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Deminor Funds French Class Action Representing 6,200 Investors

By John Freund |
In the world of litigation funding for class actions, the American, Australian, and British jurisdictions tend to dominate the headlines. However, as many industry analysts have predicted, the potential for growth in European actions remains high, as reflected by Deminor’s announcement that it is funding a large investor-led class action in France. A post from Deminor reveals that the litigation funder is financially backing a French class action being brought on behalf of over 6,200 investors, who allegedly suffered financial losses from investments in funds managed by H2O AM. The asset management company was fined €75 million by French regulators in January 2023, over charges that H20 AM had breached rules regarding illiquid investments. The class action is seeking €717 million of damages to compensate the investors. The Collectif Porteurs H2O, which represents the investors in the class action, filed its claim before the Paris Commercial Court in December 2023. At the time of the filing, the group’s chairman, Gérard Maurin stated: “We would like to take this opportunity to thank the team at Deminor for their incredible support in processing the claimants’ files and funding the legal initiatives undertaken by the association on behalf of its members.” Deminor provided a joint statement from Edouard Fremault, head of investment recovery, and Olivia de Patoul, General Counsel France:  “We look forward to further helping the thousands of people who have suffered substantial losses on their H2O investments. We would like to extend our thanks to the entire team who have worked on the case at Deminor and to the tireless efforts of the association Collectif Porteurs H2O and its counsel Dominique Stucki as they seek to bring justice for the 6,200 plus claimants they are acting on behalf of.”  Deminor’s announcement also noted that the class action is still open for H20 AM investors who have not yet joined the claim, and encouraged any potential class members to register on the association’s website.

Parabellum Capital Closes $754 Million Litigation Fund

By John Freund |
As the litigation finance market continues to become more competitive, funders who consistently raise capital at a large scale are solidifying their position atop the industry. New York-based Parabellum Capital has made a definitive statement about the firm’s strength, with the close of its largest litigation fund yet.  Reporting from Bloomberg Law covers the news that Parabellum Capital has closed on a $754 million litigation finance fund, with at least two-thirds of that capital reportedly already committed to 50 investments.  Speaking with Bloomberg Law, Parabellum’s CEO and co-founder, Howard Shams said that litigation finance “is moving out of infancy and moving into a state of maturity,” and explained that serious investors “can recognize this as a way to make money over and over again with excellent results.” Commenting on the strength of Parabellum’s position in the market, Rebecca Berrebi, litigation finance broker and consultant, stated that “the proof of their success is in their ability to fund-raise large amounts.”  This impressive fundraise is one of the largest ever reported in the litigation finance market, and marks the third such fund that Parabellum has closed, following its first two litigation funds that closed for $166 million $465 million, respectively. According to Bloomberg Law’s reporting, Parabellum’s first fund financed 55 investments, with the firm later selling about half of the original investments in a secondary market deal. The value of that transaction reportedly reached nine figures, with Shams stating that “nobody’s done a secondary trade of that size.”

Burford Capital Announces Pricing and Upsizing of Private Offering of Senior Notes

By John Freund |
Burford Capital Limited ("Burford" or "Burford Capital"), the leading global finance and asset management firm focused on law, today announces the pricing of its private offering of $275.0 million aggregate principal amount of additional 9.250% senior notes due 2031 (the "Additional Notes") by its indirect, wholly owned subsidiary, Burford Capital Global Finance LLC (the "Issuer"), which represents an increase from the previously announced offering size. The Additional Notes will be guaranteed on a senior unsecured basis by Burford Capital as well as Burford Capital Finance LLC and Burford Capital PLC, both indirect, wholly owned subsidiaries of Burford Capital (such guarantees, together with the Additional Notes, the "Securities"). There is $400.0 million aggregate principal amount of the Issuer's 9.250% senior notes due 2031 (the "Initial Notes") outstanding as of the date hereof. The Additional Notes will initially be offered to investors at an offering price equal to 103.625% of the principal amount thereof, plus accrued interest from January 1, 2024, representing a yield to worst of 8.251%. The offering is expected to close on January 30, 2024. If issued, the Additional Notes will be issued as "Additional Notes" under the indenture pursuant to which the Issuer previously issued the Initial Notes, will have identical terms to the Initial Notes (other than with respect to the date of issuance, the issue price and the first interest payment date) and will be treated as a single class for all purposes under such indenture. Burford Capital intends to use the net proceeds from the offering of the Securities for general corporate purposes. The Securities have not been, and will not be, registered under the US Securities Act of 1933, as amended (the "Securities Act"), or the laws of any other jurisdiction and may not be offered or sold within the United States or to, or for the account or benefit of, US persons absent registration or an applicable exemption from registration under the Securities Act or any applicable state securities laws. The Securities will be offered only to persons reasonably believed to be "Qualified Institutional Buyers" within the meaning of Rule 144A under the Securities Act or non-US persons outside the United States pursuant to Regulation S under the Securities Act, in each case, who are "Qualified Purchasers" as defined in Section (2)(a)(51)(A) under the US Investment Company Act of 1940, as amended.
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Exton Advisors Announce Inaugural Singapore Litigation Funding Conference

By John Freund |
In a post on LinkedIn, Exton Advisors announced the launch of its inaugural Singapore Litigation Funding Conference, set to take place on 7 March 2024. The litigation funding advisory company is working with David Grief, CEO of David Grief International Consultancy (DGIC), to deliver its first event covering the ‘increasingly thriving market’ for litigation finance in Singapore. Whilst the full event agenda has not yet been revealed, Exton Advisors confirmed the following speakers who will be taking part in the conference:
  • Calvin Liang, Advocate, Duxton Hill Chambers
  • Teck Wee Tiong, Partner and Joint Head of the Sustainability & Responsible Business Practice, WongPartnership LLP
  • Carolina Carlstedt, Investment Manager, Litigation Capital Management
  • Jasmine Chin-Sabado, Ministry of Law – Singapore
  • Hasan Tahsin Azizagaoglu, Associate, Bench Walk Advisors
  • Anthony Ellwood-Russell, Investment Manager, Omni Bridgeway
  • Timothy Cooke, Partner, Reed Smith LLP
  • Daryl Chew, Office Managing Partner, Three Crowns LLP

Maurice Thompson Returns to HFW to Lead Global Litigation Funding Team

By John Freund |
An announcement from HFW reveals that the law firm is expanding its operations in Australia with the appointment of Maurice Thompson as a partner in its Melbourne office, where he will lead the firm’s litigation funding practice. Thompson, who has joined the firm along with three of his colleagues from Clyde & Co., is a household name with 30 years of experience in complex disputes across Australia and the Middle East.  HFW’s announcement emphasised Thompson as ‘having the leading litigation funding practice in Australia’, with the firm keen to make use of his expertise in class actions and funded disputes in the region. Commenting on his move to HFW, Thompson stated: “I also look forward to leading HFW's global litigation funding team and assisting the firm and its clients in taking advantage of opportunities arising with developments in the litigation/disputes funding market internationally. The firm has an ambition to become a market leader in litigation/disputes funding and the opportunity to contribute to this initiative was a major attraction for me." HFW Australia’s managing partner, Gavin Vallely described Thompson as “an expert practitioner in the offshore energy, aviation, insurance, litigation funding and, more recently, autonomous ships and aircraft sectors.” Vallely further highlighted Thompson’s “vast experience managing large scale multijurisdictional arbitrations and litigation,” and explained that this latest appointment was a key part of HFW’s growth strategy in Australia. 

