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LFJ Conversations
LFJ Conversations

LFJ Conversations is an original content series produced by the Legal Funding Journal editorial team, and featuring key thought leaders from throughout the global legal funding community.

LFJ Conversations

48 Articles
LFJ Conversation

An LFJ Conversation with Neil Purslow

Neil Purslow co-founded Therium in 2008 and is a director of Therium Capital Management Limited and the firm’s Chief Investment Officer. Neil is a solicitor with over 26 years’ experience and was previously Litigation Counsel in-house for Marsh & MacLennan Companies, Inc. (MMC). Prior to this he was in practice in the City of London with US firm Reed Smith and Withers. Neil is Chair of the Executive Committee and on the management committee of ILFA, he is also a board member of the Association of Litigation Funders, the self-regulatory body for the litigation funding industry in England and Wales. Neil has given expert evidence on litigation funding and speaks regularly at conferences and is often quoted in the media on issues related to the industry and asset class. He gained an MA in Jurisprudence from the University of Oxford (1995). Neil Purslow was ranked as a Tier 1 individual in litigation finance by Chambers and Partners, Leaders League, Law Dragon and other directories. Below is our LFJ Conversation with Neil Purslow: As the PACCAR situation continues to develop, how do you think this will ultimately play out?  Will the litigation funding industry face enhanced regulation in the UK going forward? The steps the Government has taken in response to PACCAR have been very positive and reaffirm the Government’s recognition of the importance of the litigation funding industry in supporting access to justice and the UK legal sector. The Litigation Funding Agreements (Enforceability) Bill (LFA Bill), which is presently going through Parliament, will reverse the PACCAR decision and reestablish the Government’s original policy intent, ensuring continued access to third-party funding in the UK.  The Bill is expected to be passed before the summer recess at the end of July. The benefits of funding were highlighted throughout the recent debate on the Bill in the House of Lords, in particular that funding enables access to justice and upholds the rule of law, enabling ordinary individuals and SMEs to bring claims against better resourced companies and institutions, such as the Post Office. Several Lords even made the point that funders’ returns were fair, given the significant risks involved in funding litigation, especially against large and deep pocketed defendants. This week, the Civil Justice Council (CJC) published the terms of reference for its review of third party litigation funding. It is extremely encouraging that the CJC is committed to making litigation funding more accessible in order to improve access to justice and fairness for all, so that claimants like the sub-postmasters, can seek redress against large corporations.  The litigation finance industry shares that aim. Whatever the outcome of the review, regulation will need to align with the government’s goals of furthering access to justice. The risk with any regulatory regime is that it can have unintended consequences, which could ultimately disadvantage claimants by limiting the availability of funding and curtailing access to justice. How should the industry respond to calls for regulation? Some stakeholders are suggesting that litigation funders should lead the charge here. Do you agree or disagree, and why?  The industry has always taken a proactive approach to regulation through the UK’s Association of Litigation Funders (ALF) and its Code of Conduct which has been influential in setting standards in litigation funding, both for members and non-members alike in the UK and elsewhere.  Litigation funders are already subject to Court’s oversight.  The industry has nevertheless rightly welcomed the CJC review as an opportunity to take a fresh look at the sector and the positive role that it plays in the legal system and how the review can improve access to litigation funding. Consistent with many of the speeches in the House of Lords on the LFA Bill as well as the CJC’s stated objective, the starting point for the review must be the recognition that in the absence of legal aid and with the high cost of litigation, litigation funding is an important and essential tool to provide access to justice.  Any proposals arising from the review should promote the potential for litigation finance to perform that role. The review of the industry provides an opportunity to examine any other changes that would improve the availability of funding to claimants and also deliver better financial outcomes for claimants in litigation.  For instance, empowering the Courts to order defendants to pay successful claimants’ funding and insurance costs would result in significantly improved financial outcomes for claimants and disincentivise the defence strategy of running up costs to stifle claims, seen so starkly in the Post Office litigation. Any regulatory proposals should seek to address a problem and there should be clear evidence that such a problem exists.  Self-regulation of the industry has worked well in practice for over 10 years and litigation finance arrangements have many checks and balances already built in, not least the involvement of lawyers advising claimants on their litigation funding arrangements.  There is an important role for the International Legal Finance Association (ILFA) and the ALF to provide the CJC with an understanding of how claims are funded in practice. Any proposal for regulation must also be workable and effective.  The industry witnessed the impact of the clumsy and inappropriate regulation brought in by the Liberal government in Australia which significantly impeded the proper functioning of the industry for a period until the regulation was withdrawn.  The UK should be wary of falling into that trap. ILFA and ALF are ideally placed to assist the CJC in understanding the practice of litigation finance and the opportunities that exist to make the best use of its potential in upholding the rule of law.  Both organisations will work constructively with policy makers to ensure that the review supports greater access to justice for consumers and SMEs and maintains the UK’s place as a leading global legal centre. Has PACCAR influenced your investment thesis at all? Are you adapting your underwriting standards in any way - either in the UK, or globally?  In common with the entire UK market, Therium has had to take steps as far as possible to mitigate the potential effects of PACCAR.  That in itself has been time consuming and there has been opportunistic satellite litigation which has both wasted Court time and cost money.  The LFA Bill however will restore the pre-PACCAR position for both existing and future funding arrangements, which will remove the uncertainties that PACCAR has created and restore the ability of funders to offer funding to as many cases as possible.  It also preserves the viability of the CAT collective proceedings regime, which is reliant on funding. The Government’s response to PACCAR has demonstrated that it understands and values the benefits that the litigation finance sector brings and that it reinforces the attractiveness of the UK as a jurisdiction in which to invest.  From a public relations perspective, what more can the industry do to convince legislators and the general public that litigation funding is ultimately a force for positive change in the world?  The Post Office scandal has been an important example of how civil litigation can play a pivotal role in righting a huge miscarriage of justice. In turn, the media coverage has been a game changer in increasing awareness of the vital role that litigation finance plays in providing access to justice.  That example continues to resonate with the public and with legislators, with its effects felt both domestically and also internationally. ILFA plays an essential role in helping legislators and policymakers to understand litigation finance and in countering misinformation about the industry pedalled by corporate lobbyists such as the US Chamber of Commerce and their proxies like Fair Civil Justice and its forerunner, Justice Not Profit, which unsuccessfully tried to derail the introduction of the collective proceedings regime in the CAT in 2015. Their objective is to limit access to justice and frustrate litigation against big corporate wrongdoers. It is also important that the benefits of litigation funding to upholding the rule of law are appreciated more widely. Lord Sandhurst made the point in the House of Lords that the absence of legal remedies damages our economic system and the society in which we live.  Finding funding mechanisms to achieve legal remedies for individuals and small and medium sized businesses who do not have the resources to achieve this is of social value and in the public interest. Being able to enforce legal rights is essential for a functioning market economy.  According to Bain and Co’s Transatlantic Confidence Index, the rule of law remains one of the most appealing reasons to invest in the UK. At an event at Gray’s Inn that was supported by The Law Society and the Bar Council, Shadow Justice Secretary, Shabana Mahmood made her first major speech since assuming the role in which she expressed her desire for the UK be home to the fastest growing legal sector in the world. The availability of litigation funding will undoubtedly help to ensure that the UK retains its position as a leading global disputes hub that currently contributes £34 billion to the UK economy each year.
LFJ Conversation

An LFJ Conversation with Michael Kelley, Partner, Parker Poe

Parker Poe traces its roots to 1884, when it was founded by a future North Carolina Supreme Court justice. In the early 1950s, World War II veterans Francis Parker and Bill Poe became partners. Their names and commitment to public service have been part of the fabric of the firm ever since. ‘LFJ Conversations’ is an original content series produced by the editorial team at Litigation Finance Journal and featuring the leading thought leaders from throughout the global litigation finance community.’ For more than a century, Parker Poe has represented many of the Southeast’s largest companies and local governments in transactions, regulatory issues, and complex litigation. The business law firm has more than 250 attorneys serving clients from eight offices in Charlotte and Raleigh, North Carolina; Charleston, Columbia, Greenville, and Spartanburg, South Carolina; Atlanta, Georgia; and Washington DC. Parker Poe uses a cross-disciplinary, collaborative approach to provide comprehensive solutions to their clients. What led you to make the move to Litigation Finance? My move to Litigation Finance was coincidental. In 2012, a litigation funder retained me to assist with the structuring and formation of its second international fund. Shortly after, they offered me the opportunity to work on all their litigation funding transactional work. In the past ten years, my litigation funding practice has grown exponentially, representing over 90% of my professional time. Litigation funding allows me to practice and use both areas of my background in finance and law. Moreover, the bespoke nature of litigation finance transactions requires creativity to achieve the right mix of aligned incentives for all parties involved in the transaction. I appreciate this remarkable opportunity to foster the growth of and to help define this maturing asset class. And I love working with all my clients, whether they are litigation funders, law firms, or claimants. How does your experience in non-profits and social impact investments inform your work in Litigation Finance? People frequently ask me about the corporate-related work I rely on for structuring litigation finance transactions. More than M&A, I rely on my investment funds formation background for finding creative solutions to unique structuring challenges. I have especially drawn on my work with social impact investment funds and transactions. For example, I have created mini-funds of pooled capital that play a first-loss capital tranche role, providing those investors an opportunity for out-size return while paving the way for raising traditional litigation finance. Traditional litigation funders have appreciated having that first-loss cushion to mitigate the risk of loss on their investment (a form of insurance). For the funded party, the first-loss pooled capital tranche unlocked the door to receive an aggregate of $60 million for financing a portfolio of claims. I have also drawn on my fund formation work for structuring innovative waterfall structures to balance incentives among participants in the litigation funding transaction. Can you talk about the interplay between Litigation Funding and social justice? It is often cliche that litigation funding provides access to justice. However, every day I see highly meritorious claims that would otherwise not be able to be advanced but for litigation finance. I have seen this in individual claims and portfolios of claims across a wide range of cases, including intellectual property, international arbitration, corporate disputes, and, of course, in the personal injury and mass tort space. Money alone should not be the sole barrier to pursuing meritorious claims. Litigation Finance helps level the financial playing field for claims prosecution/monetization. How do you think GCs can be convinced to utilize Litigation Funding? I was a GC for over 17 years and wish I had access to litigation finance during that time. The value proposition for GCs and in-house legal departments is clear: legal claims are assets that can and should play a vital role in a company’s financial health and growth. Litigation finance permits GCs to turn dormant claims or claims they cannot otherwise pursue due to financial budgets into sources of revenue. Instead of in-house legal teams being viewed solely as cost centers, those departments can become revenue and profit centers for the companies without adding any additional legal risk to the company. In addition, the GCs can become heroes inside their companies! I would even go so far as to say that GCs not taking advantage of litigation funding to pursue their company’s claims are not acting responsibly. I would further argue the same for law firms who need to understand litigation funding and what it can do for law firm clients and build contacts in the industry to properly service law firm clients. Michael P. Kelley, Partner, Parker Poe Kelley is a thought leader in the industry with more than ten years of experience assisting US and International litigation funders, law firms, and claimants. He is one of Lawdragon’s “Top 10 Global Advisors in Litigation Finance” and a frequent speaker on key industry issues. Kelly has over 25 years of experience in the legal finance industry. He is the former general counsel of EMP Global, overseeing $8 billion in assets across different investment funds in emerging markets. He has a JD from Antonin Scalia School of Law, George Mason University, and a Ph.D. from the London School of Economics and Political Sciences.
LFJ Conversation

An LFJ Conversation with Jonathan Stroud

Jonathan Stroud is General Counsel at Unified Patents, where he
manages a growing team of talented, diverse attorneys and oversees a
docket of administrative challenges, appeals, licensing, pooling, and
district court work in addition to trademark, copyright,
administrative, amicus, policy, marketing, and corporate matters.


