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Case Developments Commercial

Argentine President Suggests Creation of Perpetual Bond to Pay for $16 Billion YPF Award

By John Freund |
The $16 billion award handed down in the YPF lawsuit stands out as one of the key moments in litigation finance for 2023, with Burford Capital looking to achieve a massive return on its investment. However, in the months since the judgement was announced in September, there has been much speculation over Argentina’s ability to pay the full multi-billion sum if its appeal fails. Reporting by Bloomberg suggests that the Argentine government is exploring options for payments of the award, with recently elected President Javier Milei suggesting that the government could issue a perpetual bond without a fixed maturity to cover the costs. In a televised interview on La Nacion, Milei explained that the government could charge Argentines what he called the “Kicillof tax,” referring to Buenos Aires Governor Axel Kicillof who led the plan to nationalize YPF in 2012. During the interview, President Milei explained the government’s current predicament, stating: “we don’t have the money, we don’t have $16 billion, that’s the reality — but we have the willingness to pay.” He went on to describe the idea of using the new tax to “pay this fund with a perpetual bond,” with the ‘fund’ in question referring to Burford Capital. Burford Capital did not respond to Bloomberg’s request for comment in the wake of President Milei’s interview.
Announcements Commercial Deals

Montauk Metals Obtains Litigation Funding Against the Republic of Colombia

By John Freund |
Montauk Metals Inc. (TSX-V: MTK) (the “Company” or “Montauk”) is pleased to announce that it is been advanced US$200,000 (the “Loan Amount”) pursuant to the loan and option agreement (the “Loan Agreement”) with Omni Bridgeway (Fund 5) Canada Investments Ltd. (“Omni”), as previously announced in its news release on November 9, 2023. The Loan Amount was advanced to the Company in connection with the execution of promissory note by Montauk in favour of Omni (the “Note”). Montauk brought arbitration proceedings (the “Arbitration”) against the Republic of Colombia (“Colombia”) to enforce the Company’s rights to compensation under the Canada-Colombia Free Trade Agreement (the “FTA”), as previously described in its news releases of March 27, 2018, February 25, 2019, February 10, 2020, November 23, 2021, September 1, 2023, October 5, 2023 and November 9, 2023 and subject to certain conditions and approvals as noted below. Montauk contends that Colombia breached its obligations owed to the Company, including specific obligations under the FTA. The claims include Colombia’s refusal or failure to compensate the Company for the losses with respect to the Company’s Reina de Oro project incurred as a consequence of Colombia’s prohibition of mining in the páramos (high altitude eco-systems). On March 21, 2018, Montauk filed a Request for Arbitration against the Republic of Colombia before the International Centre for Settlement of Investment Disputes (“ICSID”). The Arbitration is being conducted in two phases. Phase One will determine whether the ICSID Tribunal adjudicating Montauk’s claims (the “Tribunal”) under the FTA has jurisdiction over this case and whether Colombia has breached its obligations under the FTA and is liable for compensation to the Company. Assuming that ICSID decides in favour of Montauk in Phase 1 (the “Phase 1 Decision”), Phase 2 of the arbitration (“Phase 2”) will involve determining the quantum of damages awarded to Montauk to compensate it for losses incurred. The Company must make a payment of US$200,000 to ICSID (the “ICSID Payment”) before a ruling on Phase 1 is rendered. The Company has advanced the Loan Amount to ICSID to satisfy the ICSID Payment and expects for this to result in the issuance of a decision on jurisdiction and liability. The ICSID payment was originally required to be paid on or before November 9, 2023 (the “Payment Deadline”), however the Company advised ICSID that the Agreements (as defined below) were subject to the approval of shareholders at a meeting of shareholders to be held on December 14, 2023 (the “Meeting”), and accordingly ICSID indicated that they would extend the Payment Deadline until after the shareholders vote to approve the Agreements at the Meeting. Shareholders of the Company approved the Agreements at the Meeting. Litigation Funding The Loan Agreement grants Omni the option, exercisable in the sole discretion of Omni (the “Phase 2 Election”) to provide litigation funding to the Company pursuant to an arbitration funding agreement (the “AFA”, and together with the Loan Agreement, the “Agreements”). The Company, Omni and Lenczner Slaght LLP entered into the AFA, which, should Omni exercise the Phase 2 Election, provides Montauk an initial funding amount of up to US$2,325,000 (the “Non-Recourse Funding Amount”) subject to certain conditions. The Non-Recourse Funding Amount will be used to fund Phase 2 and may be increased in certain circumstances as may be agreed upon between the Corporation and Omni. If Omni elects to provide the Non-Recourse Funding Amount for Phase 2 and the enforcement of any award obtained by the Company in the Arbitration, the Loan Amount and interest shall be repaid through proceeds recovered in the Arbitration (and in the event there are no proceeds recovered in the Arbitration, such amount inclusive of such interest shall be payable by the Company at the conclusion of the Arbitration). Please see the Company’s press release issued on November 9, 2023 and management information circular dated November 9, 2023 for further information on the Agreements. Omni’s return on the Non-Recourse Funding Amount (the “Omni Return”) will be limited solely to recovery from the amount of money for which the Arbitration is settled, or for which a final, non-appealable award is given in favour of the Corporation (the “Litigation Proceeds”). The Omni Return shall be an amount calculated as the sum of (i) a multiple of the amounts actually incurred of the Non-Recourse Litigation Funding Amount and (ii) a percentage of the gross recovery proceeds, both calculated when the recovery proceeds are received, as set out in the table below:
MonthsMultiplePercentage
0-122.0x12%
12-243.0x14%
24+3.5x16%
For any resolution that occurs on or after thirty-six (36) months from the date Omni makes a positive Phase 2 Election, Omni’s Return shall bear interest at the rate of twelve percent (12%) per annum, accruing and compounding on a monthly basis. The Litigation Proceeds, if received, will be disbursed in the following order of priority: (a) Omni shall be reimbursed the Recourse Loan and the amounts actually incurred of the Non-Recourse Funding Amount; (b) Omni shall be paid the Omni Return and legal counsel shall be paid their legal fees; and (c) the balance shall be paid to the Corporation. In connection with the Loan Agreement, Note and LFA, the Company has agreed to grant Omni a continuing first priority security interest over any and all assets of the Company (whether presently held or acquired after the date hereof), including the Company’s interest in any Litigation Proceeds. The Company cannot guarantee that it will be successful at the Arbitration, or that the estimated amounts disclosed herein will not be revised as the Arbitration proceeds. The Company also cannot guarantee that it will be able to recover all or part of its legal and arbitration costs from Colombia even if it is successful at the Arbitration. Management of the Company will continue to provide updates on material developments of the status of the Arbitration. Private Placement Withdrawal Due to securing the foregoing funding, the Company will not be proceeding with the proposed private placement that was previously announced by the Company on October 5, 2023. RISK DISCLOSURE STATEMENT: At the present time, the Company’s payment obligations are substantially in excess of its cash balances and it has no other assets. The Company is not solvent and cannot continue as a going concern. Trading in shares of the Company and any investment in the Company is highly speculative. No trading in securities of the Company or investment should be made without being able to lose the entire amount of such funds. See below, “Cautionary Note Regarding Forward-Looking Statements”. Investors are advised to seek professional advice before making any decision to trade in or invest in the securities of the Company.
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Commercial Regulatory Issues

