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Industry News

2017 Year In Review: 5 Topics that Shaped the Industry

December 29, 2017
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3min

The New Year is time for many activities, but one most important: reflection!

Everyone can benefit from a little reflection and introspection–individuals and businesses alike.

So, after reviewing all of the headlines from the last 12 months, we’ve determined the major stories that persisted throughout the year in legal funding:

  1. The Trump Administration
  2. Disclosure as the hot-button legal issue
  3. Endowment funds getting in the game
  4. Legal Tech heating up
  5. Commercial funders raising gobs of Money

 

#1 The Trump Administration Colliding with Legal Funding

Donations to A.C.L.U. and Other Organizations Surge After Trump’s Order

January 2017’s Immigration Order from President Trump sparked an outpouring of donations to the ACLU, bringing litigation finance into the news.

Eugene Kontorovich, a professor at Northwestern University School of Law noted, “Anyone who donates to the ACLU or a Legal Aid fund is basically underwriting third-party litigation.”

That is to say, by supporting the non-profit’s filing of lawsuits on behalf of green card holders and others who were banned under the executive order, donors effectively became legal funders.

 

Leandra English not funding lawsuit against Trump Administration

This will be an interesting thread to follow into 2018. In the short video above, when asked how he is being paid, Deepak Gupta, attorney for Leandra English, revealed that  “Well, uh, it’s, uh, it’s not, um, uh Miss, uh, English, uh-um, there are ethics lawyers we’ve consulted and we have a structure set up that complies with ethics rules.” Read more here.

 

 

#2 Disclosure as the hot-button legal issue

Lit Funders Get a Little Sunshine – Whether They Want it or Not

Historically, big litigation funders have been fairly transparent about their general operations, but have always remained tight-lipped about specific deals. The industry has warned that “revealing which cases they are behind would invite costly discovery ‘sideshows’ that would eat at their return.”

As litigation funding becomes more common, companies and funders are not only feeling less obligated to keep their financial arrangements under wraps, but they are also growing more optimistic about publicity and its potential advantages.

Litigation Funder Bankrolls Snapchat Whistle-Blower Suit

In May, we learned that a former Snapchat employee who filed a whistleblower lawsuit against his former employer received legal funding from Pravati Capital, marking what may have been the first publicly announced portfolio litigation funding deal ever, according to counsel for the plaintiff.

 

Northern District, First in Nation, Mandates Disclosure of Third-Party Funding in Class Actions 

On 1/23/2017, the U.S. District Court for the Northern District of California announced a new rule requiring the automatic disclosure of third-party funding agreements in proposed class action lawsuits. Despite its limited scope, the rule was still seen as groundbreaking. Until then, no U.S. district court had adopted a rule requiring the automatic disclosure of funding agreements of any kind.

 

Xarelto Makers Want Plaintiffs’ Litigation Funding Info

In the Xarelto blood-thinner litigation—an on-going mass tort case (about 1,200 cases strong) in the Philadelphia court system—defendant drug companies in the mass tort want to know how the plaintiffs are funding their lawsuits.

 

Judge won’t force Viamedia to share documents on litigation funding, DOJ action vs Comcast

Legal funding was front and center in a battle between Viamedia, a New York-based TV advertising business, and Comcast. On June 30, a Chicago federal judge denied Comcast’s motion to compel disclosure of documents that Viamedia may have shared with prospective litigation firms, and said that the documents should remain protected under the “work product doctrine.”

 

How Jones Day Unmasks a Litigation Funding Deal and Won

At the end of October, documents were released for a Therium-backed class action against Chevron. Read on for analysis of the disclosure here: Litigation Finance: Work Product & Discovery in the Wake of Gbarabe v. Chevron

 

#3 Endowment funds getting in the game

Investors courting litigation finance for profit potential

Endowments and pension funds are starting to take chances on corporate litigation finance investments. Investment managers — and some asset owner executives who’ve signed on with them — say the strategy provides uncorrelated returns regardless of market volatility or economic conditions, and provides increased liquidity.

 

Michigan Endowment to invest in Y Combinator, Litigation Fund

The University of Michigan commits up to $33.7 million to London-based Harbour Fund IV, which is notably the third litigation fund backed by Michigan this year

 

Not Your Usual Alternatives

New Mexico Educational Retirement Board is making moves into atypical, for now, investment alternatives, including litigation finance

 

#4 Legal Tech Heating Up

Litigation Finance, Big Data and the Limits of AI

As an indicator of just how central the topic of big data & technology was to the legal funding conversation in 2017, CEO of Burford, Christopher Bogart, weighed-in on this topic in April. He concluded, “…it is unquestionable that as litigation finance grows and evolves, data analytics will play an increasing role: If nothing else, litigation finance providers have accumulated vast amounts of their own data based on the many thousands of matters they have seen, and built their own proprietary risk management and investment models.”

 

Legal SaaS A.I. Platform LawGeex Raises $7 Million in Funding Round

LawGeex was founded by Noory Bechor and has raised $9.5 million to date and has built technology to automate the contract review and approval process.

 

Casetext Raises $12 Million for Legal Research Assistant CARA

Casetext uses AI and natural language understanding to scan legal briefs and locate and analyze case citations.

 

The Funded: Former Peter Thiel fellow raises $10M to invest in small biz lawsuits

Legalist added $10,000,000 to their coffers to fund small business lawsuits using a proprietary algorithm. This process assesses multiple case factors to identify potential investments.

 

ROSS Intelligence lands $8.7M Series A to speed up legal research with AI

ROSS Intelligence is using ‘machine learning’ going after LexisNexis and Thomson Reuters for ownership of legal research. At its core, ROSS is a platform that helps legal teams sort through case law to find details relevant to new cases.

 

Jury.online wants to replace lawyers with blockchain technology  

Jury.online, a ‘blockchain technology‘ startup is using the blockchain to make it easier to settle small claims and intends to eradicate the hundreds, sometimes thousands, of dollars spent on the lawyers needed to win or defend these cases.

 

#5 Commercial Funders Raised Gobs of Money

Longford Capital raises biggest litigation fund 

Longford aimed to raise $250 Million for their second fund, and instead closed at $500 million. For context, their first fund raised in 2014 was a comparatively small $56.5 million.

 

Launch of USD $200 Million Bentham IMF Investment Vehicle to Help Company Scale up U.S. Operations

Announced in February, this fund was raised to scale up U.S. operations, improve their portfolio diversification satisfy capital requirements without resorting to debt or equity raises, and increase the flexibility of capital uses for purposes such as redeployment in Australia, Asia, and potentially Europe.

 

Burford Capital Raises $500M For New Complex Strategies Fund

Announced in July, this fund’s purpose is to invest in assets that the Burford team identifies as “mispriced and where value can be realized through recourse to litigation and regulatory processes.”

 

Lexshares Eyes $25M for New Litigation Investment Fund

LexShares launched a marketplace fund that is intended to allow investors to invest in bundled small and midsized commercial litigation.

 

Here’s to an exciting and prosperous 2018!

Post by

The Mighty Team

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