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LFJ Dealmakers Panel: Opportunities at the Intersection of Funding, Mass Torts & ABS

September 28, 2023

LFJ Dealmakers Panel: Opportunities at the Intersection of Funding, Mass Torts & ABS

The panel discussion consisted of Jacob Malherbe, CEO of X Social Media, Sara Papantonio, Partner at Levin Papantonio Rafferty, and Ryan Stephen, Managing Partner of Pine Valley Capital Partners. The panel was moderated by Steve Nober, CEO of Consumer Attorney Marketing Group (CAMG), The discussion spanned the following topics:
  • Who’s doing what in mass torts? How about funding?
  • How funders are evaluating and working with firms
  • Examples of the ABS framework in action & challenges
  • Pre- and post-settlement funding and time to disbursement
The conversation began around the integration of litigation funders into the mass torts sector. There are a lot of variables to consider around mass torts which typically don’t exist in other case types. These include marketing ethics, use of proceeds, claimant access and relationship building, where the call center is located, firm operations at an administrative level, etc. These are all aspects of a law firm that litigation funders need to understand if they are going to partner with a mass torts law firm. The degree of diligence is vast, and will require a years-long commitment. What’s more, there is now a focus on unethical marketing practices, with Congress taking a look at the tactics being used. The question for funders is, how can you protect yourself from unethical marketing efforts (funders might be named in a suit against the law firm). Funders need to mitigate these risks by asking more questions at the outset: What kind of advertising is being used, where are the clients coming from, how do I know that the clients are real (ad tracking)? Too many funders are pouring money into this lucrative space, and run the risk of encountering scammers who set up a business looking to raise money for a mass torts claim, when they have no ability to secure claimants or conduct the proper marketing outreach. What this comes down to at its core is relationships—understanding and knowing who you’re working with. Funders need to feel that the law firm they partner with us trustworthy, but of course should still conduct their own diligence to verify that all activities are on the up and up. On this last point, the panel recommends creating more nuanced tracking—not just ‘cost per case.’ Track advertising costs, medical records, other marketing materials. Really understand how money is moving at a granular level. The discussion then pivoted over to the Camp Lejeune case. Sara Papantonio feels that there will be one more opportunity to make a push for cases when payouts start happening. The question is, will there be enough time to advertise and file a claim before the statute of limitations runs out? Papantonio also noted that many clients won’t qualify for the elective option, and those that do probably won’t take it because of how undervalued it is. So likely, we will see more cases move into litigation. Values are starting to be presented for Tier 1 and Tier 2 injuries, which will help push this into litigation as well. She believes around May of 2024 will be an opportunity to advertise, but the statute of limitations runs out in August. Papantonio explained that Tier 1 injuries are far less risk for funders and litigators. Tier 2s and Tier 3s will have to move through a process, and some won’t be approved, so there is more risk there. Papantonio also believes the fees will be capped at 20-25%, which was the DOJs recommendation. So funders and law firms should plan for that. One final point Papantonio made, was that these mega mass torts are sucking up all the oxygen in the space, but there are plenty of smaller torts that are very meritorious and present opportunities for funders and law firms. The panel concurred, given that $1 billion has spent on Camp Lejeune already, so any new entrants into that claim are coming in late stage. Panelists Ryan Stephen and Jacob Malherbe added that torts such as Tylenol, Roundup part two, paraquat, PFAS claim (which the panel believes might become the biggest case ever), anti-terrorism cases, and others. Malherbe even recommended ‘The Devil We Know,’ a documentary on Netflix about the PFAS claim—so anyone interested can follow up with some binge watching!
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King & Spalding Sued Over Litigation Funding Ties and Overbilling Claims

By John Freund |

King and Spalding is facing a malpractice and breach of fiduciary duty lawsuit from former client David Pisor, a Chicago-based entrepreneur, who claims the law firm pushed him into a predatory litigation funding deal and massively overbilled him for legal services. The complaint, filed in Illinois state court, accuses the firm of inflating its rates midstream and steering Pisor toward a funding agreement that primarily served the firm's financial interests.