IVO Capital Partners becomes the 8th member of the European Litigation Funders Association (ELFA)

By John Freund |
The European Litigation Funders Association (ELFA) is pleased to announce that IVO Capital Partners, an independent French investment manager with nearly 10 years of active presence in the litigation funding industry, has joined ELFA. Paul de Servigny, manager of litigation finance strategy at IVO Capital Partners stated: “Active since 2014 we have witnessed firsthand the strong development of the litigation finance industry in Europe for claimants and lawyers seeking funding as well as for investors seeking different strategies and return profiles compared to typical illiquid offerings. Joining ELFA and being able to work with our fellow funders is the logical step as the market grows and further institutionalizes itself. We are very excited in actively participating to help guide and advise the various national and European institutions and governmental bodies who have shown, for good reason, more and more interest in litigation finance.” Charles Demoulin, Deminor’s Chief Investment Officer and ELFA Director, commented: “We are delighted to have IVO Capital Partners joini ELFA. Based in France, their team has extensive experience and expertise in litigation funding specifically bringing on board a French perspective. With IVO Capital Partners, we further increase the number of European jurisdictions being represented in the association. While litigation funding is a global phenomenon, the ability to acknowledge, understand and address the regional and local specificities from a legal and cultural perspective specifically in the EU remains a priority for ELFA and its members. We look forward to involving IVO Capital Partners in all our activities. We trust their contribution to ELFA’s mission, together with those of all existing and future members, will be highly valuable for the litigation funding industry and the legal community as a whole.” About The European Litigation Funders Association: ELFA was founded by three leading litigation funders with a European footprint, Deminor, Nivalion AG, and Omni Bridgeway Limited. ELFA was established to serve as the European voice of the commercial litigation funding industry. With the objective of representing the industry’s interests before governmental bodies, international organizations and professional associations, ELFA also aims to act as a clearinghouse and reference for relevant information, research and data regarding the uses and applications of commercial legal finance within the European continent. About IVO Capital Partners: Founded in 2012, IVO Capital Partners is an independent French management company specialized in various forms of corporate debt. They invest in listed and unlisted credit with a predilection for special situations offering yield premiums on international markets, particularly emerging markets and litigation finance. The company manages €1.3 billion in assets and employs around 30 people at its Paris offices.
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UK Justice Secretary says Government Will Reverse ‘Damaging Effects of PACCAR’

By John Freund |
The biggest story from the UK litigation finance industry in 2023 was undoubtedly the Supreme Court’s ruling in PACCAR, raising the greatest challenge to the viability of the UK funding market in recent times. However, it appears that UK funders are now receiving support from the government, bolstered by awareness around the role of litigation funding in providing access to justice for the sub-postmasters in the British Post Office scandal.   In an article from the Financial Times, the UK justice secretary, Alex Chalk KC stated that the government “will be reversing the damaging effects of PACCAR at the first legislative opportunity.” This latest statement firmly establishes the government’s position with regard to the Supreme Court’s ruling, building upon its efforts to reduce the impact on UK litigation funding through the amendment to the Digital Markets, Competition and Consumers Bill (DMCC). The catalyst behind this definitive proclamation from the government appears to be the renewed public attention on the British Post Office scandal, in which litigation funding played a key role in allowing the former sub-postmasters to bring their claims against the Post Office. Alan Bates, from the Justice for Sub-postmasters Alliance, had once again highlighted the crucial support that third-party funding had played in his group’s fight for justice, describing it as an “essential financing tool.” Whilst the justice secretary’s proclamation will be well-received by UK litigation funders, it is not yet clear what concrete steps the government will be taking beyond the existing DMCC amendment. Gary Barnett, executive director of the International Legal Finance Association (ILFA), emphasized that the type of funding that supported the sup-postmasters “is now under threat,” and called for the government to move quickly to provide a legislative fix.

LegalPay launches Zero Interest Credit Line for businesses to settle legal disputes, to disburse Rs 200 cr in 2024

By John Freund |
LegalPay, India’s first litigation funder and legal solutions provider, has announced the launch of a zero-interest credit line for enterprises, startups, individual business owners, and freelancers to settle legal disputes while preserving their working capital. LegalPay aims to disburse INR 200 crore in 2024 through its own NBFC Padmalaya Finserve along with other partner NBFCs. Named Quick Settle, this innovative structured financing is designed to streamline the resolution of legal disputes with a flexible 6–12-month repayment plan, enabling parties to resolve conflicts without depleting their working capital. In a move set to transform legal finance in India, Quick Settle aims to facilitate amicable dispute resolution by enabling parties involved in disputes to settle claims without impacting their working capitalthrough a zero-interest credit line offered to the defendants with a flexible 6–12-month repayment cycle. Kundan Shahi, Founder and CEO of LegalPay, said, "Our vision is to bridge the gap between legal disputes and swift resolutions. Quick Settle is not just a financial product. It catalyzes change, fostering a culture of collaboration and resolution. By allowing defendants to manage their working capital efficiently through a zero-interest repayment cycle, we aim to foster a more conducive environment for businesses to thrive. Quick Settle embodies years of litigation funding expertise, adopting a tailored approach because we understand that one size does not fit all. This structured financing option enablesdefendants to settle claims seamlessly, alleviating the stress of legal battles without compromising their working capital." Quick Settle is expected to disrupt innovation in legal finance, specifically tailored to improve the efficiency of the Indian judicial system, which is currently burdened with an overwhelming backlog of 61 lakh cases in the country’s 25 High Courts. By offering defendants manageable repayment options and claimants immediate settlement funds, Quick Settle aims to streamline the judicial process and foster a culture of amicable resolutions. Founded in 2019, LegalPay has funded over 44,000 commercial cases and underwritten a staggering 92,000 cases nationwide. With Quick Settle, LegalPay aims to further disrupt a potential $200Billion market by bringing financial relief to businesses and having a positive social impact by expediting dispute settlements. Quick Settle ensures that the businesses receive their claim amount on day one, thus proving to be a game-changer for companies looking to bolster their financial strength. With QuickSettle, companies can navigate conflicts without lawsuits, preserving valuable business relations with vendors and customers. About LegalPay: LegalPay is a leading name in the Indian litigation funding market, dedicated to providing comprehensive financial solutions to individuals and businesses involved in legal disputes. Currently managing over INR 2800 Crores worth of claims, LegalPay has emerged as a leader in litigation funding, bridging the gap between legal expertise and financial solutions with a focus on innovation, transparency, and client satisfaction.
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Judge Prohibits Trump From Raising Issue of Litigation Funding in Carroll Defamation Trial

By John Freund |
Whilst it is not uncommon for funded litigation to involve a political aspect, with disputes involving national governments being a regular occurrence, few cases are attracting as much attention as one involving the former President of the United States. A judge’s ruling in a defamation case brought against Donald Trump has highlighted the issue of the potential political bias of organizations who fund lawsuits. Court documents posted on CourtListener reveal that in the case of Carroll v. Trump, Judge Lewis A. Kaplan has denied former President Donald Trump’s request to use ‘any evidence or argument concerning litigation funding in the presence of jury.’ Judge Kaplan’s Memorandum And Order On Plaintiff's In Limine Motion covered a number of evidentiary issues in the defamation case, including E. Jean Carroll’s choice of counsel or use of litigation funding.  Judge Kaplan’s order provided an in-depth explanation as to why the defendant was prohibited from raising evidence around Carroll’s use of third-party funding. Kaplan first explained why the Court refused to allow Trump to make arguments around the source of litigation funding in the other case (Carroll II) brought against him by Carroll over allegations of sexual assault. After allowing limited discovery into the plaintiff’s use of litigation funding, the Court found that regardless of which organization was funding Carroll’s lawsuit, ‘Mr. Trump had more than ample evidence before that jury to the political and personal views of Ms. Carroll.’ Citing the reasoning in the previous case, Judge Kaplan wrote that ‘Mr. Trump’s position on this issue is no stronger now than it was in Carol II’. Kaplan explained that Trump already ‘has an ample basis for challenging her credibility without getting into a collateral and time consuming dispute’ about the existence of any third-party funding, ‘let alone the political views of whoever funded that organization.’ Kaplan concluded by firmly stating that ‘the prejudice inherent in such an exercise would outweigh substantially any probative value.’

Judge Rules in Favour of Burford Capital Over Argentine Asset Seizure

By John Freund |
As LFJ reported earlier this week, the ongoing saga of the $16.1 billion award in the Argentina YPF case is continuing to demonstrate the difficult process of judgement enforcement and collection. However, there has now been a positive update for Burford Capital, as the U.S. judge has ruled against Argentina’s request to block the funder seizing assets to secure the award. Reporting by Reuters covers today’s judgement from U.S. District Judge Loretta Preska, who ruled that Argentina had been given a “reasonable period of time” to assign assets as security for the $16.1 billion award. This ruling was in response to Argentina’s filing of a request to delay the start of any asset seizure by Burford Capital, with the funder having intended to begin seizing Argentine assets as soon as this week. Judge Preska stated that the Argentine government had failed to either pledge assets to secure the award or pursue an expedited appeal against the judgement. As Judge Preska’s original deadline (January 10th) for Argentine to pledge assets has now passed, it can be expected that Burford Capital will look to immediately begin the asset seizure process. At the time of publication, neither Burford Capital nor Argentina had provided a comment to Reuters.