Bloomberg Law Lists Five Biggest Developments in Litigation Finance for 2023

By John Freund |
As we head into the final days of 2023, industry leaders and analysts continue to offer their takeaways from the previous year, putting the spotlight on the most important cases, regulatory developments, and market trends. In an article on Bloomberg Law, Emily R. Siegel takes a look back at the last 12 months in litigation finance and highlights five of the most important market events and trends that occurred in 2023. First up is the headline-grabbing dispute between Burford Capital and its former client, Sysco Corp. The conflict came into public view in March after the wholesale food distributor sued Burford over claims that the funder had interfered with its efforts to settle cases, whilst the funder argued that Sysco had broken the terms of the original funding agreement. The dispute was resolved in June after Sysco agreed to assign the claims to Burford affiliate, Carina Ventures LLC, yet the public fight reignited debates over the level of control that funders can exert over proceedings. Siegel’s second highlight also involves Burford Capital, with the landmark $16 billion award in the Argentina YPF case. Whilst a temporary suspension of enforcement has been granted by a New York judge, if Burford are successful in their enforcement and collection efforts, then the funder could be in line to receive up to $6.2 billion from the award. The third big development on the list is the appearance of new legislative measures being taken at the state level to enforce tighter disclosure requirements on litigation funding arrangements. As Siegel notes, these policy proposals have achieved varying levels of success, with Montana’s governor signing a bill governing disclosure whilst Louisiana’s governor vetoed a similar piece of legislation. Moving from the US to the UK, Siegel unsurprisingly places the Supreme Court’s PACCAR decision among the year’s biggest developments. Whilst industry leaders and analysts had mixed perspectives on the impact of the judgement at the time, we have seen encouraging signs that a variety of solutions are evolving, whether that is in the form of legislative amendments or the modification of existing funding agreements. Finally, Siegel highlights the ongoing campaign by Judge Colm F. Connolly in Delaware to shed light on the presence of third-party funding in patent litigation matters. This November saw Connolly make his biggest move yet, when he announced his intention to refer multiple lawyers for ethics inquiries, due to their alleged violation of professional conduct rules in cases involving patent monetization firm IP Edge LLC.
Announcements Commercial Fundraising

Omni Bridgeway Announces First Close of Funds 4 and 5 Series II Capital Raising

By John Freund |
Omni Bridgeway Limited (Omni Bridgeway) (ASX:OBL) is pleased to announce the first close (First Close) of capital raising for the second series of its core funds, Fund 4 and Fund 5 (Series II), with existing investors on improved cost coverage terms achieved through transaction fees (Transaction Fees). Each Series II fund is capped at US$500 million, and Omni Bridgeway will continue to be a 20% co-investor. Existing investors1 in Fund 4 and Fund 5, being funds managed by Harvard Management Company, Partners Capital Investment Group LLP and Amitell Capital (Existing Investors), have all exercised their capacity rights which were a key term of the first series, granting the Existing Investors the right to reinvest in Series II on the same terms. The continued reinvestment by the Existing Investors of the first and second generation funds underscores the confidence of leading institutional and legal finance investors in our track record, investment origination and underwriting process. We anticipate additional closings in 2024 for Series II, involving potential further commitments from clients of Existing Investors (Advised Accounts), which were a significant part of Series I, along with new investors. Highlights of the Series II capital raising
  • First Close: US$485million from Existing Investors2 inclusive of OBL’s co-funding3, provides a strong base to market the remaining US$515 million capacity of Series II. 
  • Upcoming second close: Aimed at existing and new Advised Accounts. This is expected to complete in the third quarter of FY24.
  • Further closings and timeline: We anticipate further closings over the next 12 months to build up to the capped size of US$500 million for each Series II fund. This further capital raising will be aimed at broadening our private capital investor base.
  • Fee terms / cost coverage: Series II has been structured to improve the cost coverage received by Omni Bridgeway as manager through the inclusion of Transaction Fees. Transaction Fees, comparable to facility fees in traditional lending, are targeted to average around 2.5% to 3.0% of investment commitments and will typically be payable to Omni Bridgeway in the first years of an investment’s life cycle. The Transaction Fees represent a significant improvement on the fee terms of the first series, in line with our stated objective to increase cost coverage contribution from future funds. The market leading performance fee terms (an 8% hurdle return to the investors followed by a full catch-up, a 20% performance fee up to 20% investor IRR and a 30% performance fee on the residual profit) and a deal-by-deal “American” waterfall are unchanged from the first series.
  • New fund structures established: The Series II Funds 4 and 5 will be structured as new and separate fund vehicles.
  • Fund 5 adverse cost insurance policy: We are in the process of replicating the adverse cost insurance wrapper, a beneficial and innovative feature of Fund 5 series I, prior to the commencement of Fund 5 Series II.
  • Commencement: Series II will commence making investments following the expiry of the first series commitment periods.  Fund 4 series I has approximately US$150 million available for commitments, plus the ability to recycle capital from completed investments up to the end of its commitment period on 18 April 2024.  Similarly, Fund 5 series I has approximately US$77million available for commitments, with the same recycling rights and a commitment period which ends on 31 October 2024.
1 Refer to OBL’s announcement dated 20 June 2019 for further details on these investors. 2 Harvard Management Company (Harvard) has structured its commitment to each Series II fund such that US$50 million is committed unconditionally and the balance of US$25 million is conditional on Harvard’s interest being capped at 15% of the ultimate fund size (i.e., after further closings). 3 OBL’s commitment of US$100 million to each Series II fund is capped at 20% of the ultimate fund size (i.e., after further closings). Raymond van Hulst, Managing Director and CEO, commented “We have achieved an important milestone with this first close of our Series II capital raise at improved cost coverage terms. Our valued capital partners are amongst the most reputable and experienced investors in legal finance. Their ongoing support and our continued access to capital is a strong endorsement of our platform and long term performance track record, particularly given the current private capital landscape. “Our newly established capital markets team has initiated an investor outreach and onboarding campaign dedicated to further expanding our investor base to support our continued growth. This will mark the first time our core funds have been open to new investors in almost six years supporting our strategy of further diversification,” said Mr van Hulst.
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Commercial People Moves

UK Funder IQuote Relocates to Support Expansion and Rebrand

By John Freund |
Earlier this month, LFJ reported on a Liverpool-based funder’s successful fundraising round. There are more signs of strength from funders in Northwest England, as a Manchester firm has signaled its plans for future growth by expanding its footprint.  An article by Insider Media covers the news that IQuote Limited, a Manchester-based litigation funder, is relocating its offices to a larger location as part of the firm’s growth and rebranding strategy. IQuote has moved from its Dale Street office to the newly refurbished Cardinal House in Manchester's business district, with the funder looking to create 30 new jobs including roles focused on AI, management, finance, marketing, risk, compliance and legal.   Craig Cornick, founder and chief executive of IQuote, stated that the move to Cardinal House “goes beyond mere physical relocation; it symbolises our unwavering dedication to delivering unparalleled services in the sector.” Similarly, Cornick explained that the rebranding efforts are a representation of IQuote’s “dedication to embracing AI and technology in the legal funding landscape”, and that the company is “a testament to the transformative power of technology in reshaping the legal industry and enhancing performance for capital providers." According to IQuote’s website, it has already deployed over £50 million in capital to fund cases and has achieved £110 million in recovered damages. The funder offers a variety of services including operational expenditure loans, legal disbursement funding, and cost advance funding.
Commercial Deals

