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Key Takeaways from LFJ’s Special Digital Event–Litigation Funding in 2022: What to Expect

Litigation Finance News

Key Takeaways from LFJ’s Special Digital Event–Litigation Funding in 2022: What to Expect

Litigation Finance News

This past Tuesday, Litigation Finance Journal hosted a panel discussion and Q&A with a global swathe of litigation funding experts. The subject was key trends facing the industry in 2022, and the panel did not disappoint by delivering in-depth responses across a broad array of subjects.

The event was moderated by Peter Petyt (PP), Co-Founder of 4 Rivers Services. Panelists included Tets Ishikawa (TI), Managing Director of Lionfish in the UK, Stuart Price (SP), Co-Founder of CASL in Australia, and Molly Pease (MP), Managing Director of Curiam Capital in the US.

Below are some key takeaways from the discussion:

PP: Stuart, I’d like to get your view on this: Is there an ideal portfolio that a funder might invest in, in terms of the numbers of cases, the types of cases, the size of cases?

SP: I think that’s an interesting question, Peter. I come at it from a first principles perspective and it’s portfolio theory 101, so we’ve got to salute a problem within the law firm that they’re looking to solve, and we’re trying to tailor a solution for them. I think ultimately portfolio theory says you need diversification…you need to have the ability that you can spread the risk across multiple cases, so really depending on the nature of what the problem is, you may structure a portfolio to be thematic…and when I say thematic, it might have an insolvency or flavor or class action securities flavor because that’s a problem that you’re trying to solve. But really, the art and design and pinning together of portfolio funding is probably understanding what the problem is, and I think starting from that you need to have the diversity across a number of cases. I’d look and see on a portfolio, you certainly shouldn’t have more than ten percent in one case. I think logically that follows that you have to have at least ten cases then, that concentration and manage properly. But I think that defining the ideal portfolio is a very difficult component because you’ve got to start at first principles. I think the duration is important to consider, long and short, and dated assets, jurisdiction and common issues that may arise when you get a contagion risk in particular cases. You’ve got to consider the return profile and ideally you want to mix those factors all together and ensure that you’ve got the diversification, ensure that you’ve got an appropriate funding source to actually meet what the client ultimately is wanting, and put that all together and deliver something that’s tailored, I really push back against us as litigation funders defining what the product law firms or corporates want. We should listen to what their problems are, and tailor something to their requirements.

PP: Molly, obviously Curiam has been around for a while now, and I’m assuming you’re seeing an increase in uptake on portfolio funding from law firms, more inquiries, more interesting opportunities being presented to you?

MP: Yes, it’s definitely become more prominent than it was four years ago when we started. I really think there is not an ideal portfolio. I think it’s so dependent on the circumstances and there are so many different ways to do it, that can all work out well for all the parties involved. You could have a portfolio that is a collection of cases all for one claimant, and maybe they have one case that’s very very strong and very likely to succeed, and has significant enough damages to be able to cover a number of other cases, or are maybe a little bit more of a long shot or have more binary risk or whatever it is. So they may see some benefit in being able to pursue all of the cases, and maybe have the handful of cases that aren’t as strong free ride a little bit off the really strong case. So that could be an instance where you have a small portfolio, but it might make a lot of sense in that context, versus the other end of the spectrum where you could have a law firm trying to pool together a number of different cases for different clients across different practice areas that really have quite a bit of diversification. And that’s probably a little bit more work to figure out the appropriate pricing on that. But I think it’s certainly doable, and I think at every point in between there are portfolios that make sense. So I agree with Stuart, that you just have to understand the situation, what the law firm and the clients are trying to accomplish. I think there’s almost a portfolio that makes sense of all different types. So it’s very broad and I think there’s a lot to consider.

PP: Yes, I can see that there isn’t necessarily an ideal portfolio, you need to look at each one as a separate entity. Tets, I was wondering what your views were, being someone from the investment banking background on pricing for portfolio funding? Clearly, if you can get it right, the costs of capital for portfolio funding structure should be significantly better than just looking at single case funding. Shouldn’t it?