Dealbridge.ai Welcomes Adam Frederick as New CEO 

By John Freund |
In a post on LinkedIn, Dealbridge.ai announced the appointment of Adam Frederick as the company’s new CEO. The Deal Relationship Management (DRM) platform stated that Frederick would lead its ‘upcoming growth phase, building upon the remarkable strides made by Jon Burlinson, Joshua Masia, and the entire DealBridge.ai team over the past year.’ Frederick brings a ‘a rich background as a seasoned executive and multi-time founder in the SaaS startup realm’ to Dealbridge.ai, having most recently served as the Global President & CEO Americas for Morrow Sodali. Frederick’s career highlights also include founding both Samurai Data Analytics and Oxford Intelligence Partners, in addition to serving six years as managing director of the corporate solutions group for NASDAQ. Learn more about Dealbridge.ai’s work in their LFJ article on ‘Navigating Patent Litigation: The Crucial Role of Generative AI Platforms’.

Insights on Portfolio Funding for Law Firms

By John Freund |
The following article was contributed by Peter Petyt, CEO of 4 Rivers Services, a third-party funding advisory and legal project management firm.   Peter is undertaking part-time doctoral research at the University of Westminster in London to explore how law firms can ensure that they are suitable for portfolio funding and how can funders best evaluate which law firms to support. In his thesis, he will be examining the different ethical and regulatory challenges in various jurisdictions and analyzing the characteristics of legal case types which make them suitable or unsuitable for inclusion in a funded portfolio. The research will complement the existing 4 Rivers know-how which has been developed to help law firms and claimants secure third-party funding. Below is a Q&A with Peter on his doctoral research findings: What led you to carry out this research? Third-party funding is becoming increasingly important, so I was particularly keen to create some thought leadership which would demonstrate how law firms can take benefit from portfolio finance and what criteria are necessary. This form of finance could be genuinely transformational for many firms. How do clients benefit from law firms which have this sort of financing behind them? The fees and expenses of running disputes can be substantial, so clients often require the law firm to offer fee arrangements which are success-based. However, law firms are naturally cautious about risking their own time and third-party costs if payment for these depends on an uncertain outcome, and they must ensure that they have adequate operating capital to survive. What is the essence of portfolio funding? Portfolio funding is a form of finance which is provided for, and secured against, a bundle of cases which are cross-collateralised.  The cross-collateralization diversifies and reduces the funder’s risk, enabling the funder to reduce its overall cost of capital, especially when compared to single-case financing. A law firm can use portfolio finance to provide it with working capital whilst the cases are in progress; to pay disbursements of a case (including court and arbitration fees, experts, e-disclosure etc); and potentially to fund other initiatives such as acquisitions, recruitment, marketing, and IT. Unlike bank finance or shareholder equity, portfolio finance is aligned with the successes and failures of cases. It is therefore an attractive non-recourse and non-dilutive source of capital. What are the traditional sources of law firm finance? Often, law firms simply use bank finance and other sources of debt finance which can be expensive and may not be attainable at all to plaintiff law firms. Banks do not accept unrealised contingency fees as collateral for credit, requiring instead more conventional security such as property and personal guarantees from the partners of the firm to counterbalance economic or financial risks or uncertainties.  Are public listings of law firms an alternative? Since 2012, UK law firms have been permitted to list and raise capital on a public stock exchange. A public listing provides cash which can enable a law firm to effectively back its own judgment when taking cases on a contingent or partially contingent basis. However, there has not been a flotation of a law firm on a UK market since 2019 and indeed the market appears to be generally less receptive at present. Additionally, the process of taking a firm to market is not straightforward and, post-listing, partners earn less per year. However, they do have equity ownership of a publicly quoted business which can have substantial capital value over time and can be more easily monetized than a share of a traditional partnership. What about external equity investment in law firms? This is permissible in the UK, as well as in US states Arizona and Utah, so it may well become a trend in the future. However, there must be a concern that if a funder becomes an equity investor in a law firm, it will impact on a law firm’s independence. This important issue was illustrated when Burford purchased a minority 32% stake in PCB Litigation and provided capital to fund a portfolio of litigation cases. Equity participation brings with it a degree of control and influence over operations and strategy, and the question is therefore whether a firm in a highly regulated industry such as legal services should be allowed to take investment from a party which has a direct influence in the financing of its cases. What are “pacts” or “best friends” relationships? These are where the law firm “partners” with a preferred funder which finances the law firm fees and expenses on single cases. One example was the Willkie Farr & Gallagher law firm partnership with Longford Capital in 2021, where a “facility” of US$50 million was made available. There was also Harbour’s venture with Mishcon de Reya, which was publicized as a “strategic partnership”; and a “strategic alliance” between Litigation Capital, DLA Piper and Aldersgate Funding to provide DLA clients access to £150m for funding large-scale litigation and arbitration. The “pact” structure is not a genuine portfolio structure, as the finance provided is for the client’s account, not for the law firm’s account. There is no cross-collateralzsation of claims and therefore the obvious benefits of diversification are lost. There is also no evidence that such pacts offer a better financial deal for a client than if the client were to conduct a competitive process either directly or through an advisor/broker, and indeed the negative impact of a pact/best friend funder declining to fund a case could have a negative impact on that case being attractive to other funders. Furthermore, whilst speed of execution is cited as a benefit of the pact structure, there is no evidence to support this. What portfolio funding deals have been announced in the market? UK litigation law firm, Provenio, has a £50 million fund in partnership with Therium to finance high value business litigation and arbitration claims. Provenio had been launched in 2019 by a team of senior litigation lawyers from DLA Piper to advise exclusively on high-value, national and international commercial disputes. Then, in March 2021, international firm PGMBM announced a £45 million “funding partnership” with North Wall Capital to support the funding of cases related to diesel emissions scandals, breaches of personal data and risks associated with drugs and medical devices, as well as environmental litigation.  This was followed in 2022 by a further investment of £100 million by North Wall, targeted at litigation arising from ESG issues, which is “in the form of a loan secured against the revenues from winning or settling cases brought by PGMBM”. This structure- a cross-collateralized loan which is repaid from the proceeds of cases- is typical of a law firm portfolio funding facility. Harbour provided financing for an acquisition of a division of a law firm in July 2023 in the UK, where Rothley Law acquired the private client team and business book of Shoosmiths; and Harbour was also the financier behind the acquisition of the UK law firm Hawkins Hutton by Bamboo Law in August 2023, as well as providing Slater and Gordon (S&G) with a £33m facility in one of the largest deals publicly announced during that year.  The S & G facility is for expansion into high-value PI work as the UK fixed cost regime reduces profit margins on lower value claims, with the firm focusing instead on severe and life-changing injury cases, including catastrophic loss work, as well as consumer law developments. How does portfolio funding differ from single-case funding? A single dispute carries a risk which is binary, which is why TPF for single cases requires a high rate of return. Portfolio funding, however, is provided for a bundle of cases, so that the funder can offer a non-recourse credit-like solution which creates liquidity and leverages a law firm’s investment of its own time. The bundle can involve a group of specific cases, or it can include existing and future cases, including a large group of low-stakes cases, or a smaller group of high-stakes cases. Sizes of portfolios vary among funders but in general a minimum of three cases and a minimum investment size of $3 million are standard. Other specific uses include helping a new law firm launch, monetizing unpaid WIP, acquiring a new line of business, mergers and acquisitions, and geographic expansion. The funding can be used to increase revenues by opening new business locations and divisions in strategic markets, as well as hiring new individuals or groups of fee earners with client followings. Additionally, the capital might be used for remuneration to existing staff to secure their continued employment. It also seems likely that the funder will offer added value services to law firms to which they are providing portfolio financing, including mock trials, moot courts, and strategic advice. The research is showing that portfolio funding enables the law firm to secure funding more quickly, on pre-arranged terms, and, depending on the structure, the ability to benefit from the overall success of the portfolio. How does 4 Rivers use the know-how which is being created by this research to benefit its law firm clients? This know-how, combined with my own many years of experience in assisting corporations with securing capital from venture capitalists, private equity houses, family offices and banks, is vital in allowing us to advise our law firm clients on how to structure a portfolio so that it is investment ready and to optimise the chances of securing funding. In effect, a unique methodology has been developed.
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Managing Duration Risk in Litigation Finance (Pt. 1 of 2)

