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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third-party litigation financing
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.
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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…
The Global Rise in Collective Investor Actions
As I noted in my recent round up of current trends in the world of D&O, one of the most important recent developments in the D&O claims arena has been the rise of collective investor actions outside of the U.S. I amplified on this theme in a Q&A that I also recently published on this site. In a recent blog post, Columbia Law Professor John Coffee underscored the recent significant rise in collective investor actions in Europe and Asia. In a September 19, 2016 post on the CLS Blue Sky Blog entitled “The Globalization of Securities Litigation” (here), Professor Coffee details how entrepreneurial U.S.-based plaintiffs’ law firms have managed to circumvent apparent local obstacles and succeed in pursuing collective investor actions even in otherwise inhospitable legal environments. As I have previously noted and as I discuss further below, the rise of collective investor actions outside the U.S. is one of the most significant recent developments in the global D&O claims arena.
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Interview with Christopher Bogart, CEO of Litigation Funding Firm Burford Capital

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.
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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.
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The Next Step in Litigation Financing?
In recent years, litigation financing has become an increasingly important –albeit controversial – part of the litigation landscape. The ongoing evolution of litigation financing now appears to have taken a significant next step, in the form of a formal, public partnership between the litigation funding firm and a plaintiffs’ law firm. On October 28, 2015, the litigation funding firm Burford Capital and the plaintiffs’ competition law firm Hausfield issued a joint press release (here) in which the two firms announced their entry into a €30 million agreement to fund claims in Germany and to allow the law firm to open a Berlin office.
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Why Are Investors Seeking Litigation Funding Opportunities? Because Litigation Funding is Profitable
In a March 9, 2015 article entitled “Hedge Fund Manager’s Next Frontier: Lawsuits” (here), the Wall Street Journal described how the “next act” for EJF Capital LLC, a hedge fund run by Friedman, Billings, Ramsay Group’s former co-founder Emmanuel Friedman, will be to deploy a new litigation finance arm that has already,…