Prior to Unified, he was a patent litigator, and prior to that, he was
a patent examiner at the USPTO. He earned his J.D. with honors from
the American University Washington College of Law; his B.S. in
Biomedical Engineering from Tulane University; and his M.A. in Print
Journalism from the University of Southern California. He enjoys
teaching, writing, and speaking on patent and administrative law and
litigation finance.

Unified is a 350+ international membership organization that seeks to
improve patent quality and deter unsubstantiated or invalid patent
assertions in defined technology sectors (Zones) through its
activities. Its actions are focused broadly in Zones with substantial
assertions by Standards Essential Patents (SEP) holders and/or
Non-Practicing Entities (NPEs). These actions may include analytics,
prior art, invalidity contests, patentability analysis, administrative
patent review (IPR/reexam), amicus briefs, economic surveys, and
essentiality studies. Unified works independently of its members to
achieve its deterrence goals. Small members join for free while larger
ones pay modest annual fees.

Below is our LFJ Conversation with Jonathan Stroud:

1)   Unified Patents describes itself as an "anti-troll." You claim to
be the only entity that deters abusive NPEs and never pays. Can you
elaborate?

In the patent risk management space, Unified is the only entity that
works to deter and disincentivize NPE assertions.  Because of the
expense and economics of patent litigation, parties often settle for
money damages less than the cost of defending themselves, paying the
entity, often for non-meritorious assertions. This allows them to
remain profitable, thus fueling and incentivizing future assertions,
regardless of merit. Unified is the only solution designed to counter
that dynamic.  That is why Unified never pays NPEs. This ensures that
Unified never incentivizes further NPE activity. By focusing on
deterrence, Unified never acts as a middleman, facilitating licensing
deals between NPEs and implementors.

2) How does Unified Patents work with litigation funders, specifically?

As many NPE suits are funded or controlled by third parties, we are
often called to consult on and seek to understand litigation funding
and the economics of assertion.  Among other things, we provide filing
data, funding information, reports, and other work related to funding
and also run a consulting business related to negotiations and aspects
of dealmaking affected by litigation funding.  For example, we have
helped identify that at least 30% of all U.S. patent litigation filed
in recent years has been funded (up through 2020), through one
mechanism or another.  We will continue to work to understand the
marketplace and transactions, and endeavor to provide the best insight
into the marketplace that our data affords.

3)  With Judge Connolly's recent ruling, disclosure has become a hot
topic in the US. How do you see this ruling impacting IP litigation
going forward?

Well before Chief Judge Connolly's actions, litigation funding
disclosure has been a topic of discussion at the judicial conference,
among other judges, and amongst those implementing and revising the
Federal Rules of Civil Procedure, not to mention Congress and the SEC.
The Judicial Conference has been called to revise the disclosure rules
for over a decade.  Similar disclosure orders or rules applied in New
Jersey, California, Michigan, and another dozen district courts
nationwide, in addition to numerous rulings on admissibility and
relevance in Federal and state courts stretching back decades.  Chief
Judge Connolly's order has attracted outsized interest in the patent
community in particular.  It quickly exposed some of the 500 or so
cases filed annually by IP Edge as funded, as well as the high number
of patent plaintiffs in Delaware.   Calls for disclosure did not begin
with Judge Connolly; has been a continuing ongoing debate stretching
back decades. Insurance disclosures go back to the early 70s, and
other types of loans or financial instruments are already subject to
certain disclosure rules, in court, governmentally, or by regulators.
Moving forward, the increasing prevalence of litigation funding and
the rising awareness among the judiciary and bar will mean fitful
district-specific under- and over-disclosure until a national rule is
put in place through the Federal Rules of Civil Procedure.  It's
inevitable.  It's just a matter of time.

4) Insurers seem to be shying away from judgment preservation
insurance at the moment--is this a trend you see continuing, and how
might this impact IP litigation?

Insurance markets are often dominated by sales-side pressures and so
are susceptible to irrational exuberance and overpromotion of certain
policies.  Couple that with competition amongst brokers to offer
attractive terms for a "new" product, and you have pressures that have
driven down offered rates, a trend that seems to be reversing itself
now. To be sure, judgment preservation has existed in some form for
many years through other funding and insurance sources, and you've
always been able to buy and sell claims and judgments on appeal.

The increased emphasis on judgment preservation insurance seems driven
by a handful of brokers successfully selling rather large policies,
coupled with a glut of interest; my understanding is that some of the
recent (and predictable) remand on appeal have dampened
the enthusiasm of that market a tad, but that really just means rates
returning to reasonable levels (or at least growing resistant to
sales-side pressure).  The small JPI market should stabilize,
affording successful plaintiffs the option, and in turn extending
appellate timelines and recovery timelines, especially in
higher-profile damages award cases.  It will generally prevent
settlements below the insured threshold. It should also provide some
incentive to sue and to chase large damages awards in the first place,
if it becomes clear that JPI will be available after a judgment,
allowing for less well-capitalized plaintiffs to recover earlier and
avoid binary all-or-nothing outcomes.

Additionally, the Federal Circuit and other appellate courts will
eventually grapple with the "disclosure gap." That is, the Federal
Rules of Civil Procedure insurance policies since the 1970s must be
disclosed at the trial level, but not yet at the appellate level; but
the same concerns that animated the 1970 amendments to the FRCP now
apply on appeal, with the rise of JPI.  Circuits will have to
grapple with adopting disclosure rules for insurance policies
contingent upon appeal.

5)   What trends are you seeing in the IP space that is relevant to
litigation funders, and how does Unified Patents' service fit into
those trends?

Early funding stories were dominated by larger cases and portfolios,
but we are now seeing a trend of much smaller cases being funded, and,
in the case of both IP Edge and AiPi Solutions, with certain patent
aggregators getting creative and funding entire suites of very small
nuisance cases.  We see funding now at all levels, from the IP Edges
of the world to the Burfords, and there is a trend toward investing in
pharmaceutical ANDA litigation and ITC cases.  Both should continue,
which should extend cases, increase the duration and expense of
litigation, and should drive more licensing.  Unified will continue to
seek to deter baseless assertions and will continue to identify,
discuss, and detail the structures, funding arrangements, and suits
related to litigation funding, and continue to show how much funding
is now dominating U.S. patent litigation, to the extent it is knowable.

LFJ Conversation
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An LFJ Conversation with Nick Wood

Nick Wood has been involved in structuring and financing numerous litigation strategies over many years. After a long career in wealth management and many allied business ventures, he established Audley Capital in late 2022. Audley has grown rapidly to be a leading light in the litigation funding industry, bringing together investment capital, legal excellence and case origination. Legal Intelligence - formed by Audley Capital and AXai - empowers the legal industry to navigate the future with confidence. Nick believes that by harnessing the transformative power of AI and digital innovation, Legal Intelligence can equip legal firms and litigation funders with the tools and insights they need to make informed decisions, reduce risks, and offer unparalleled service and efficiency gains. LI’s goal is to create a world where legal practices can thrive on the certainty of their actions, driving positive outcomes for their clients. The utilisation of technology has always been a key ingredient in the Audley service proposition. As with many great opportunities, Audley and AXai came together by chance but swiftly worked out that collaboration was essential-maximising the impact of knowledge, connectivity and technology to create the art of the possible. Away from work, Nick’s interests include golf, rugby, cycling, food and wine. Below is our LFJ Conversation with Nick Wood. 1) There is a lot happening at the intersection of litigation funding and technology. Where do you currently see the most intriguing opportunities at the moment? The litigation funding industry has grown massively in recent years as demand has created intriguing investment opportunities for those seeking uncorrelated returns. However, it is fair to say that the legal profession has lagged behind other sectors in implementing technology and this has meant that accurate assimilation of risk/return ratios have been difficult for investors to ascertain. Indeed, in some cases money has been poorly allocated to firms that quite frankly do not have the required skill sets, and in others it has proved impossible to raise the required investment to take a case forwards. Neither of the above serves plaintiffs properly and they are the most important stakeholder in this. We see technology as an enabler. It helps great cases, great law firms and intelligent capital to stand out and be heard. It enables funders to risk assess potential cases quickly, accurately and effectively. It enable law firms to demonstrate historical performance, current case work and future opportunity. 2) You recently launched Legal Intelligence, an AI platform for the Legal Services industry.  What is the key differentiator here - why should legal professionals consider Legal Intelligence? Legal Intelligence Ltd (LI) is the coming together of like minded individuals. Audley brings a weight of experience in terms of litigation funding, law firm consulting and case development and management. AXai is an AI/technology powerhouse with long term experience of implementing technology to create bespoke solutions to complex problems. Together, LI is demonstrating the art of the possible. 3) Walk us through how a litigation funder might use your platform. From bookbuilding to client onboarding, how would Legal Intelligence provide efficiencies along the way? Wow, that could take a while! In brief, LI  has several ready made modules to enable claim verification, quantum calculation, case management, data trawling and risk analysis both at inception and at each milestone. For law firms, LI can provide onboarding tools, data scraping to maximise the value of each client, data trawling to reduce paralegal costs, client facing chatbots, case management tools and financial management assistance. Basically, LI makes investment capital more intelligent and it makes investable law firms stand out. We are also working on a number of bespoke projects with both funders and law firms. 4) What are the chief concerns prospective clients have about your platform - or about AI platforms in general? And how do you allay those concerns? It is really interesting to discuss technology generally, and AI in particular with prospective clients. Losing control is the probably the biggest fear, but those at the forefront of our industry realise that it has to be the way forward. Costs will always be under pressure, either through competition or regulation. Funders spend much of their time on cases that will not be funded and law firms spend massive resources on trying to access funding without success. LI seeks to short circuit much of this, making funding more swift, more accessible and more efficient. If we can work more effectively as a collective, access to justice will become quicker, cheaper and more successful, enabling those that need a voice to be heard. Enabling social justice is the beating heart of Audley, AXai and LI. 5) Where do you see the evolution of litigation funding and legal technology moving from here?  What advancements should we be keeping an eye on, and how do you see those impacting the sector?  There is massive interest from institutions, endowment funds and private capital in legal finance. Returns can be impressive and impactful. Many of those investing see that social responsibility and justice is served best by enabling those that need representation to be able to access it. We see the implementation of ‘intelligent’ technology as being vital to the further development of the litigation finance sector, ensuring that capital is invested wisely and effectively. Claim verification, case management, data trawling, client facing chatbots, settlement calculation, performance monitoring and active communication are becoming ever more embedded in litigation management. Legal Intelligence is, and will continue to be at the forefront of this transformational and exciting new world!
LFJ Conversation
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An LFJ Conversation with Louisa Klouda, CEO at Fenchurch Legal

As the litigation funding industry continues to evolve, Louisa Klouda, CEO of Fenchurch Legal shares insights into the sector and Fenchurch Legal’s approach and practices. Below is our LFJ Conversation with Louisa Klouda:

What drew you to the world of litigation funding?

My entry into the world of litigation funding wasn't a direct one, but rather a spark of curiosity during my previous role in corporate finance and the asset-backed lending world. I came across the concept of litigation funding and found myself instantly drawn to its unique characteristics. I discovered a market dominated by large funders focusing on large cases like class actions. However, I noticed a significant gap: a lack of support for smaller claims, particularly in areas like housing disrepair and the challenges the law firms faced in accessing funding for these meritorious claims. Recognizing the gap in the small-claims market, I saw an opportunity to create Fenchurch Legal in 2020. The aim of the business was twofold: to facilitate access to justice for smaller claims and to provide an avenue for investors looking for alternative investment opportunities.

Can you provide an overview of small ticket litigation funding and its significance in the UK legal landscape?