TI: Absolutely. I mean I started in fixed income but I was actually doing credit portfolios and that’s just heavily involved in a lot of the early days of the credit indexes, which are now part of the standard credit benchmarks. When we were constructing those portfolios, we were saying basically a combination of both the principles of 101, of keeping it diverse but also at the same time having to be relevant to the actual market that you want, which in this case is the client base. In terms of pricing, of course diversification is always going to work, but I don’t think diversification necessarily means looking through different types of cases. What you have to also factor in, is also the alignment of interest and the areas of expertise that the law firm has. So you can have a firm that’s specialized in one type of law, the diversification comes just from the cases themselves because each case is so sufficiently different that the fact that they’re in the same area of law doesn’t necessarily mean that they’re correlated. And that in itself brings down pricing. But what does also help bring down pricing at least on an academic level, and whether this translates to another market is another matter, but on an academic level when you have diversification and you have strong skills which back it up and an alignment of interest by the people running the claims, then absolutely pricing should be reduced to reflect those risk mitigants.

PP: What we want in the market are well-funded, well-capitalized, well-run funds. And certainly, there’s been some issues recently. In the UK, Affinity went into administration, Augusta had to shed half of its staff, move to other premises, restructure its lending agreement with lenders. Vannin got subsumed into Fortress, so clearly there were some business model issues, probably has something to do with working capital during the time it takes for cases to resolve. Stuart, I don’t know what your view is on this, but I would have thought there’s a need for consolidation at some point, amongst the funder market, what’s your view?

SP: Consolidation in the traditional sense of funders or businesses—I think is probably not likely. I think you’ll have a bit of exits from the industry. You will have groups of people leaving one funder and joining or establishing another funder. So I think you will have an aggregation and consolidation, but not in the traditional sense of a mergers and acquisitions approach. I don’t think that necessarily is the nature of this market—unless you’re getting together two very large funders or two very established funders, and taking a global view on the market.

PP: We’ll see. I think you’re right that there will be movement between funders, there’ll be split-off groups and I think there might be some traditional, good old fashioned M&A at some point. But it’s an evolving market so we’ll see. 

Let’s move onto blockchain crowdfunding platforms—do you as panelists see this as being an interesting way of raising money for you funds?  

TI: We don’t actually manage money, so we don’t really think about raising capital. As a business model, I think it’s a slightly different business model to be raising money. So I don’t have a particular view on that. Having said that, I don’t really understand blockchain. That’s not to say ‘therefore it’s bad.’ Just that I don’t have the intellectual capacity or the ability to understand it as things stand. But yeah, it’s certainly been very successful in other markets at raising capital. And if it means raising cheaper capital and it means raising and passing some of that benefit onto the end users of litigation, then I don’t think that can be anything but a good thing.

LFJ will be hosting more panel discussions with audience Q&As throughout the year. Please stay tuned for information on future events.

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Harris Pogust Joins Bryant Park Capital as Senior Advisor

By John Freund |

Bryant Park Capital (“BPC”) a leading middle market investment bank and market leader in the litigation finance sector, is pleased to announce that Harris Pogust has joined the firm as a Senior Advisor.  Harris (Mr. Pogust) is one of the best known and prominent attorneys in the mass tort and class action fields, he was the founding partner and Chairman of Pogust Goodhead worldwide until early 2024 and is currently working with Trial Lawyers for a Better Tomorrow, a charity Harris founded, to help children reach their educational potential all over the world.  Harris’ life work has been to deliver justice for those who have been damaged or injured through the negligence or bad faith of others.

“We are thrilled to have Harris as part of our team.  His knowledge, experience and relationships in the litigation finance sector are of great value to Bryant Park and our clients.  As the litigation finance world becomes more competitive, complex and challenging, having an expert like Harris on our team is invaluable,” said Joel Magerman, Managing Partner of Bryant Park.