By John Freund |
The following is the first of a two-part series, contributed by Ed Truant, founder of Slingshot Capital, Executive Summary
  • Duration risk is one of the top risks in litigation finance
  • Duration is impossible to determine, even for litigation experts
  • Risk management tools are available and investors should make themselves aware of the tools and their costs prior to making their first investment
  • Diversification is critical in litigation finance
Slingshot Insights:
  • Duration management begins prior to making an investment by determining which areas of litigation finance have attractive duration risks
  • Avoidance can be more powerful than management when it comes to duration in litigation finance
  • There is likely a correlation between duration risk and binary risk (i.e. the longer a case proceeds, the higher the likelihood of binary risk associated with a judicial/arbitral outcome)
When you are speaking to an institutional investor about litigation, it doesn’t take long until the concept of “duration risk” enters the discussion.  Everyone seems to have a story about that one piece of patent litigation or commercial dispute that went on for over a decade that seems to have marked them for life even though they weren’t in any way involved. Yet, it’s a real risk.  Thankfully, it’s not a real risk for a well-constructed portfolio of different case types in different jurisdictions, which is one of the reasons that prompted me to raise a commercial litigation finance fund-of-funds in 2016 – it will ultimately serve as a very good proxy or index for how the industry performs. The whole concept of duration risk is critically important for investors in legal finance to understand, including ways in which duration risk can be managed in this specialized asset class. Private alternative asset classes, such as litigation finance, always need to deal with duration as part of their fundraising pitch to investors as the investments are inherently illiquid investments.  This means that in order for investors to obtain their liquidity, their needs to be a mechanism to allow for that to happen.  Within most private equity sub-classes (venture capital, growth equity, leveraged buy-out, real estate, etc.) the exit is typically a sale of the business.  An argument is often made that there is always a clearing price for any private company and the path to liquidity is generally through an investment bank or intermediary that canvasses the market to search for the best price for that asset at any given point in time.  However, with litigation finance, the pool of capital providers is relatively small, the complexity is very high and the nascency of the market means that beyond the settlement of the case (either through negotiation or a court/arbitral decision) there are not many options. But that is changing… Duration Risk Let’s start by defining duration risk for purposes of litigation finance investing, as the risk that the time horizon of a given investment is different than that which was originally underwritten without a commensurate increase in economics. Most Litigation Funding Agreements (or “LFA”s) have provisions to deal with duration risk such that the negotiated economics increase as time progresses, but often this ultimately gets capped as the claimant is concerned that the funder can end up with the lion’s share of the settlement amount.  Similarly, the funder does not want to put itself in a position where the claimant is not participating in the economic outcome of the claim, otherwise the claimant is wasting their time and effort (and stress). The two opposing forces work to keep each other “in check”. And while the LFA is typically structured to mitigate this risk, there is the potential that the case simply takes much longer than originally thought and investors want to get their money back to redeploy into another, perhaps slightly more liquid, investment.  And this is where many investors, individual and institutional, who poured into the space since 2015 find themselves today. Now, the duration risk inherent in commercial litigation is not to suggest they will rival Myra Clark Gaines (the longest-running civil lawsuit in the US at 57 years), but the difference between 5 years and 10 years can make a meaningful difference to an investor’s return profile if the economic benefits are not commensurate with the timeline extension.  While many funders quote an average hold period of 30+- months, one needs to be careful of the use of averages in litigation finance.  Many of those averages have been derived from the average length of settled cases only, which inherently ignore the duration of the unsettled cases, which is obviously not reflective of reality. Since there are very few fully realized funds in existence globally, it is difficult to determine an actual industry average for litigation finance but I would confidently say that the average will in fact be greater than the 30-month time period often quoted.  The other thing to consider is that any average should be weighted based on dollars invested to ensure that the early settlements, which by definition would likely have fewer invested dollars, do not contribute disproportionately to the average.  The reality is that funders rely on the relatively early case wins to produce strong IRRs (albeit lower MOICs) in order to offset the IRR drag of those cases that are not successful and that exceed the average duration. If we look at a case where the LFA calls for 3X multiple (200% return on investment) during the 3-year period and a 5X multiple (400% return on investment) thereafter, then the IRRs would look as follows for different durations:
Original InvestmentProceeds ReceivedDurationInternal Rate of Return
100300344%
100500538%
100500822%
1005001020%
The first two data points illustrate that where the cap on the proceeds move in lock-step with timing, it has little effect on IRRs. However, the last three data points illustrate the punitive impact that duration has on internal rates of return. When duration moves from 5 to 10 years for a fixed outcome the internal rate of return decreases by approximately half. In addition to the duration necessary to get to a decision (after the potential for an appeal), you may then get caught up in additional enforcement and collection timelines which could add years and additional investment to the original investment proposition.  A good example of this is the “Petersen” & “Eton Park” claims that Burford invested in involving a claimant that is fighting Argentina & YPF over the privatization of energy assets without due compensation. The Implications of Time on the Value of Litigation  In a prior article written about the value of litigation, I describe how a piece of pre-settlement litigation starts off at the risky end of the spectrum due to a lack of information about the various parties’ positions, it then starts to de-risk as each side goes through discovery (approaching the optimal zone of resolution) and then the it starts to re-risk as each side becomes entrenched in their positions and pushes on to a third party decision.  This then leads to a bifurcation in value because the more the outcome of a case is dependent on the outcome of a disinterested third party (a judge, jury or arbitral panel) the more binary the outcome becomes as displayed in the chart below. This of course begs the question, if the timeline of a lawsuit extends beyond its original timeline, what does this say about the value of the case itself? Is it that the case is seen as a win by both sides and therefore each side ‘digs in’ to ensure the other side loses (hence a more binary outcome), or is this just a reflection of healthy sparring between parties to delay the inevitable and increase the friction costs to force the claimant to drop its case? Sadly, because every case has its idiosyncrasies and different personalities involved, we will never know the answer.  But what we do know is that any case that does get decided by a third party results in a binary outcome and as an investor “binary” doesn’t make for a good night’s sleep. I have written about this issue in an article about secondary investing, and in that article I make the argument that secondaries, if not valued properly, likely have a higher risk profile then the rest of the portfolio in which they reside because they are moving into the re-risk zone which inherently has a higher level of binary risk attached thereto.  I think this is important for investors to understand because it suggests that if you are concerned about duration in a litigation finance investment, it is probably (although not always) in your best interest to get out earlier than later.  Of course, the counter-argument is that the longer the case has elapsed the more you know about its merits and how the other side has conducted itself during the case and so your case may in fact be less risky than when it started. However, in these cases you are going to be asking the secondary investor for a premium to reflect that fact and that means you need to convince them of the merits, the likely duration and any credit/collection risks, which is a difficult task by any measure. We must also not lose sight of the fact that the longer a case proceeds, depending on the size and financial capacity of the defendant, the risk of collection may increase due to the financial condition of the defendant especially those with multiple lawsuits or those whose fortunes (profits and cashflow) are tied to more cyclical industries.  What looked like a good credit risk five years ago when the case commenced may look very different coming out of a recession or a commodity cycle.  Similarly, if the plaintiff is not of sound financial condition, the risk that the plaintiff runs out of money or interest in pursuing the case is also a risk that you are implicitly assuming. Given that the secondary industry is in its infancy and there is very little in terms of empirical results on secondaries, it remains to be seen how secondary portfolios will perform but if I were an investor in the sector I would go in with ‘eyes wide open’ and a deep value mindset.  The reality of most litigation finance is that the economic benefits tend to be somewhat capped, and so whatever premium is paid on a secondary, it means it reduces the overall economics available to the secondary investor. Dissimilar to private equity where a secondary investor can still benefit from growth in the value of the underlying company it acquires, the same does not generally hold for litigation finance investments and in fact the risk is to the downside with most LFAs. In the second article of this two-part series, we will look at the various ways in which investors can manage duration risk, both before they start investing and after they have invested. Slingshot Insights Duration management in litigation finance is almost as critical as manager selection and case selection.  I believe duration management starts prior to making any investments by pairing your investment strategy and its inherent duration expectations with the duration characteristics of your investments.  From there, you should ensure your portfolio is diversified and you should be actively assessing duration and liquidity throughout your hold period.  You should also assess the various tools available to you both on entry and along the hold period to determine your optimum exit point. As always, I welcome your comments and counterpoints to those raised in this article.  Edward Truant is the founder of Slingshot Capital Inc. and an investor in the consumer and commercial litigation finance industry.  Slingshot Capital inc. is involved in the origination and design of unique opportunities in legal finance markets, globally, advising and investing with and alongside institutional investors.
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Arbitrator in Malaysia Sulu Heirs Case Found Guilty of Contempt of Court

