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Key Takeaways from LFJ’s Virtual Town Hall: Spotlight on AI & Technology

By John Freund |

Key Takeaways from LFJ’s Virtual Town Hall: Spotlight on AI & Technology

On Thursday, February 27th, LFJ hosted a virtual town hall on AI and legal technology. The panel discussion featured Erik Bomans (EB), CEO of Deminor Recovery Services, Stewart Ackerly (SA), Director at Statera Capital, David Harper (DH), co-founder and CEO of Legal Intelligence, and Patrick Ip (PI), co-founder of Theo AI. The panel was hosted by Ted Farrell, founder of Litigation Funding Advisers.

Below are some key takeaways from the discussion:

Everyone reads about AI every day and how it’s disrupting this industry, being used here and being used there. So what I wanted to ask you all to talk about what is the use case for AI, specific to the litigation finance business?

PI: There are a couple of core use cases on our end that we hear folks use it for. One is a complementary approach to underwriting. So initial gut take as to what are potentially the case killers. So should I actually invest time in human underwriting to look at this case?

The second use case is a last check. So before we’re actually going into fund, obviously cases are fluid. They’re ever-evolving. They’re changing. So between the first pass and the last check, has anything changed that would stop us from actually doing the funding? And then the third more novel approach that we’ve gotten a lot of feedback

There are 270,000 new lawsuits filed a day. Generally speaking, in order to understand if this lawsuit has any merit, you have to read through all the cases. It’s very time consuming to do. Directionally, as an application, as an AI application, We can comb through all those documents. We can read all those emails. We can look through social and digest public information to say, hey, these are the cases that actually are most relevant to your fund. Instead of looking through 50 or 100 of these, these are the top 10 most relevant ones. And we send those to clients on a weekly basis. Interesting.

I don’t want you to give up your proprietary special sauce, but how are you all trying to leverage these tools to aid you and deliver the kind of returns that LPs want to see?

SA: We can make the most effective use of AI or other technologies – whether it’s at the very top of the funnel and what’s coming into the funnel, or whether it’s deeper down into the funnel of a case that we like – is that we try to find a way to leverage AI to complement our underwriting. We think about it a lot on the origination side just making us more efficient, letting us be able to sift through a larger number of cases more quickly and as effectively as if we had bodies to look through them all, but also to help us just find more cases that may be a potential fit.

In terms of kind of the data sources that you rely on. I think a question we always think about, especially for kind of early stage cases is, is there enough data available? For example, if there’s just a complaint on file, is that going to give you enough for AI to give you a meaningful result?

I think most of the people on this call would tell you duration is in a lot of ways the biggest risk that funders take. So what specific pieces of these cases is AI helping you drill down into, and how are you harnessing the leverage you can access with these tools?

DH: We, 18 months ago or so, in the beginning of our journey on this use case in law, were asked by a very, very big and very well respected personal injury business in the UK to help them make sense of 37,000 client files that they’d settled with insurers on non-fault motor accident.

And we ran some modeling. We created some data scientist assets, which were AI assets. And their view was, if we had more resources, we would do more of the following things. But we’re limited by the amount of people we’ve got and the amount we get per file to spend on delivering that file. So we developed some AI assets to investigate the nearly 40,000 cases, what the insurers across different jurisdictions and different circumstances settled on.

And we, in partnership with them, improved their settlement value by 8%. The impact that had on their EBITDA, etc. That’s on a firm level, right? That’s on a user case where a firm is actually using AI to perform a science task on their data to give them better predictive analysis. Because lawyers were erring on the side of caution. they would go on a lowball offer because of the impact of getting that wrong if it went to court after settlement. So I think for us, our conversations with financiers and law firms, alignment is key, right? So a funder wants to protect their capital and time – the longer things take, the longer your capital’s out, the potential lower returns.

AI can offer a lot of solutions for very specific problems and can be very useful and can reduce the cost of analyzing these cases, but predictive outcome analysis requires a lot of data. And so the problem is, where do you get the data from and how good is the data? How unstructured or structured are the data sets?

I think getting access to the data is one issue. The other one is the quality of the data, of course, that you put into the machine. If you put bad data in a machine, you might get some correlations, but what’s the relevance, right? And that’s the problem that we are facing.