Small ticket litigation funding plays a vital role in the UK legal landscape, offering an alternative approach to financing legal claims. In essence, it involves providing funding to law firms for smaller value cases across various areas like personal injury, housing disrepair, and financial mis-selling, unlike large-ticket funding which targets high-stakes class actions. Small-ticket funders like Fenchurch Legal focus on quantity, funding a high volume of smaller cases. These case types have clear legal precedent, and are protocol-based and process-driven consumer claims, with high success potential. This subset of litigation funding addresses a gap in the legal financing ecosystem created by rising legal costs and resource-intensive cases. Small ticket litigation funding ensures that even modest claims, like housing disrepair receive the backing necessary to navigate the legal process, ultimately facilitating access to justice and contributing to a more balanced and inclusive legal landscape.

How does this subset of litigation funding attract investors?

The appeal of small-ticket litigation funding to investors is multifaceted, driven by three key factors -  flexible entry points, portfolio diversification, and unique security features. Firstly, it provides investors with lower entry points compared to larger funders. This is particularly attractive to those moving away from traditional markets and seeking a more balanced investment approach with steady returns. The accessibility of smaller minimum investment amounts aligns with the preferences of investors aiming for a diversified and resilient portfolio. Small-ticket funders focus on quantity, funding a high volume of smaller cases. This diversification approach effectively spreads the risk across various law firms, multiple cases and case types, reducing the reliance on the success of a single case. Investors are drawn to the stability and risk mitigation inherent in this investment strategy. Moreover, investors like the insurance-backed nature of this investment. All cases are supported by an After the Event (ATE) insurance policy, covering all costs and disbursements if the case is unsuccessful. Additionally, upfront interest is charged, debentures are in place and there is an assignment over the case proceeds.

How has Fenchurch emerged and established itself in this market, and what key strategies contributed to its growth?

Our key strategy is to have a niche focus on smaller claims within specific case types where we have a deep understanding and only partnering with fully vetted law firms. Recognizing growing interest in litigation funding as an alternative asset class, Fenchurch strategically lowered investment entry barriers making it a more accessible investment solution. This has enabled us to broaden our investor base, enabling us to raise more capital and support a wider range of law firms seeking funding.

How have you seen the landscape of small ticket litigation funding evolve, and what trends do you anticipate for the future?

There's a noticeable shift towards recognising the significance of smaller-scale claims in the funding market. I anticipate the market to continue its expansion into new case types beyond traditional areas but with that will come changes in the regulatory landscape, potentially impacting market dynamics and requiring adaptation from funders. As a funder specialising in small ticket claims, especially those funded at volume, staying ahead of regulatory changes is important. We remain cautious about specific case types, recognising that shifts in litigation trends could render a case type unviable, as witnessed in the Road Traffic Cases (RTA) cases when fixed costs were brought in. Funders must develop a broad network of contacts to stay informed about evolving market conditions. Another trend I see growing is wider tech adoption within the industry. Technology is playing a pivotal role in streamlining processes, enhancing risk assessment and driving efficiency and scalability. Recognizing the limitations of off-the-shelf solutions, we developed our own loan management software, providing a bespoke platform for managing loan repayments, monitoring, and onboarding. Continued tech integration is needed to enable automation, boost efficiency, enhance risk assessment capabilities, and improve investor reporting. I also see increased awareness and interest from investors. I think small-ticket litigation funding will become increasingly more attractive as investors become more familiar with the potential benefits and opportunities, resulting in a rise in investment inflows. Lastly, the focus on Environmental, Social, and Governance (ESG) considerations is likely to gain prominence, influencing investment decisions and funder strategies. The growing recognition of the value and impact of small-ticket litigation funding aligns with ESG requirements.

What sets Fenchurch Legal apart from other funders? What are your unique value propositions?

Our core strength lies in our deep understanding of the small-ticket claims landscape. We have developed a rigorous and data-driven selection process tailored to this specific segment, allowing us to identify top-tier law firms and high-potential case types with lower individual risk profiles. Through discussions, we've learned that law firms often face challenges with other funders, including issues like complex drawdown procedures, undisclosed fees, and the non-funding of crucial costs like WIP capital or case acquisition expenses. Recognizing these pain points, we've developed an offering specifically designed to avoid these issues. As mentioned before having access to our own proprietary software has been a game-changer. It has significantly enhanced our whole business operations, driving efficiency and enabling us to scale. This technological edge not only sets us apart but also positions us as an innovative and forward-thinking player in the industry. Additionally, our team is a vital component of our unique value proposition. Made up of experienced professionals who understand the industry, our team ensures we look thoroughly at both legal merit and financial viability. This dual expertise ensures that every funding decision is based on a thorough understanding of the legal intricacies and financial soundness of each case.

Could you elaborate on your approach to case selection and investment criteria?

Our selection process is multi-layered, considering both legal merit and financial viability. In the initial stages, we conduct an in-depth evaluation of case strength, law firm expertise, financial strength and claim history, while also examining the specific legal and procedural landscape surrounding each claim. After completing the underwriting process, we grant each firm a facility limit. They can regularly draw down against this limit, as long as they adhere to the terms of the agreement, including providing a list of claims for auditing and granting us access to their systems. We also employ robust financial modelling and stress testing to evaluate potential returns and manage risk effectively. This approach ensures we invest in case types with strong success potential and manageable risk profiles. So far, we’ve funded various case types with strong merits, including Plevin, Motor Finance Mis-selling (PCP), Tenancy Deposit Schemes, and Housing Disrepair claims. Our compliance criteria for each case type involve thorough vetting, examining details such as case referrals, fee earners, and the experience of law firms. This process enables us to partner with trusted law firms, further mitigating risks associated with our investments. Importantly, Fenchurch Legal only provides funding for cases where After the Event (ATE) insurance has already been obtained. This insurance covers costs and disbursements in the event of an unsuccessful claim. By advancing the premium directly to the ATE Insurer, we ensure that each policy is live at the time of funding, adding an extra layer of security to our investment strategy. This unique security feature enhances the attractiveness of funding ATE claims, aligning with our commitment to minimising associated risks.

The recent PACCAR ruling in the UK has sparked discussions about the future of litigation funding. What are your thoughts on its implications and potential impact on the industry?

The recent PACCAR ruling didn’t impact Fenchurch as our small ticket business model is focused on charging a fixed return per case, regardless of the outcome and not a percentage of damages recovered. However, whilst the ruling presents certain challenges, I believe it ultimately presents an opportunity for the industry to strengthen its practices and regulations.

Could you share your vision for Fenchurch Legal's future growth and expansion plans?

We plan to maintain our focus on small-ticket litigation funding, leveraging our experience, growing our loan book, and onboarding new borrowers. As the business grows, we plan to deploy more capital aiming to reach a loan book value of £75 million within the next two years. We will also recruit key roles to bolster our team.

Lastly, for investors considering small ticket litigation funding, what key factors should they take into account, and how can Fenchurch Legal add value to their investment strategies?

For investors contemplating small ticket litigation funding, several key factors should be carefully considered to make informed and strategic decisions. Firstly, understand the specific criteria and due diligence processes the litigation funder uses and pay attention to their track record in managing and funding small ticket claims.  Risk management is vital and investors should seek funders with robust strategies in place. This includes an assessment of how the funder mitigates risks associated with smaller claims and adapts to changing circumstances. In the case of Fenchurch Legal, our approach to small-ticket litigation funding is grounded in a commitment to comprehensive due diligence, case assessment, and risk management. We have created an offering suitable for investors seeking diversification, lower risk profiles, access to a broader market, and lower entry points.
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An LFJ Conversation with Harish Daiya

Harish Daiya is the Co-Founder and Chief Executive Officer of Lumenci. He is based out of Austin, Texas and oversees the company’s operation across all global offices. With over 15 years of industry experience in technical consulting in IP litigation and licensing, Harish has been a part of $2B+ in IP value creation.

Harish is also a member of the Forbes Business Council, where he regularly writes Thought Leadership pieces and shares ideas on global impact. Harish has also been a serial entrepreneur and angel investor for several successful startups. As the CEO, Harish is elemental in driving Lumenci’s vision, goals, sales, and revenue. He oversees organizational growth, business strategy, people culture, client relationships, business development, strategic partnerships, and launching new businesses.
 
Below is our LFJ Conversation with Harish Daiya:
 
Lumenci is a full-service technology consulting firm that uses domain expertise and automation to create value from technical innovations. Can you unpack that for us?
 

At Lumenci, we provide turnkey solutions to generate value from patent assets. What started as a technical consulting team has, over time, evolved into a team of like-minded experts, engineers, and deal makers who find innovative ways to commercialize the value of the patents. 

We frequently engage with deep-tech companies (and their investors) with sizeable patent portfolios that want to understand and estimate the value of their patents, which requires thoroughly examining their patent portfolio, deep diving into the invention/inventor story, and identifying assets that can generate maximum returns. This could also mean assisting the client in developing patents and selecting the best out of the lot for monetization. Our analysis and strategies to customers drive tangible value out of intangible assets, with more tech companies becoming more aware of the value of intellectual property. Our global clientele is now expanding with more requirements on the ‘how’ than the ‘what.’  

How does Lumenci help patent owners, law firms, and litigation funders during IP litigation?

Lumenci has supported AMLaw100 law firms in over 175 patent litigation matters, on both plaintiff and defense, across the US, EU, China, India, and Brazil, and has helped generate over $3B in verdicts, settlements, licensing revenues, and cost savings. Our team has successfully represented as technology consultants in high-stakes patent litigation lifecycle in creating high-quality litigation grade claim charts, drafting complaints, investigating confidential source code under the protective order, documentation review, expert reports prep, and supporting our law firm customers during deposition and trial.

Lumenci’s vast experience of supporting multiple high-stakes cases through the trial is beneficial to patent owners in not only validating the merits of a patent portfolio from a technology and valuation standpoint but also getting a turnkey solution to craft the right story, raise capital via litigation funding or insurance, engage with law firms, and get insights throughout the commercialization lifecycle. 

Our experts advise litigation funders with in-depth technology and valuation due diligence and help them identify the risks of a potential investment. Our experience with litigation funders has yielded them to mitigate high investment risks by identifying the underlying potential of patent assets, the risk of a commercialization campaign, and strategies on how to mitigate them. 

What is the role of due diligence and technical analysis in the patent litigation lifecycle?

Foundational, to sum it up in a word. 

Lumenci conducts due diligence on the company’s patent assets, highlighting relevance w.r.t technology evolution, assessing validity w.r.t section patentable subject matter, novelty and obviousness, scoping enforceability across the industry, and outlining the damages potential. This process becomes integral to the initial stages of a patent commercialization process. In addition, venue consideration is an important aspect of the diligence.  This due diligence forms the basis of building infallible evidence, which is critical in supporting a high-stakes commercialization campaign. 

How does the technical analysis process work? Are you able to analyze any technical domain?

We support high-stakes patent commercializing and litigation campaigns from day 1 through trial and specialize in technology domains like Software, Telecom/Networking, Semiconductors, and Medical Devices.  We support our law firm customers in maintaining and constantly upgrading the state of infringement or non-infringement evidence, and validity or invalidity evidence as a case progresses by analyzing source code, reverse engineering hardware, testing prior art systems, and conducting complex testing of telecom/networking devices. Lumenci is well known in the industry for "illuminating innovation”, i.e. finding key pieces of evidence which can be material in affecting the outcome of a case, on both the plaintiff and defense side.

What trends are you seeing in the patent space that is relevant to litigation funders specifically, and how does Lumenci's service fit into those trends?

As litigation costs, especially in the US, continue to increase, the level of pre-intake diligence by the litigation funders also continues to increase. For the funders, this means having access to or relationships with technical and damages diligence teams that can provide priority and prompt support to their diligence needs is essential. The litigation funders that have these relationships ironed can out-compete their peers in terms of speed and depth of decision-making. Lumenci with its trained teams in various parts of the patent monetization and litigation cycle in over 10 countries, offers this depth and speed that is virtually unmatched at scale.