Harris’ efforts, in conjunction with Bryant Park will focus on assisting law firms and funders in developing strategies to more efficiently fund their operations and cases and assist them in establishing the right relationships for future growth.  Harris commented, “I have been fortunate to have been a practicing attorney and partner in law firms for over 35 years focused on building and growing a worldwide book of business in the class action/mass tort field.  That required significant capital and throughout my career I have raised over $1 billion for my firms.  I have learned what works and what doesn’t.  I have seen both the risks and rewards in this industry.  I look forward to being able to work with law firms and funders to assist them in putting the right strategies in place with Bryant Park and bringing capital and liquidity to help them grow and flourish.”

About Bryant Park Capital

Bryant Park Capital is an investment bank providing capital raising, M&A and corporate finance advisory services to emerging growth and middle market public and private companies. BPC has deep expertise and a diversified, well-founded breadth of experience in a number of sectors, including specialty finance & financial services. BPC has raised various forms of credit, growth equity, and assisted in mergers and acquisitions for its clients. Our professionals have completed more than 400 assignments representing an aggregate transaction value of over $30 billion.

For more information about Bryant Park Capital, please visit www.bryantparkcapital.com.

20 Legal Firms and Groups Calling on UK Government for Urgent Legislation to Reverse PACCAR

Despite a government-commissioned independent review recommending priority standalone legislation to reverse PACCAR, the Government has failed to act, the letter to the Lord Chancellor says.

“As a highly respected member of the legal community, the Prime Minister rightly often speaks of ‘following the evidence’.

“The independent experts have provided the evidence that this issue needs fixing, yet this Government refuses to act, delaying justice for some and denying justice for future claimants.

“We call on the Government to act swiftly and legislate for the sake of claimants and the reputation of the UK’s justice system.”

The letter follows earlier calls on the Government from claimants to reverse PACCAR urgently, including from Sir Alan Bates , truck hauliers and the lead claimant in a mass action case against six water suppliers for alleged customer overcharging.

This comes amid a drop off in collective proceeding cases in the Competition Appeal Tribunal this year according to Solomonic, as reported in the Financial Times this morning (link). 

Neil Purslow, Chairman of the Executive Committee of ILFA, said:

“We’ve been warning successive governments for more than two years about the potential impact this uncertainty will have on consumers and small businesses’ ability to access justice.

“These figures show that stark reality. Meritorious claims are going unfunded, alleged wrongdoers are unchallenged and competition - one of the great drivers of growth - is not being enforced.

“The Government must act before this small trickle of cases dries up altogether.”

Martyn Day, co-founder of Leigh Day and co-president of the Collective Redress Lawyers Association (CORLA) which signed the letter, said: 

“This issue has created a great deal of uncertainty that is blocking access to justice for ordinary people taking on powerful corporations accused of wrongdoing. 

“The system simply cannot work without litigation funding, and this is a timely reminder to government to fix this issue, and urgently.”

In July 2023, the Supreme Court ruled in the PACCAR judgment that litigation finance agreements were unenforceable unless they met the requirements of Damages-Based Agreements, rendering many ongoing cases invalid and causing delays in the pursuit of justice for millions of claimants. 

The Civil Justice Council (CJC) concluded its comprehensive review of the funding sector four months ago, after the Government had promised to review what legislation might be needed to address PACCAR once the review was complete. The CJC’s review urged priority standalone legislation to reverse the damaging effects of PACCAR. Yet, despite earlier promises, the Government has said the review would merely “help to inform the approach to potential reforms” in “due course”. 

The letter highlights how the Government’s continued inaction contradicts the Prime Minister's own commitment to "following the evidence”.

The signatories, representing firms including Mishcon de Reya, Stewarts, Freeths, and Scott+Scott UK, highlight the “pivotal role” of group actions. They call on the Government to “act swiftly” to adopt the CJC’s recommendation to reverse PACCAR to protect the reputation of the UK’s justice system. The firms also include those who have provided legal representation for Sir Alan Bates, hauliers ripped off by truck manufacturers (link), and leaseholders fighting secret insurance charges (link).

Since the ruling, crucial investment into the UK economy is rapidly being lost. Litigation funders like Burford Capital are taking their funds elsewhere, with CEO Chris Bogart, stating his firm has begun ‘migrating some dispute resolution away from London’, following PACCAR. 

