Trending Now
Commercial Special Features

Key Takeaways From LFJ’s Special Digital Event on Litigation Funding Advisory Firms

May 3, 2022

Key Takeaways From LFJ’s Special Digital Event on Litigation Funding Advisory Firms

LFJ’s latest digital event featured Litigation Finance advisors Rebecca Berrebi (Founder and CEO, Avenue 33, LLC), Peter Petyt (Co-Founder, 4 Rivers Legal), Andrew Langhoff (Founder and Managing Director, Red Bridges Advisors), and moderator Ed Truant (Founder, Slingshot Capital). The panel discussed how they navigate between funders, law firms and claimants, as well as the challenges they face in this market, and the numerous benefits they provide each counter-party. ET: Can you comment on some of the key changes you have seen in the litigation finance market since you got started?  RB: The number one biggest change is that there is so much more money out there than there used to be. In 2016, we rarely had competition on deals. There are so many funds out there that want to allocate capital. If you have a good case, or a portfolio of cases that has merit and a good chance of winning, there would be multiple funders out there looking to fund your case. That is primarily the change I have seen over the arch of my life in litigation finance.  PP: The change that I have seen over the last couple of years is the willingness and appetite for funders to provide capital in addition to what is necessary to run the case. What I have seen is the willingness and appetite for funders to provide working capital. That’s definitely been the development over the last couple of years.  ET: What do you believe is your greatest value add for your clients?  PP: It becomes clear that a very low amount of opportunities that are presented to funders are actually funded. It is in the low single digits. And I am very confident that I will achieve much better success rates than that. And I think it’s the approach that is the most important thing and value add here.  ET: Can you talk about your origination efforts and how you find opportunities? AL: I have been lucky over the last five years being a broker and intermediary, cases and opportunities have found me. What I have found is referral and repeat business is really the best part of the origination process for me. The trick is to find lawyers who are entrepreneurial, who are very open to litigation finance.  RB: I am a lawyer by background. I have a pretty strong network from my whole career working at law firms and funds. And I do try to educate the market the best way I can. Frankly, I get a lot of hits that way by being out in the market and talking in the media.  ET: When a client comes to you, what are they looking for?  PP: I think in the vast majority of cases, plaintiffs may have never used litigation finance before.  There is no doubt in my mind that law firms are the right people to go out and seek opportunities. I think we perform a valuable role here and I think plaintiffs know that. I think it is about managing processes, but adding value.  ET: What are some of the legal considerations as you take on a new client?  RB: You have to start thinking about confidentiality from the get-go. Disclosure with respect to privilege we have to be careful about. There are state-specific issues related to litigation finance that you have to be careful about, specific to disclosure.  ET: In terms of the intake, can you provide us an overview?  AL: I think it is far more effective to take all the information, organize it, mitigate any concerns and present it to the funder. Almost in a way that you are doing the funder’s work for them. Ideally, when I give them that memorandum, I know many funders will paste it into their investment committee memorandum. And that is that idea, I am trying to make it drop dead simple for them. Click here to listen to the entire episode. 
Secure Your Funding Below
Secure Your Funding Sidebar

Commercial

View All
Case Developments Commercial

Woolworths Faces Shareholder Class Action Over Underpayments

By John Freund |

Woolworths Group is facing a new shareholder class action that alleges the company misled investors about the scale and financial impact of underpaying salaried employees. The action, backed by Litigation Lending Services, adds a fresh legal front to the long-running fallout from Woolworths’ wage compliance failures.

According to AFR, at the heart of the claim is the allegation that Woolworths did not adequately inform the market about the risks posed by its reliance on annualised salary structures and set-off clauses. These payment methods averaged compensation over longer periods instead of ensuring employees received correct pay entitlements for each pay period. This included overtime, penalty rates, and other award entitlements.

Recent decisions by the Federal Court of Australia have clarified that such set-off practices are non-compliant under modern awards. Employers must now ensure all entitlements are met for each pay period and maintain detailed records of employee hours. These rulings significantly raise the compliance bar and have increased financial exposure for large employers like Woolworths, which has tens of thousands of salaried employees.

As a result, Woolworths could face hundreds of millions of dollars in remediation costs. The shareholder class action argues that Woolworths failed to disclose the magnitude of these potential liabilities in a timely or accurate way. Investors claim that this omission amounts to misleading conduct, and that they were not fully informed of the risks when making investment decisions.

Case Developments Commercial

Parabellum Capital Named in Goldstein Criminal Disclosure

By John Freund |

Tom Goldstein, the former SCOTUSblog co-founder and prominent appellate advocate, has named Parabellum Capital as the litigation funder at the center of a federal indictment accusing him of misappropriating legal financing to pay off personal debts.

Bloomberg Law reports that in a court filing made last week, Goldstein disclosed that he used advances from Parabellum to cover non-litigation-related expenses, including the purchase of a multimillion-dollar home. The revelation comes amid federal charges alleging that Goldstein misused firm funds to settle gambling losses and personal obligations, then mischaracterized those payments as business expenses. Prosecutors previously referred to an unnamed funder involved in these transactions; Parabellum is now confirmed to be that firm.

Goldstein’s disclosure appears to be part of a strategic legal response to mounting charges of tax evasion and financial misrepresentation. Once a high-profile figure in Supreme Court litigation, Goldstein now faces scrutiny not only for alleged personal financial misconduct but also for the implications his actions may have on the litigation finance ecosystem.

While Parabellum has not been accused of any wrongdoing, the situation highlights a key risk in the litigation funding model: the potential for funds advanced against anticipated case proceeds to be diverted toward unrelated personal uses. Funders traditionally require that capital be deployed for case expenses, legal fees, and expert costs—not real estate acquisitions or debt payments.

This case underscores a growing concern in the legal funding industry: the need for tighter controls, enhanced due diligence, and possibly more explicit regulatory frameworks to ensure that funding agreements are not exploited. As the industry continues to mature, episodes like this could shape how funders vet borrowers and monitor the use of their capital.

Commercial

Litigation Finance Hits Wall as Bets on Blockbuster Returns Flounder

By John Freund |

At a Fall conference hosted by law firm Brown Rudnick, attendees from across the litigation finance industry voiced growing concern about the sector’s prospects, signaling what may be a turning point for a business long hyped for outsized returns.

According to Yahoo Finance, many in attendance described a drain in new investment and increasing skepticism that big wins, once seen as routine, will materialize. In recent years, funders have aggressively financed high-stakes lawsuits with the expectation that a handful of big verdicts or settlements would deliver significant payouts. But now, as legal outcomes remain unpredictable and returns disappoint, investors appear to be pulling back. Some funders are reportedly limiting new deals, tightening criteria for which cases to support, or reevaluating their business models altogether.

For smaller plaintiffs and everyday plaintiffs’ firms, the contraction in funding availability could prove especially painful. The ripple effects may leave many without access to third-party capital needed to bridge the lengthy wait until verdict. And for funders, the shrinking appetite for risk could mean narrower portfolios and potentially lower returns overall.

The industry’s recalibration may also carry broader implications. Fewer fundings could slow litigation overall. Plaintiffs may see reduced leverage while funders may prioritize lower-risk, smaller-return cases. The shift could further concentrate power among a shrinking number of large, well-capitalized funders.

As the post-conference murmur becomes a chorus, the once-booming litigation finance sector may be entering a more sober phase — where hope for home-run returns gives way to caution, discipline, and perhaps a redefinition of what success looks like.