Despite the rising interest rates and dire macroeconomic conditions, the growing number of litigation cases and the emerging secondary market for litigation finance claims highlight the pertinence of litigation funding. Litigation funders are particularly interested in understanding the underlying potential of patent assets and mitigation potential before investing in a case. Additionally, operating technology companies continue to find creative ways to generate revenue and many patent assets are coming to the market which have little to no diligence done on them. Lumenci’s in-depth expertise in technical due diligence, validity assessment, damages assessment, and experience in handling high-stakes patent litigation matters are highly valued by litigation funders and insurance underwriters in making informed decisions on their investments in patent asset commercialization campaigns.

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An LFJ Conversation with Tanya Lansky, Managing Director of LionFish

Tanya Lansky is Managing Director of LionFish and has been working in the disputes finance and insurance industries for close to a decade. After reading law in London Tanya sought to abstain from treading the traditional legal pathways, and instead began her career at TheJudge Global, the then independent specialist broker of litigation insurance and funding. Tanya then joined boutique advisory firm Emissary Partners to leverage her relationships in the market and her economic understanding of disputes as an asset. LionFish is a London-based litigation funder offering financing solutions for litigation and arbitration risks. Founded in 2020 as a subsidiary of listed RBG Holdings Plc, the firm was acquired by funds managed by Foresight Group – the private equity firm with over £12bn AUM – in July 2023. With a core focus on efficient delivery, the firm’s transparent approach is a reflection of its corporate structure as principal investor which in turn also enables it to ensure alignment with its clients and their interests. Below is our LFJ Conversation with Ms. Lansky: Litigation finance has grown exponentially over the past decade, yet the industry is still nascent, with room for innovation and growth. What role does LionFish play in the funding industry's future growth? To-date, our market has often been compared to trends and growth of the legal industry. The reality is, we are a financial services industry which we believe should be our reference point as a market. This is why we encourage, share and apply standards that are commonplace in financial markets, which we believe will help drive further growth as well as a more robust framework with established credibility and transparency from which innovation can flourish. In this context, we frequently vocalise the drivers we believe would help further industry growth. Standardisation or documentation frameworks, as we recently wrote about in Bloomberg Law, is one such example. Another is encouraging market standard processes around the mechanics of how litigation funding agreements work, which naturally delivers greater transparency. Although the list can go on, a third is more coordination with the contingent and dispute risks insurance markets who play a central role in our market and beyond. We appreciate that we are just one of many players in the market and that this will have to be an industry-wide effort, but it must start somewhere. So, our contribution to the industry’s future growth is a starting point that encourages greater engagement and highlights the issues that we see prohibiting growth, all whilst practising the things we preach. Your website states that you are not a traditional litigation funder - how does LionFish differentiate from the competition? We are often asked by funders, insurers and lawyers to talk about “your fund” because many assume that all litigation funders are investment managers using third party capital raised from external investors. LionFish’s core business does not involve managing investor monies; we do not run a fund based on management and performance fees, but instead invest straight off our balance sheet such that if we lose, we are not losing investor monies but our own. Conversely, if we win, we keep those returns instead of paying them to investors. Greater reward but also greater risk, but critically, and in terms of how this translates to our client, this means that the decision-making sits with us and not our investors. This benefits our clients in several other ways. Firstly, we do not waste time looking at cases that may be remotely fundable but unsuitable for our portfolio. We are therefore candid, sincere and swift in our responses. Secondly, given that the decision-making sits solely within LionFish, we deal with opportunities and live investments efficiently and quickly. Thirdly, we are not investing in a defined pool of capital for fees but simply building and sustaining a profitable business. We therefore think in terms of long-term solutions that help forge long-term relationships. Perhaps most importantly though, our model allows us to invest in the £500k to £2m range that most often funders cannot do viably because of their business models. So, while we do compete for and have funded investment tickets considerably larger than £2m, our greater range of investment appetite means that we are more relevant to a wider range of lawyers than most others. How has the Foresight acquisition changed LionFish's strategy and operations? When our previous parent company, RBG Holdings Plc, announced that they were going to sell LionFish, we received significant interest in the business from multiple, differing parties. However, because of the different perspective they had on us as a business Foresight was such a natural fit. From very early on, it was very clear that Foresight recognised the strengths of our model and acknowledged that the issue was that the business was housed in the wrong structure (RBG being listed). Foresight therefore had no want to make changes to our business model but instead sought to enhance it. For example, our previously robust infrastructure became even more resilient and slick. We have also been able to assemble a new Board and panel of advisors, all of whom bring very relevant, heavy-hitting gravitas both in terms of breadth and depth of expertise and experience. So, although our strategy and USP has not changed, the operational tweaks have strengthened the business and improved the ‘user experience’ for our customers, providing them with greater confidence in working with and choosing LionFish as long-term partner. Much is being made about the recent PACCAR ruling in the UK, where the Supreme Court found that litigation funding agreements can be classified as 'DBAs', and may therefore be unenforceable under the 2013 DBA Regulations. What are your thoughts on the implications of this ruling? How impactful will this be on the funding industry in the UK going forward? Six months on from the judgment, we are pleased to see that the recognition of its damaging implications have been widespread and that there is movement and an explicit desire from the government to address it. The Post Office scandal in the UK has highlighted the value of litigation funding; at the height of its widespread media coverage, the lead claimant Alan Bates (after whom a BBC mini-series on the scandal was named) wrote a piece in the Financial Times regarding his views on reversing the PACCAR judgment given that justice would not have been served following one of the greatest domestic injustices of the 21st century to-date. This brought the consequences of the PACCAR judgment to the fore. Against this backdrop, Justice Secretary Alex Chalk MP told the Financial Times that litigation funders should be protected from the PACCAR judgment and that the Government would remedy the issue across the board at the earliest possible opportunity. The Digital Markets, Competition and Consumer bill is working its way through parliament and if it is passed into law, LFAs in opt-out competition claims (where DBAs are not permissible) will not be deemed to be DBAs (which would of course apply retrospectively). The latest Parliamentary debate surrounding the bill has been quite telling and reflective of the Lord Chancellor’s statement regards the intention to remedy what some Lords described as the “mistaken decision” and for this to be achieved across the justice system. Although the latest Parliamentary debate suggests that the bill will not go further than the CAT, Lord Offord of Garvel emphasised government’s policy to return to the pre-PACCAR position at the earliest opportunity. It is worth noting the long-term support of this point, in that as early as 2015, the Ministry of Justice has stated that LFAs should not be considered DBAs and the DBA Regulations should be clarified to reflect this. If nothing changes, the impact will continue to be damaging to the detriment of some claimants and more generally to access to justice – despite the fact that the industry would (as it has already done) adapt. That said, at the time of writing, we are encouraged by the drive and determination at the legislative and parliamentary levels to address the consequences of the PACCAR judgment. What are the key trends to watch out for as the litigation finance industry continues to evolve over the coming years? Consolidation and sophistication are probably the two key trends to watch out for. That said, the elements that drive these trends are what we think are the most interesting to watch. The first is that the institutional capital involved in the market is more experienced than ever and is sharpening in terms of appetites and investment profiles. This will inevitably continue to propel the industry forward and see it evolve in a Darwinistic way, with institutional capital focusing on the stronger players. Another, and a sign that the market is maturing, is the recognition of the various subsets of the litigation funding asset class – in the same way that real estate investing has long been recognised as a combination of many subsets of investing (e.g., residential, commercial, etc.). This is because funders are developing more targeted investment strategies. For example, the rise of law firm portfolio lending, which is very different from single case investing, appears to have driven funders to hire former bankers rather than lawyers. While some focus on group actions and mega-value claims, others focus on specialist claim types such as intellectual property or high-volume mass tort consumer claims. And, within single case investing, some are even redefining their strategies around philosophies such as ESG, or size (as we are). Fundamentally, with greater focus and specialisations, the feel of the litigation funding market will become more comparable to other established financial markets. The biggest trend-setting-element though is the increasing financial sophistication of the industry. To date, the industry has been dominated by ex-litigators but with the interplay of litigation insurance and funding, it is clear that beyond the underlying investment is a need to understand the structure it sits in. With funders increasingly hiring beyond the litigation sphere, we can only see this as a beneficial element which will allow for the market to continue evolving and maturing.
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An LFJ Conversation with Chris Baildon, Co-Founder and Chief Operating Officer of Lex Ferenda

Lex Ferenda is latin for “the law as it should be”. The firm includes a team of seasoned lawyers, financiers, general counsel, and retired jurists who bring value to every aspect of the cases they commit to, resulting in better outcomes for all. Below is our LFJ Conversation with Chris Baildon, Co-Founder and Chief Operating Officer of Lex Ferenda: Lex Ferenda recently announced the launch of its first fund. Tell us a little about the company, its focus, and what you’re investing in.  Lex Ferenda Litigation Funding’s (“LF2’s”) investment mandate is primarily geared towards commercial claims in the United States, with funding available for cases at any point in the dispute resolution timeline. We typically target funding towards single commercial cases averaging $1-10 million per investment, however the firm has the resources and capital to make substantially larger investments in a broad range of single cases, portfolio investments, and law firm financing. Our team consists of seasoned litigation funders, lawyers, and investors with substantial legal and financial expertise. LF2 was founded by Michael German and Chris Baildon. Michael is an experienced litigator, trial lawyer, and litigation funder with more than a decade of experience litigating, resolving, and investing in complex commercial litigation and arbitration matters. Chris has three decades of global investment banking and finance experience, with substantial capabilities in management, business development, and capital raising across investment verticals, including litigation finance. LF2’s investment underwriting is directed by Andrew Kelley, who has more than two decades of complex commercial litigation experience, both as head of commercial litigation for a large publicly traded company and as an external advisor at international law firms, where he created and led programs that resulted in recoveries of almost $1 billion for his clients. The Advisory Board consists of Honorable Vanessa Gilmore, who recently retired after serving over 25 years on the federal bench, and Scott Mozarsky, who is a former GC to a public company and former President of a major legal technology outfit, and as such adds substantial legal and technology expertise. Litigation Finance is quickly maturing into a mainstream alternative asset class. Where do you see the evolution of the industry from here?    The market for litigation finance is seeing a rapid expansion in both the number of active funds as well as the amount of committed capital from institutional investors. Additionally, the penetration of third-party funding in the US is still low compared to other global markets. Recent research from Westfleet Advisors and Research Nester predicts that cases funded in the U.S. will grow by 17% year over year to 2035. As the asset class matures, I believe you’ll see a far greater volume of high profile/high value lawsuits financed through litigation funding. Similarly, I believe you’ll continue to see increasing commitments from large asset managers who are weary of market volatility and attracted to impressive returns in an uncorrelated asset class. What makes Lex Ferenda different from other funds operating in this space? What can the industry expect to see from the firm going forward? LF2 is unique in that it’s anchored by institutional-grade capital from a leading global investment manager, with the discretion to invest within its target based on good judgment without the delay of seeking investor approval. This structure allows the firm to be incredibly nimble while still operating an investment platform and system of controls of the highest standard to satisfy all of our different investor groups. Our market focus on domestic commercial litigation/arbitration (within our investment target of $1-10 million per case) has allowed the firm to seize upon attractive funding opportunities with a growing pipeline. LF2 adds value before and after investment with strategic case advice available from experienced legal and finance professionals with a best-in-class track record. LF2 tries to live up to its exponent so-to-speak – we use the broad experience and capabilities of our day-to-day employees and the Advisory Board to offer insight and experience as the dispute resolution process progresses so that our clients can secure (hopefully exponentially) better outcomes. Of course, LF2 maintains the highest level of ethical standards in funding, and our clients retain control over the litigations they fund with us. The industry can expect to see LF2 make major advances in medium to large commercial case investments, while also serving as a thought leader in the litigation finance space through education and philanthropic initiatives. Speaking of those initiatives, you recently launched a pair of them—LF2 University and LF2 Gives.  Can you provide some background on each?   LF2 University is a first-of-its kind educational initiative that aims to provide a greater understanding of the litigation finance industry. The program offers educational seminars to law firms, attorneys, businesses, students, and individuals interested in learning more about this growing field. Recently, we’ve launched Lit Finance 101 which covers the fundamentals of legal finance, and we’ll soon be launching a seminar on Litigation Finance Ethics which will cover the rules and ethical considerations involved in litigation funding. We’re equally excited about LF2’s new philanthropic initiative, LF2 Gives, which seeks to make positive impacts in the communities in which LF2 operates through community action programs and legal service offerings. During multi-annual “Action Days”, LF2 personnel partner with local organizations to participate in various volunteer services. This past Summer, LF2 Gives had its first Action Day where LF2 members volunteered their time with the Food Brigade in New Jersey as well as the Food Bank of the Rockies. For those interested in learning more about (or participating in) these initiatives, we encourage you to visit our website (LF-2.com). We look forward to further collaborations with those who share our dedication to service and education as we grow.
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An LFJ Conversation with Geoffrey White, General Counsel and Chief IP Counsel, SilcoTek

Geoffrey White is General Counsel, Chief IP Counsel, and on the Board of Directors at SilcoTek, a high-tech materials science manufacturing company in the United States. At SilcoTek, Geoffrey balances his role as an attorney, an IP strategist, and a manufacturing executive. He also separately launched Innovative Product (IP) Manufacturing to help commercialize and monetize more innovative ideas (see www.IP-mfg.com).