By John Freund |
The dispute between the Malaysian government and the Sulu heirs has been one of the most high profile international arbitration cases in recent times, raising issues around state sovereignty and the role of third-party funders in international arbitration. The new year has brought one of the biggest developments yet in the case, as the arbitrator who issued the preliminary award to the Sulu heirs has been found guilty of contempt of court. Reporting by Bloomberg Law takes an in-depth look at the ongoing aftermath of the arbitration case brought against the Malaysian government by the heirs to the Sulu sultanate, and the subsequent issuance of a multi-billion-dollar award. In a major development, Gonzalo Stampa, the Spanish arbitrator who handed down the preliminary $14.9 billion award to the Sulu claimants has been found guilty of contempt of court and been handed a six-month jail sentence. In addition, the court banned Stampa from acting as an arbitrator for one year ‘for knowingly disobeying rulings and orders from the Madrid High Court of Justice.’ The origins of Stampa’s guilty verdict date back to his issuing of the preliminary award, after which the court of justice in Madrid ‘found that the claimants did not serve the government of Malaysia properly and instructed Stampa to close the proceedings.’ When Stampa ignored these instructions and took the award to be recognized in France, the Malaysian government filed a criminal complaint with the Spanish authorities. Paul Cohen, the attorney for the Sulu heirs, described the verdict as “a disgrace to Spain and a stain on its reputation as a venue for neutral dispute resolution,” whilst Mr Stampa’s own attorney, Sofía Parada Cano-Lasso, argued that “the judgment makes an incorrect interpretation of the arbitration sphere.” The $14.9 billion award that Stampa handed down has already been the subject of appeals by the Malaysian government, with a French court indicating that it would annul the award, whilst attempts by the claimants to enforce the award in the Netherlands and Luxembourg were unsuccessful. Stampa’s guilty verdict raise fresh issues for Therium Capital Management, who reportedly provided $20 million in funding for the Sulu heirs’ case, and now have another obstacle in the way of enforcing and collecting the award. Therium declined Bloomberg Law’s request for comment.  Azalina Othman Said, the Malaysian government minister for law and institutional reform, celebrated the ruling as a “significant victory for the rule of law that will help preserve the sanctity of international arbitration as an alternative form of dispute resolution.” Azalina has long been the most outspoken representative from the government on what they call the ‘Sulu Fraud’, having previously raised the possibility of legal action being brought against Therium.

Argentina Asks Court to Delay Asset Seizure for $16.1 Billion Award

By John Freund |
The $16.1 billion award in the Argentina YPF case stands out as one of the biggest events in the litigation finance world in recent memory. However, the process of actually recovering the award is proving predictably difficult, with Argentina continuing to seek court ordered holds on any asset seizure. Reporting by Reuters provides an update on the latest developments in the ongoing efforts by Burford Capital to enforce and collect on the $16.1 billion judgement in the YPF case, whilst Argentine explores every avenue to delay the process. The article details Argentina’s filing this Monday in a New York federal court, asking the judge to delay asset seizure efforts which Burford had planned to begin on Wednesday. In its filing, Argentina argued that, as the judgement was only handed down four months ago and their appeal is still underway, the planned asset seizure was “unnecessary and premature”. The filing also cited the “extraordinary and unique circumstances” of the multi-billion dollar award, with the Argentine government having already stressed the challenge of paying such a large sum. As LFJ recently reported, Argentina's new president, Javier Milei has suggested that the government could create a perpetual bond to cover the cost. The Reuters article highlights that Judge Preska has ‘agreed not to enforce her Sept. 15, 2023, judgement until the earlier of Argentina's failure to pledge assets by Jan. 10 or seek an expedited appeal by Jan. 30.’ However, as recently as last week, Burford Capital reemphasized that it was intent on pursuing collection immediately, stating that Argentina “made clear that it does not intend to post the minimal security required to continue the (stay) pending appeal, much less pay the judgement.”

EU Corporate Sustainability Directive to Create Opportunities for ESG Litigation Funding

By John Freund |
Lawsuits focusing on ESG violations by large companies have become a top priority for many of the world’s leading funders, with some firms focusing their entire portfolio around these types of cases. The next 12 months is set to continue that trend, with European funding leaders identifying a new European Union directive as a key driver of ESG litigation in the future. An article in Bloomberg provides an overview of the current state of the European litigation funding market, focusing on the impact of new EU rules and the growing appetite of investors to pursue claims against companies over ESG breaches. The article brings together insights from prominent funders, lawyers, and policymakers to analyse the driving forces behind the European funding market in 2024.  Ana Carolina Salomão, chief investment officer and partner at Pogust Goodhead, highlighted the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) as a factor that may increase the volume of funded ESG litigation. The directive, which is awaiting formal adoption from the European Parliament and Council, outlines rules for large companies to follow when it comes to their impact on the environment and human rights, along with establishing penalties and civil liability for those companies who breach these obligations.  Salomão stated that the CSDDD will ensure that there is “much more information available in the public domain,” which will help demonstrate where companies have failed to meet their ESG obligations.  Steven Friel, CEO of Woodsford, explained that his company has seen an increase in activity around investor-led claims being brought against companies over governance and corporate responsibility failings. Friel said, “We go in when there’s a catastrophic breakdown in ESG in major companies with losses for shareholders or customers. We mobilize them, engage with the company, seek a settlement or litigate.” Aristata Capital’s CEO, Rob Ryan highlighted his firm’s focus on ESG issues, stating that the current environment is presenting plenty of claims in their target area. Ryan stated that Aristata’s goal is “to change corporate behavior in the long run.” 

Apex Litigation Finance to Appoint Timothy Fallowfield as Interim Chairman 

By John Freund |
Litigation funding specialists Apex Litigation Finance have announced the upcoming appointment of Timothy Fallowfield as interim Chairman. Tim will commence the new position in January 2024, assuming overall responsibility for guiding Apex through its next growth stage. Tim brings a wealth of experience to the table, having honed his skills on both the buy and sell sides of the financial spectrum. His diverse background includes managing risk at Black River Asset Management and latterly for Noble Resources HK, where he managed a medium-sized absolute return Macro fund with AUM of $480mm. On the sell side, Tim has lent his expertise to financial powerhouses such as Chase, UBS, and ING, gaining valuable insights into the dynamics of financial markets. With an impressive track record spanning 35 years, Tim has consistently demonstrated his proficiency in managing risk and generating consistent returns for investors. Having built a fund business from the front to the back office, this extensive experience positions him as a seasoned professional capable of navigating the complexities of the financial landscape. Apex will look to leverage off his risk management background to build a robust investment process. Tim says: “There were three elements that attracted me to Apex: our CEO, the opportunity to generate uncorrelated returns and the focus on the small claims, which allows Apex to build a diversified investment portfolio. We do this while helping those who may perhaps not usually have access to legal recourse. With Crestline’s participation, we will look to expand our investments significantly.” In leveraging Tim's skill set, Apex is well-positioned to benefit from his proven ability to establish and manage funds successfully. Tim's strategic approach and in-depth industry knowledge make him an invaluable asset to the Apex team as they chart a course for success in the ever-evolving world of litigation finance. Apex CEO Maurice Power says: “Having recently secured investment capital from Crestline Investors Inc., Apex is expanding to position itself as the litigation funder of choice for small to mid-size commercial claims in the UK. Being able to bring in someone with Tim’s drive and experience to guide us through this period will hugely benefit the Apex team. We welcome Tim’s appointment and look forward to the exciting times ahead.” About Apex Litigation Funding: Apex Litigation Finance Limited brings together experts from the legal and finance sectors to provide third-party litigation funding to litigants (corporates, liquidators, and individuals) who are unable to pursue a claim due to the prohibitive cost of litigation. Although the claim may have merits, uncertainty over the total costs and the potential risk of being ordered to pay the defendant’s cost, should they lose the claim, prohibits access to justice for many claimants. Our process is augmented by artificial intelligence systems to assess risk. As a professional litigation funder, Apex will make available funds to pay legal and other costs associated with a claim in return for an agreed share of any successful return. If there is no recovery or the claim is lost, there is nothing to repay.
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Former MP Praises PACCAR Ruling, Says Litigation Funding is a ‘Destructive Industry’

