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Legislation to ensure the enforceability of LFAs is progressing smoothly through Parliament

By John Freund |

The following is a contributed piece by Tom Webster, Chief Commercial Officer at Sentry Funding.

So far, the Litigation Funding Agreements (Enforceability) Bill has been passing through Parliament without a hitch.

The government is bringing the legislation in response to the Supreme Court’s decision last summer in PACCAR Inc & Ors v Competition Appeal Tribunal & Ors [2023] UKSC 28, which called into question the enforceability of LFAs.

The Bill was briefly introduced into the House of Lords on 19 March, and was debated at second reading on 15 April. During the debate, while some peers discussed the need for regulation of the litigation funding industry and for careful consideration of whether the retrospective nature of the legislation was justified, no peers opposed the Bill – and many welcomed it.

More recently, during scrutiny at grand committee on 29 April, the relatively small number of peers who attended the session broadly supported the Bill, and several spoke in favour of the need for its provisions to be retrospective.

In terms of the Bill’s drafting, the government proposed some small changes at committee stage, which were waved through by peers. The most significant was to address a potential problem with the original drafting where the LFA relates to the payment of costs rather than funding the provision of advocacy or litigation services.

The problem was that, in the original wording, it could be argued that the Bill only applied to the funding of costs that relate to court proceedings, but not those relating to arbitration, or settlements. This has now been resolved by new wording to make clear that an LFA may relate to the payment of costs following court, tribunal or arbitration proceedings, or as part of a settlement. An LFA may also relate to the provision of advocacy or litigation services.

Meanwhile another government amendment was aimed at avoiding problems for litigants-in-person, by ensuring that the definition of LFAs in the Bill includes agreements to fund the expenses of LiPs, for example where they need to pay for an expert’s report.

During grand committee, peers also expressed their approval of the broad terms of reference that have now been published by the Civil Justice Council for its review of litigation funding, which will include an examination of whether the sector should be regulated; and if so, how. Peers commended the speedy timescale that the CJC has set itself, aiming to produce an interim report by the summer, and a full report by summer 2025.

As the Litigation Funding Agreements (Enforceability) Bill continues its journey through Parliament and the CJC begins work on its review, there are clearly significant changes on the way for the litigation funding sector in the UK.

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Burford Capital Appoints KPMG LLP as Independent Auditor

By Harry Moran |

Burford Capital Limited ("Burford"), the leading global finance and asset management firm focused on law, is pleased to announce that, on July 1, 2024, the audit committee (the "Audit Committee") of Burford's board of directors (the "Board") has approved, and the Board has ratified, the appointment of KPMG LLP ("KPMG") as Burford's independent registered public accounting firm. KPMG will review Burford's consolidated financial statements for the three and nine months ending September 30, 2024 and will audit Burford's consolidated financial statements for the fiscal year ending December 31, 2024.

KPMG replaces Ernst & Young LLP ("E&Y"), which has served as Burford's independent auditor since 2010. While Burford is not subject to traditional UK mandatory auditor rotation every ten years, Burford is nevertheless conscious of shareholder feedback about best practices in the UK market and, while it would have been disruptive to have rotated auditors during the transition to US GAAP and the addition of our New York Stock Exchange listing, with those items behind us now is an appropriate moment to abide by those best practices and move to another Big Four accounting firm.

KPMG's appointment is subject to the ratification of Burford's shareholders at an extraordinary general meeting (the "2024 EGM") to be held in due course.

Dismissal of Previous Independent Registered Public Accounting Firm

On July 1, 2024, the Audit Committee has also approved, and the Board has ratified, the dismissal of E&Y as Burford's independent registered public accounting firm, effective immediately following the issuance of Burford's consolidated financial statements for the three and six months ended June 30, 2024.

The reports of E&Y on Burford's consolidated financial statements for the fiscal years ended December 31, 2023 and 2022 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. In connection with the audits of Burford's consolidated financial statements for each of the fiscal years ended December 31, 2023 and 2022 and during the period from the end of the most recently completed fiscal year ended December 31, 2023 through July 1, 2024 (the "Interim Period"), there were no "disagreements" (as defined in Item 304(a)(1)(iv) of Regulation S-K) with E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which "disagreements", if not resolved to the satisfaction of E&Y, would have caused E&Y to make reference to the subject matter of the "disagreements" in connection with their report for such years. There were no "reportable events" (as described in Item 304(a)(1)(v) of Regulation S-K) during the two fiscal years ended December 31, 2023 and 2022 or the Interim Period, except for certain identified material weaknesses in Burford's internal controls relating to:

  • a lack of available evidence to demonstrate the precision of management's review of certain assumptions used in the measurement of the fair value of capital provision assets as disclosed in Burford's annual report on Form 20-F for the year ended December 31, 2023 filed with the US Securities and Exchange Commission (the "SEC") on March 28, 2024, which Burford is in the process of remediating as of the date of this announcement; and
  • the determination of Burford's approach to measure the fair value of capital provision assets in accordance with Accounting Standards Codification Topic 820—Fair Value Measurement, as disclosed in Burford's annual report on Form 20-F for the year ended December 31, 2022 filed with the SEC on May 16, 2023, which was remediated at December 31, 2023.

The Audit Committee discussed the "reportable events" with E&Y, and Burford has authorized E&Y to respond fully to the inquiries of KPMG, as successor auditor, concerning the subject matter of such "reportable events".