Liquidator for Xpress Fuel Australia Secures Financing from Ironbark Funding

By John Freund |
One of the most potent use cases of litigation finance can often be found in cases of insolvency proceedings, where liquidators can access third-party funding to pursue meritorious claims and recoup lost value for creditors. In a post on LinkedIn, Aston Chase Group (ACG) announced that it had received creditor approval to secure litigation funding to pursue claims as the liquidator for Xpress Fuel Australia Pty Limited. Following its appointment as the liquidator for the Australian fuel supplier, along with Xpress Transport Solutions and Xpress Group Australia, ACG has secured legal financing from Ironbark Funding. The litigation funding will allow ACG to pursue lawsuits against other fuel companies over claims of ‘unfair preferential payments in excess of $40m’. ACG explained that the additional capital would support its efforts ‘to undertake detailed investigations and bring mothership proceedings for the benefit to the overall body of creditors.’ ACG’s Rajiv Goyal, Ian Niccol, and Andrew McEvoy, have all been added as liquidators to the appointment, with legal support provided by Noel McCoy, a specialist restructuring and insolvency lawyer at Norton Rose Fulbright.
Commercial Deals

Aringa Lawsuit Reveals Details of Longford Capital’s Funding to Susman Godfrey

By John Freund |
Due to the confidential nature of litigation finance arrangements, the wider public rarely receives insights into the specific amounts of capital provided, or the terms involved in funding agreements. However, a lawsuit between a patent monetization firm and its funder has provided a rare glimpse into the scale of funding that is driving patent infringement cases. Reporting from Bloomberg Law covers a court filing in the case of Arigna Technology Limited v. Longford Capital Fund, which has revealed details of litigation finance arrangements between Longford Capital and boutique litigation firm Susman Godfrey. The lawsuit was filed in U.S. District Court, District of Delaware by Arigna Technology, an affiliate of the patent monetization company Atlantic Technology Limited. The details of the filing shed light on the terms of the funding agreement between Longford and Susman, with Longford's capital to be used for patent enforcement cases in the US, Germany, and the International Trade Commission. The agreement shows Longford committing $23,595,500, with additional monthly fees of up to $6,915,000 for Susman to bring district court cases to a first trial. The deal also provides for monthly non-contingent fees, which ranged from $1.3 million to $3.6 million. Susman has represented Arigna across 12 separate patent cases over the last two years, bringing lawsuits against major technology corporations such as Samsung, Google and Apple. All of these cases have been brought in the Eastern and Western Districts of Texas.
Commercial

Houlihan Lokey’s Valuation Framework for Litigation Finance Assets

By John Freund |
Whilst the vast sums of capital raised by litigation funders and the equally impressive settlements and awards achieved often dominate the headlines, there is a more fundamental question that underpins the market: how do we value individual litigation finance assets? A new white paper from Houlihan Lokey sets out to provide a framework to assist in the valuation of third-party litigation finance assets.  The paper acknowledges from the outset that any attempt to provide a valuation of litigation finance assets ‘can be challenging’, explaining that unlike calculation the valuation of a business, these assets ‘typically do not have representative metrics that can be easily capitalized.’ Furthermore, the fact that litigation funding assets are rarely uniform in nature and are ‘often highly customized with structured payoffs to the financier’, it is difficult to compare the economics of different pieces of litigation. Houlihan Lokey’s valuation framework is comprised of four key steps:
  • Step 1: Underwriting Assumptions
  • Step 2: Discount Rate and UEV Discount Estimation
  • Step 3: Milestone Probability and Litigation Risk Discount Estimation
  • Step 4: Fair Value Estimation
The white paper then lays out the individual equations that form each of the steps in the valuation framework, before providing an example to illustrate how the framework is used in practice. However, it is also noted that the framework is simplistic ‘as it assumes that the Asset is fully funded at the start’, and ‘also does not consider settlements.’ However, the author adds that the framework ‘can be expanded to handle these and other considerations.’ To read the full white paper, click here.
Commercial People Moves

Litica Appoints Ben Hooper and Sam Dansey to Leadership Team

By John Freund |
An announcement by Litica highlights two new appointments to the company’s leadership team, as Ben Hooper has joined the company as Finance Director and Sam Dansey takes on the role of Head of Operations. Hooper brings over 20 years in accounting and a depth of expertise in the insurance industry to his new role at Litica, having previously been a partner at Gravita. Hooper also served in senior managerial positions at both Blick Rothenberg and Moore Stephens. In his new position as Litica’s Finance Director, Hooper will oversee ‘all aspects of internal finance, accounting, and tax compliance.’ Dansey brings his own wealth of experience in underwriting and operations, having worked across insurance, broking, and reinsurance. Dansey arrives at Litica from Allianz, where he served as the Head of Home Underwriting, having previously spent five years at Flood Re as the Head of Operations and Market Relations. Steve Ruffle, Co-Founder and Director of Litica, described the appointments as “a significant milestone” for Litica, and said that Hooper and Dansey’s “wealth of experience and expertise will undoubtedly contribute to our mission of setting the highest standards in the litigation insurance industry.”
Case Developments Commercial

Therium Announces Settlement for 700 UK Businesses in Claims Brought Against Mastercard and Visa

By John Freund |
Funded claims brought in the Competition Appeal Tribunal continue to achieve successful outcomes, as a claim brought against two of the world’s largest payment processing corporations has achieved a settlement for over 700 companies. An announcement from Therium Capital Management reveals that a settlement has been reached in claims brought by over 700 UK businesses against Mastercard and Visa. The settlement will provide compensation to this group of claimants, which is mostly comprised of retailers, as well as local authorities and universities. The claims, which were fully funded by Therium, focused on allegations that Mastercard and Visa had broken both domestic and European competition regulations through their use of multilateral interchange fees (MIFs).  Fred Bowman, Senior Investment Manager at Therium, stated: “Therium is proud to have provided the funding that enabled the claimants to take legal action against such well-resourced defendants. This result demonstrates the important role of litigation finance and we are very happy to have supported the claimants in this long-running litigation.” Therium’s announcement also clarified that whilst these claimants have settled, there is a wider group of claims focusing on MIFs, ‘which are currently being managed together in the Competition Appeal Tribunal in the UK in the Merchant Interchange Umbrella Proceedings.’ These claims are due to proceed next year, with the first trials set to begin in February 2024.
Case Developments Commercial

Federal Court of Australia Dismisses IOOF Class Action

By John Freund |
As LFJ reported earlier this week, the shareholder-led class action brought against Wellard and funded by ICP Funding has reached a settlement agreement. However, today we have news of another investor-led class action which has met a different fate, as the case brought against IOOF and funded by LLS has been dismissed by the court. Reporting from Australian Associated Press, published by Yahoo Finance, provides an overview of the judgement in the IOOF class action in the Federal Court, where Justice Anderson dismissed the case and stated that the claimants had failed to provide evidence for the allegations brought against IOOF, now known as Insignia Financial. In his judgement, Justice Anderson reasoned that “the evidence as a whole, does not rise to the level of establishing a problem with IOOF's culture, systems, governance and compliance during the relevant period." The class action, which began in February 2020, had been brought on behalf of investors who alleged that IOOF engaged in material non-disclosures, as well as misleading or deceptive conduct between March 2014 and July 2015. The claim alleged that these breaches in disclosure obligations had led investors to purchase IOOF shares at an inflated price. In response to the favourable judgement, Insignia’s spokesperson continued to attest that the allegations in the case “were all historical, relating to matters which are more than a decade old," and had been “investigated, and disproved or addressed at the time."  The group members in the class action were represented by Shine Lawyers, with the firm’s joint-head of class actions, Craig Allsop stating that they would consider whether they would appeal the court’s judgement. Funding for the class action was provided by LLS Fund Services. The case is John Mcfarlane ATF The S Mcfarlane Superannuation Fund v Insignia Financial Limited in the Federal Court of Australia, New South Wales Registry.
Commercial Fundraising