Geoffrey has a true passion for value-enhancement, applying his experience and education, including a Cambridge MBA, a George Washington IP-LLM, a Widener JD, and a Chemistry BS from the University of Pittsburgh. He is collaborating with Cambridge’s Institute for Manufacturing, Innovation and Intellectual Property Management on patent strategy research, volunteers for the Penn State Start-Up Leadership Network on several Boards of Advisors, and is always open to discussing the intersection of law (especially patent law) and corporate strategy.

SilcoTek provides game-changing coating service to solve challenges for some of the largest global organizations in the world, especially in semiconductor, analytical instrumentation, life science, and energy industries. Properties include inertness, corrosion resistance, metal-ion containment, and more (see www.SilcoTek.com). SilcoTek has coated parts that have been sent throughout the world, into the Earth, to space, to Mars, to an asteroid, and to places unknown. Below is our LFJ Conversation with Geoffrey White: I understand you are participating in a litigation funding agreement as General Counsel and Board Member of a manufacturing company. What was your selection process like in terms of the litigation funder you opted to partner with? What were you looking for in an agreement, how many funders did you speak to, and what did that funder offer that others did not?

Just a few years ago, we at SilcoTek were totally unaware of the growing litigation finance community. I attended an intellectual property conference in New York and heard Sarah Tsou of Omni Bridgeway describe how it works. She discussed the waterfall in many agreements, their initial terms sheet, the due diligence that follows, and how it is an investment with aligned interests. After that, I started reaching out to several funders, including Sarah.

I settled on three funders to consider more closely. They were generally selected due to responsiveness and clarity. Being new to the litigation finance world, I was not looking for any specific terms in the agreement. I wanted to provide our Board with options. Overall, the proposals between funders were similar. One funder proposed a substantial monetization payment, which I personally liked. However, our Board liked the clarity of interactions with individuals from Omni Bridgeway, which is who ultimately funded us. They also liked the patent litigation experience of the team at Omni Bridgeway.

From an SME's perspective, what advantages does litigation finance bring, beyond the obvious funding of meritorious claims? 

Personally, I think that the litigation finance industry is of huge value to SMEs and anyone else who has enforceable rights. Hopefully the Small Business Administration (SBA) embraces it!

The industry should help strengthen the value of rights owned by SMEs. For example, contractual rights are more meaningful and valuable if enforcement is not linked to whether a company has cash to support litigation. I think the biggest help, however, relates to patent enforcement, which becomes attainable for more patent owners.

SilcoTek’s primary reason for obtaining litigation financing was that we felt it would prevent waste. Being an SME and enforcing patent rights against a multi-billion dollar company creates an imbalance and a risk that the other side could try to bleed you dry, even if you are in a position to fund litigation. We felt that public awareness of us receiving litigation financing would reduce that risk created by the imbalance.

When choosing a litigation funder, what concerns you the most?  What are the 'red flags' you look for when it comes to selecting the appropriate funding partner? 

SilcoTek is interested in obtaining a reasonable outcome, whether it be through settlement or going all the way through litigation. Personally, I was concerned that litigation financing was similar to the contingency-based injury-lawyer model, and that is not something that was consistent with our core values. After I understood that it is an investment for a future return, I became more comfortable that it would align with our core values and support our desired outcome.

If there are funders that have the contingency-based injury-lawyer model, that would be a red flag to me; however, all of the funders I communicated with seemed much more sophisticated and seemed like investors.

How can litigation finance help encourage innovation in the SME space and beyond? 

Litigation finance can help encourage innovation through its impact on patent rights. It is well-established that patent systems foster innovation, especially the corresponding disclosure of ideas and the increase in access to investment for companies. Patent rights, however, are expensive to enforce.

Without access to litigation finance, some companies will not be able to assert their rights, thereby reducing the value of the patents and ultimately the companies. Without awareness of litigation finance opportunities, some companies will choose to use trade secret law to protect ideas instead of patents, which reduces innovation and technological progress overall (and has a negative economic impact based upon principles from the Solow-Swan economic model showing how GDP is driven by technological progress).

Long-term, providing litigation finance for patent enforcement should increase valuations. This is especially true with techniques based upon relief from royalty calculations, as royalties should be more likely with easier access to funding. Such effects should further drive innovation and technological progress by making such firms more appealing for investment in the future. Ultimately, litigation finance will drive global growth of GDP by driving technological progress.

What are your predictions for how litigation finance will evolve over the coming years? 

I think litigation finance will have clearer delineation between stages similar to other investments. It seems that many or all stages are represented right now, albeit without it being easy for outsiders to identify them. More focus will be on early investment with the ability to capture option rights for future investment. Later-stage investment arrangements may also grow. Of course, such changes are going to require adjustments to the expectations of investors and the duration they can expect for returns, but the overall returns could be much higher and the risk could be much lower due to concepts like portfolio theory and real options.

Here is a patent-specific, technology-agnostic effort I began with Innovative Product (IP) Manufacturing, separate from my role at SilcoTek:

  • Seed Stage: to support patent drafting and innovation protection before any patent filings.
  • Angel Stage: to enhance patent protection while generating early revenue from operations.
  • Venture Stage: to enforce issued patents (this seems to be the focus of funders now).
  • Mezzanine and Bridge Loans: to drive standards or to establish new standards.
  • IPO: to fund sector-specific innovation deployment based upon robust patent portfolios.

Although the Innovative Product (IP) Manufacturing effort is merely at the Seed Stage leading into the Angel Stage, existing interest from funders suggests to me that the litigation finance industry will evolve into more robust support of such efforts. Efforts beyond the Venture Stage may not be necessary in many situations, but broader and bigger opportunities could be anchored by such early-stage rights and the litigation finance industry.

I am sure other similar efforts outside of the patent sector will evolve over the coming years, but the opportunity for fascinating growth within litigation finance is clear to me.

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An LFJ Conversation with Jamie Allen, Co-Founder & CFO, Allen & Calabro

Jamie is a Naval Academy graduate with a Johns Hopkins’ Masters in Finance. He served on a ground combat tour in Iraq, on hazardous duty in the Arabian Gulf and at the Pentagon managing an $800 million tech fund before entering the civilian sector as the CFO of a multi-million-dollar startup. He later became the COO of a 1,000-employee company owned by a NYSE listed entity. Allen then transitioned to the litigation finance sector in 2021 with the founding of Allen & Calabro. Below is our LFJ Conversation with Jamie Allen: I understand you made the transition from service member to litigation finance investor. What drove you to make this transition, and what about litigation finance has surprised you the most?  Following graduation from the US Naval Academy, I spent nearly eight years on active duty in assignments around the world.  After my service, I attended Johns Hopkins for business school (finance) and began consulting for “David like” plaintiffs in disputes stemming from the crisis of 2008.   During my own experience as an entrepreneur and an executive of a NYSE listed entity, litigation and funding thereof became my focus.  After successes with investments in probate, employment, and RICO claims, it made sense to make the transition to a full-time investor and to operate a fund, as I had managed an $800 million tech portfolio while serving at the Pentagon.  Additionally, my dad, a Navy Veteran, lawyer and seasoned entrepreneur, and J. Toji Calabro, Esq., a coast-to-coast litigator, were available to join as my co-founders.  Together, we are “business, litigation and finance,” the three staples of commercial litigation finance. The thing that has been the most surprising is the amount of open space for investments with smaller contingency based, plaintiff counsel.  Many such offices are unfamiliar with litigation finance for commercial disputes. What types of cases does Allen Calabro invest in, and what differentiates you from other funders in the market? We focus on whether the claim is meritorious first and foremost.  After that, we like small to medium investments where a small business owner or entrepreneur is out of business—or their only assets are the legal claims against the wrongdoer.  We have been in those shoes and came out successfully—and want to help our clients do the same. How does your past military and business experience inform your partnerships with your clients? The military helped me learn how to listen to varying ideas--getting along with others that may not share the same viewpoints or opinions and those with diverse backgrounds.  Listening to our clients and understanding their challenges when their backs are against the wall—enabling them with the resources to carry out the battle plan to defeat Goliath and sharing how to adapt and overcome. What are the key questions / concerns that clients ask when considering a funding partnership, and how do you allay those concerns? Clients want to know their rights and responsibilities. The amount and timing of our investment are of keen interest. We review and discuss the proposed budget explaining our risk analysis that includes the complexity of the case, defenses, the defendant’s ability to pay and an estimate of the duration of the investment among other things. The generally non-recourse nature of our investment and our willingness to provide advice from our experiences, if requested, allay many concerns. Our clients know we’ve been in “their shoes” and through our empathy and emotional support they identify with us. What are some interesting trends we should be aware of in the litigation funding space?  How do you see this sector evolving over the coming years? The trends we see are more ominous than interesting. First, there are seemingly more and more defendants that disregard the “rule of law.”  They commit clear wrongs with the knowledge that the wronged party has little ability to pursue the claim and/or “remain in the fight” as they unnecessarily prolong and add expenses to the proceedings. Second, as smaller law firms and sole practitioners become more comfortable with commercial litigation funding, we see an improvement in civil justice.  Unfortunately, we also see the potential for an economic downturn like 2008.  That will increase the demand for commercial litigation funding, and we will be there to help our “Davids.”
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An LFJ Conversation with Byron Sumner, CEO and Co-founder, Ignite

