More attention to the growing use of litigation funding. Another WSJ piece with small bits of new information on fund raising in progress. Also, a new post from Kevin LaCroix at D&O Diary adds some analysis of a recent N.D. Ill. opinion on discovery about litigation funding, as well as some of his own thoughts that seem to reflect grudging acceptance of a growing reality.
A new post at On the Case covers a new federal court ruling sustaining privilege claims involving communications with litigation funders, and includes links to several of the underlying documents. The article also covers a couple of prior rulings that went the other way.
A May 25, 2011 conference in London will bring together true industry leaders and legal thought leaders, including Justice Jackson. The agenda and registration are here for Maximising Opportunities in Litigation Funding.
Justice Jackson authored the leading report for the UK on litigation costs and funding. Background materials are here, as are links to the paper. Panel members will include Selvyn Seidel, a leader in this field.
The conference agenda is pasted below.
09:20 - 09:25 Chair’s opening remarks
- Jackson review: recommendations on third party funding
- What is the interaction between access to justice and third party funding?
- Considerations when accessing funding
- What funding options are available?
- What provisions should you expect to find in funding agreements?
- How to make use of funding to maximise fee income for your practice
10:45 - 11:00 Coffee
- David v Goliath – access to justice for SMEs
- Risk sharing
- Aggregating claims
Christian Stuerwald, Head of Underwriting, Calunius Capital LLP
Leslie Perrin, Chairman, Calunius Capital LLP
- Current issues and major developments
- Assessing the impact of Campbell v MGN
- Implications of ending the recoverability of success fees
- What does the future hold?
12:30 - 13:30 Lunch
- Potential risks for solicitors
- Eligibility requirements
- Interaction with third party funders
- When can contingency fees be used?
- The Ontario model
- Contingency fees vs. third party funding
- What are the implications of contingency agreements as a funding option?
- Funding investor-state arbitration
- Differences in risk profiles between arbitration and litigation
- Overview of arbitration funding
- Contingency fees in arbitration
15:20 - 15:35 Afternoon Tea
- Litigation funding and forum selection in Europe
- The Dutch model
- The German model
- Future trends in Europe
Rob Murray, Partner, Crowell & Moring LLP
Pierre Bos, Partner, BarentsKrans
Till Schreiber, Legal Counsel, Cartel Damage Claims
- How is the market going forward?
- What are the investment opportunities?
- Can third party funding be extended to the high-street?
Ross Clark, Underwriting Director, Firstassist Legal Expenses Insurance Limited
Selvyn Seidel, Chairman and Co-Founder, FULBROOK MANAGEMENT LLC
17:00 - 17:10 Chair’s closing remarks
Private litigation funder Burford Capital has just raised another $ 175 million to become the world's largest private investor in litigation. Prior funds were raised through an IPO on AIM, as described here. The new round of funding is described here. A successful prior Burford investment is described here.
The world of public and private litigation is fascinating. Any bets on how long will it be before we see IPOs for litigation funds raised to target specific companies or specific industries ? By 2020 seems like a good bet to me, and that may well be longer than it actually takes.
Report on Civil Justice in Scotland Calls for Class Actions and More Work on Litigation Funding and Contingency Fees
Lord Gill's report on civil justice in Scotland was issued on 30 September. The full report and the synopsis are available here. See below for some key excerpts from the synopsis.
"Multi‐party actions (Chapter 13)
The Report recommends that there should be a special procedure for dealing with multiple claims which give rise to common or similar issues of fact or law, for example, litigation arising out of a mass disaster or liability for defective products. Detailed recommendations are made regarding the features that such a procedure would have, including special funding arrangements for multi‐party actions to be administered by the Scottish Legal Aid Board (see paragraphs 64‐119).
The cost and funding of litigation (Chapter 14)
Detailed recommendations are made on the recovery of expenses. The cost of litigation should form part of the remit of the proposed Civil Justice Council for Scotland (see below); pending which the Scottish Government should set up a Working Group to look at the issue of expenses (paragraphs 50‐67).