Qanlex Raises $30MM for Third Litigation Investment Fund

By John Freund |
With competition among funders increasing across the major markets of the US, UK and Australia, emergant funders are keen to explore opportunities in jurisdictions that lack a well-established funding market. The investment appetite for these specialist regional funders appears to remain healthy, as a funder with a focus on Latin America has completed a new $30 million fundraising round.  An article from Financecommunity.es covers an announcement by Qanlex, a litigation funder with operations in both Europe and Latin America, that it has raised $30 million for its third litigation investment fund.  Fernando Folgueiro, co-founder of Qanlex, stated that the establishment of a third investment fund will allow the funder to expand its operations and pursue its goal of “levelling the playing field in the legal system and ensuring that justice is accessible to all.” Qanlex’s other co-founder, Yago Zavalia Gahan emphasised that this latest fundraising “underlines the confidence that investors have in our business model and our mission to democratize access to justice.” As LFJ reported in September 2022, Qanlex has also conducted two separate fundraising rounds to develop its proprietary Case Miner platform, which allows the funder to find and analyse potential cases for investment. Last year’s $3 million fundraising round saw Qanlex secure investments from private capital including The LegalTech Fund, Carao Ventures, FJ Labs and J Ventures. In Latin America, Qanlex has a presence in Argentina, Brazil, and Columbia, with European operations in Spain and France.
Case Developments Commercial

Rockhopper Enters Into Funding Agreement to Monetize Arbitration Award

By John Freund |
In August 2022, LFJ reported on the €190 million arbitration award secured by Rockhopper Exploration, a UK-based oil and gas exploration company, from the Italian government over its breach of the Energy Charter Treaty (ECT). Whilst LFJ reported at the time that Harbour Litigation Funding had provided the legal finance for Rockhopper to pursue the arbitration proceedings, it now appears that the company has entered into an agreement with a new funder to monetize its ICSID award. A press release from Rockhopper Exploration reveals that it has signed ‘a funded participation agreement with a regulated specialist fund with over $4bn in investments under management.’ The agreement will allow Rockhopper to ‘retain legal and beneficial ownership’ of the ICSID award, which will allow the business to remove any additional costs from pursuing the award whilst accelerating the enforcement process. The terms of the new funding agreement are split into three tranches, with the first payment of €45 million to be paid immediately, of which, Rockhopper will receive around €15 million. The second ‘contingent payment of €65 million’ will be made following a successful annulment hearing outcome, with the amount reduced if the annulment is only partially successful. The third third tranche includes ‘potential payment of 20% on recovery of amounts in excess of 200% of the Specialist Fund's total investment including costs.’  The terms of the agreement ensure that Rockhopper will pay ‘€26 million of the Tranche 1 proceeds to discharge all of its liabilities under the agreement with the Original Arbitration Funder.’ Samuel Moody, chief executive of Rockhopper, explained that the funded participation agreement “provides near-term certainty for Rockhopper and de-risks our exposure to the annulment process, while maintaining potentially significant upside exposure both to a successful annulment outcome and eventual recovery.”  This move to secure new funding for monetisation and enforcement of the award follows a protracted process over the last year, as Italy sought to annul the award under Article 52 of the ICSID convention. The ad-hoc ICSID committee had issued a provisional stay of enforcement in March 2023 to allow Rockhopper and Italy to pursue measures to discuss risk mitigation for non-recoupment if the award was annulled. The stay of enforcement was lifted in July and Rockhopper states the Italian government ‘has not responded to Rockhopper's September 2022 request for payment of €247 million, or to multiple subsequent attempts to engage in negotiating a settlement.’ The ICSID annulment hearing is set for April 2024.
Case Developments Commercial

Attorney in Patent Infringement Case Files Motion to Withdraw, Citing Issues with Funder

By John Freund |
The role of funders in patent litigation has come under much scrutiny over the last year, with objections arising over the lack of disclosure of funder involvement and the level of control that funders can assert. An emergency motion for withdrawal made by a plaintiff’s attorney has provided some insight into one such case, where the relationship between legal counsel and plaintiff has broken down over the actions of an outside funder. A blog post on Patently-O by Dennis Crouch, law professor at the University of Missouri School of Law, analyses an ongoing dispute between a plaintiff and its attorney over the role of a third-party funder in its patent infringement case.  The conflict emerged in the case of CTD Networks v. Microsoft, an infringement lawsuit that was dismissed in the Western District of Texas for a failure to ‘include plausible allegations of infringement’, and which has subsequently been appealed. However, since the appeal was filed, the plaintiff’s attorney, William P. Ramey III has filed an emergency motion seeking court approval to withdraw from the case.  Ramey’s motion alleges that CTD’s funder, AiPi failed to pay legal fees and that ‘CTD is controlled by AiPi, whose principal recently formed Whitestone Law.’ Ramey explains that the conflict over control emerged because AiPi’s co-founder, Eric Morehouse, ‘explained that he controls CTD because he bought the patents which allowed him to do what he wants with the patents and settlements.’ He also alleges that the funder and its owner ‘appear to be purposely prejudicing Ramey LLP’s and CTD Network’s interests in the pending appeal at the Federal Circuit by not filing an appeal brief.’  CTD has filed a response to Ramey’s request to withdraw, arguing that ‘CTD Networks is not controlled by any other party’, and that ‘AiPi is not "adverse" to Mr. Ramey, AiPi is adverse to improper handling of litigation.’ The brief places the blame squarely on Ramey, stating that the attorney ‘is facing sanctions in a number of other matters in a number of other jurisdictions and has been sanctioned in a number of cases over the past few years.’ Whilst CDT does not object to Ramey’s withdrawal from representing the business, it argues that Ramey cannot withdraw wholly from the matter, as they remain responsible for their actions in this matter and remain as a party from whom Defendant is seeking sanctions.’   This ongoing conflict once again demonstrates the issues that can arise in cases where the line between a funder of patent litigation and an entity controlling the litigation is blurred.
Commercial Legal Innovation

Growing Strength of Insurers Represents Competition for Litigation Funders

By John Freund |
In panel discussions at industry forums and conferences, there is often much conversation around the harmonious relationship between litigation funders, litigation risk insurers and law firms. However, new insights from industry executives suggest that insurers are not just partners in the world of legal finance, but instead are more frequently positioning themselves as genuine competitors to traditional funders.  Reporting by Bloomberg Law examines the growing influence of insurers in the legal finance market, featuring insights from numerous industry executives who suggest that insurers are able to offer attractive products and services, allowing insurers to take business from traditional litigation funders. Stephen Kyriacou, managing director at Aon Plc, explains that through the offering of judgment preservation insurance, “funders have started to kind of cede that ground to us and focus on other avenues.” Bob Koneck, senior vice president at Atlantic Global Risk, highlights that insurers can compete with funders for their law firm clients because “it’s a more economical way for them to finance their litigation.” Megan Easley, who left a position at Omni Bridgeway to join CAC Speciality, argues that insurers are able to offer “more tools and more ways to create good outcomes for clients.” The article also notes that beyond the activity of these insurers in the market, their growing strength is reflected in the fact that we have seen professionals, such as Easley, leaving positions at funders to join insurers. Jason Bertoldi, head of contingent risk solutions at Willis Towers Watson, explains that “there’s been a noted influx of really talented people who are entering the space,” and there are no signs that this trend is slowing down. Reacting to the growing momentum behind insurers in the market, litigation funders are taking a pragmatic view of the impact this will have on their own businesses. Burford Capital’s co-COO, David Perla describes insurers as being an ‘adjacent’ presence to funders, rather than ‘competition’ for their market share. Cesar Bello, research and portfolio manager at Corbin Capital Partners, goes a step further and argues that whilst there has been growing discussion and concern over insurers replacing funders, “it just hasn’t happened.”
Case Developments Commercial