Litigation funding enables claimants with limited means to access justice, enabling landmark cases including those brought by the subpostmasters, retail workers, and small business owners, to hold multinational corporations accused of serious wrongdoing to account, while promoting fair, competitive markets and securing investment into the UK.

--

Below is the letter to the Lord Chancellor, in its entirety:

Rt Hon David Lammy MP
Lord Chancellor and Secretary of State for Justice
Ministry of Justice
102 Petty France
London
SW1H 9AJ

Dear Lord Chancellor,

Congratulations on your new role as Lord Chancellor and Justice Secretary. While we recognise the many challenges you'll face stepping into this role, we wanted to highlight a critical issue that is undermining access to justice and stifling investment in the UK's legal system. But it's an issue with a quick and simple fix.

Group actions in the UK play a pivotal role in enabling individuals to come together to bring claims against those accused of wrongdoing - often multinational corporations with significant resources. It has helped claimants like the subpostmasters, shopworkers, retail investors, and small business owners access justice.

The regime is underpinned by claimants’ abilities to access finance - often through litigation funding where funders provide financial backing for an agreed return of any settlement. However, as you know, the future of this mechanism and the regime is under threat thanks to the disruptive effects of the 2023 PACCAR judgment, and subsequent challenges to the enforceability of funding arrangements.

Claimants with limited means are struggling to access funding to bring their cases, and investment from funders is draining away from the UK legal system.

The Government promised to review what legislation might be needed to address PACCAR once the Civil Justice Council’s review had concluded. 

The CJC reported back 4 months ago with a thorough and nuanced perspective on the funding sector. As members of the legal community, we are sympathetic to sensible reforms and are reassured that the Government is considering these carefully. 

But one unequivocal and pressing recommendation from the CJC was for urgent standalone legislation to reverse the effects of PACCAR to end the uncertainty damaging access to justice. Disappointingly, the Government has so far failed to hear that call, saying only that the review would “help to inform the approach to potential reforms” in “due course”, despite its previous promises.

As a highly respected member of the legal community, the Prime Minister rightly often speaks of “following the evidence”. The independent experts have provided the evidence that this issue needs fixing, yet this Government refuses to act, delaying justice for some and denying justice for future claimants. 

We call on the Government to act swiftly and legislate for the sake of claimants and the reputation of the UK’s justice system.

Signed

The Collective Redress Lawyers Association (CORLA).
Stewarts
Group Actions & Competition, Stephenson Harwood
Scott+Scott UK LLP
Backhouse Jones
Freeths 
Humphries Kerstetter LLP
Mishcon de Reya LLP
Velitor Law
Milberg London LLP
Fladgate LLP
Geradin Partners
Harcus Parker
Tim Constable, Bates Wells
Phi Finney McDonald
Keidan Harrison LLP
Asserson
Leigh Day
Cooke, Young & Keidan LLP
KP Law

Shai Silverman Departs CAC Specialty, Joins Litica as U.S. Head of Underwriting

By John Freund |

After four years helping to build CAC Specialty’s contingent risk insurance practice from the ground up, Shai Silverman is departing the firm to join litigation risk insurer Litica as its Head of Underwriting – U.S.

In a LinkedIn post, Silverman reflected on his time at CAC, where he joined in the early days of the firm’s efforts to turn contingent risk insurance into a mainstream product. Alongside colleagues Andrew Mutter, Michael B. Wakefield, and David Barnes, Silverman helped develop insurance solutions for a wide array of legal risks, crafted bespoke products for hundreds of clients, and played a key role in launching the first-ever contingent risk insurance conference.

Silverman now moves to Litica, a UK-headquartered specialist insurer focused on litigation and contingent risks, to lead its U.S. underwriting function. His move signals not just a personal transition but also the growing transatlantic ambitions of insurers operating in this once-niche corner of legal risk.

Silverman’s departure marks a broader inflection point for contingent risk insurance—a sector now poised for significant expansion. As underwriting talent like Silverman shifts into leadership roles at specialist firms, questions emerge around how traditional insurers will respond, and whether contingent risk insurance will continue its trajectory toward becoming a standard risk-transfer tool for litigation and arbitration.