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Commercial Special Features

Key Takeaways from the LFJ Podcast with Mani Walia of Siltstone Capital

By John Freund |

On the latest episode of the LFJ Podcast, we spoke with Mani Walia, Managing Director, General Counsel and Chief Compliance Officer and Siltstone Capital. Siltstone is a Houston-based alternative investment firm that invests in litigation finance claims, focusing on $500,000 to $5 million funding requests. Siltstone is also producing LitFinCon, the inaugural litigation finance conference in the Houston area, set to take place on March 2nd and 3rd of 2022.

Below are some key takeaways from the discussion:

Re: Siltstone’s focus areas

Siltstone was founded nearly ten years ago in 2013 by a group of entrepreneurial, energy focused investors. Our team being entrepreneurial, was able to recruit folks with a very interesting set of backgrounds—not just energy sophistication on the nitty gritty of energy assets, but a legal team that understood that there might be value in claims.

Through the course of our energy work, we discovered that there may be times that we have to evaluate cases and see if there is any merit to a potential case. And that’s where my addition to the team was something that shaped how we look at things. I have a litigation background and am honored to have learned how to case pick from one of the premiere litigation firms in the country.

We had the impetus to start a litigation finance fund focused on energy because of the unique skills set that our team displays. So these two strategies are distinct, they have different bases and stakeholders—but there’s overlap.

Re: Limited Partners and Structuring of Funds

I’ll note that our funds are separate, so we have a set of funds that are tailored to the energy investor, and then a separate set of funds for those who might want exposure to litigation finance. We’re proud to have successfully closed our second such litigation finance fund in December of last year, 2021.

Some folks want a little exposure in both areas, in particular because of the uniqueness of our team—the energy expertise and the focusing on finding value in energy litigation.

Re: Types of Claims: Jurisdiction, Single case v Portfolio, Sizes?

First, we’re really proud to have entered into a very collegial space. Most of the litigation finance brethren that we have have helped pave the way for entities like us.

We’re guided by our experience, so we enjoy a laser-like focus with helping provide solutions only in the commercial context. We haven’t ventured outside into consumer finance or injury cases.

We also, for the same reasons, enjoy funding patent infringement cases. Earlier in my career, I tried patent infringement cases and by actively litigating a case or subject matter you really develop the ability to understand what makes a case meritorious or advantageous or what makes the case not good. So those are the two sub-focuses in our commercial lending. We enjoy looking at single case risk or portfolio funding.

Q: On ESG Investing & Access to Justice

At the end of the day, the job of a funder is to make sure there’s access to justice for somebody who thinks he or she should have a day in court. Embedded in that is an inherent ESG leveling-the-playing-field thought process.

Learn more about Siltstone’s upcoming event, LitFinCon (the inaugural litigation finance conference in the Houston area), here.

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Case Developments Commercial

Australian Federal Court Approves $24.5M Funder’s Commission for Galactic 

By John Freund |

Reporting by Lawyer’s Weekly covers a major development in two Australian class actions, where litigation funder Galactic obtained a favourable ruling from the full Federal Court to double its commission from its funding of lawsuits brought against 7-Eleven and ANZ Bank. Justices Craig Colvin, Bernard Murphy and Michael Lee, overturned a 2023 judgement by Justice O’Callaghan that refused to make Galactic’s CFO order. As a result, Galactic’s commission from the class actions will drastically rise from $12 million, to a total $24.5 million.

The Federal Court’s ruling on 2 May found that Justice O’Callaghan had been wrong to refuse making the CFO order on the basis that the court did not have the power to do so. The three Justices wrote that Galactic’s $24.5 million commission “is commercially realistic and properly reflects the costs and risks Galactic took on by funding the proceedings.”

The class actions brought against 7-Eleven and ANZ Bank focused on allegations that the fuel and convenience store chain’s standard Franchise Agreement had ‘unfair contractual terms’ that violated consumer law. ANZ Bank were targeted by the second class action over claims that it had failed to meet its obligations under Australia’s Code of Banking Practice, ‘by lending to buy into the franchise system, often up to 100 per cent of the franchise license.’

Case Developments Commercial

London’s Black-Cab Drivers Bring £250M Claim Against Uber

By John Freund |

An article The Financial Times covers legal actions being brought against Uber on behalf of London’s black-cab drivers, centred on allegations that Uber misled Transport for London (TfL) to obtain its license. Specifically, the lawsuit focuses on the claim that Uber misled TfL around its booking model, and that the company allowed its drivers to receive direct bookings from customers rather than through a central system.

The claim is being brought in the High Court by RGL Management and is representing more than 10,500 black-cab drivers, who argue that they were harmed by unfair competition and are seeking up to £25,000 in compensation per driver. The claimants are represented by Mishcon de Reya and Katch Investment group are providing the litigation funding for the claim, with the total value of the group litigation reaching £250 million.

In a statement, Uber continued to deny the allegations and said that the claims “are completely unfounded”, maintaining its position that the ride-hailing company “operates lawfully in London, fully licensed by TfL.”

More information about the group litigation can be found on RGL Management’s ‘Black Cabs v Uber Litigation 2021’ (BULit21) website.

Commercial Regulatory Issues

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

By John Freund |

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

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

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

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

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

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

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

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

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

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

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