$23M Settlement Reached in Shareholder Class Action with Wellard

By John Freund |
The Australian class action landscape continues to show the significance of funded claims, as we have seen numerous settlements announced and approved over recent months. This trend has continued as the respondent in a shareholder class action has announced that it has reached a settlement agreement with the group members. An ASX announcement from Wellard Limited revealed that the company has reached a $23 million settlement agreement in a class action brought by a group of its shareholders in 2020. The company, which operates as a livestock carrier operator, specified that ‘the settlement is without any admission of liability’ and that if the settlement receives court approval, the settlement payment ‘will be fully met from available insurance proceeds.’ John Klepec, executive chairman of Wellard, stated that the company is “pleased that this matter has been resolved, so we can focus on the operations of the business,” and offered reassurance that “the settlement will not impact Wellard’s cashflow.”  The class action was brought against Wellard over allegations that the prospectus for its Initial Public Offering (IPO), published in November 2015, ‘contained misleading statements or material omissions.’ Furthermore, the lawsuit claimed that Wellard had breached its continuous disclosure obligations and ‘made misleading representations as to its forecast financial performance for FY2016.’ The group members in the class action are represented by Quinn Emanuel Urquhart & Sullivan, and entered into a litigation funding agreement with ICP Funding Pty Ltd.  The case is Ewok Pty Ltd as trustee for the E & E Magee Superannuation Fund v Wellard Limited, in the Federal Court of Australia, Victoria Registry.
Announcements Commercial Legal Innovation

Dealbridge.ai Revolutionizes Deal Management With Launch of Groundbreaking Generative AI Platform

By John Freund |
DealBridge.ai, a leading innovator in Deal Relationship Management (DRM), proudly announces the official release of its groundbreaking generative AI platform. This cutting-edge solution harnesses the power of Generative AI to automate financial, legal, and insurance processes, revolutionizing deal origination, due diligence, and distribution in the industry. As the first DRM platform to integrate Generative AI, DealBridge.ai sets itself apart by streamlining the handling of unstructured data within data rooms. Traditionally, the manual review of extensive data was a time-consuming process, but DealBridge.ai's DRM platform intelligently structures this data, enabling instantaneous freeform querying. The platform's unique ability to summarize vast amounts of information in seconds positions it as a game-changer in the deal-making arena. DealBridge.ai prioritizes data security, compliance, and risk mitigation. The platform provides a white-label Software as a Service (SaaS) solution hosted on DealBridge's secure cloud infrastructure, aligning with the robust security measures of Microsoft Office products. DealBridge's hosted Large Language Models (LLMs) ensure data privacy, and compliance is upheld with SOC2-compliant blob storage, addressing audit needs in sectors such as banking, finance, law, and insurance. "The introduction of Generative AI in DealBridge.ai's latest release marks a pivotal moment in the evolution of Deal Relationship Management. We are empowering deal professionals to redefine the way they approach due diligence and decision-making," says Joshua Masia, CEO of DealBridge.ai. DealBridge.ai's use of embedded LLMs and self-hosted vector databases, along with proprietary Retrieval Augmented Generation (RAG) solutions, sets it apart from other generative AI solutions. By building personalized models for each deal, the platform eliminates the risk of hallucinations, ensuring accuracy, reliability, and precision in the information generated. "Generative AI is not about replacing human expertise but enhancing it. Our platform ensures a seamless integration of human judgment with advanced AI capabilities, providing a synergy that is unmatched in the industry," emphasizes Jon Burlinson, Co-founder and CEO. DealBridge.ai's decision to emerge from stealth was driven by the need to engage early adopters who share the company's vision. The platform's MVP development benefited significantly from the insights and feedback provided by its initial partners, setting the stage for a practical and easy-to-adopt solution in the deal-making space. Early adopters, including Pat Shannon at Equine Capital Solutions, have expressed enthusiasm for DealBridge.ai's transformative capabilities. "The official release marks a pivotal moment, opening the floodgates for wider adoption and feedback to further improve the platform. DealBridge.ai's Generative AI is a game-changer for our industry. We are excited to integrate this innovative solution into our processes, enhancing the efficiency and accuracy of our Litigation Finance program." "The beauty of our solution is its agnosticism to asset class and industry. If you have data, we help extract value from it automatically. Whether it's Litigation Finance, Medical Underwriting, M&A, you name it, we do it," affirms Joshua Masia. DealBridge.ai has a robust roadmap with continuous updates and features based on client demands. The company is currently in trials with over a dozen partnerships and plans to announce several formal collaborations in the coming quarters. "We are on the cusp of even greater innovations. DealBridge.ai has a robust roadmap of future developments, and there's no slowing down. We are committed to continuously pushing the boundaries of what's possible in Deal Relationship Management," adds Christopher Benjamin, Co-founder and CTO. DealBridge.ai's generative AI software is available through the company's website, offering a simple onboarding process for users to join, create deals, and leverage the platform's powerful capabilities. At any point, you can elect to create your own branded white label experience that furthers your isolation of your data into a standalone environment.

ABOUT DEALBRIDGE.AI

DealBridge.ai is a trailblazing company in the field of Deal Relationship Management (DRM), offering the first platform to leverage Generative AI for automating financial, legal, and insurance processes in deal-making. With a commitment to security, compliance, and innovation, DealBridge.ai is shaping the future of secure and confident deal management. Website: www.DealBridge.ai
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Commercial

Exton Advisors Offers Seven Predictions for Litigation Finance in 2024

By John Freund |
With less than two weeks until the end of 2023, industry leaders are busy planning for next year and attempting to forecast how the litigation finance market will evolve in 2024. In a post on LinkedIn, Exton Advisors looks ahead to what opportunities and challenges the litigation finance market will face over the next 12 months, offering its top seven predictions for 2024:
  1. Increased opportunities for well capitalised funders
  2. Pricing will increase
  3. Law firm financing will increase
  4. Regulation will continue to be a topic of conversation
  5. The secondary market will continue to expand and develop
  6. Key judgements will impact funding
  7. AI and tokenisation will be disruptive
Exton’s prediction of increased opportunities highlights the potential for rising volumes of insolvency and commercial disputes, whilst the likely increase in pricing is predicted to be ‘driven by high interest rates and the overall cost of financing.’ These factors are also the drivers behind the prediction of increased law firm financing, as funders may move away from single case funding for small to mid-sized commercial claims. However, Exton’s prediction of an increase in pricing is also paired with the suggestion that funders will explore alternative fee structures and focus their capital on a smaller number of transactions. To read Exton’s full predictions and the accompanying explanations, click here.
Case Developments Commercial

