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Litigation Capital Management Limited Positive Update on Fund I Investment

By Harry Moran |

Litigation Capital Management Limited (AIM:LIT), an alternative asset manager specialising in dispute financing solutions internationally, announces a positive development on an investment within its Fund I portfolio.

LCM has funded a claim advanced in respect of an international arbitration claim brought against the Republic of Poland under the United Nations Commission on International Trade Law (UNCITRAL) Rules. The Tribunal has unanimously held in favour of the funded party that the Republic of Poland breached its obligations under the Australia-Poland Bilateral Investment Treaty and the Energy Charter Treaty.  

The quantum of the award entered in favour of LCM’s funded party totals A$490 million plus interest.

LCM’s funded party has therefore been successful in the claim. If the award is not subject to challenge and is not satisfied the dispute will move to an enforcement stage. We will assess any further funding requirements once the enforcement strategy has been finalised.

The total investment into the case to date is A$16.6 million (US$11.3 million). This investment comprises A$4.2 million (US$2.8 million) from LCM’s own balance sheet and A$12.4 million (US$8.5 million) of third party capital from Fund I. In line with our usual practice LCM’s returns are calculated as a rising multiple of invested capital over time.  

This investment is no longer attended with liability and quantum risk as that has been decided. Final performance will be announced to the market after conclusion of the investment. However, if the award is satisfied within a reasonable period without the need for enforcement, then based upon the contractual terms with the funded party as at the date of this announcement, LCM would be entitled to a multiple of 6 times its own invested capital plus significant performance fees on third party capital invested. 

Patrick Moloney, CEO of LCM, commented: “This announcement represents a very significant milestone in this investment. Subject to any challenge to the very favourable and unanimous award we now move to an enforcement stage. This investment is part of Fund I and therefore stands to benefit from significant performance fees giving it the potential to be the most successful investment in LCM’s history.”

About LCM

Litigation Capital Management (LCM) is an alternative asset manager specialising in disputes financing solutions internationally, which operates two business models. The first is direct investments made from LCM’s permanent balance sheet capital and the second is third party fund management. Under those two business models, LCM currently pursues three investment strategies: Single-case funding, Portfolio funding and Acquisitions of claims. LCM generates its income from both its direct investments and also performance fees through asset management.

LCM has an unparalleled track record driven by disciplined project selection and robust risk management. Currently headquartered in Sydney, with offices in London, Singapore, Brisbane and Melbourne, LCM listed on AIM in December 2018, trading under the ticker LIT.

www.lcmfinance.com

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Harry Moran

Harry Moran

Commercial

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Federal Court Approves $180m Settlement in Northern Territory Stolen Wages Class Action

By Harry Moran |

The combined strength of experienced law firms and well-resourced litigation funders can be a powerful tool for disadvantaged communities seeking justice and compensation from state authorities. However, a recent settlement approval order in Australia was notable for the judge’s pointed questioning of the commercial business model behind these class actions, which sees law firms and funders receive significant payments whilst the victims they represent receive comparatively meagre compensation.

An article in ABC News covers the approval of a $180 million settlement in the Northern Territory stolen wages class action, bringing to an end the claim brought against the Commonwealth of Australia over historic mistreatment of Aboriginal workers in the Northern Territory between 1933 and 1971. Whilst Chief Justice Debra Mortimer approved the settlement along with the related payouts to Shine Lawyers and LLS Fund Services for the claimants, her written judgment raised many questions about the costs accumulated by the legal team and the relatively low value of compensation that the workers would receive.

The judgment approved payments of up to $15 million to Shine Lawyers for legal costs, and a funder’s commission of up to $31.5 million to LLS Fund Services. However, Chief Justice Mortimer’s judgment also contained criticism for both these parties, stating that their “good intentions” in supporting the claimants has been somewhat overshadowed by “the pursuit of the business model”. Mortimer expressed doubt that Aboriginal and Torres Strait Islander communities would “see much social justice” in an outcome where these “city based non-indigenous participants in this proceeding come out with so much money compared to their family and friends.”

The settlement in the Northern Territory lawsuit is the latest in a series of similar class actions brought against the Australian state, with previous settlements having been reached with the Western Australia and Queensland state governments.

The full judgment from Chief Justice Mortimer in McDonald v Commonwealth of Australia can be read here.

Community Spotlights

Community Spotlight: Nick Tsacoyeanes, Managing Director & Counsel, Blue Sky Advisors

By John Freund |

Nick Tsacoyeanes is a founding partner of Blue Sky Advisors and serves as a Managing Director & Counsel at the firm. Nick has spent his career working closely with pension funds, mutual funds, hedge funds and other institutional investors as an attorney and investment consultant.  

