £1.3bn

By Harry Moran |

As LFJ reported yesterday, funders and law firms alike are looking to the Competition Appeal Tribunal (CAT) as one of the most influential factors for the future of the UK litigation market in 2025 and beyond. A judgment released by the CAT yesterday that found in favour of Britain’s largest telecommunications business may provide a warning to industry leaders of the uncertainty around funding these high value collective proceedings.

An article in The Global Legal Post provides an overview of the judgment handed down by the CAT in Justin Le Patourel v BT Group PLC, as the Tribunal dismissed the claim against the telecoms company following the trial in March of this year. The opt-out claim valued at around £1.3 billion, was first brought before the Tribunal in 2021 and sought compensation for BT customers who had allegedly been overcharged for landline services from October 2015.

In the executive summary of the judgment, the CAT found “that just because a price is excessive does not mean that it was also unfair”, with the Tribunal concluding that “there was no abuse of dominant position” by BT.

The proceedings which were led by class representative Justin Le Patourel, founder of Collective Action on Land Lines (CALL), were financed with Harbour Litigation Funding. When the application for a Collective Proceedings Order (CPO) was granted in 2021, Harbour highlighted the claim as having originally been worth up to £600 million with the potential for customers to receive up to £500 if the case had been successful.

In a statement, Le Patourel said that he was “disappointed that it [the CAT] did not agree that these prices were unfair”, but said that they would now consider “whether the next step will be an appeal to the Court of Appeal to challenge this verdict”. The claimants have been represented by Mishcon de Reya in the case.

Commenting on the impact of the judgment, Tim West, disputes partner at Ashurst, said that it could have a “dampening effect, at least in the short term, on the availability of capital to fund the more novel or unusual claims in the CAT moving forward”. Similarly, Mohsin Patel, director and co-founder of Factor Risk Management, described the outcome as “a bitter pill to swallow” for both the claimants and for the law firm and funder who backed the case.

The CAT’s full judgment and executive summary can be accessed on the Tribunal’s website.

Commercial Fundraising

Sandfield Capital Secures £600m Facility to Expand Funding Operations

By Harry Moran |

Sandfield Capital, a Liverpool-based litigation funder, has reached an agreement for a £600 million facility with Perspective Investments. The investment, which is conditional on the identification of suitable claims that can be funded, has been secured to allow Sandfield Capital to strategically expand its operations and the number of claims it can fund. 

An article in Insider Media covers the the fourth capital raise in the last 12 months for Sandfield Capital, with LFJ having previously covered the most recent £10.5 million funding facility that was secured last month. Since its founding in 2020, Sandfield Capital has already expanded from its original office in Liverpool with a footprint established in London as well. 

Steven D'Ambrosio, chief executive of Sandfield Capital, celebrated the announced by saying:  “This new facility presents significant opportunities for Sandfield and is testament to our business model. Key to our strategy to deploy the facility is expanding our legal panel. There's no shortage of quality law firms specialising in this area and we are keen to develop further strong and symbiotic relationships. Perspective Investments see considerable opportunities and bring a wealth of experience in institutional investment with a strong track record.”

Arno Kitts, founder and chief investment officer of Perspective Investments, also provided the following statement:  “Sandfield Capital's business model includes a bespoke lending platform with the ability to integrate seamlessly with law firms' systems to ensure compliance with regulatory and underwriting standards.  This technology enables claims to be processed rapidly whilst all loans are fully insured so that if a claim is unsuccessful, the individual claimant has nothing to pay. This is an excellent investment proposition for Perspective Investments and we are looking forward to working with the management team who have a track record of continuously evolving the business to meet growing client needs.”

Announcements Case Developments Commercial

Australian Google Ad Tech Class Action Commenced on Behalf of Publishers

By Harry Moran |

A class action was filed on 16 December 2024 on behalf of QNews Pty Ltd and Sydney Times Media Pty Ltd against Google LLC, Google Pte Ltd and Google Australia Pty Ltd (Google). 

The class action has been commenced to recover compensation for Australian-domiciled website and app publishers who have suffered financial losses as a result of Google’s misuse of market power in the advertising technology sector. The alleged loss is that publishers would have had significantly higher revenues from selling advertising space, and would have kept greater profits, if not for Google’s misuse of market power. 

The class action is being prosecuted by Piper Alderman with funding from Woodsford, which means affected publishers will not pay costs to participate in this class action, nor will they have any financial risk in relation to Google’s costs. 

Anyone, or any business, who has owned a website or app and sold advertising space using Google’s ad tech tools can join the action as a group member by registering their details at www.googleadtechaction.com.au. Participation in the action as a group member will be confidential so Google will not become aware of the identity of group members. 

The class action is on behalf of all publishers who had websites or apps and sold advertising space using Google’s platforms targeted at Australian consumers, including: 

  1. Google Ad Manager (GAM);
  2. Doubleclick for Publishers (DFP);
  3. Google Ad Exchange (AdX); and
  4. Google AdSense or AdMob. 

for the period 16 December 2018 to 16 December 2024. 

Google’s conduct 

Google’s conduct in the ad tech market is under scrutiny in various jurisdictions around the world. In June 2021, the French competition authority concluded that Google had abused its dominant position in the ad tech market. Google did not contest the decision, accepted a fine of €220m and agreed to change its conduct. The UK Competition and Markets Authority, the European Commission, the US Department of Justice and the Canadian Competition Bureau have also commenced investigations into, or legal proceedings regarding, Google’s conduct in ad tech. There are also class actions being prosecuted against Google for its practices in the ad tech market in the UK, EU and Canada. 

In Australia, Google’s substantial market power and conduct has been the subject of regulatory investigation and scrutiny by the Australian Competition and Consumer Commission (ACCC) which released its report in August 2021. The ACCC found that “Google is the largest supplier of ad tech services across the entire ad tech supply chain: no other provider has the scale or reach across the ad tech supply chain that Google does.” It concluded that “Google’s vertical integration and dominance across the ad tech supply chain, and in related services, have allowed it to engage in leveraging and self-preferencing conduct, which has likely interfered with the competitive process". 

Quotes 

Greg Whyte, a partner at Piper Alderman, said: 

“This class action is of major importance to publishers, who have suffered as a result of Google’s practices in the ad tech monopoly that it has secured. As is the case in several other 2. jurisdictions around the world, Google will be required to respond to and defend its monopolistic practices which significantly affect competition in the Australian publishing market”. 

Charlie Morris, Chief Investment Officer at Woodsford said: “This class action follows numerous other class actions against Google in other jurisdictions regarding its infringement of competition laws in relation to AdTech. This action aims to hold Google to account for its misuse of market power and compensate website and app publishers for the consequences of Google’s misconduct. Working closely with economists, we have determined that Australian website and app publishers have been earning significantly less revenue and profits from advertising than they should have. We aim to right this wrong.” 

Class Action representation 

The team prosecuting the ad tech class action comprises: 

  • Law firm: Piper Alderman
  • Funder: Woodsford
  • Counsel team: Nicholas de Young KC, Simon Snow and Nicholas Walter