Meta Class Action Set for Certification Hearing in January

By John Freund |
As a busy year of activity for UK class actions comes to a close, the industry’s sights are already set on funded proceedings which are looking to advance in early 2024. Among the high profile cases to watch next year, an opt-out claim being brought against Meta has received an early Christmas present, as a date for its certification hearing has been announced.  An article in CDR reports that the proposed opt-out class action filed against Meta will have its certification hearing before the Competition Appeal Tribunal (CAT) on 8 and 9 January. The application for the class action, which was originally filed on 6 October, has been revised following comments from the CAT and now includes ‘an expert report from Fiona Scott Morton, Theodore Nierenberg Professor of Economics at the Yale School of Management.’ The claim, which has secured funding from Innsworth and representation from Quinn Emanuel Urquhart & Sullivan, focuses on allegations that ‘Meta has violated UK competition law by forcing users to share their data from activities outside of the Facebook platform.’ Dr Liza Lovdahl Gormsen is the proposed class representative, with the class action looking to represent any UK Facebook users who had an account “at any time between 14 February 2016 and the date of final judgment or earlier settlement of the present proposed collective proceedings, inclusive”. Kate Vernon, partner and head of the competition litigation practice at Quin Emanuel, stated that they were “pleased that a quick certification hearing for the revised application has now been listed for 8–9 January”, and emphasised that the newly included expert report “sets out a clear blueprint to trial of this important claim on behalf of the UK users of Facebook.”
Case Developments Commercial

NSW Supreme Court Ends Class Action, Citing Lack of Funding

By John Freund |
Over recent months we have seen numerous victories for funded class actions in Australia, with litigation funders earning significant returns on their investments. However, a judgement from one of the state Supreme Courts shows that if funders lose confidence in a case, the prospect of success for group members can quickly disappear.  A judgement by the Supreme Court of New South Wales in the case of Australian Retirement Group Pty Ltd v The Commonwealth Bank of Australia Ltd (No 4), approved the settlement and discontinuance of proceedings the class action brought against CBA after the plaintiffs failed to secure litigation funding to continue the litigation.  In his decision, Justice Ball explained that ‘it is not realistic to think that the plaintiffs will be able to obtain alternative litigation funding or representation by counsel on a contingency basis.’ He went on to say that as ‘the underlying claim appears to have poor prosects of success’, and he remained unconvinced that the plaintiffs would be able to secure either funding or representation. The class action had previously received litigation funding from JustKapital Limited, with Shine Lawyers paid to represent the plaintiffs. However, JustKapital stopped funding for the case on 29 September 2020. Following the cessation in funding, Hall Partners acted for the plaintiffs starting from 20 May 2021, but ‘neither Hall Partners nor the plaintiffs have been able to arrange alternative funding.’ The class action was first brought in 2016 on behalf of small business customers of Bankwest, now a subsidiary of CBA, ‘who were placed into the Credit Asset Management (CAM) division of Bankwest and were not subsequently “rehabilitated”.’ The litigation focused on allegations that after Bankwest was acquired by CBA, the bank ‘engaged in unconscionable conduct by treating the loans of group members as nonperforming and bringing them to an end in a way that was harsh, unconscionable and in breach of provisions of the Banking Code of Conduct.’ The terms of the proposed settlement for ending the proceedings include CBA receiving a payment of $2.9 million to cover legal costs. This will be paid by AmTrust Europe Limited, ‘which provided an indemnity as security for CBA’s costs.’ In return, CBA will pay £375,000 as a contribution towards the group members’ legal costs. The full judgement can be read here.
Commercial Regulatory Issues

UK Government ‘Considering Options’ for Legislative Solutions to PACCAR

By John Freund |
As many industry commentators suggested when the Supreme Court released its PACCAR judgement, one of the most important and interesting elements has been the UK government’s response to the decision. In a story that is developing week after week, we are beginning to see how a potential solution may not emerge from one singular piece of legislation, but could instead be divided across multiple bills. Reporting by The Law Society Gazette provides an update on the ongoing parliamentary debate over the Digital Markets, Competition and Consumers Bill (DMCC), which includes an amendment (Clause 126) that has solved the issue for funding agreements in opt-out collective actions in the Competition Appeal Tribunal (CAT). However, this amendment only provides a solution for one type of funded proceeding, and industry leaders have been keen to understand how the government may provide a wider legislative fix. During the debate in the House of Lords, this issue was raised by Lord Sandhurst (Guy Mansfield KC), who argued that ‘clause 126 needs to be redrafted and expanded’ in order to address funded cases outside of opt-out cases before the CAT. He noted that there are a wide range of funded matters that require a solution, including opt-in cases in the CAT, ‘conventional bi-party litigation’, and claims brought in the High Court.  Lord Sandhurst emphasized that without a broader legislative solution, “Claimants will have no effective access to litigation funding agreements and many cases already in the pipeline face considerable problems.” However, the Gazette article also reports that in response to a parliamentary question, Lord Bellamy, the Parliamentary Under-Secretary of State for Justice, stated that “the government is assessing the impact of the judgment and considering options for non-CAT proceedings.” Whilst no details were specified for what these options might include, this is another encouraging sign for the UK litigation funding industry, given that the government is actively looking for more comprehensive solutions to the PACCAR ruling.
Commercial Fundraising

UK Funder Sandfield Capital Raises £20M to Fuel Expansion 

By John Freund |
Whilst the largest international funders tend to dominate the headlines in the world of litigation finance, there is a still a plethora of activity among smaller funders operating within regional markets. An article on TheBusinessDesk.com covers the news that Sandfield Capital, a UK funder based out of Liverpool, has raised £20 million in funding through a credit facility from Ampla Finance. This initial tranche is part of a wider £100 million in fundraising led by Altimapa Capital, which will allow Sandfield to further its expansion plans including bringing on an additional 10 staff to its operations team. Steven Ambrosio, co-founder and CEO of Stanfield Capital, explained the company’s strategy which focused on “cases in areas of clear demand which have been overlooked by other finance providers and help tenants, home owners and others to seek justice through the courts.” He went on to say that the £20 million “is the first phase in our journey to raise £100m to transform our business”, which will allow the funder to “meet the growing demand” of this market.  Ampla Finance’s CEO, Richard Kennerley said that his firm had identified “a number of evolving tech trends in the civil litigation arena”, and that this new capital would allow Sandfield to capitalise on these advancements whilst also providing its client base with a high quality, ethical and comprehensive offering.” Pedro Tavares, founder and CEO of Altimapa Capital, also praised Sandfield for having “a well-thought-out business model and a sound proposition,” which had been overlooked by traditional funders.  Sandfield Capital currently operates from both its Liverpool and London offices, with a staff of eight employees including Paul Meehan who serves as COO and Mark Siney as the funder’s Head of Finance.
Commercial

Omni Bridgeway Highlights Funding as a ‘Strategic Risk Management Tool’

By John Freund |
When illustrating the benefits of litigation funding for businesses, funders are keen to point out the wider strategic benefits available to companies beyond the provision of capital. In a blog post on LinkedIn, Paul Rand, Chief Investment Officer (Canada) at Omni Bridgeway, discusses the use cases and benefits of litigation finance, explaining how it can be used by businesses to take ‘a more strategic approach to affirmative litigation.’ Rand argues that businesses who see litigation ‘exclusively as something to avoid’ are missing out on strategic opportunities, and that ‘his approach may avoid risk, it doesn’t manage the risk.’ Instead, Rand lays out the case for companies to take a proactive approach to litigation, noting that business leaders can still pursue meritorious disputes whilst mitigating risk through litigation funding. He goes on to suggest that companies can ‘use funding to generate successful outcomes’, reframing disputes as assets rather than seeing them solely as liabilities.  Rand goes on to explain the different ways that litigation funding can reduce risk, beyond the individual provision of non-recourse funding. These benefits include providing strategic guidance and expertise when determining whether to pursue a case, as well as managing the risks around judgement collection. The full blog post can be read here.
Commercial Regulatory Issues