Byron Sumner is the CEO and Co-founder of Ignite, a specialist litigation insurer built on its founding members' significant litigation and reinsurance expertise. Ignite offers large capacity limits on 'A' rated paper across various case types, along with an extensive product suite tailored to each stakeholder's unique needs. Their solutions range from straightforward contract disputes up to multi-billion pound international arbitrations. Ignite's mission is to transform the legal expenses insurance experience by providing swift and simplified solutions, transparent communication, tailored problem-solving, and unwavering support to help clients achieve their desired outcomes. Byron’s experience over the past decade includes a plethora of cross-class responsibilities within the (Re)Insurance industry, having held both analytical and transactional roles at several leading insurance organisations, including Argo Syndicate 1200, Chubb, and Aon. As well as founding an analytics and targeted client acquisition business, Byron has supported the capacity acquisition, product development, and growth strategies of several market leading MGAs. Byron’s commitment in the co-founding of Ignite is driven by a strong appetite to further develop the harmonisation of Insurance and Commercial Litigation. Below is our LFJ Conversation with Byron Sumner: Can you please provide the basics on Capital Protection Insurance (CPI)? At its most basic level, how does it work, whom does it protect, and what are the benefits?  At its core, a CPI policy safeguards an agreed portion of a funder’s outlay. A CPI policy can be purchased for a single piece of litigation, or across several litigation assets that form a portfolio of investments. Simply put, if the agreed portion of capital is not generated by a specified date outlined in the policy wording, the insurer is obligated to pay a claim in line with the deficit between the funder’s return and the policy’s limit of indemnity. The benefits of CPI go beyond the scope of most conventional insurance products, which primarily focus on the provision of ‘sleep easy’ downside protection. When leveraged efficiently, CPI offers litigation funders the opportunity to unlock a wider pool of potential investment partners and more attractively priced debt capital. How does the rise of CPI within the legal services landscape impact litigation funders when it comes to their case selection and underwriting approach?  The CPI policy does not intend to allow funders to dilute their DD approach to cases. Ignite collaborates with top-tier litigation funders who are not only expected to maintain the same high level of DD, whether insured or not, but are also obligated to adhere to specific case selection criteria and other underwriting processes to satisfy the policy’s requirements. Eligible only for discerning customers, Ignite’s CPI policy is designed to be a highly utilisable safety net in the event of an unexpected loss rather than an instrument employed to eliminate legitimate litigation risk in its entirety. What would you say the interest level is from litigation funders around your CPI product? What sorts of questions are they asking you / what concerns do they have - and how do you allay those concerns?  Interest in CPI products has steadily increased over the past three to five years. While most prospective insured partners encountered by Ignite are funders seeking to protect a portion of their capital, we now see requests for additional cover such as insured premiums and ‘upside protection’, which involves ensuring the return of a portion of capital in excess of the principal investment (>1X MOIC). The primary concern of litigation funders and their LPs/financiers regarding CPI revolves around the insurer’s ability to pay a claim in the event of a large loss. This concern is largely mitigated by Ignite’s capacity partners’ A- rating and market-leading internal underwriting team. Through adept policy structuring and procedural stipulation, we reduce the risk of a lost case to a minimum. When Ignite partners with litigation funders, what criteria are you looking for in your diligence? Ignite’s DD is extensive, and underwriting portfolio CPI ‘wrappers’ is a more complex, bespoke process when compared to single case, open market policies. Transparency is critical to the process; working in partnership with its prospective customers, Ignite’s underwriting team will initially explore a fund manager’s historical track record, as well as their internal experience and expertise, including that of their investment committee. To gain an early understanding of viability, Ignite’s team also evaluates a funder’s IRR and MOIC expectations underpinned by their assumptions around case success rate and associated recoverability. How do you see the continuing emergence of insurance products within the litigation funding sector contributing to the evolution of litigation finance over the coming years, and how will Ignite play a role in that ongoing story?  Utilisation of insurance is still a relatively new concept to many funders, particularly in the context of CPI over more traditional ATE products such as adverse costs cover. I am confident that insurance products will play a significant role in the future of litigation funding and Ignite’s increased receipt of insurance applications unequivocally attests to this upward trend. A CPI policy can not only facilitate a reduced cost of capital for funders, but also unlock the litigation asset class through the utilisation of an investment grade rating for traditionally risk-averse investors such as pension funds and insurance companies. As a result of the growing harmonisation of insurance and commercial litigation, I anticipate a greater influx of appropriately priced capital and access to justice for those claimants/plaintiffs with meritorious claims. Ignite will continue to play a leading role in this evolution by providing specialist insurance products that fulfil the needs of our customers. Ignite’s offering, which itself is always evolving, aims to work back-to-back with funders on baskets of cases which are cross collateralised, allowing insurers to benefit from the familiar benefits of diversification. As litigation funders explore new avenues to mitigate risk, the role of insurance products like CPI becomes increasingly significant. Could you share some insights into how Ignite caters to the needs and expectations of litigation funders in this changing environment? Ignite dedicates a significant amount of time and resources to developing a profound understanding of its target market. The company collaborates closely with some of the world’s premier funders to explore innovative and well-established strategies to assist in the management of their portfolios to utilise their capital more efficiently to drive better returns for all stakeholders. Ignite’s success is intricately linked to the success of its insureds, and this dynamic serves as a solid foundation for future collaborations. For example, this strong working relationship typically manifests in the seamless adaptation of standard policy documentation to cater to the specific individual needs of the funder client. Ignite consistently maintains a sharp focus on delivering a catalyst for an increase in successful case outcomes, which, ultimately benefits plaintiffs and claimants.
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An LFJ Conversation with Reid Zeising, CEO and Founder, Gain

Reid is the CEO of Gain, the fastest-growing SaaS-based, AI enhanced, medical lien servicing and legal funding company in the United States. He is an industry expert on optimizing the utilization of technology in personal injury cases and in maximizing reimbursements in a challenging environment. Reid has been featured on national and local media outlets throughout his career, including Inc. and Becker’s Hospital Review. He was named the 2022 Ernst and Young Entrepreneur of the year in the Southeast Region, an award given for his entrepreneurial spirit, purpose, growth and impact. Reid is passionate about making a difference by connecting, mentoring, opening doors and leading people.
  1. Why the recent rebrand to Gain? What was the motivation for this change?
The recent rebrand from Cherokee Legal Holdings to Gain was driven by the need for clarity and unification of our various brands under a single, cohesive go-to-market identity. This change aims to unite our entire organization under a shared mission: to facilitate access to quality medical care for individuals who have suffered injuries through no fault of their own, regardless of their financial or insurance situation. In 2011, I founded Cherokee with the aim of offering financial options to personal injury victims awaiting settlement. Over time, that mission has expanded to include innovating and transforming the personal injury space to truly level the playing field for personal injury plaintiffs as they battle big insurance companies. Gain Servicing, a subsidiary of Cherokee Legal Holdings, was established as an AI-enabled platform to do exactly that and to provide Letter of Protection (LOP) servicing and collections to doctors. Our technology simplifies the process for doctors to accept LOPs as payment, allowing them to focus on delivering quality medical care to individuals in need, particularly those who lack health insurance or sufficient savings. In 2022, Gain Servicing accounted for a significant portion of Gain's total revenue, and this is expected to grow even further in the future, highlighting the need for the innovations we are prioritizing. By consolidating all of our capabilities under one unified brand, we now provide comprehensive solutions for every facet of personal injury, with a steadfast focus on the plaintiff at the heart of all of our endeavors. In essence, the rebrand to Gain represents the company's dedication to supporting personal injury victims – by providing resources to access quality medical care, and by making it more accessible to those who would otherwise be limited by financial or insurance challenges. It reflects Gain's mission to create a fairer insurance system and a more equitable healthcare model for all Americans.
  1. Gain is seeking to streamline the medical lien process for healthcare providers. What are the challenges at play here, and how does Gain address those issues?
Treating personal injury patients who may not have the financial means to pay upfront can make it a challenging process for healthcare providers. The main challenges in this context are:
  1. Delayed payment: Healthcare providers often have to wait for an extended period of time to receive payment for their services, which can strain their cash flow.
  2. Administrative complexity: Managing a portfolio of liens and receivables associated with legal cases can be administratively burdensome, diverting resources from patient care.
  3. Collection efforts: Collecting on these liens and receivables can be time-consuming and challenging, leading to potential write-offs.
  4. Risk management: Healthcare providers may also face the risk of not being compensated if the legal case does not result in a settlement or judgment in their favor.
Gain has developed solutions to address these specific lien challenges: Lien Management Services: Our team of experts takes on the responsibility for full revenue cycle management services, including negotiation and collection of medical liens associated with Letters of Protection (LOP). Leveraging data from our AI-enhanced LOP servicing platform and industry experience, we help practices reduce write-offs and enhance collections. On average, our approach yields approximately 900 basis points more than practices that self-manage lien receivables. Medical Billing Partial Advance: We offer healthcare providers the option to receive partial payment at or near the time of treatment for personal injury patients with pending legal cases. By blending a partial advance of future cash flows, combined with additional payments at the time of collection, we increase healthcare providers cash flows while improving reimbursements over selling these liens outright. Bulk Lien Purchase: For healthcare providers with outstanding liens, we offer a bulk purchase program. This allows them to receive cash immediately, eliminating the time and stress associated with managing and collecting lien receivables. Gain is dedicated to simplifying and expediting the medical lien process, empowering healthcare providers to focus on providing quality patient care while ensuring they receive timely and fair compensation for their services. We understand the unique challenges faced by providers in this space, and our solutions are designed to alleviate those challenges and improve their financial stability.
  1. How does Gain's AI technology help attorneys and healthcare providers? Can you give us an example of how Gain's AI can be used for enhanced efficiency or business intelligence?
Gain's AI technology plays a pivotal role in assisting both attorneys and healthcare providers by revolutionizing the management of complex medical claims. Here's how our AI technology enhances efficiency and provides valuable business intelligence: Efficiency Enhancement
  • Imagine a personal injury case where various parties, including attorneys and healthcare providers, need to collaborate seamlessly to ensure the best outcome for the injured patient. Our AI-powered platform streamlines this process. For instance, it offers a patient record center, simplifying the updating and retrieval of information and documents. This feature alone saves valuable administrative time, ensuring that nothing gets missed in the case.
  • Our AI-enhanced dashboard and reporting capabilities provide real-time insights into case status and financials. This means better monitoring, quicker decision-making and enhanced efficiency in managing personal injury cases. The messaging and notifications feature further streamlines communication among all stakeholders involved.
Business Intelligence
  • Our AI technology equips attorneys and healthcare providers with predictive analytics capabilities, which provide invaluable business intelligence. AI-enhanced reports shed light on payor sources, case characteristics, jurisdictions, third-party liability carriers, financial outcomes and other vital decision-making factors.
  • For instance, attorneys and healthcare providers can gain insights into case volumes, treatment costs, reimbursement rates, duration and more. They can drill down to obtain detailed information on cases, attorneys, healthcare providers or individual patients. Moreover, Gain's database of similar cases helps in understanding standard treatment costs, reductions and reimbursement rates. All of this information empowers those providing services to personal injury plaintiffs to make better decisions and optimize their approach to specific cases.
Collaboration and Communication
  • Effective collaboration and communication are vital in personal injury cases. Gain's secure document storage and messaging system make it incredibly easy to share important documents and updates related to cases securely. This not only saves administrative time but also ensures that critical information is readily accessible.
  • Real-time notifications and status updates keep medical and legal teams in sync as cases progress, enabling them to take timely actions and prioritize tasks efficiently.
Gain's AI technology is a powerful platform that brings attorneys and healthcare providers together, simplifying the management of personal injury cases. It enhances efficiency by providing tools for streamlined collaboration, offers valuable business intelligence for informed decision-making, and ensures that all stakeholders are well-informed throughout the process. We're proud to be recognized for our commitment to innovation and our mission to provide access to care and financial solutions to those in need.
  1. How is Gain pursuing fairness and equity in the Consumer Legal Finance and Medical Lien spaces?
Gain is committed to pursuing fairness and equity in the Consumer Legal Finance and Medical Lien spaces by addressing the challenges faced by both personal injury plaintiffs and healthcare providers. Our goal is to create a more balanced and efficient system for all stakeholders involved.
  • Supporting personal injury plaintiffs – and those who support them: For personal injury plaintiffs who lack the financial means to pay for essential bills and necessary medical treatment, navigating the insurance system can be incredibly challenging. This is where Gain steps in to offer assistance. We specialize in managing Letters of Protection (LOP), collections and funding, providing the support needed to ensure plaintiffs receive the care they deserve. Our AI-enhanced platform simplifies the handling of LOP agreements, personal injury receivables and medical liens. It facilitates better communication between personal injury attorneys and healthcare providers, streamlining document sharing, case updates and financial transactions. Through the platform, we also compare reimbursement amounts to thousands of similar lawsuits, ensuring fair payment for services provided.
  • Enhancing efficiency with AI: Our AI technology plays a crucial role in achieving fairness and healthcare equity. It empowers healthcare providers and attorneys with predictive analytics capabilities, providing valuable business intelligence. Attorneys and healthcare providers can access AI-enhanced reports that offer insights into payor sources, case characteristics, jurisdictions, third-party liability carriers, financial outcomes, duration and more. This data equips professionals with the information they need to make informed decisions, ultimately leading to better patient care and fairer financial outcomes.
  • Fighting back with a wholistic team approach – Managed Services: Gain's Managed Services team is dedicated to managing personal injury receivables and medical liens. They work closely with healthcare providers to monitor progress, follow up on key items and ensure that cases are advancing toward settlement. This partnership helps push back on reductions, reduce write-offs and increase collection amounts. Leveraging our third-party status also helps minimize the risk of being targeted in legal proceedings.
Gain is fiercely committed to creating a fairer and more equitable system in the Consumer Legal Finance and Medical Lien spaces. Our suite of services, including our AI technology, managed services and funding solutions, coupled with our commitment to transparency and efficiency all contribute to this mission. We believe that everyone deserves access to quality care and fair financial outcomes, and we are actively working to make this a reality in the personal injury space.
  1. Gain is leaning into AI and Legal Technology heavily. What has the response been from claimants, attorneys and healthcare providers? Do you plan to continue making investments in Legal Tech initiatives going forward?
The response to Gain's heavy investment in AI and legal technology has been incredibly positive from claimants, attorneys and healthcare providers. Our innovative approach to managing complex medical claims through advanced AI solutions has garnered recognition and appreciation within the legal and healthcare industries. Just within the last few months, our AI platform has been recognized by the Technology Association of Georgia as a most innovative company of 2023 and by the Software & Information Industry Association as a Best Healthcare Technology Solution. This recognition further validates our dedication to helping injured patients by revolutionizing the management of medical claims. Attorneys have found tremendous value in our AI platform, which accurately assesses case values and informs them of available funds for reimbursements. This empowers attorneys to collaborate more effectively with healthcare providers, resulting in higher reimbursements and improved outcomes for their clients. Our technology has also been welcomed by healthcare providers. Gain's platform streamlines the process of accepting LOPs as a form of payment, allowing providers to focus on delivering superior clinical outcomes and ensuring access to high-quality medical care for everyone, regardless of their payor source. This has made a significant difference in the efficiency of their practices and their ability to provide care to those in need. As for our future plans, we are fully committed to continuing our investments in legal tech initiatives. We believe that technology is the key to driving meaningful change in the legal and healthcare sectors. Our goal is to further enhance and evolve our technology, making it even more efficient and effective in serving the needs of claimants, attorneys and healthcare providers. We are dedicated to advancing our mission and ensuring that everyone receives the care and support they deserve.
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An LFJ Conversation with Viren Mascarenhas