By John Freund |
Within the litigation finance industry, the consensus reaction to last year’s UK Supreme Court PACCAR ruling was largely one of disappointment. However, for those individuals and lobby groups that are opposed to the widespread use of third-party litigation funding, it has been warmly welcomed as an important corrective measure. In an opinion piece on Law.com, the executive director of Fair Civil Justice, and former MP, Seema Kennedy argues that the Supreme Court’s decision in the PACCAR case ‘should mark the beginning of steps to rein in this destructive industry.’ She describes the ruling as having been a desirable outcome for the UK’s legal system, and one that ‘clips the wings of investors gambling on the outcome of competition class actions.’ At the core of Kennedy’s column is the argument that in a fair legal system, any lawyers or third parties representing a claimant must share their interests. In her view, ‘allowing an outside third party to have a financial stake in any case’s outcome inherently creates conflicts of interest.’ Kennedy delineates between the system of ‘strict legal and professional standards’ that lawyers operate within, and the world of litigation funding, which she argues is ‘ripe for exploitation and abuse.’ Kennedy argues that the Supreme Court’s decision should only be considered a first step in the process of increasing oversight and regulation of third-party litigation funding. She goes on the suggest that, ‘safeguards could include licensing of funders, disclosure of funding agreements to the court, and making sure claimants get a fair payout.  As LFJ has previously reported, Kennedy has been a regular critic of litigation funding in the past, having previously blamed third-party funders for contributing to what she describes as the UK’s shift towards an ‘aggressive profit-driven litigation culture’.

Danny Kinnear Launches EAKO Capital

By John Freund |
In a post on LinkedIn, Danny Kinnear announced the launch of his new company: EAKO Capital. The new venture is designed to provide a variety of solutions across foreign exchange (FX), litigation funding, and trade finance. According to EAKO’s website, the company ‘partners with leading FX solutions providers to offer currency management and payment solutions to law firms and their clients, across all industries.’ As part of its litigation funding services, EAKO offers portfolio funding, monetisation of claims and awards, judgement enforcement, early stage finance, and assignment of officeholder and company debt claims. In the announcement post, Kinnear said, “I am excited about this new chapter in my life and look forward to reconnecting with former clients and colleagues and creating new relationships to explore how EAKO’s solutions can deliver value to their businesses.” Kinnear brings a wealth of experience in FX and funding to EAKO Capital, having most recently served as the Global Head of Corporate Origination at Litigation Capital Management. Prior to his time at LCM, Kinnear has also held senior positions at Deutsche Bank, JB Drax Honore, and Nomura.

Member Spotlight: Michael Volpe

By John Freund |
Michael Volpe brings a decade of nonprofit fundraising experience to his role as Executive Director. His passion for making a positive impact on the world is evident in his history of success in securing funding and developing innovative fundraising strategies. Mike is committed to leveraging his experience and expertise to expand the Milestone Foundation’s fundraising efforts and amplify its mission of providing life-changing support to those who need it most.   Company Name and Description:  The Milestone Foundation provides financial assistance to people pursuing a lawsuit while facing financial hardships. Being a nonprofit organization enables us to advance settlement funding to plaintiffs at low-cost and simple interest – a unique model in the plaintiff-funding industry. Since our founding, the Milestone Foundation has empowered more than 700 individuals & families totaling more than $5 million advanced to plaintiffs in need. Company Website: https://themilestonefoundation.org/ Year Founded:  2016 Headquarters:  Buffalo, NY Area of Focus:   Increased Awareness and Assistance for Litigation Funding Member Quote: "I am honored to be entrusted with leading The Milestone Foundation," said Volpe. "The Foundation's steadfast commitment to providing critical support to plaintiffs during their most challenging moments is inspiring. I'm eager to leverage my experience to amplify our impact and empower even more individuals to fight for justice."
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Lexolent Announces Groundbreaking Launch of LexHub: A Revolutionary Platform for Legal Finance Professionals

By John Freund |
Lexolent, the trailblazing force in the legal finance industry with offices in Dubai and London, is thrilled to announce the forthcoming launch of LexHub, the world's first online platform for legal finance professionals. Scheduled to go live on Monday, January 8th, LexHub represents a seismic leap forward for the industry, offering a unique one-stop-shop experience for legal professionals worldwide. About Lexolent: Lexolent stands as the world's first globally coordinated network for legal finance professionals. This community of professionals is dedicated to generating investment opportunities and benefiting from referrals of work. Lexolent provides its members with access to a suite of services through LexHub, LexInvest and LexTrade, including SaaS, e-learning, conferencing, legal finance accreditation, recruitment and commissions for referrals. The online marketplace facilitates primary, secondary and syndicated investments in legal assets, offering investors access to origination from the network and the option for secondary or syndication of Lexolent’s executed investments. LexHub: LexHub, the crown jewel of Lexolent's offerings, is the world's first online platform for legal finance professionals. Positioned at the forefront of the industry, LexHub constantly evolves through cutting-edge technology and innovative solutions. Members gain access to SaaS in case management, Customer Relationship Management (CRM), Artificial Intelligence and predictive analytics. LexHub serves as a one-stop shop, leveraging advanced technology to connect capital with origination, providing a legal finance marketplace for primary, secondary, and syndicated transactions. LexInvest: Within the LexHub portal, LexInvest offers a dedicated marketplace for primary investments. Network Members upload their origination and in just three simple steps, a case is created and triaged by the Lexolent underwriting team. The case is then matched with a global network of Investor Members who can bid on the cases they wish to view. All case activity is recorded in the members' dashboard, ensuring transparency, efficiency and efficacy. LexTrade: Lexolent's commitment to swift execution of investments is embodied in LexTrade, the trading platform for secondaries, syndication, and 'copy' trading. Every investment made by Lexolent is immediately available for syndication or secondary trading on the LexTrade platform. LexTrade provides access to pre-qualified, underwritten and fully assessed legal finance investment opportunities, catering to a vast number of investors who are new to the asset class and were previously unable to access the market. Lexolent’s CEO and legal finance veteran, Nick Rowles-Davies stated, “I am beyond excited about the launch of the most innovative and  ground breaking project I have ever worked on.  The Lexolent platform will positively disrupt and elevate the legal finance space in a way we have never before experienced. I would also like to take this opportunity to thank the team who have worked tirelessly to turn my initial ideas into a Lexolent reality.” About Lexolent: As the first ever legal finance business to be based in Dubai, Lexolent is a pioneering force in the legal finance industry, dedicated to fostering collaboration, innovation, and global connectivity among legal finance professionals. The company's comprehensive suite of services and platforms aims to redefine the landscape of legal finance, making it accessible to a broader audience.
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Personal Injury Claimant Sues his Former Lawyer and Funder

By John Freund |
Consumer litigation funding for personal injury lawsuits rarely make the headlines, with these small cases happening largely out of public sight. However, a dispute between a claimant and his former lawyer and funder is bringing attention to those calling for greater regulation of consumer legal funding. Reporting by Bloomberg Law provides insights into the case of Sean Murtaugh v. Robert S. Goggin, III, Esquire, in which Mr Murtaugh is suing his former lawyer and litigation funder over claims that he is having to pay for legal funding costs that he did not agree to. The lawsuit originated from a personal injury claim that Murtaugh brought against his employer, having received legal representation from Goggin and financing from Jordan Litigation Funding. However, when the case was settled for $475,000, Murtaugh says that Goggin billed him for interest on additional funding ‘to cover the costs of experts, Murtaugh’s medical bills, and depositions.’ In the lawsuit brought against his lawyer, Murtaugh stated that he “had no idea that Mr. Goggin had received litigation funding to cover case costs,” and had “never agreed to pay interest on any of those case costs.” Murtaugh claims that whilst he did agree to funding for six months of personal expenses whilst he was out of work, he never agreed to any funding from Jordan to cover the personal injury lawsuit. Murtaugh reported that the additional bill for costs totalled over $81,000, with the accrued interest bringing the sum owed to almost $137,000. Speaking with Bloomberg Law about the case, the president of the Alliance for Responsible Consumer Legal Funding, Eric Schuller stated that “this is a good example why proper regulation on the industry is needed.” He went on to explain that such regulation could “ensure that both consumers and attorneys are fully understanding as to what their roles are and what the funds can be used for.”