LCM Argues PACCAR Decision is ‘Old News’ for Funded Opt-Out Claims

By John Freund |
Following the Supreme Court’s PACCAR ruling, opinions on the impact of the decision ranged from descriptions of it as a small bump in the road, to predictions that there would be no easy solutions for funders looking to modify their funding agreements. A new insights post from Litigation Capital Management (LCM) looks at two of the most important developments that have occurred in the wake of the PACCAR decision, and questions whether its impact on funding agreements in opt-out collective actions has dissipated. The article first highlights the current draft of the Digital Markets, Competition and Consumers Bill (DMCC), which now includes an amendment which clarifies ‘that a DBA is only unenforceable in opt-out collective proceedings before the CAT if the agreement is with a provider of advocacy or litigation services.’ This specification, along with the removal of any reference to ‘claims management services’, has been lauded for resolving the issue of enforceability for these types of cases. However, it should be noted that industry leaders and analysts have continued to raise concerns around the limited scope of the DMCC amendment, arguing that it is still only a ‘partial solution’ to issues raised by PACCAR. The second development that LCM’s post addresses, is the CAT’s decision in November to certify the opt-out claim brought against Sony, and particularly the CAT’s dismissal of Sony’s objections over changes to the funding agreement. The article points out that ‘Sony sought to attack the new arrangements on a number of fronts’, but in each and every case, the tribunal disagreed with Sony and rejected their arguments in turn. LCM concludes by arguing that in contrast to the doomsaying following the Supreme Court’s decision in PACCAR, the funding of opt-out claims has largely survived intact. The article suggests that ‘Defendants can now concentrate on the merits of the claims, rather than being distracted by unmeritorious attempts to derail valid proceedings by reference to the supposed wider ramifications of the PACCAR judgment.’
Commercial Regulatory Issues

UK Lobby Group Calls for Regulation to Protect Consumers from ‘Opportunistic Claimant Law Firms’

By John Freund |
Whilst recent court victories and settlements have demonstrated the benefits that funded class actions can bring to consumers, there are still groups who argue that there are insufficient regulatory measures to govern these claims, and to protect the interests of businesses.  An article in The Law Society Gazette highlights lobbying efforts by Fair Civil Justice (FCJ) against the proliferation of ‘no win, no fee’ advertising from law firms, and calling for the UK government to crack down on the practice through tougher regulation. These calls for regulation are part of FCJ’s latest research focused on what it describes as the UK’s ‘predatory claim culture’, which supposedly misleads people about these lawsuits by underselling the risks involved. Seema Kennedy, executive director of FCJ, called on the government to ‘take notice and update the regulations to protect people from opportunistic claimant law firms.’ The FCJ suggests that these regulations should include more rigorous regulation of advertisements, such as banning targeted claims adverts on social media, a 60-day cooling off period for those who register for a group claim, and the option for these claimants to end the retainer without facing additional costs. Kenny Henderson, partner at CMS, is quoted in the article and echoes concerns around the current state of UK class actions. He suggests that whilst the market is beneficial for funders and law firms, ‘it is questionable whether it is good for consumers and it is definitely not good for the UK’s business environment.’ The Gazette’s article points out that whilst the source of FCJ’s funding is unknown, reporting by Law.com in December 2022 claimed that the group was launched by the US Chamber of Commerce’s Institute for Legal Reform. Readers will of course be very familiar with the Chamber’s lobbying efforts against litigation funding in the US and will notice the familiar language around the ‘opportunistic’ nature of claimant law firms and funders. Earlier this week, the British Chamber of Commerce (BCC) announced that it had become a member of FCJ, stating that the campaign group “is striving to protect the interests of consumers, businesses and the civil justice system.”
Case Developments Commercial

Funded Class Action Targets UK Mobile Operators for Overcharging Customers

By John Freund |
In the face of alleged corporate wrongdoing, consumer-led group actions are continuing to gather momentum in the UK, with litigation funders eagerly stepping up to provide the financial support needed to bring these claims. Reporting from The Guardian provides an overview of the latest UK class action to be brought against big business, as the UK’s largest mobile operates are faced with a new lawsuit focusing on allegations that they have overcharged customers after the handsets were paid off in their contracts. The opt-out class action could represent up to 4.8 million consumers who purchased contracts with EE, O2, Three or Vodafone, arguing that customers could have been collectively overcharged as much as £3.28 billion since 2007. Justin Gutmann, who is acting as the proposed class representative for the lawsuit, said that “these four mobile phone companies have systematically exploited millions of loyal customers across the UK through loyalty penalties.” Law firm Charles Lyndon has been instructed by Gutmann to represent group members, and according to the Loyalty Penalty Claim website, LCM Funding UK Limited is providing the financing for the claim. The website states that Gutmann is ‘seeking a total compensation sum of £2.822 billion plus interest for the proposed classes as a whole.’ Gutmann has been involved in a number of other consumer-led class actions, including the case brought against Apple, which as LFJ reported, recently saw the CAT grant the application for a collective proceedings order (CPO). Of the four mobile operators targeted by the claim, only O2 provided a comment, with its spokesperson stating that the company has “long been calling for an end to the ‘smartphone swindle’ and for other mobile operators to stop the pernicious practice of charging their customers for phones they already own.” The spokesperson also emphasized that it is “the first provider to have launched split contracts a decade ago which automatically and fully reduce customers’ bills once they’ve paid off their handset.”
Case Developments Commercial

Australian Federal Court Approves $30M Settlement in BT Super Class Action

By John Freund |
The use of litigation funding for class actions in Australia continues to achieve successful results for both the group members and the funder, as the Federal Court has approved another class action settlement along with a significant deduction for the funder.  An article from Financial Standard highlights a recent ruling from the Federal Court of Australia, where Justice Murphy approved a $29.95 million settlement sum in Ghee v BT Funds Management Limited. The class action had first been brought in 2019 against BT Funds Management Limited (BTFM) and Westpac Life Insurance Services Ltd (WLIS), on behalf of members of BT Super for Life Superannuation Fund (SFL) who were invested in the Super Cash option.  The class action focused on allegations that BTFM had ‘breached various legal duties owed to members’ by investing funds in WLIS’ life policy. Slater & Gordon, who represented group members, argued that ‘BTFM’s contraventions caused loss to be suffered by the Applicant and group members, in that higher investment returns would have been earned if those contraventions had not occurred.’ The court order approved a $9.6 million deduction from the settlement to be paid to Therium, who funded the class action.. This figure was divided into $2.7 million for paid legal costs, $1.2 million for the reimbursement of ATE insurance costs, and $5.7 million. In his ruling, Justice Murphy said that it was “appropriate to order the deduction of total funding charges of $6,888,500 which equates to 23% of the gross settlement,” and described the deduction as “reasonable and proportionate in the circumstances of the case.” According to Slater & Gordon’s class action page, following the various deductions from the overall settlement sum, the final amount distributed to group members will likely total approximately $15.45 million, plus interest. There are approximately 15,000 registered group members who are eligible to receive money from the settlement distribution scheme.
Case Developments Commercial

Valve Alleges Law Firm and Litigation Funder are Attempting to ‘Extort a Settlement’