Viren Mascarenhas is a Partner in the Litigation and Arbitration Practice at Milbank LLP based in New York.  He specializes in construction, commercial and investment arbitration, and has represented investors in investment arbitrations against the governments of Argentina, Azerbaijan, Bosnia-Herzegovina, Bolivia, Ecuador, India, Italy, Mexico, Nigeria, Peru, the Philippines, the Russian Federation, Timor-Leste, Uruguay, and Venezuela. Viren has special expertise in commercial disputes in the energy and mining sectors, and construction disputes over energy infrastructure.  He has been ranked in international arbitration by Chambers Global, Chambers USA, Legal 500, Lawdragon 500, Who’s Who Legal, Euromoney Legal Media, Latinvex, and Law 360, and has been recognized more generally for his accomplishments as a lawyer by The New York Law Journal, Crain’s New York Business, the American Bar Association, the US National South Asian Bar Association, and the US LGBT Bar Association. Milbank is a full-services, international law firm, with offices in the US (New York, Los Angeles, and Washington DC), Brazil, Europe (London, Munich, and Frankfurt), and Asia (Beijing, Hong Kong, Singapore, Seoul and Tokyo).  Its Litigation and Arbitration practice thrive on complex cases in federal and state courts throughout the US, English courts, and arbitral tribunals. Below is our LFJ Conversation with Viren Mascarenhas: What first interested you in litigation finance? What experiences (positive or negative) have you had interacting with the sector?  My first encounter with the litigation finance industry goes back to 2011, when a funder instructed the firm where I was then an associate to assess the likelihood of an investor prevailing in a potential investment treaty arbitration against a South American state regarding the denial of a mining concession.  The experience helped me cut out the noise; focus on the key elements of an alleged wrongdoing; review the key evidence; and then use my judgment to assess the likely outcome.  As lawyers, we want to tell the full story when pleading a case—sometimes to a fault.  Litigation funders—like judges and arbitrators—rigorously try get to the heart of the matter quicker. My experience with the sector has always been positive.  In addition to being instructed by funders to do risk assessment, I have been able to secure funding successfully for my clients over the past decade from several different funders.  These were all meritorious matters in which my clients would not have been able to get a shot at justice without funding.  And their claims always have become stronger and more compelling based on insights shared by experienced funders during the due diligence/underwriting phases and exchanges during the arbitral proceedings. What trends are you seeing pertaining to arbitration funding of various legal sectors? How is the landscape evolving?  The trends I have seen are:
  1. Funders have become more selective about funding investment treaty claims.  The increased selectivity usually is unrelated to the merits of the cases—which often times are compelling—but concern over the length of time tribunals are taking to render awards, and subsequent time thereafter to enforce the award if the respondent state does not comply willingly with the award.  The profile of the sovereign defendant (are they likely to pay; do they have enforceable assets) has become critical to the funding assessment.
  2. By contrast, funders are increasingly keen to fund commercial and construction arbitrations.  They are very eager to work with corporates that likely have a portfolio of arbitrations at any given time.
  3. More players exist in the market now to buy a stake or all of an arbitration award than a decade ago.
What are the regional issues that arise when funding arbitration disputes?  It is becoming increasingly clearer in certain jurisdictions, especially in Asia, about the extent to which litigation funding is permitted and under what terms because of recent legislative or common law developments in those jurisdictions.  However, clients from those jurisdictions who are seeking litigation funding sometimes have “sticker shock” when reviewing funding terms being offered to them either to fund their matters or to “buy” their awards.  They need more handholding when it comes to understanding the economics of litigation funding, largely because of a lack of familiarity with the litigation funding market. Sometimes, local law firms that have strong relationships with local clients may have difficulty securing funding either because they are not known to the funders (relationships matter) or because they have not represented their clients in specialized arbitrations, such as construction or investment arbitrations.  In these circumstances, local law firms have reached out to me to serve as lead or co-counsel during the funding process and then subsequently in the arbitrations. What are the challenges presented in terms of compliance with the losing party during an arbitral award, and how do you navigate those?  Enforcement of international arbitration awards has got a relatively bad rap now because of investment arbitration.  Increasingly, sovereign states seek annulment of an award as a matter of course, just to tie things up in annulment proceedings for several years to demonstrate to their voting constituents that the government used all options available to it.  And even after an award survives annulment challenges, some states still do not pay up, resulting in years of enforcement litigation chasing after those state assets that are not protected by sovereign immunity. The challenges are much fewer in commercial and construction arbitration.  Unless the stakes are very high (a “bet the company” arbitration), award debtors do not frequently seek annulment of an award given the low chances of ultimately being successful.  Unless the award debtor is a true deadbeat, it will tend to comply with the award or at least offer to settle the award at a discount.  Often, these commercial actors have long-standing relationships with each other, so the arbitration outcome is just one component of the business relationship with the counterparty and overall reputation in the industry. What are the trends / key developments you are keeping an eye on in relation to litigation/arbitration funding that impact how you think about your international arbitration portfolio?  The main developments that I focus on are:
  • New mining claims from investors in the critical minerals industry. These are minerals that are essential to the energy transition (such as lithium, which is used in battery storage). Governments all over the world, such as in Argentina, Bolivia, Chile, Mexico, Zimbabwe, and Zambia, are enacting new measures to regulate and control these critical minerals.  Many of the mining companies or their investors (such as electric vehicle automakers) are new to the mining sector and/or are junior or small mining companies.  They likely will need third-party funding for their claims—and there will be claims in the next few decades given the commercial and geo-political fights over critical minerals in the supply chains.
  • More arbitrations in the renewables sector (commercial, construction, and investment arbitrations) all over the world as governments continue to implement their obligations under the Paris Agreement and fulfill their Nationally Determined Contributions to invest in renewable energy, low carbon, and hydrogen projects. As has been the case in Italy, Spain and other European countries, governments may change a key economic input (such as the price of feed-in tariffs) that led to foreign investment in the renewables sector, resulting in investment treaty disputes.  There will also be more commercial disputes as new technologies in the sector evolve and the limits of existing technologies in long-term projects (wear and tear) are tested.
  • My firm Milbank frequently serves as counsel to lenders in financing projects. If the project company is tied up in disputes, lenders need comfort on recovering their loans, which requires ballparking damages and obtaining protections in the form of insurance products or indemnities. This has led to me facilitating more conversations between my finance/restructuring partners and litigation funders.
  • Discussions with clients over whether to secure ATE insurance even if an arbitration is not seated in a jurisdiction such as England that adopts a default principle of “loser pays.” We are seeing more adverse costs awards against unsuccessful claimants in the investment arbitration space.  So, a client may want to consider whether to obtain ATE insurance in addition to third party funding, even though this might mean more overall borrowing.
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An LFJ Conversation with Wendy Chou, Founder and CEO of Dealmakers Forums