So many cases are settled, you don’t know the outcome. And that’s why you still need the human component. We need doctors to train computers to analyze medical images. We need lawyers and people with litigation experience who can tell a computer whether this is a good case, whether this is a good settlement or a bad settlement. And in the end, if you don’t know it because it’s confidential, someone has to make a call on that. I’m afraid that’s what we have to do, right? Even one litigation fund or several litigation funders are not going to have enough data with settlements on the same type of claim to build a predictive analytical model on it.

And so you need to get massive amounts of data where some human elements, some coding is still going to be required, manual coding. And I think that’s a process that we’re going to have to go through.

You can view the full panel discussion here.

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John Freund

John Freund

Commercial

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Burford Capital Says $700 Million Cash Position Keeps Growth Plans on Track After YPF Setback

By John Freund |

Burford Capital issued a follow-up statement on March 30 addressing the financial fallout from the Second Circuit's reversal of the $16.1 billion judgment against Argentina in the long-running YPF nationalization dispute.

As reported by PR Newswire, the litigation funder emphasized that the ruling has no cash impact on its operations, pointing to more than $700 million in cash, cash equivalents, and marketable securities on hand. The company said its diversified portfolio routinely delivers cash proceeds independent of the YPF asset and reaffirmed plans to double its portfolio by 2030 without additional borrowing.

Burford expects a substantial GAAP write-down of the YPF asset as of March 31, with full details to be disclosed in its first-quarter results in the first half of May. Management noted the write-down is a non-cash accounting adjustment that does not affect operational cash flow.

Looking ahead, Burford signaled it may pursue arbitration through the World Bank's International Centre for Settlement of Investment Disputes under bilateral investment treaties. The company argued Argentina breached investment protections during the 2012 expropriation, though it acknowledged any ICSID proceeding would be a multi-year process.

The statement comes days after Burford shares cratered more than 45% following the Second Circuit's March 27 decision, which found Argentina's nationalization of YPF was governed by public law rather than private corporate bylaws, rendering the breach-of-contract claims non-cognizable.

Cadence Minerals Secures Litigation Funding for Arbitration Against Mexico Over Lithium Nationalization

By John Freund |

Cadence Minerals has obtained third-party litigation funding to pursue an international arbitration claim against Mexico following the cancellation of its mining concessions during the country's lithium sector nationalization.

As reported by Investing.com via bilaterals.org, LCM Funding SG Pty Ltd has approved financing for the arbitration on a non-recourse basis, meaning Cadence and its subsidiary REM Mexico Limited have no obligation to repay if the claims are unsuccessful. The funding arrangement is designed to allow the company to pursue the case while preserving its balance sheet flexibility.

Cadence and REM Mexico allege that Mexico violated the UK-Mexico bilateral investment treaty by canceling concessions tied to the Sonora Lithium Project. The claims include unlawful expropriation and failure to provide fair and equitable treatment to foreign investors.

CEO Kiran Morzaria said the funding "materially strengthens our ability to pursue the arbitration in an appropriately resourced manner." The company indicated it remains open to negotiated settlement discussions with the Mexican government.

The case highlights the growing role of litigation funding in investor-state dispute settlement, where resource companies increasingly turn to third-party funders to pursue treaty-based claims against sovereign governments over nationalization and regulatory actions.

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By John Freund |

JPMorgan Asset Management has made its entry into the litigation finance sector by advancing funds to two major mass tort law firms, marking a significant milestone as one of the world's largest financial institutions moves into the legal funding space.

As reported by Bloomberg Law, the investments were made through JPMorgan's Lynstone Special Situations Fund II, a $2.4 billion fund closed in June 2022. The deals involve post-settlement arrangements with Seeger Weiss and Simmons Hanly Conroy, two prominent plaintiffs' firms.

The structure allows law firms to receive accelerated payments for attorneys' fees that have already been earned but not yet collected. Investors profit when final fee payments exceed their initial advances, with returns typically falling in the low double digits. Because the deals are completed after settlements have been reached, they carry significantly less risk than traditional litigation funding tied to case outcomes.

Seeger Weiss serves as lead counsel in Ozempic and Depo-Provera litigation and played a key role in opioid settlements. Simmons Hanly Conroy received 11.4% of a $2.14 billion opioid litigation fee fund and led Norfolk Southern derailment litigation.

JPMorgan's move follows a broader trend of institutional investors entering litigation finance. Fortress Investment Group, BlackRock, and Davidson Kempner Capital Management are among the major firms increasingly active in legal asset investments, drawn by returns that are uncorrelated with equity markets. Commercial litigation funders deployed $2.8 billion in new commitments last year across 346 deals.