By John Freund |
A common criticism of litigation funders' involvement in claims against large corporations is that funders are more concerned with generating ROI than with assisting the consumers being represented. A recent complaint filed by the world’s largest video games distributor bears a striking resemblance to this critique. An article in Reuters highlights an ongoing lawsuit filed by video game company Valve, alleging that a law firm and funder had planned to take advantage of the company’s users and ‘extort Valve for their own benefit’. The filing alleges that Zaiger, LLC ‘hatched a scheme’ with the litigation funder to ‘weaponize’ the Steam Subscriber Agreement (SSA), which Valve uses to resolve disputes with customers of its video game marketplace, Steam. The origins of Valve’s complaint lie in the allegation that Zaiger has planned to ‘to recruit 75,000 clients and then bring arbitrations on behalf of a subset (no more than 160) of those clients to drive a settlement on behalf of all 75,000 of its clients.’ The complaint goes on to illustrate how Zaiger’s plan would use the SSA’s arbitration clause, in which ‘Valve agrees to pay the fees and costs associated with arbitration’, to expose Valve to ‘potentially millions of dollars of arbitration fees alone.’ These allegations are based on a presentation that Zaiger gave to Black Diamond Capital Management, a company which Valve claims is the unnamed litigation funder. Valve’s complaint then highlights that Zaiger’s presentation planned to “offer a settlement slightly less than the [arbitration] charge—$2,900 per claim or so—attempting to induce a quick resolution.” They further argue that Zaiger made no reference to ‘Steam users’ concerns or interests’ and provided ‘no space in that lifecycle for investigating the legal issues involved or evaluating the facts of any particular Steam user’s situation.’ The filing asserts two causes of action: ‘tortious interference’ and ‘abuse of process’, arguing that ‘Zaiger and its funder are engaging in an egregious abuse of the litigation process.’ Going even further, Valve’s complaint makes the claim that ‘the point of all of Defendants’ actions against Valve is to improperly interfere in Valve’s valid contractual relationships with its customers and to use the arbitration system to extort a settlement from Valve.’ Jeffrey Zaiger, in response to Reuter’s request for comment, described Valve’s legal action as “meritless” and said that it was “a transparent attempt to intimidate my law firm into abandoning meritorious claims on behalf of our clients.”
Announcements Commercial

International Legal Finance Association Adds Orchard Global as New Member

By John Freund |
The International Legal Finance Association (ILFA), the only global association of commercial legal finance companies, has announced the addition of Orchard Global to the organization’s rapidly growing membership base.  Orchard Global is a multi-strategy alternative asset management firm that launched its legal finance strategy in 2015 and has made over 100 legal finance investments across its managed funds. The firm launched its standalone legal finance fund in November of last year.  “As the only global association representing the commercial legal finance industry, ILFA is excited to welcome Orchard Global as its newest member,” said Gary Barnett, ILFA’s Executive Director. “Orchard’s addition continues to demonstrate that ILFA’s membership is made up of the world’s leading legal finance providers and to strengthen ILFA’s role in promoting the highest standards of operation and service for the commercial legal finance sector around the world.” “We are thrilled that the team at Orchard Global will be joining ILFA’s ranks,” said Neil Purslow, ILFA Chairman and Co-Founder of Therium, an ILFA member. “The addition of yet another leading legal finance provider will serve to bolster our efforts as the voice of the legal finance industry throughout the world.” “We look forward to joining the ILFA membership, supporting ILFA’s mission and deepening our collaboration with our colleagues across the industry,” said Co-Heads of Litigation Finance at Orchard Global, Ben Moss and Lara Melrose.  Orchard Global provides creative and flexible litigation financing solutions to lawyers and claimants, investing in commercial litigation and arbitration cases globally, with a focus on England and Europe, as well as other common law and other selective jurisdictions. The firm’s investments span a broad spectrum of commercial claim types and structures, including general commercial disputes, group actions, competition claims, insolvency-related disputes, law firm lending, equity stake investments and portfolio financing.  About the International Legal Finance Association  The International Legal Finance Association ILFA represents the global commercial legal finance community, and its mission is to engage, educate and influence legislative, regulatory and judicial landscapes as the global voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA has local chapter representation around the world. For more information, visit www.ilfa.com and find us on LinkedIn and X @ILFA_Official.  About Orchard Global Orchard  Global is an alternative asset manager providing transformational solutions to banks, asset managers, and other borrowers seeking capital solutions to complex problems. Orchard provides lending and risk-transfer solutions across a range of private and public markets strategies. Orchard Global manages capital on behalf of pensions, sovereigns, endowments, hospitals, educational institutions, families, and many others around the world. Orchard Global offers private credit and public credit strategies by leveraging its complex structuring capabilities, an in-house legal team, comprehensive credit expertise, and global reach.
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Announcements Commercial Deals

Omni Bridgeway Announces: Secondary market transaction completed in relation to Fund 4’s IP portfolio

By John Freund |
Omni Bridgeway Limited (Omni Bridgeway, OBL, Group) (ASX: OBL) announces that it has completed the sale of a 25% interest in a portfolio of 15 intellectual property (IP) investments (Investments) in Fund 4 (Fund) to an affiliate of GLS Capital Partners Fund II, LP (GLS) for an initial amount of US$21.5 million, representing a multiple on invested capital (MOIC) of 2.0x of the apportioned aggregated deployments to date.  GLS will receive a preferred return on its deployments alongside OBL, beyond which OBL retains further profit rights on the 25% interest.  The cash consideration is anticipated to be received within five business days.  The total committed capital of the Investments is US$104.4 million with total deployed capital of US$42.9 million. The future budgeted costs (committed but undeployed capital) of US$61.5 million will be split proportionately between the Fund and GLS.  The sale will be treated as a partial completion of each of the 15 Investments for our fund and performance reporting. The full estimated portfolio value (EPV) of the Investments, at 30 September 2023, was approximately A$3.3 billion, with the Fund’s remaining proportionate share being A$2.5 billion.  The transaction will result in the deconsolidation of the Investments and an estimated net gain before non-controlling interests (NCI) of approximately US$51.0 million EBITDA (after NCI of approximately US$4.6 million EBITDA) before management and performance fees.  The residual interests of the Investments will be recognised as “Litigation Investments - investment in associate” within the Group Consolidated Financial Statements.
Transaction detailsUS$ million
Cash consideration21.5
add fair value of the residual interest179.5
less derecognition of associated net assets, capitalised overheads, direct costs and expenses1(50.0)
Group net profit151.0
Attributable to NCI1(46.4)
Group net profit after NCI1,24.6
  1. Amounts are estimated and subject to finalisation of costs and audit of balances. 2. Excluding management and performance fees.
Raymond van Hulst, Managing Director and CEO, commented “The conclusion of this transaction with an expert litigation finance investor with strong IP capability demonstrates the continued growth and depth of the secondaries market as well as the intrinsic value of our portfolio. The thorough due diligence process undertaken affirms our belief in the value of the Investments.  “Opportunities in IP are expected to exceed our concentration limits within Fund 4, this deal strategically frees up capacity for this growing and highly accretive sub asset class. It enables us to redeploy capital towards our strong pipeline of new, attractively priced IP investments, while retaining majority ownership in the Investments. It furthermore supports diversification of our portfolio overall.  “This also reinforces our commitment to diversifying revenue sources, while concurrently mitigating underwriting risks, monetising the incremental value created from the portfolio and advancing our strategic priorities,” said Mr van Hulst.  Adam Gill, Managing Director of GLS commented “GLS is pleased to partner with Omni Bridgeway in this transaction which accomplishes important strategic goals for both parties. The transaction provides GLS an attractive risk-reward proposition in a highly diversified and collateralized portfolio of litigation finance investments, curated and managed by an industry leader. We look forward to our continued collaboration with Omni Bridgeway to maximize the value of this portfolio for our respective investors.”
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