Company Name and Description: Blue Sky Advisors is a consulting firm that works with institutional investors and others in the capital markets to address corporate misconduct and serious governance failures. 

The firm provides clients with research into corporate misconduct and a variety of related consulting services. The team includes former securities litigators, chief investment officers, governance experts, litigation consultants and top officials at large state pension funds. 

Blue Sky monitors global stock markets and court dockets daily to detect corporate misconduct that may impact capital markets—often before litigation is filed. This includes material securities devaluations linked to alleged misconduct, significant government and regulatory actions, and newly filed or developing securities fraud cases.

Blue Sky Advisors’ subscriber list includes pension funds, mutual funds, hedge funds, AmLaw 100 law firms, boutique litigation firms, accounting firms, insurance companies as well as a variety of other institutional investors. 

Please contact Nick Tsacoyeanes at ntsacoyeanes@blueskyadvise.com to learn more about Blue Sky’s research and consulting services.

Company Website: www.blueskyadvise.com

Year Founded: 2022

Headquarters: Boston, MA

Key Takeaways from LFJ’s Virtual Town Hall: Spotlight on Patents & Trade Secrets

By John Freund |

On Thursday, April 17th, LFJ hosted a virtual town hall featuring key stakeholders in the legal funding for patents and trade secrets markets. The panel featured Anup Misra (AM), Managing Director of IP at Curiam, Robin Davis (RD), Director at Fortress Investment Group, Erick Robinson (ER), Partner and Co-Chair of the PTAB Practice Group at Brown Rudnick, and Scott Davis (SD), Partner at Klarquist Sparkman. The panel was moderated by Salumeh Loesch (SL), Founder at Loesch Patents, LLC.

Below are key takeaways from the panel discussion:

Do you feel like in the litigation world generally, that there is a greater interest in trade secret enforcement and litigation just because of the difficulties with patent enforcement? Do you feel like there's a growing interest from the funder's perspective to fund trade secret cases?

AM: I think every funder is going to be a little bit different on how interested they are in trade secrets litigation. Just to be perfectly candid, for example, Curium has not typically been as interested in this because collectively in our practices and in funding, we haven't had the best experiences with trade secret cases. Other funders, though, probably love trade secret cases.

Now, that's not to say we won't do them. And we certainly see more of them. And we're certainly seeing a lot more sort of combo trade secret / patent litigation, which I think is extremely interesting for funders. And if you can manage that, it really puts your case on the upper shelf of what funders are going to consider.

I want to get a sense of how we should consider the multijurisdictional approach in the patent context and how this applies when you're seeking funding?

RD: Obviously, if you have patents in multiple jurisdictions, the US, Europe, beyond, that is a real asset and obviously something you should be bringing to the attention of a litigation funder if you're seeking investment in your case. The key is going to be to make sure that whatever international strategy you're considering is one that takes advantage of the various strengths and differences between different forums around the world.

For instance, many people have always enjoyed filing in the US because there's the potential for large damages awards. However, US district court litigation, especially with the advent of stays for IPRs, can be slow depending on where you're litigating. There are faster forums in other parts of the world; Germany has long been considered a favorite in that regard. And with the advent of the UPC, the Unified Patent Court, which is now in many of the EU member states, this gives you both a faster timeline to a resolution and a much bigger market now that you've got multiple EU member states that are all able to be adjudicated in a single proceeding.

What are your thoughts on the impact of that [PTAB rule changes], in terms of the changes to the types of cases that may potentially arise in both patent litigation and patent litigation funding.

SD: Discretionary denials are increasing. Just in our own practice, we've seen a dramatic change very quickly on that. And I think that's going to continue as a trend for some time, at least until folks filing petitions figure it out as far as what the rules are and as far as what the standards are and what factors are weighed most heavily in the analysis in order to basically present the best argument they can to keep their petition on track.

Certainly in the short term, discretionary denial is a real thing and it's surging. So there's an opportunity to take advantage of that while the rules shake out and both litigants and the board are trying to adapt and adjust to the new reality.

Do you have any tips for how companies can protect their trade secrets but still obtain litigation funding?

ER: My first advice to companies is to have a trade secret management system. That can be as complicated as having an entire software suite. That can be as simple as having a spreadsheet that has trade secret, date, who came up with it, and additional details.

That actually feeds into the real answer, which is you need to know what the trade secret is. Once you know what the trade secret is, things get easier. And that's easier said than done. I've been in cases where nobody really knew what the trade secret was until throttle, which is what makes it crazy. The good news is that damages are a lot more flexible, for instance, in the patent world; you can get actual losses, you can get unjust enrichment, you can get reasonable royalty, you can get punitive damages. There's just a much broader system of damages.

To view the entire discussion, please click here.