January Legal Funding News Roundup

Legal Funding: The ACLU's response to Trump's Immigration Order

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Within days of President Donald Trump's signing of the executive order banning green card holders, over 350,000 individuals opened their wallets and donated more than $24 million dollars to the ACLU. That's over 6x more than the ACLU typically raises each year!

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

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What Eugene means is that 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 have effectively become legal funders.  

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Legislation and Law

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• 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. Despite its limited scope, the rule was still seen as groundbreaking. Until now, no U.S. district court had adopted a rule requiring the automatic disclosure of funding agreements of any kind. For additional perspectives:

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• San Francisco Chronicle: Court quashes proposed sunshine rule for litigation finance firms
• The Recorder: New Litigation Funding Rule Seen as 'Harbinger' for Shadowy Industry
• Law360: Calif. Legal Funding Rule Won't Shed More Light on Deals

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Trend watch: Outsider expertise joining legal funding companies

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Not so much news as it is a trend we've noticed. In the past few months, news has been trickling out about industry outsiders with impressive pedigrees joining the industry. It portends further professionalization of legal funding and perhaps even quicker growth. Something to keep an eye on.

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• Taking on Industry Critics, Vaughn Walker says Litigation Finance Won't Drive 'Spurious Litigation - Vaughn Walker, former chief judge of the U.S. District Court for the Northern District of California, recently joined Bentham IMF, and makes compelling arguments in favor of litigation funding. Regarding disclosure rules, "I suspect that some form of disclosure with respect to litigation funding will, at some point or other, be required."

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• Picking Litigation Finance Fund Managers - Michael McDonald makes an argument for this trend to proceed in a second direction as well. He writes that legal funders should take a page from the mutual fund world and hire dedicated fund managers. These finance specialists would then focus on selecting which cases or case types to invest in, and work to attract investors.e investment.

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• Chicago Litigation Funder Adds Nixon Peabody Practice Leader - Some of the reasons Big Law attorneys are joining commercial litigation finance firms

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• Opportunity to continuously analyze complex case

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• High compensation

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• Daily interaction with a combination of law, finance, business, and strategy