Ramco’s CEO Discusses European Funding Trends and Future Growth

By John Freund |
Whilst litigation funding in Europe faces several challenges, including the spectre of new regulatory measures and the nuanced differences in the legal systems of individual European jurisdictions, there is still plenty of optimism among the region’s leading funders. A new interview with Ramco’s CEO provides insight into the types of cases and sectors that European funders are focusing on, and where the future of legal finance in Europe may be headed. In an interview with Lawdragon, Cristina Soler, co-founder and CEO of Ramco Litigation Funding, discusses her career in law and the development of the legal finance market in Spain. Across the detailed interview Soler discusses Ramco’s work as “a pioneer and leading innovator in the Spanish market,” as well as the wider trends in the litigation funding industry. Soler describes the wide variety of litigation matters that Ramco is involved in financing, from single-case funding to the monetization of awards. Beyond these litigation cases, “the number of international arbitration cases has grown particularly in recent years,” particularly in the energy sector where funding is often required “because this sector requires very comprehensive and sophisticated technical reports and therefore involves high costs.” Looking at where the litigation finance industry could continue to grow and mature, Soler points to the “continued development of defense funding offerings” as one area that funders could look to innovate in. Soler also reinforces the strong growth potential for dispute funding in the energy sector, predicting an increase in arbitrations “due to energy market volatility on gas prices and other contractual disputes and an increase in investment arbitrations and commercial arbitrations arising from the implementation of ESG regulations.” Turning to the European Union’s plans for increased regulation of third-party funding outlined in the Voss Report, Soler argues that the current proposal is “introducing over-regulation with rigid structures that represent a step backwards for the development of third-party funding.” She goes on to say that there is plenty of room for improvement in the final regulatory structure the EU could implement, suggesting that the best route forward would be for policymakers to seek input from “experts and entities specialized in third-party funding that could provide experience on the needs of these types of transactions.”

Aon’s Stephen Kryiacou Highlights ‘Incredibly Active and Robust’ Litigation Insurance Market

By John Freund |
Alongside the global growth in third-party litigation funding over recent years, the parallel litigation risk insurance market has experienced its own surge in activity to meet increasing levels of demand for coverage. As we enter the first weeks of 2024, an interview with a leading broker suggests there are plenty of indicators that the insurance market is still growing with impressive momentum behind it. In the first part of a wide-ranging interview with Above The Law, Stephen Kyriacou Jr., managing director and senior lawyer for Aon’s Litigation Risk Group, discusses the developments in the litigation risk insurance market over the last 18 months. Kyriacou illustrates how the market has seen continued growth, with the broker seeing an increasing volume of submissions and having heard from insurers “that they expected to see between 100 and 120 submissions for 2023.” He explains that this “level of activity would have been unthinkable in the early days of this market.” Kyriacou notes that this growth in submission counts is also reflected in the greater number of insurers writing litigation risk coverage, “with many insurers recently hiring from the litigation funding world.” In terms of the types of deals that are getting done in this growing market, Kyriacou highlights that the UK and EMEA markets are busier than ever, with an additional increase in “cross-border activity where U.S. insureds are buying insurance for U.K. or European litigation risks,” and vice-versa. He goes on to explain that because of these high levels of activity, Aon has now established a “a full team of litigation and contingent risk brokers in the U.K. and Europe, several of whom joined Aon from industry-leading litigation funders.” Turning to the role of litigation finance providers, Kyriacou highlights that these funders “are now especially well-versed in the coverage that is available to them in the market.” Due to this increased level of awareness and understanding from lawyers, funders, and business leaders, Kyriacou states that the litigation risk insurance market “has become an incredibly active and robust area that lots of people know about and are talking about and are actively involved in.”

Member Spotlight: Davide De Vido

By John Freund |
Davide De Vido is an Italian lawyer with more than 20 years of experience in commercial litigation. In 2019, Davide has created FiDeAL® with the aim to import the tool of litigation funding in Italy and democratize access to justice for every individual, company or entity to pursue meritorious disputes. Prior to foundingFiDeAL, Davide was the General Counsel of a large Italian construction firm, and then of an international eyewear firm. Company name and description: FiDeAL® is the first Italian litigation finance consultancy company, and it is also specialized in managing and funding small/mid-sized disputes. FiDeAL® is focused on Italian litigation - disputes that involves an Italian party and/or Italian jurisdiction - but not limited to them. In fact, during its activity, FiDeAL® has supported several Clients, and their law firms, in finding the right funding solutions for international disputes (arbitration and judicial claims). Recently, FiDeAL® has enlarged its services range, offering litigation insurance consultancy and W&I's consultancy for M&A transactions too. FiDeAL® is also developing two more projects: (i) the creation of a business angel community dedicated to financing small/mid-sized disputes and (ii) a LegalTech project. Company website: Litigation Funding o Finanziamento della lite | FiDeAL Year Founded: 2019 Headquarters: via Venezia, 59 - 31020 San Vendemiano (TV), Italy Area of focus: FiDeAL® works indiscriminately with individual, company and other entities. It offers advice and support to find finance or insurance solutions for a wide range of disputes: Commercial litigation, Class and collective action lawsuits, Personal injuries, Intellectual property, Environmental litigation, Antitrust and competition law, Construction dispute, Real estate litigation, securities litigation, Enforcement award and so on. Member quote: "Funders often say that litigation funding is useful for pursuing David vs. Goliath disputes. Who better than me (Davide) can recognize the value of this statement?" "With the UN's 2030 Agenda, litigation funding can ensure access to justice for all and can contribute to achieving Goal 16 for more sustainable justice."
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LitFin Capital, in cooperation with WOOD & Company, launched a unique fund of qualified investors

By John Freund |
LitFin Capital, a Prague-based litigation finance provider and one of the largest players in Europe, has enriched the investment landscape by launching one of the first qualified investor funds for litigation finance in continental Europe. Developed in partnership with WOOD & Company, a major Czech investment firm, this innovative fund presents a unique opportunity for investors seeking uncorrelated market returns. "We're extremely thrilled that after significant preparation time, as this is still a new asset class, we came to the successful setting up of the fund," says Ondrej Tylecek, partner at LitFin overseeing the investments of the group. Primarily focused on investing in significant LitFin cases, the fund aims to deliver an impressive net return of around 15% per annum. "This venture marks a strategic move by LitFin to take advantage of the lack of competitors in this space and introduce a distinctive investment path that remains resilient and independent of traditional financial market fluctuations," adds Tylecek. By entering this territory of regulated investment funds, LitFin aims to provide investors with an exclusive opportunity to diversify their portfolios and tap into a niche market with significant potential. Partnering with WOOD & Company, known for its prestige and expertise in investment management, further solidifies the fund's credibility and promise of delivering exceptional results. The creation of LitFin SICAV not only represents a milestone for LitFin Capital, but also allows to offer litigation finance participation to smaller investors seeking strategic opportunities in alternative assets. Investors are encouraged to take advantage of this unprecedented opportunity to participate in a venture that promises both financial rewards and new diversification possibilities. The development of litigation finance in the European market is very promising over the next few years, thanks to the growing understanding of its benefits and the maturing legal environment inspired by common law countries. This shift is likely to widen the range of cases eligible for funding and boost the volume of capital invested.
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Member Spotlight: Robert Martorana

By John Freund |
Robert Martorana is a NYS licensed attorney who has 10 years of experience in the litigation finance industry.  Rob worked for Burford Capital and Stifel prior to launching REMO Litigation Finance in January of 2023. While at both companies he worked on single case and portfolio deals ranging in value from $5m to $200m.  Having been on the funder side for many years learning their underwriting criteria and process, he is uniquely positioned to represent clients seeking funding. Company Name and Description:   REMO Litigation Finance provides advisory services for law firms and companies seeking funding. REMO provides concierge level service throughout the process, from objective setting to negotiating deal terms. Company Website: www.RemoLitFin.com Year Founded:  2023 Headquarters:  Haddonfield, NJ Area of Focus:  REMO provides advisory services to a broad range of clientele, from mass tort lawyers obtaining portfolio funding, to AmLaw 100 firms seeking funding for complex commercial litigation.  We make the process of obtaining funding transparent, and we do that through frequent and clear communication with our clients. Member Quote: Anyone who thinks that litigation funding creates frivolous litigation has never tried to get funding.
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Panthera Resources Announces Issue of Notice of Dispute with India