Wendy Chou is the Founder and CEO of Dealmakers Forums, operating with 20+ years of experience in marketing, communications, events, and business development. She created the first series of intellectual property monetization and finance conferences starting in the early 2000s — a number of those conferences are still being held on an annual basis. That’s what sparked her interest in the sectors where legal, finance, and tech converge. Since then, Wendy has served as CMO for a financial services firm, led a marketing agency, and in her various roles, has produced over 100 successful events in IP, litigation finance, and other complex markets. She’s become a big believer in the power of events. If designed and executed well, she believes an event experience can bring people together, build community, stimulate thinking and creativity, advance both personal and professional objectives, and even move industries and markets forward. Dealmakers Forums curates meaningful event experiences and content for senior executives in the legal, finance and technology industries, bringing together a selection of organizations and individuals who are working at the forefront of the industries we serve to facilitate deep discussions onstage and offstage, and to make valuable new connections that lead to collaborations and strengthen existing relationships. For ten years our IP Dealmakers Forum has been the “must-attend” event for decision makers driving IP transactions. Upon its debut in 2018, our inaugural LF Dealmakers event likewise became the “go-to” conference for litigation finance. In 2022 Wendy created LINE, a digital publishing platform, to share perspectives from our community year-round. Find out more at: DealmakersForums.com Below is our LFJ Conversation with Wendy Chou: This is the 6th annual LF Dealmakers Forum! Hard to believe it has been six years already. What have you noticed in terms of how the industry has evolved over the years? Absolutely, it’s remarkable to think that this marks the sixth annual LF Dealmakers Forum! During this time, we’ve witnessed significant transformations within the litigation finance industry. One of the most striking changes has been the overall growth in both size and scope of the industry. In addition to an increased acceptance of litigation finance as a legitimate and valuable tool, the industry has evolved into a multifaceted ecosystem with a diverse range of players and products. In just six years, we’ve gone from primarily talking about single-case funding to discussions involving various insurance products, co-investing partnerships, innovative deal structures, and even secondary market transactions. The industry has also become more global in scope, with cross-border partnerships and international cases becoming more prevalent. It's truly exciting to witness the growth and evolution of this industry. Having said that, there are of course the challenges and controversies inherent in a maturing industry that benefit from having a space for continued dialogue. That’s why I believe LF Dealmakers has grown alongside the industry, as we provide a necessary forum for discussion, debate, and dealmaking. What can we expect at this year's conference? Any speakers or agenda items you'd like to highlight? This year's LF Dealmakers promises to be our most impactful event yet, featuring a diverse range of sessions and discussions. One of the sessions I’d like to highlight is, "The Great Debate: Trust and Transparency in Litigation Finance." In this session, we'll bring together leading experts who hold differing perspectives for an open dialogue and insightful exchange on critical issues such as disclosure, control, ethics, and conflicts of interest. We’re particularly excited to have the U.S. Chamber of Commerce participating in the discussion via their Institute for Legal Reform. They are not typically a participant in public debate on this topic, and I feel honored to host them at LF Dealmakers. I think you’ll be surprised to hear what they have to say. These aren’t always easy discussions, but we don’t shy away from reality and controversy, especially when it is necessary and can be productive to the advancement of industry practices. Alongside this, we've curated a lineup of distinguished speakers who are experts in various facets of litigation finance and the broader landscape of legal finance and risk management. Our agenda is filled with panel discussions covering topics ranging from emerging trends to navigating regulatory challenges to best practices and lessons learned. I’d say that over the years of LF Dealmakers the discussions have become much more advanced, and often provide practical takeaways for funders, funded parties, and others, including how to negotiate the best deals and address the inevitable issues that arise post-funding. So we are looking forward to hearing about those aspects of the industry and much more this year. The industry is facing some headwinds at the moment. How will issues like the recent UK Supreme Court ruling and the impact of inflationary pressure factor into this year's conference? The recent UK Supreme Court ruling and the challenges posed by inflationary pressures are indeed significant concerns within the industry, both of which will certainly come up in discussions this year. We also have dedicated sessions specifically addressing the headwind issues including a policy briefing session covering the latest in US federal, state, and forum-specific (e.g. Delaware) treatment of litigation funding as well as the industry response. A prominent expert and lobbyist from the American Legal Finance Association will address both the consumer and commercial fronts and where pending legislation and efforts would impact both. We believe that openly discussing these challenges and exploring solutions will help attendees navigate these headwinds more effectively. How would you recommend that litigation funding stakeholders make the most of this year's conference? First of all, I’d like to note that we’ve expanded the event this year, to include a pre-conference workshop on navigating the mass tort landscape and an opening reception the evening before, so attendees should plan on getting to NYC early to attend those events. Other than that, I would advise litigation funding stakeholders to come prepared to engage in robust discussions and networking opportunities. Take advantage of the diverse perspectives shared by our speakers and fellow attendees, attend the sessions to gain practical insights that can be applied directly to your strategies and most importantly, don't be afraid to ask questions and participate actively in the panels. It wouldn’t be a Dealmakers event without mentioning the one-to-one meetings. As in past years, attendees will have the opportunity to book 30-minute meetings with one another to occur throughout the event, and because the audience is curated, there should be plenty of options for productive discussions with new and existing clients and partners. The conference is a prime opportunity to foster connections, share knowledge, and explore new collaborations. What is it like for you--the conference organizer--during this multi-day event? Do you have time to enjoy the discussions and networking, or are you overwhelmed with last minute hiccups? Well, as they say, it’s not my first rodeo. Seriously, as the conference organizer, these multi-day events are both exhilarating and demanding. The key is that I've built a fantastic team that helps manage the logistical details. This allows me to actively engage in the discussions and networking opportunities. Of course, there are always last-minute hiccups that require quick thinking and problem-solving, but I've come to embrace these challenges as part of the experience. Ultimately, witnessing the exchange of ideas, the forging of partnerships, and the enthusiasm of attendees makes all the hard work incredibly rewarding. Who was it that said change is the only constant in life? I believe that wholeheartedly. Once you accept that, your mind shifts from thinking “why are there waves” to “how can I best ride these waves” (and yes, I took up surfing on one of my post conference vacations)!
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An LFJ Conversation with Kundan Shahi, Founder and CEO of LegalPay

LegalPay is the only company in India which provides different financing solutions to businesses for their legal services and/or litigations. Founded by Kundan Shahi in 2019, LegalPay now has a team of more than 100 staff managing more than USD 400 million of claims under management.

Kundan Shahi is an alumnus of IIM Bangalore's startup incubator, NSRCEL and had perviously founded a LegalTech company. He deeply believes in relieving the burden on Indian judiciary, and to further that cause he supports Bharat Disputes Resolution (BDR), India’s largest online dispute resolution platform.

Below is our conversation with Mr. Shahi:

What is the litigation funding landscape like in India? What are the unique challenges and opportunities for funders operating there? 

At present, litigation finance in India is at an embryonic stage, reflective of its burgeoning legal expense market. A combined total of around 40 billion dollars encompasses both individual and business legal expenditures, a figure poised for further escalation with the country's rapid economic expansion and the surge in cross-border transactions. The imminent ascension of India to become the world's third-largest economy is projected to further amplify the legal expense market's growth. Distinguishing India from other jurisdictions is the absence of a contingency fee model, necessitating the demand for alternative financing avenues. The concept of third-party funding (TPF) was initially alien to the legal landscape, often perceived as illicit by legal practitioners. The awareness around litigation finance has been minimal until recently.

What types of cases does LegalPay fund? What case aspects do you look for? What are some of the things you look to stay away from?

LegalPay has made substantial investments to cultivate awareness within the business sphere, elucidating the financial dimensions of litigation. This concerted effort has yielded a notable increase in litigation finance inquiries from businesses. In contrast to conventional jurisdictions where stakeholder interests are aligned (plaintiff, lawyer, funders), in India, only funders and plaintiffs share a common interest. We are a low trust society with price sensitivity. Consequently, possessing deep pockets alone does not guarantee access to lucrative opportunities. To navigate this landscape, an innovative blend of technology and distribution strategies is imperative for robust deal origination.

One of the major concerns for funders is case duration. India is not known for speedy case resolutions. How do you manage this risk factor?

The reputation of India's judicial system for protracted case resolutions is acknowledged, yet empirical data reveals incremental improvements. While perceptions linger, the expansive realm of disputes provides ample room for astute selection. Adaptation is key in this price-sensitive climate; prioritizing plaintiff interests ensures risk management remains a cornerstone. Businesses have started understanding the financial perspective of litigation which encourages them to opt for alternative disputes resolutions.

You recently launched Contract Defense, a free service protecting businesses from disputes arising from BNPL. What can you tell us about this? 

Our recent introduction of "Contract Defense" serves to bolster trust and provide businesses with a safety net against disputes arising from the contract bought using our framework. This innovative offering extends an interest-free credit line to manage legal expenses and covers initial legal costs stemming from contractual agreements facilitated through our BNPL platform. This engagement serves as a prelude to forging robust relationships, positioning us to offer litigation finance when needed. To use Contract Defense, all the customer needs to do is create a contract through any lawyer or law firm in India and pay for it using our BNPL payment method. If any legal disputes arising from the contract, the customer can simply transfer the legal expense to LegalPay, and we will cover the cost of all possible disputes.

What are your predictions for the future of litigation funding in India? How will this market evolve?

Forecasts for the litigation funding landscape in India remain resoundingly positive. As awareness burgeons, businesses are keen to transfer the financial risk of litigation to platforms such as ours. The aftermath of a Delhi High Court judgment has triggered heightened discussions and inquiries, attracting international funders and law firms seeking symbiotic collaborations. The expansive market paves the way for coexistence and flourishing among several prominent litigation funders, contingent upon their adept adaptation to the intricacies of the Indian landscape.

In conclusion, the canvas of litigation funding in India is unfolding with remarkable potential. The convergence of economic growth, legal dynamics, and the desire for risk transfer converge to paint a promising trajectory for this evolving sector.

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Key Takeaways from the LFJ Webinar on COVID-19’s Impact on the Litigation Funding Industry

On Thursday, Litigation Finance Journal held a special digital conference on how litigation funding and the broader legal services sector have been impacted by COVID-19. Ed Truant of Slingshot Capital moderated an expert panel, which included Eric Blinderman, CEO (U.S.) of Therium Capital, Paul Haskel, Partner at Richards, Kibbe & Orbe, LLP, and Ralph Sutton, Founder and CEO of Validity Finance.  The conversation opened on the macro implications of the COVID-19 pandemic, and how the broader legal industry is being impacted. Paul Haskel, the one practicing attorney on the panel, opened the discussion by explaining that firms are experiencing a decline in revenue, and anticipate that continuing. Staff reductions and hiring freezes have become commonplace. And due to financial scarcity, firms that have never before considered third party funding, are now taking a close look at industry utilization. In line with what's happening across industries, law firms both large and small are also focusing on investing in tech tools to reduce costs, and reevaluating the need for real estate, as working from home becomes more palatable for many roles.  Mid-way through the hour-long conference, the topic shifted to COVID-19's impact on litigation funding. Below is a small sampling of the Q&A that took place:   Ed: How do you see the changes in Force Majeure claims in the future, given that many such contracts don’t include clauses specific to pandemics? Paul: Force Majeure has to be specifically cited, and it’s rare to see a clause that refers to a pandemic. Historically these claims have been read narrowly. What will be fascinating to see, is how courts interpret this going forward. What happens if a contract wasn’t specific about pandemics, and was this unforeseeable?  Ed: Are Force Majeure claims a good bet for lit funding? Or are they too subjective in nature? Eric: This turns on the four pillars of underwriting. Likelihood of success on the merits, damages, timing of recovery, judgment of the lawyers. Most FM clauses still trigger payment obligations even if other obligations are negated. The question then becomes whether or not they have the ability to pay.  Ralph: I think firms that only dabble in funding would do better to focus on their own houses.There will likely also be fewer new firms getting into lit fin for the foreseeable future. Those who are funding can be much pickier as there will be so many opportunities to fund. Ed: How will hedge funds impact the markets?  Paul: Over the last five years, hedge funds have created platforms in litigation finance. Overall, everyone is waiting to see what happens with the market. I represent a lot of multi-strategy hedge funds, and they are all hesitant to enter into new investments right now. I agree that there is much more opportunity out there, it just depends on who is putting capital to use.  Ralph: I would expect that hedge funds that dabble in litigation finance and don't have an entire dedicated unit, but maybe just one person or two people looking at the space, that they'd rather focus on their corse business and ensure that they are keeping their powder dry to focus on things they understand much better. I also think there will be fewer new litigation finance companies launched in the near future, because the capital will be more frightened of folks who do not have track records. That said, folks with strong track records can expect to find limited partners willing to fund them. Ed: Where would you expect to see the most activity over the next 6-12 months? Ralph: The majority of claims for us are still commercial. 25% or so is patent, which will probably continue. I think we’ll do a lot more insurance recovery. Eric: There’s an immediate need to look for revenue streams, and insurance policies is an area everyone is turning to. We can expect a wave of class action suits as well. People are hurting and plaintiff-side lawyers are looking for someone to blame. Ed: For new opportunities, have your underwriting procedures changed at all, or is there more emphasis on certain underwriting aspects today than there was a month or two ago.  Ralph: We haven't changed our criteria at all. Most funders turn down over 90% of the opportunities that come to them. I don't think that's going to change dramatically. Eric: I agree exactly with what Ralph said. The fundamentals matter. There's no shortcuts, no secrets. You need to focus on the core basics of what makes you successful, and if you do that, you'll make it through this crisis. Ed: Last question, if there is a significant increase in cases, is there sufficient capital in the marketplace to meet demand? Paul: There will be less capital in the market, and what’s there will be more selective and seeking a higher rate of return than is currently there. So I think there will be an opportunity for funders to be even more picky, going forward.  Eric: I agree with Paul, although I don't generally foresee us changing our capital structure. We're pricing risk. There is a tremendous ability for litigation finance companies to be more selective, as opposed to less. Ed: What about you, Ralph, are you going to run out of money or are you good? Ralph (laughs): I think we’re good.
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