While no recommendations are made on speculative fee arrangements pending the outcome of a review in England and Wales, it is recommended that this issue should urgently be addressed by the proposed Working Group on Judicial Expenses (see paragraphs 125‐127).
The Scottish Government should explore with insurance providers the scope for improving public awareness and increasing voluntary uptake of legal expenses insurance (see paragraph 140)."
Regardless of what some may think, investors apparently like the idea of litigation as an investment vehicle. The proof ? Burford Capital this week succeeded in raising $ 130 million in its IPO.
Here is an Am Law article by Alison Frankel in which she declares: "It's time to declare litigation financing a bona fide investment class."
Here is the link to a Bloomberg story on Burford's IPO.
The UK is famous for assessing costs if a case actually goes to judgment. A new look at that topic is underway and is slated to produce a final report by year end 2009. A preliminary draft report has been issued and will be the subject of meetings and comments over the summer. More specifically, a press release from the British Judiciary explains that " Lord Justice Jackson has published the preliminary report in his Review of Civil Litigation Costs.The report is a major piece of work, deriving from four months of fact-finding, research and receiving submissions, and it extends to over 650 pages with three annexes and 30 appendices. It is available" online here.
A June 1, 2009 article in Business Insurance by Sarah Vesey provides a terse summary of the report. She comments:
"In the report, Justice Jackson said several potential changes to the existing cost regime for group actions "merit consideration."
Among them are instituting a no-cost-shifting rule; allowing cost-shifting for only part of the proceedings, for example only after the stage where a class wins certification; implementing a common funds doctrine, such as that used in the United States in which successful lawyers are entitled to have their fees reimbursed from the fund awarded to the class; public interest litigation, whereby the court has power to order that no cost-shifting occur when a group representative brings an action on an issue of public interest; and using a lower-cost scale for collective actions.
Justice Jackson said his "tentative view" to do away with cost-shifting for collective actions merits serious consideration in the second phase of his review and would, among other things, promote access to justice and be fairer for defendants."
Global Litigation Trends Article - Aggregate Litigation, Contingent Fees, Litigation Funding, and Punitive Damages
Looking for a tight but informative summary of changes around the globe with respect to (1) aggregate or class action litigation, (2) contingent fees and litigation funding, and (3) exemplary or punitive damages? If so, you should read a new article, "Global Litigation Trends." The authors are Mark Behrens, Gregory Fowler and Silvia Kim, who are all Shook Hardy lawyers. The article was published at 17 Michigan State Journal of International Law 166 (2008-09). You can download it here from the TortsProf blog.
I particularly liked the article because it packs a material amount of information into 30 pages. The first two sections provide an overview of particular developments in aggregate litigation/class actions and some nation by nation citations to articles on aggregate litigation. Those highlights are followed in section III by an incredibly handy reference tool that provides a country by country synopsis of the aggregate litigation procedures increasingly available in countries ranging from Argentina to Taiwan, followed by a brief section IV addressing EU law aggregate litigation developments. Section V addresses developments in paying for litigation. First covered are changes around the world with respect to contingency fees (they are permitted more places than you might think - for example, Italy recently passed legislation to permit contingent fees), as well as uplift fees, success fees and multipliers. The section also touches briefly on the rise of litigation funding outside the US. Global developments in punitive damages are covered in section VI. The article provides cogent cites to demonstrate that new attitudes are developing outside the US with respect to non compensatory damages.
