A Blast from the Past: Fugitive Comverse Technology CEO Kobi Alexander Returns to Enter Guilty Plea

namibiaA very long ten years ago – before the financial crisis, before the Euro crisis, before the Brexit vote — there was the options backdating scandal. The wave of litigation the scandal stirred up took its time to work its way through the system, but eventually the litigation was resolved and the scandal moved into the past. Even though the the scandal moved into the realm of history several years ago, there was one small but important unresolved item. The criminal case against Jacob “Kobi” Alexander, the former CEO of Comverse Technology, Inc., remained open, because shortly before he was about to be indicted, Alexander fled to Namibia. This strange but interesting chapter of the options backdating saga came closer to resolution last week when Alexander – back in the U.S. from his Namibian refuge — appeared in federal court in Brooklyn to enter a guilty plea to a single charge of securities fraud. Continue Reading

Guest Post: Company Directors Who Cannot Read or Understand English Warned by Australian Court

chris smith

Christopher Smith

In our increasingly global economy, corporate boards are increasingly diverse, and among the diversities boards increasingly encompass are geographic and cultural diversity. However, while diverse directors may serve for many reasons, they still must be able to discharge their duties to the corporation. In the following guest post, Christopher Smith of the Sydney office of the the Clyde & Co. law firm, take a look at an interesting recent case from an Australian Court, in which the court held that directors who sign corporate documents must be able to read and understand the documents in order to discharge their duties. A copy of the August 11, 2016 Federal Court of Australia ruling to which Chris refers in his guest post can be found here. I would like to thank Chris for allowing me to publish this article as a guest post on this site. Readers interesting in submitting guest posts should contact me directly. Here is Chris’s guest post. Continue Reading

Interview with Christopher Bogart, CEO of Litigation Funding Firm Burford Capital


Christopher Bogart

One of the most noteworthy recent developments in the litigation arena has been the rise of litigation funding.  Litigation funding is well-established in Australia and Canada, and it is becoming increasingly important elsewhere. Among the largest litigation funding firms is Burford Capital, which is a publicly traded company with offices in London and New York and whose securities trade on the London Stock Exchange. The company’s most recent interim financial results can be found here. Christopher Bogart, who previously was EVP and General Counsel of Time Warner and whose background includes a stint at the Cravath law firm, is the company’s CEO. In the following post, Chris answers my questions about litigation funding and about his firm. My questions appear in italics, followed by Chris’s answers in plain text.  I would like to thank Chris for his willingness to participate in this Q&A.



Third-party litigation is relatively recent phenomenon in the United States but it has quickly become a very important part of the litigation environment. Why has litigation funding recently taken off so significantly and why has it so quickly become to important?


The simple answer is that clients have been seeking alternatives to the tyranny of the billable hour for a long time, but they have been slow to arrive.  It has been 15 years since I was the general counsel of Time Warner, and even then we were looking for solutions to manage legal cost.  Since then, we have seen both continued increases in the cost of litigating, and in the amount of litigation companies both face and need to bring.  If you’re running a company, you need to spend your capital on things that are relevant to your business mission, not diverting that capital to lawyers.  Litigation finance is nothing more than the natural evolution of businesses seeking alternatives to paying legal fees by the hour – just as they have financial alternatives for photocopiers and truck fleets.

There is an inherent suspicion among corporate counsel that litigation finance will result in more litigation being brought against them, and that this is some sort of extension of the plaintiffs’ bar.  That view is misplaced.  The bulk of our business is for corporate counsel who are facing internal challenges around legal fee spending, and in any event the worst choice when running a litigation finance firm is to invest in litigation that doesn’t have clear merit.


There has been a lot of publicity recently about changing approaches to litigation funding, with some firms focusing on portfolio-wide rather than individual case investing, while others have focused on financing law firm expansion or diversification financing. What do you see as the best opportunity ahead for your firm and why?


Burford is the world leader in litigation finance, publicly traded on the London Stock Exchange and well past the billion dollar mark.  So, we do it all – single case finance, portfolio finance and law firm finance.

