Category Archives: Public
By any measure 2016 was a great year for Burford Capital. The now undisputed worldwide leader in litigation finance managed to acquire its largest rival, expand its market share, nearly triple its stock price and post record profits, all in the same year.
Editor’s Note: This Article is the first in a series that will act as a primer on litigation finance for parties new to the space.
The driving force behind all markets and economics in general is the competition for scarce resources; that competition as all contests do has some competitors who perform better than others. This has led to an unequal distribution of wealth across society. Far from being a negative this unequal distribution brought on by competition for scarce resources is actually the engine which drives modern society. The advancements in science, technology, and information distribution made possible by modern society have created the unprecedented level of prosperity across the world and undeniably created a better habitat for all mankind.
However, the uneven distribution of money brought on by this system has also lead to some inequalities in the services available to people. Some of the services deal with basic human rights which society in general feels should be available to all people regardless of their level of wealth or income. One of the most prominent examples of this is found in our legal system. An unbiased observer could not deny that the level of capital available to a party has a direct correlation with their ability to receive justice for transgressions committed against them. Plaintiffs seeking redress against defendants whose resources vastly exceed their own face an uphill battle against steep odds as the defendants can employ those resources to delay and exhaust the resources of the plaintiff.
This inequity has created a growing demand which around the turn of the millennium became so great that a market formed to supply that demand with what was required in order to restore all parties to an equal footing, namely: capital. The professional litigation finance market can trace it’s roots to Australia where in 2001 the first companies formed to provide capital to meritorious and worthy cases which lacked the funding to pursue true justice. This was not the first time the idea had come about however, its roots go back thousands of years.
In the time of the Roman Empire the practice of funding or betting on matters of litigation was rather common. This came to a halt when the practices of champerty and maintenance were banned under English Common Law, which forms the basis of many legal systems across the world today. However, these rules which were made centuries ago are no longer considered sufficient to address the complexities of the legal system today in many jurisdictions. The increasing number of jurisdictions which have relaxed the rules against champerty and maintenance have created a fertile atmosphere in which litigation finance has flourished.
This new market has met with stiff opposition from those who stand to benefit from continuing the status quo. This opposition however, diminishes every year as the benefits of litigation finance become more and more apparent to those in need of it. Every year, the market is expanding both in terms of size and in the level of services it provides. This expansion continues despite of opposition from powerful interests in both the legal and financial realms. The reason for the success of this emerging market against other entrenched interests is simple. It redresses the obvious imbalances of the justice system without requiring exertion from any but the interested parties. This will continue to fuel the rise of litigation finance until such time as it is commonly accepted as a means for funding the litigation of worthy cases with sufficient merit.
One continuing important question for litigation finance firms is on what basis do clients decide who they will get to fund them? In other words, what are the important considerations from the client’s perspective? The answers to these questions can be gleaned from a recent extensive survey of attorneys conducted by Lake Whillans and Above The Law.
Last month Bentham IMF an offshoot of the world’s oldest litigation financing company announced a big expansion into the US market. Included with its expansion comes a big name in the local litigation scene. The firm is opening a new office in Houston and at the head of the expansion will be prominent Harris County-area attorney Eric P. Chenoweth.
Litigation financing is a new method for dealing with an old problem, namely, how to pay the high upfront legal costs associated with litigation needed to defend the rights of one party in court. The market is still relatively new to having only emerged as a legitimate industry in the first years of the 21st century. The United States is the largest legal marketplace in the world in terms of the volume of cash involved in litigating cases every year.
This could give people the erroneous impression that the United States invented litigation finance or holds a dominant position in the industry around the world. Neither of those assumptions would be correct. There are in fact several very important distinctions between the legal marketplace in the United States and other jurisdictions. These distinctions have influenced the development the industry around the world.
Chipotle Mexican Grill on Wednesday won the dismissal of a lawsuit claiming it defrauded shareholders about its ability to protect customers from at least seven norovirus, E.coli and salmonella outbreaks that erupted in 2015.
A series of catastrophic electrical and other failures may have led to the crash of MH370 over the Indian Ocean, according to a lawsuit filed in the U.S. on behalf of the families of 44 people on board the still missing plane.
Much is made in the world of litigation finance of the antiquated nature of the common law doctrines of champerty, maintenance, and to a lesser extent barratry. These statues which are still a part of the legal system in many jurisdictions have been called everything from outdated to useless in the modern era. However, toward the end of last year the highest court in New York, one of the world’s premiere financial markets upheld the dismissal of a $300 million dollar lawsuit violating champerty. So the question must be asked, what exactly is champerty, and when does it still apply in the modern world?
A lawsuit brought by the Des Moines Water Works (DMWW) against three counties in the state of Iowa and the Iowa agricultural groups defending them has provided a rare opportunity to for members of the public to view the details of a proposed third-party funding agreement.
Michael Vinci, Litigation Finance Journal Staff
The United States is the largest legal marketplace in the world as measured by legal costs paid. This makes some degree of sense on the face of it as the United States is also proportional to its demographics the largest economy in the world.
But, why is the U.K. the second largest legal marketplace as measured by costs?
Why is litigation financing so prominent in both countries and why was it started in Australia of all places?
What do all of these countries and many other litigious countries have in common?
Litigation Finance Journal Staff
Editorial Note: This is the first in a series of articles the LFJ is doing for novice claim holders.
In so many matters in life, proper timing is of the utmost importance. Gauging exactly when to enter a litigation financing agreement is no different.