As the name of this blog reflects, it seems plain enough to me that tort litigation is indeed going global, albeit with regional and national twists, not to to mention the intricacies of comparing civil law countries to common law countries, as well as developments in Asia where some countries have this century essentially embarked anew in their approach to courts and law because past law was feudal or otherwise outmoded. I was curious though to read the the concluding remarks of Mark and his colleagues since they (like me) are not academics and represent the defense side in most cases. Here's what they had to say:
"A growing list of countries outside the United States, including Canada, Australia, most European, and several South American countries, now recognize some form of multiclaimant litigation-- whether class actions, groups actions, or representative actions by consumer or public organizations. The trend, however, has been to reject wholesale adoption of U.S.-style class actions. What has emerged instead is a distinctly "un-American" approach that generally disfavors opt-out procedures and often allows public bodies and private consumer organizations to bring collective actions in addition to (and sometimes in place of) individuals. Foreign countries also have "not so far been inclined to change other rules that have helped make class action lawsuits practical in the United States." In particular, there have not been widespread calls to do away with the loser-pays rule. Contingent fees and punitive damages remain generally prohibited, but changes are occurring in this area and past prohibitions are softening. The stepstaken so far in these two areas, in particular, have been incremental and modest--but a wall is built one brick at a time. If collective actions become more prevalent, and the foreign plaintiffs' bar better funded and coordinated as a result, it would not be surprising to hear calls for broader and speedier reform."
Sign Up Tomorrow for Great Looking UCLA - RAND Conference on Litigation Funding - June 2, 2009 in Santa Monica
My friend Steve Sellick points out that UCLA and RAND are teaming up for and presenting an interesting June 2 seminar at RAND in Santa Monica on litigation funding. Litigation funding is a topic I've mentioned before in a Corporate Counsel "special section "article and on this blog. The existence of material amounts of capital available for litigation funding is in my opinion a huge development in and driver for litigation of all kinds, ranging from intellectual property to securities class actions to mass tort personal injury claiming. Moreover, this trend is only going to accelerate as the UK's legal reforms will soon (not later than 2011) allow direct outside investment in UK law firms.
The UCLA-RAND seminar speakers include some significant academics and a former President of the British Bar. An online invitation to the seminar is available here . Attendance is free, but advance registration is required by May 25, it says. The academic speakers include UCLA's Prof. Stephen C. Yeazell and Lynn M. LoPucki. I would love to attend but family activities dictate other priorities. Hopefully the papers will be published online after the conference. Sponsors include litigation funders Juridica, IM Litigation Funding and Oxbridge, with the latter explicitly saying on its website that it funds mesothelioma claims.
Professor LoPucki is well-known for his many papers on bankruptcy economics, including attorneys' fees. Even more interesting for me is Professor Yeazell's participation. Professor Yeazell is the author of wonderful 2001 law review article I cite time and again in discussions regarding the how and why of the nature of our litigation system in the United States. The paper was delivered as part of a seminar sponsored annually by one of Chicago's most respected plaintiffs lawyers, Robert Clifford. The paper is titled:
SYMPOSIUM ARTICLE: THE CHANGING LANDSCAPE OF THE PRACTICE, FINANCING AND ETHICS OF CIVIL LITIGATION IN THE WAKE OF THE TOBACCO WARS: Seventh Annual Clifford Symposium on Tort Law and Social Policy: RE-FINANCING CIVIL LITIGATION , 51 DePaul L. Rev. 183. The paper can be downloaded from this site.
Back to the seminar - the invitation describes the seminar as follows.
"RAND Institute for Civil Justice and UCLA School of Law recently forged a new initiative through which they identify and analyze the biggest and most influential trends in civil justice. One such trend--litigation claim transfer (also referred to as third party litigation funding)--has created the environment for litigation claim transfer to be evaluated as a component of the American civil justice system. The confluence of the recent credit shortage, the enormity of the overall market for legal services, and the search for investment opportunities unrelated to general economic risk has created the supreme environment for litigation claim transfer to expand and thrive.
UCLA-RAND Center for Law and Public Policy is bringing together stakeholders to not only discuss this phenomenon, but to frame how it is debated in government, law schools and state bars across the country. We are pleased to invite you to attend a conference designed to address these important issues on June 2, 2009 at RAND's Santa Monica headquarters. "
As the litigation funding business grows in popularity, it becomes apparent that new issues will arise in terms of how to deal with the rights to collect on settlements and judgments. In that vein, here's an interesting newspaper article describing two federal appellate decisions relating to problems with a company that buys out structured settlements that is said to buyout settlements without following state law rules that require judicial approval of such buyouts. One wonders if all litigation funding agreements are structured to avoid the problem.