An article in Law.com reports that the litigation stems from King and Spalding's representation of Pisor and his company, PSIX LLC, in a 2021 dispute. According to the complaint, the firm directed him to enter a funding arrangement with an entity referred to in court as “Defendant SC220163,” which is affiliated with litigation funder Statera Capital Funding. Pisor alleges that after securing the funding, King and Spalding tied its fee structure to it, raised hourly rates, and billed over 3,000 hours across 30 staff and attorneys within 11 months, resulting in more than $3.5 million in fees.

The suit further alleges that many of these hours were duplicative, non-substantive, or billed at inflated rates, with non-lawyer work charged at partner-level fees. Pisor claims he was left with minimal control over his case and business due to the debt incurred through the funding arrangement, despite having a company valued at over $130 million at the time.

King and Spalding, along with the associated litigation funder, declined to comment. The lawsuit brings multiple claims including legal malpractice, breach of fiduciary duty, and violations of Illinois’ Consumer Legal Funding Act.

Commercial Legal Innovation

Legal Finance and Insurance: Burford, Parabellum Push Clarity Over Confrontation

By John Freund |

An article in Carrier Management highlights a rare direct dialogue between litigation finance leaders and insurance executives aimed at clearing up persistent misconceptions about the role of legal finance in claims costs and social inflation.

Burford Capital’s David Perla and Parabellum Capital’s Dai Wai Chin Feman underscore that much of the current debate stems from confusion over what legal finance actually is and what it is not. The pair participated in an Insurance Insider Executive Business Club roundtable with property and casualty carriers and stakeholders, arguing that the litigation finance industry’s core activities are misunderstood and mischaracterized. They contend that legal finance should not be viewed as monolithic and that policy debates often conflate fundamentally different segments of the market, leading to misdirected criticism and calls for boycotts.

Perla and Feman break legal finance into three distinct categories: commercial funding (non-recourse capital for complex business-to-business disputes), consumer funding (non-recourse advances in personal injury contexts), and law firm lending (recourse working capital loans).

Notably, commercial litigation finance often intersects with contingent risk products like judgment preservation and collateral protection insurance, demonstrating symbiosis rather than antagonism with insurers. They emphasize that commercial funders focus on meritorious, high-value cases and that these activities bear little resemblance to the injury litigation insurers typically cite when claiming legal finance drives inflation.

The authors also tackle common industry narratives head-on, challenging assumptions about funder influence on verdicts, market scale, and settlement incentives. They suggest that insurers’ concerns are driven less by legal finance itself and more by issues like mass tort exposure, opacity of investment vehicles, and alignment with defense-oriented lobbying groups.

Commercial

Courmacs Legal Leverages £200M in Legal Funding to Fuel Claims Expansion

By John Freund |

A prominent North West-based claimant law firm is setting aside more than £200 million to fund a major expansion in personal injury and assault claims. The substantial reserve is intended to support the firm’s continued growth in high-volume litigation, as it seeks to scale its operations and increase its market share in an increasingly competitive sector.

As reported in The Law Gazette, the move comes amid rising volumes of claims, driven by shifts in legislation, heightened public awareness, and a more assertive approach to legal redress. With this capital reserve, the firm aims to bolster its ability to process a significantly larger caseload while managing rising operational costs and legal pressures.

Market watchers suggest the firm is positioning itself not only to withstand fluctuations in claim volumes but also to potentially emerge as a consolidator in the space, absorbing smaller firms or caseloads as part of a broader growth strategy.

From a legal funding standpoint, this development signals a noteworthy trend. When law firms build sizable internal war chests, they reduce their reliance on third-party litigation finance. This may impact demand for external funders, particularly in sectors where high-volume claimant firms dominate. It also brings to the forefront important questions about capital risk, sustainability, and the evolving economics of volume litigation. Should the number of claims outpace expectations, even a £200 million reserve could be put under pressure.