Any question that litigation funding has become a very big business was completely eliminated by the December 14, 2016 announcement of the merger between Burford Capital Ltd., the world’s largest publicly traded litigation funding firm, and GKC Holdings, LLC, the parent company of Gerchen Keller Capital, the largest privately held litigation funding firm. When the combination is completed the merged company will have $2 billion committed to litigation and a current portfolio of more than $1.2 billion in litigation investments, with hundreds of millions of dollars of capital available for further litigation investments.
Continue Reading A Watershed Event in Litigation Funding Industry and More Thoughts About Litigation Funding
U.K. Court Sends Cautionary Note to Fledgling Litigation Funders
A recent U.K. appellate court sends a strong cautionary note to litigation funders about the need for vigorous and independent pre-litigation due diligence and of the risks that can follow their support of an unmeritorious claim. In a November 2016 Judgment, the U.K. Court of Appeal ruled that the litigation funders that supported a claimant’s unsuccessful claim to oil field production rights are jointly and severally liable for the successful parties’ fees and costs. The Court’s ruling acknowledges litigation funding’s role in the system of civil justice, but the Court’s decision also highlights an expectation that the funders must evaluate the claims they support – and, because they have a substantial stake in a claim’s outcome , must accept the consequences if their evaluation is deficient. The U.K. Court of Appeals’ November 18, 2016 decision in Excalibur Ventures LLC v. Texas Keystone, Inc. et al. can be found here.
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Guest Post: The 101 of Litigation Funding in the German D&O-Claims Arena
One of the most significant recent developments in the litigation environment has been the rise of third-party litigation funding. However, as I noted in a recent post, the impact of litigation funding has varied from jurisdiction to jurisdiction based on differences in the local law. In the following guest post, Burkhard Fassbach, a German attorney and D&O Advisor to the Frankfurt-based MRH TROWE Brokerage Group, and Carsten Wettich, a founding partner of Berner Fleck Wettich, a Dusseldorf-based corporate law firm, take a look at litigation funding environment in German and its impact on the D&O claims arena there. I would like to thank Burkhard and Carsten for their willingness to allow me to publish their article as a guest post. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Burkhard and Carsten’s guest post.
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As Litigation Funding Rises Globally, Important Local Differences Affect its Impact
As I have previously noted on this site, the rise of third-party litigation funding is one of the most significant and potentially consequential development in the global litigation arena. But because of differences in countries’ legal systems, the escalation of litigation funding means and will mean different things in different jurisdictions. In an interesting November 10, 2016 Law 360 article entitled “U.S. vs. The Rest: Litigation Funding’s Local Characteristics” (here, subscription required), Noah Wortman of the Goal Group of Companies and Jeremy Marshall of Bentham Europe Ltd. suggest that the rise of litigation funding has had and will continue to have important consequences in the litigation arena, but those consequences differ and will differ due to important differences in the litigation environment in the various countries. The authors’ comments include some interesting insights into litigation funders’ investment goals.
Continue Reading As Litigation Funding Rises Globally, Important Local Differences Affect its Impact
N.Y. Top Court Rules Litigation Finance Transaction Violates Champerty Doctrine
One of the important factors behind the recent rise of third-party litigation financing has been the view in many jurisdictions that litigation finance does not violate ancient prohibitions against “champerty” – that is, the investment by an uninvolved third-party in a lawsuit with the intent of sharing in any recovery. As I discussed in a recent post, the general view is that litigation funding arrangements are not champertous as long as the plaintiff continues to control the litigation.
However, in a recent decision, the New York Court of Appeals (the state’s highest court) held that a financial transaction in which the plaintiff had purchased securities for the purpose of filing suit violated New York’s champerty statute. The Court also ruled that the transaction did not come within the statutory safe harbor for larger financial transactions. The appellate court’s ruling on the champerty issue is interesting, but its discussion of the safe harbor provisions – which likely would protect most conventional litigation finance arrangements – may be the more significant part of the court’s decision.
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Courts Throw Some Shade at Litigation Funding Arrangements
One of the most interesting and important recent litigation-related developments has been the rise of third-party litigation funding. An important part of this development has been the more or less general view that there is nothing improper about these kinds of arrangements and, in particular, that litigation funding does not represent improper champerty or
Guest Post: Litigation Finance: Stop The Hide-And-Seek Game
Litigation Funding is an increasingly important part of the current litigation scene, but it remains controversial. One of the important issues under debate is the question of whether or not litigation funding arrangements must be disclosed. In a recent discovery-related ruling (here), Northern District of California Judge Susan Illston confronted this question of whether or not a class action plaintiff must disclose third-party litigation funding contracts. As discussed below in the following guest post from Lisa Rickard, the President of U.S. Chamber Institute for Legal Reform, takes a look at Judge Illston’s decisions and examines its relevance in the ongoing debate regarding litigation funding. I would like to thank Lisa for her willingness to publish her article as a guest post on my site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit and article. Here is Lisa’s guest post.
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After the Hulk Hogan Lawsuit Funding Flap, Is it Time for a Look at Litigation Financing Regulation?
In recent years, one of the most important developments in litigation in the U.S. has been the rise of the litigation funding industry. Indeed, the industry’s rise has more recently been fueled by increasing investor interest, even as the industry itself has diversified into lawsuit portfolio investing (as opposed to individual-case investing). The industry’s rise and increasing importance already had attracted scrutiny and criticism, but nothing compared to the deluge of attention that has followed revelations that Hulk Hogan’s privacy litigation against Internet scandal site Gawker was funded by Silicon Valley mogul Peter Thiel. The news about Thiel’s financial involvement has produced a cascade of commentary about litigation funding, which in turn has arguably put the litigation industry on the defensive. The news has also fueled a debate about whether there should be more transparency about litigation funding, and even whether there should be other litigation funding industry regulation, as discussed below.
Continue Reading After the Hulk Hogan Lawsuit Funding Flap, Is it Time for a Look at Litigation Financing Regulation?
Delaware Court Rejects Challenge to Litigation Funding Arrangement
Both inside and outside the United States, litigation financing has become an increasingly important part of the litigation environment. But litigation financing remains controversial, at least in certain quarters, and questions continue to be asked about whether or not it is proper or even appropriate. In a recent decision in a Delaware lawsuit between Charge Injection Technologies and DuPont, DuPont challenged CIT’s arrangement for financing its participation in the litigation, arguing that the financing agreement violated Delaware’s prohibition against “champerty and maintenance.” In a March 9, 2016 decision (here), Delaware Superior Court Judge Jan R. Jurden rejected the challenge. Judge Jurden’s opinion supports the view that, at least under Delaware, an appropriately structured litigation funding agreement will not be found improper.
While parties and observers undoubtedly will still seek to challenge litigation funding in general and in the context of specific cases, this ruling and related developments suggest that Delaware’s courts will where appropriate condone litigation funding.
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Litigation Funding Firm to Close Its Doors
One of the most significant recent developments in the commercial litigation arena has been the recent rise of litigation funding. Though it remains controversial in some quarters, litigation funding is, in the words of a recent Above the Law post, “here to stay.” One reason that litigation funding is likely to remain an important factor in the litigation environment is that litigation funding in general has proven to be a lucrative investment, as I have previously noted (here). But while litigation funding in general may be profitable, that does not mean that investment success is assured. Indeed, while there are several very successful litigation funding firms, other firms have stumbled.
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