By John Freund |
Litigation funders often highlight the mining industry as a sector that can benefit greatly from the use of third-party dispute financing, with conflicts over project rights and investment treaty obligations being a regular occurrence. Another example of such a use case has reappeared in the new year, with Panthera Resources announcing a step forward in their funded dispute with India.   An announcement from Panthera Resources reveals that the company’s subsidiary, Indo Gold Pty Ltd (IGPL) has issued a formal Notice of Dispute (NoD) to the Republic of India over the company’s legal rights to the Bhukia Project. The dispute focuses on allegations that the Indian government breached its obligations ‘under the 1999 Agreement between the Government of Australia and the Government of the Republic of India on the Promotion and Protection of Investments.’ IGPL is seeking damages from India, stating that the company ‘is entitled to fair and equitable compensation, not merely reimbursement of expenditures.’ The announcement explains that now the NoD has been delivered, if there is no ‘meaningful correspondence’ or ‘amicable settlement’ with India, then IGPL will pursue arbitration proceedings against the government. The company expects any notice of arbitration to be delivered within the first quarter of 2024, after which ‘an arbitral tribunal is to be constituted within two months of delivery.’ As LFJ previously reported in August 2023, Panthera Resources has already secured litigation funding through LCM Funding, a subsidiary of Litigation Capital Management. The funding agreement provides for up to $13.6 million in finance to support the dispute through to a conclusion.

Former CAT Chair says Government’s PACCAR Solution is ‘Far Too Narrow’

By John Freund |
The UK government’s efforts to provide a legislative solution to the Supreme Court’s ruling in PACCAR, namely through an amendment to the Digital Markets, Competition and Consumers Bill (DMCC), continue to receive criticism from senior figures in the legal industry. The latest of these critiques comes from the former chair of the Competition Appeal Tribunal (CAT), who argues that the government must go further to protect the UK’s ‘reputation as a global legal centre.’ In a recent opinion piece on The Law Society Gazette, Lord Carlile of Berriew, Alex Carlile KC argues that the government’s current plans to offer a legislative fix to the PACCAR ruling ‘will not solve the problem.’ He explains that ‘the role of litigation funding is now under serious threat’ in the current environment, and that without sufficient government action, the Supreme Court’s judgement will ‘give deep-pocketed defendants fresh means of challenging claims to avoid their liabilities, making cases more costly to bring and less viable for third-party funders to back.’ Lord Carlile states that the central issue with the proposed amendment is that ‘it is far too narrow.’ He goes on to explain that it is too limited in scope to stop challenges from defendants over the enforceability of funding agreements in the CAT, and it fails to offer a solution for the majority of funded cases, which take place outside the CAT. Lord Carlile goes on to suggest that the government should further amend the DMCC bill, ‘to bring it in line with its initial policy intent to allow funding and to reflect the long-held position of the courts and government.’

Navigating Patent Litigation: The Crucial Role of Generative AI Platforms

By John Freund |
In a landmark decision by the International Trade Commission (ITC), Apple's highest-grossing wearables faced unprecedented importation restrictions, marking a pivotal moment in the protracted patent dispute with medical device-maker Masimo. To put the magnitude into perspective, Apple's wearables, home, and accessory business raked in a staggering $8.28 billion in revenue in the third quarter of 2023. This ruling disrupts the very core of Apple's most popular and revenue-generating wearables, adding a seismic impact to the already intense legal battle with Masimo. This article delves into the transformative capabilities of Generative AI platforms, shedding light on how these technologies are reshaping both proactive and reactive litigation practices against the backdrop of such a significant industry development. Elevating Efficiency in Patent Litigation: A Generative AI Perspective Strategic Edge for Law Firms and Litigators:
  1. Streamlined Data Management:
    • Generative AI platforms streamline the upload and organization of voluminous case documents, enhancing law firms' and litigators' capability to manage data efficiently.
  2. Automated Analysis:
    • Leveraging Generative AI, legal professionals can automate analysis processes, extracting valuable insights from complex datasets swiftly and accurately.
  3. Dynamic Adaptability:
    • Future-ready Generative AI platforms empower law firms and litigators to dynamically adapt to new information or shifting circumstances, providing a real-time strategic advantage.
  4. Investor Collaboration:
    • Building and maintaining a comprehensive roster of investors becomes more manageable, facilitating efficient collaboration and attracting funding partners for legal fees.
  5. Tailored Content Creation:
    • Generative AI platforms excel in generating tailored content for legal motions, analyzing writing styles and logic to ensure persuasive arguments that resonate effectively.
  6. Communication Excellence:
    • Acting as central communication hubs, these platforms foster seamless collaboration and information exchange among legal professionals, enhancing overall communication efficiency.
Empowering Patent Owners in Proactive Management:
  1. Organized Patent Portfolio:
    • Generative AI facilitates the creation of well-organized rosters of patents, providing patent owners with strategic control over their portfolios.
  2. Capital Attraction:
    • Patent owners can leverage organized patent portfolios to attract funding for growth and innovation independently, reducing reliance on traditional fundraising approaches.
  3. Self-Funded Litigation:
    • Generative AI platforms empower patent owners to gain better economic control, enabling them to self-fund litigation cases when required.
  4. Global Coverage:
    • Future-ready platforms offer a comprehensive overview of patents, covering multiple regions and facilitating global enforcement.
  5. Quality Assurance:
    • While maintaining human-in-the-loop functionality, Generative AI ensures robust quality checks and efficient data management.
Masimo vs. Apple: A Glimpse into the Future of Patent Litigation The recent ITC ruling in Masimo vs. Apple serves as a poignant reminder to businesses about the critical importance of being in the driver's seat when it comes to managing their own patents and capitalizing on innovation. While Masimo, a sizable player in the industry, successfully navigated the legal terrain to secure favorable outcomes, it prompts reflection on how smaller companies might face more significant challenges in achieving similar results. This underscores the significance of businesses taking control of their intellectual property and innovation strategies. For smaller companies, such as those without the resources of a Masimo, being in the driver's seat is not just a strategic choice but a necessity. The Masimo vs. Apple case illuminates the power dynamic in patent disputes and the role that control over one's intellectual property plays in shaping the outcomes. Smaller entities, with limited resources, may find themselves at a disadvantage in legal battles, making it imperative for them to proactively manage their patents, navigate legal landscapes, and capitalize on their innovations. Generative AI platforms emerge as a leveling force in this scenario. By harnessing the power of generative solutions, smaller law firms gain a more competitive edge without the need for extensive headcount. This democratization of legal capabilities levels the playing field, allowing smaller firms to stand shoulder to shoulder with their larger counterparts. The transformative potential of generative AI platforms extends beyond just litigation; it opens up avenues for smaller entities to actively participate in the competitive capital market. In essence, a more equitable competitive capital market is crucial for fostering innovation. Generative AI platforms become the key to sustaining this trend. They empower businesses, regardless of size, to actively shape their legal strategies, manage patents efficiently, and capitalize on their innovative potential. As the legal landscape continues to evolve, embracing generative AI not only ensures a fairer competitive environment but also fosters a culture of innovation where businesses of all sizes can thrive.  As the patent community adapts to the demands of complex patent disputes, Generative AI platforms emerge as indispensable tools, revolutionizing both proactive and reactive litigation practices. This nuanced approach empowers law firms, litigators, and patent owners alike, offering a glimpse into the future of patent litigation where efficiency, data-driven strategies, and collaboration take center stage amidst the landmark shifts brought on by significant industry developments. About the author: Joshua Masia, Co-founder & CEO of DealBridge.ai, brings a wealth of experience from leadership roles at JPMorgan Chase, BlackRock, and iCapital. With a BS in Electrical Engineering, Josh has spent 15 years shaping technical and business solutions. At DealBridge.ai, Josh leads the charge in transforming private markets. Their platform, powered by Generative AI, automates deal complexities, streamlining origination, due diligence, and distribution. Eliminating traditional processes, DealBridge.ai empowers seamless connections, enhancing the human experience in deal-making. Under Josh's vision, DealBridge.ai maximizes revenue potential through automation, redefining legal, insurance, and financial transactions. As a trailblazer, Josh and DealBridge.ai usher in a transformative era in deal relationship management.
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