Litigation Capital Manag... Share Discussion Threads

[williamcooper104] 26/7/2023 17:54

Thanks Should gap up at the open

[citywolf1] 26/7/2023 17:45

Time to load up at the open it would seem

[citywolf1] 26/7/2023 17:42

Don’t worry guys. Patrick is on it: In LCM's Investor Meet Company presentation on 14 March, the following question was asked:

"It has been reported that Britain’s litigation funding industry faces “seismic consequences” if an appeal over funding agreements is allowed by the United Kingdom’s Supreme Court - what are the risks to LCM’s UK investments both directly funded and via either fund? Have you reported any information on how this case may affect LCM's business to private investors and/or other investors who participate in the funds?"

Patrick Moloney's response was as follows (my audio transcription):

"In answer to that question, there has been a challenge in the high court here in the United Kingdom with respect to whether litigation funding arrangements constitute damages based fee arrangements and are therefore caught by the legislation which governs solicitors providing those types of services. Now, the advice that we have received in and around that challenge is that it relates to that portion of the underlying funding agreement whereby the litigation financier is paid a percentage of the outcome of the pool of capital that is created as distinct from being remunerated on a multiple of invested capital. Therefore, the majority if not all of our litigation funding arrangements which have been entered into in the UK market are all based around a remuneration and return mechanism for LCM based on a multiple of invested capital. So, we're not concerned in relation to this challenge. The challenge is yet to be determined and is in early stage in terms of going through the court system, but as I say, we're not concerned about that because it really doesn't reflect the way that LCM structures its underlying litigation funding agreements. So, in answer to the final part of that question - have we reported that to the market or those who have invested in our funds management business - the answer is no because we don't perceive that as a risk."

[williamcooper104] 26/7/2023 17:41

Is it the case that the only cases this would catch is fixed share of awards where all or substantially all the funding has been advanced else the funder would just say no money unless the plaintiff agree to changing the contract Presume they can't go back and challenge historic agreements??? If so then does look like a massive over reaction

[nchanning] 26/7/2023 17:33

I guess OMNI are mostly in Oz/Asia and BUR mostly USA but surely a decent number of London cases . Looking back through old case wins time being the deciding factor in the award is a regular theme . I remember someone querying on a webinar why an Australian case did not appear to have benefitted from a long duration and Moloney saying Australian class actions were some of their only cases without a time element to the award as it was not permitted in Australia. So hopefully the vast majority of UK cases have a multiple of invested capital over time as one of the calculation methods and this proves largely irrelevant for LIT

[williamcooper104] 26/7/2023 17:25

Presumably MANO unaffected as they buy claims Weird for the rest to not move

[nchanning] 26/7/2023 17:08

Mohsin Patel, director and co-founder at litigation finance broker Factor Risk Management, said the consequences of the decision "may well not be as widespread as expected".He explained: "Given that funder returns in many LFAs are structured as multiples of funds invested as opposed to a fixed share of damages, these should therefore fall outside of the DBA regulations.

[nchanning] 26/7/2023 16:58

The 19th June huge win for LCM also referred specifically to the extended length of the case determining LCMs fees , which appear to be exactly 4 X invested capital plus a small success fee rather than a proportion of the award . Hopefully there's no affect from the ruling on these investments

[johnwig] 26/7/2023 16:53

I have just been talking to the managing partner of a large law firm who are involved in the litigation funding business. There had been two internal conferences today with all the top relevant lawyers and business bods, and the consensus there was that at first sight this is just a bump in the road. Changes in the wording of certain conditions will be necessary for certain agreements but the fundamental running of the business will suffer little damage. LIT specifically was not discussed, of course.

I am not a lawyer even though I have been in charge of more than one quoted company. Please do not act on the basis of what I have said. It has no more validity than any of the nonsense that one reads on these threads. I derive some modicum of comfort, however, from what I was told.

[wisecat2] 26/7/2023 16:52

We have prepared for this decision, and we will now work with our lawyers, class representatives and other claimants to move beyond this bump in the road.’

[nchanning] 26/7/2023 16:51

Well we will find out more at 7am but seems pretty clear to me that where agreements are structured as Lit is entitled to the higher of a) award proportion b) multiple of invested capital based on duration that they are at least always entitled to b) whatever the Supreme Court has ruled about a) . But perhaps there will be £10 or £20million in past cases where a) was higher where the client is entitled to demand that LIT's share should have been based on b) . Not ruinous for the company but a painful blow

[farrugia] 26/7/2023 16:49

why has burford not been impacted in the slightest?

[citywolf1] 26/7/2023 16:49

Question is why no movement (at all - they're even slightly up) from BUR, OMNI, MANO etc... feels like an overreaction for LIT

[riverman77] 26/7/2023 16:46

Sorry, but aren't most of their cases in Australia so this ruling wouldn't even apply? The whole thing makes no sense - BUR is completely flat today. Guess we'll find out more soon.

[williamcooper104] 26/7/2023 16:43

Looks like it doesn't kill the business model but could well kill existing claims - so could be v painful BURs not reacted to the news (it's more international/US but would still have expected some pressure on the sp)

[nchanning] 26/7/2023 16:40

It seems pretty clear it won't affect the ability to write future agreements or the viability of litigation funding in the UK, just a case of if there are any invalid agreements already in place , or clawbacks from the past where a proportion of the award was the higher figure or the only method of calculating return

[realbernie] 26/7/2023 16:39

Cheers for that Flagon - that was a frustrating 30 mins of speculation as to the cause.
I don't have law expertise but the article seems to concern the enforceability of agreements between litigation financing firms and their clients, but crucially not the court cases being funded. In which case the financing firms can either threaten to withdraw their financing or they can simply rewrite the agreements with their clients to ensure they remain enforceable. "I hope", lol.

[nchanning] 26/7/2023 16:37

I guess that's not a disaster as they have an alternative calculation to fall back on . The 20th July investment also said ' in line with our usual practice LCMs returns are calculated as a rising multiple of invested capital over time' which would not be affected by this ruling . Also all the cases in Singapore / Australia / maybe international arbitrations might not be affected

[nchanning] 26/7/2023 16:12

Not sure how many of LITs funding agreements are structured in this way . It seems like a lot of them had some time element in the fees and maybe a success fee rather than obtaining a proportion of the damages

[ntv] 26/7/2023 16:12

Guessing there will be one by the morning now
WTF

[chucko1] 26/7/2023 16:07

It's a good bet to ride it out, having read the note.

[luweiluwei] 26/7/2023 16:06

CEO just moved to the UK and now he's going to have to move again to a friendlier country.

[someuwin] 26/7/2023 16:05

Doesn't sound like too big an issue - from the link above...

Funders however said the industry would rapidly adapt. In a joint statement, the International Legal Finance Association and the Association of Litigation Funders of England and Wales said: 'We are disappointed by this decision as it runs contrary to the accepted understanding that financing agreements are not damages based agreements.

'The decision is not generally expected to impact the economics of legal finance and will not deter our members’ willingness to finance meritorious claims. It will only affect how legal finance agreements are structured so that they comply with the regulations and individual financiers will have been considering what if any changes are needed to their own legal finance agreements as a consequence of this decision.'

Steven Friel, chief executive of litigation funder Woodsford, said: ‘Our business, and UK litigation finding generally, are now sufficiently mature that this decision, while frustrating, will not stop the access to justice momentum that we have created. We have prepared for this decision, and we will now work with our lawyers, class representatives and other claimants to move beyond this bump in the road.’

[riverman77] 26/7/2023 15:58

I believe the company would have to make a statement if there is a sharp fall such as this, even it's to say we're not aware of any reason for the fall.