Pursuant to Item 304(a)(3) of Regulation S-K, Burford provided E&Y with a copy of the disclosures in this announcement prior to furnishing this announcement under the cover of Form 6-K to the SEC, and E&Y has furnished a letter addressed to the SEC stating that E&Y agrees with the statements set forth in this paragraph and the two immediately preceding paragraphs above. A copy of E&Y's letter, dated July 9, 2024, has been furnished as Exhibit 99.1 to the Form 6-K.

Appointment of New Independent Registered Public Accounting Firm

On and effective as of July 1, 2024, KPMG was appointed as Burford's independent registered public accounting firm for the three and nine months ending September 30, 2024 and for the fiscal year ending December 31, 2024. The Audit Committee approved, and the Board ratified, the appointment of KPMG, subject to the shareholder approval at the 2024 EGM. 

During Burford's two most recent fiscal years ended December 31, 2023 and 2022 and the Interim Period, neither Burford nor anyone acting on its behalf has consulted KPMG regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Burford's consolidated financial statements, and neither a written report nor oral advice was provided to Burford that KPMG concluded was an important factor considered by Burford in reaching a decision as to any accounting, auditing or financial reporting issue or (ii) any matter that was either the subject of a "disagreement" (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a "reportable event" (as described in Item 304(a)(1)(v) of Regulation S-K).

About Burford Capital

Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its offices in New York, London, Chicago, Washington, DC, Singapore, Dubai, Sydney and Hong Kong.For more information, please visit www.burfordcapital.com.

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Allia Group Appoints Seasoned Legal Strategist Justin Fitzdam as General Counsel

By Harry Moran |

Allia Group, the innovative legal finance firm exclusively specializing in healthcare insurer disputes, is excited to announce that Justin Fitzdam has been appointed as General Counsel. Mr. Fitzdam is based in Allia Group’s Nashville office.

Fitzdam has extensive in-house healthcare litigation expertise. In his 11 year tenure at HCA Healthcare, one of the nation’s largest hospital systems and healthcare service providers, he spearheaded the development of their nationwide litigation program against managed care payors. In addition, he oversaw all litigation, regulatory enforcement and compliance, investigations, and related legal issues for a substantial portfolio of HCA’s facilities and affiliates. His strong track record of successful litigation against the largest health insurance companies resulted in several of HCA’s largest judgments.

Over the course of his career, Fitzdam brings nearly 20 years of litigation, mediation, and arbitration experience across a broad range of large, complex, and highly regulated industries.He began his career in private practice at Sullivan & Cromwell LLP and then Boies, Schiller & Flexner LLP where he represented clients on both the plaintiff and defendant sides in all federal and state court levels, including the United States Supreme Court.

Fitzdam holds a J.D. from Cornell Law School and a B.S. in Accounting from the University of Florida.

In his new role, Fitzdam will be responsible for leading and implementing litigation strategy for Allia Group’s portfolio of litigation and will serve as the head legal advisor to the CEO and senior management. In addition, he will also define new areas of growth and oversee the underwriting of legal risks related to new business and transactions.

“We are thrilled to welcome Justin to the team,” said Eliot Listman, CEO of Allia Group. “His expertise with payor litigation in both in network and out of network cases will be indispensable. He is an ideal fit as our strategy grows to include solutions for even the largest hospital systems and physician groups in the battle against big health insurance. We are fortunate to have Justin on the team in our mission to hold payors accountable for bad behavior.”

About Allia Group:

Allia Group specializes in litigation finance solutions to improve the financial position of healthcare providers. To demand responsibility from healthcare insurers, Allia litigates and arbitrates against these payors and structures the purchase of underpaid claims and legal rights to monetize these assets, benefitting providers’ cash flow. Allia has the experience to address the needs of hospital systems, physician groups, and emergency transportation businesses. Visit www.allia.group to learn more.

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Lawyers for Civil Justice Submits Letter to House Subcommittee in Support of Funding Disclosure Rules 

By Harry Moran |

As LFJ reported last month, a committee hearing in the US House of Representatives brought a renewed focus on the issue of disclosure and transparency in the use of third-party litigation funding. Since that hearing, the debate has continued to evolve, with advocacy groups lending their voices to the discussion, as funders and law firms try to influence the direction the legislature will take.

In a letter submitted to the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, Lawyers for Civil Justice (LCJ) responded to the Subcommittee’s hearing on third-party litigation finance. The letter, signed by LCJ’s president, Molly H. Craig, laid out its argument that “there are numerous compelling reasons why uniform rules requiring disclosure will benefit federal courts and parties while improving the transparency and fairness of the federal court system.”

LCJ listed the following reasons why it supported the introduction of new rules governing the disclosure of litigation funding:

  • Reduce the risk of conflicts of interest
  • Ensure that decision makers participate in court proceedings
  • Identify the actual interests of parties
  • Evaluate discovery requests and allocate costs and sanctions in accordance with the FRCP
  • Protect the interests of class action members
  • Ensure counsel represent their client’s interests, not third-party funders
  • Inform trial rulings on evidence admissibility and acceptable lines of questioning

LCJ also highlighted four proposals that it has previously put forward and continues to advocate for, which would introduce specific amendments to existing rules in order to “support or require such appropriate TPLF disclosures”. These include amendments to Rule 26 disclosure, Rule 16 disclosure, Rule 26.1 of the Federal Rules of Appellate Disclosure, and FRCP Rule 7.1 disclosure.LCJ describes itself as “a national coalition of corporations, law firms, and defense trial-lawyer organizations that promotes excellence and fairness in the civil justice system and supports measures to secure the just, speedy, and inexpensive determination of civil cases.”

More information about LCJ can be found on its website.