The reason there is an explosion in portfolio finance is simple:  cost.  Every litigator knows that each individual case carries a material risk of loss; that is just the nature of litigation.  So, single case finance is inherently expensive because the capital provided need to be priced to overcome that risk of single case loss.  Portfolio finance, on the other hand, spreads that risk across multiple cases and drives down the cost of capital.

However, there will always be a market for all kinds of litigation finance.  While corporate clients and law firms may elect to drive down the cost of capital by using portfolio financing, there is also a robust need for single case finance – whether for insolvencies or other structural imperatives.


As I am sure you are well aware, there are critics who decry the rise of litigation funding, who contend that the litigation financing is fomenting litigation or creating undesirable litigation dynamics. What do you say to those who have criticized the rise of litigation financing?


Critics of litigation funding tend to be critics of litigation proliferation generally, and their criticism tends to be emotional rather than rational.  Burford is composed largely of defense lawyers from large firms; we are meeting corporate demand, not creating it.  Many of us are frustrated that no meaningful tort reform has occurred – and the US Chamber of Commerce has spent many millions of dollars failing to achieve tort reform.  Faced with that failure, the Chamber is striking out against anything that seems to justify its continued (but failed) existence.  As a former supporter of the Chamber, I am disappointed in its intellectual dishonesty, but I guess that is what American special interest politics has become.  The simple reality is that if we “foment” weak litigation, we will lose money and go out of business.


Beyond the litigation funding critics, there are those who say that litigation funding should be regulated in some way. For example, some have called for requirements for the involvement of litigation funding to be disclosed and judicially approved. What do you think about the calls for this type of litigation funding regulation?


Well, why?  Our clients are generally large corporates and their law firms.  Our role is no different than any other capital provider.  We don’t become the clients nor take over their cases, and thus we are no different than any other capital provider to corporates – banks, insurers, private equity or hedge funds …

The reason we have disclosure rules is to allow judges to test for conflicts.  That is a deliberately limited testing exercise.  If we want to expand the testing judges do, that’s fine, but it needs to happen across the board, not on some artificially limited basis.  For example, if we want courts to test for conflicts based on economic interests in litigation outcomes as opposed to the current test of equity ownership, fine, but that expansion needs to be egalitarian, sweeping in not only litigation finance providers but also other interested parties.


Many of the high profile collective investor actions that recently have been filed outside the Unites States have been guided by litigation funding firms. Why do you think this is happening and what do you see as the opportunity for these kinds of collective investor actions outside the United States?


This is a trend that began in Australia – which permits litigation funding but not contingency fees – and spread to the UK.   This is nothing but economics – if there is not a robust contingency fee bar as there is in the US, there needs to be a substitute.  At the end of the day, there are both efficient and abusive class actions, and the goal is to effectuate the former while avoiding the latter.  No one wants meritless actions, but there are also actions where appropriate redress is most efficient when provided in a collective manner.


What types of cases (as in, securities cases, competition or antitrust cases, product liability cases, and so) is your firm most interested in and why?


We have no preference as to the kind of matters we finance.  We work with corporate clients and their lawyers to support the matters they wish to pursue, which span the gamut from contract to antitrust to fraud matters.  Our only criteria are that matters be meritorious and of sufficient size to support our financing.


The litigation funding industry in the U.S. has grown very quickly. Where do you see the industry heading in the future and what do you see as the best opportunities?


Capital providers can’t create growth on their own.  Instead, client demand fuels growth.  And there is enormous demand for solutions to the dilemma of paying law firms on a current cash basis.  Virtually every company, large or small, wants different options, and we provide them – having now provided more than a billion dollars of capital to companies from the top of the Fortune 500 and down from there.  So, Burford flourishes by meeting its clients’ demands.  We started life more than a decade ago by financing Latham & Watkins’ arbitration matters when clients wanted solutions that the firm was not willing to provide, and we have built on that foundation ever since.

Another Round of Frisbee Photos

frisbeeReaders continue to send in their pictures taken with their Tenth Anniversary edition D&O Diary Frisbees. The Frisbee Photos have been taken in locations both far and near, with the most recent collection including a very heavy representation of pictures taken at beaches or in bars, as well as with kids and dogs.  Readers will recall that in connection with The D&O Diary’s recent tenth anniversary, I offered to send out a D&O Diary Tenth Anniversary Frisbee to anyone who requested one – for free — but only if the Frisbee recipient agreed to send me back a picture of the Frisbee and a description of the circumstances in which the picture was taken. I have already published four rounds of Frisbee Photos (hereherehere, and here), and now it is time for the next round. Continue Reading

The SEC Wants You to Know that It Intends to Protect Whistleblowers’ Rights

SEC logoThe SEC has long made it clear that it intends to protect whistleblowers and to suppress activities it believes will have the effect of discouraging whistleblower activity. The agency recently launched enforcement actions against companies that had incorporated various waivers in employee severance agreements that discouraged employees from reporting possible securities law violations to the SEC. The agency’s actions shows that the agency is prepared to actively target corporate actions the agency believe may suppress the whistleblowing process. Continue Reading

SEC Enforcement Actions Decline

SEC logoThe SEC’s enforcement activity so far this fiscal year trails the record levels in the 2015 fiscal year. According to a recent report from Cornerstone Research (here), the SEC’s enforcement activity through the end of the fiscal third quarter (on June 30, 2016) is eight percent below the activity levels during the same period in FY 2015, largely as a result of an activity decline in the third quarter. At this point, even if the agency is active in the fourth fiscal quarter, it seems unlikely that by the end of the fiscal year on September 30, 2016 that the agency’s enforcement activity will catch up to the prior year. Continue Reading

As the Failed Bank Litigation Wave Winds Down, A Look Back

fdicAs we approach what will be the eighth anniversary of the peak of the global financial crisis, many of the effects of the crisis have subsided. But while the crisis and many of the worst of its effects have largely faded into the past, a number of litigated matters related to the crisis have continued to grind through the courts. Among other things, the wave of failed bank lawsuits – that is, lawsuits filed by the FDIC against the former directors and officers of banks that failed in the wake of the crisis – has continued to roll along. However, at this point, it looks as if the failed bank litigation has just about played out. Now that the litigation is winding down, it may be time take a retrospective look at the failed bank litigation wave. Continue Reading

The Next Round of Frisbee Photos

frisbeeThe many travels of readers’ D&O Diary Tenth Anniversary Frisbees have continued, with stops in places both familiar and remote. The results are a variety of Frisbee photos taken on location in places both far and wide and accompanied by everything from beer to champagne. Readers will recall that in connection with The D&O Diary’s recent tenth anniversary, I offered to send out a D&O Diary Tenth Anniversary Frisbee to anyone who requested one – for free — but only if the Frisbee recipient agreed to send me back a picture of the Frisbee and a description of the circumstances in which the picture was taken. I have already published three rounds of Frisbee Photos (herehere, and here), and now it is time for the next round. Continue Reading

Seventh Circuit, Citing Delaware Precedent with Approval, Overturns Deal Lawsuit Disclosure-Only Settlement

seventh 2Cornerstone Research’s recent report on merger objection lawsuit filings showed what many of us expected to see – that in the wake of Delaware Chancellor Andre Bouchard’s rejection of the disclosure only settlement in the litigation arising out of Zillow’s acquisition of Trulia, there would be a decline in the number of merger objection lawsuits filed. The report also showed that the filing decline was particularly steep in Delaware, but not as sharp elsewhere. In other words, the plaintiffs’ lawyers still active in pursuing this type of litigation increasingly are filing their merger objection lawsuits outside of Delaware. With these kinds of cases now relatively more likely to be heard outside Delaware, the question of whether or not judges in other jurisdictions will follow the lead of Delaware’s courts in rejecting disclosure only settlements takes on relatively greater importance. Continue Reading

No D&O Insurance Coverage for Costs of Responding to Informal SEC Investigation

coloradoAmong the most frequently recurring D&O insurance coverage issues is the question of the carrier’s obligation to pay for costs incurred in connection with an informal SEC investigation. Indeed over the years, numerous policy revisions have been adopted in various forms by various carriers to address certain aspects of this issue. Yet the issues continue to arise, as shown most recently in District of Colorado Judge Robert E. Blackburn’s August 4, 2016 opinion (here), in which he held that the D&O policy at issue did not provide coverage for the insured company’s expenses incurred in responding to an informal SEC investigation. The opinion raises a number of issues, as discussed below. Continue Reading