Litigation Capital Manag... Share Discussion Threads

[jackson83] 05/8/2023 02:27

TOP UP AT 60P ? LOL OR LOWER IF WE SEE no NEW NEWS Coe on directors BUY some moe shares

[maddox] 04/8/2023 08:49

Hi Tom,

Great research! In fairness, Nick Rowles-Davies states:

' 2. Cases funded where the LFA refers solely to a multiple return

In these cases, the funder’s return is solely defined as a multiple of invested capital. The funding world seems to have convinced itself that there is no challenge to these LFAs and that they are not DBAs. On the face of it that seems to be the right conclusion. That does not mean that there will not be challenges to these agreements.'

As he was involved with LIT setting-up in the UK I surmise that he probably had a hand in LIT using this model of LFA. I also note he is still a shareholder - or at least he should have reported had he sold recently.

[mtioc] 03/8/2023 17:21

Thanks for the helpful posts and the link. Interesting if dense! 98 pages of majority and dissent considering definition of "claims management business".

To be fair to Rowles Davies, who is co-author of the practitioners' guide, he was writing generally about the industry and LIT appears to be quite exceptional in its approach and diversification.

I re-read the LIT RNS, which was pretty conclusive. They were very clear about current and future cases. I have a slight worry about historic, but I am not sure if a funded party could have a basis claim after LIT has been paid (arrangement was void?). LIT is much more likely to be a significant beneficiary as UK competition scramble to resolve their issues.

I have had little exposure to the management team and look forward to their results presentation.

[citywolf1] 03/8/2023 14:56

Thanks @74tom. Great research.

The other more intuitive point for me is that Patrick and LIT have always come across as very conservative both in how they present and in their tangible actions (like cost based accounting). In that context, to come out with a statement as definitive as they did means for me they must be extremely confident of their position. I can't see them putting decades of building credibility at risk here

[74tom] 03/8/2023 14:51

Ps. Zero surprise that the LinkedIn post shared a few days back doesn’t mention these points given they anppear undeniably positive for LCM!

[74tom] 03/8/2023 14:48

Bottom line; I've gained a lot of comfort around LCM's short, medium & long term positioning in the UK & Europe. IMO Patrick entered the UK market fully aware of the prospective legislation contained in section 58B of the 1990 CLSA. They took a prudent position vs peers for a reason & this prudence also aligns with their historic approach to recognising revenue via cost accounting. It should stand them in very good stead going forwards...

[74tom] 03/8/2023 14:48

I've spent some time reviewing the 98 page Paccar judgement discussion from 26th July & in my opinion it discloses some crucial information relevant to LIT's choice of UK revenue model. Link;



Caps emphasis is mine.

"26. Section 28 of the Access to Justice Act 1999 (“the AJA 1999”) made provision for a new section 58B to be inserted into the CLSA 1990 to make enforceable certain
litigation funding agreements which were otherwise thought to be unenforceable at
common law (“section 58B”). Section 108 of the AJA 1999 provided that section 28
should be brought into force on a date appointed by the relevant Minister, but no
commencement order has been made."

"70. Section 58B was put on the statute book in 1999 (albeit not brought into effect) as a means of permitting litigation funding by exempting it from the common law rules against champerty on a very limited basis, where damages-based remuneration would not be permitted, BUT ONLY REMUNERATION CALUCLATED WITH REFERENCE TO FUNDER’S COSTS: section 58B(3)(e). That limitation was bypassed by development of the common law in Factortame (No 8) and Arkin, which confirmed that third party funding arrangements of the kind at issue in these proceedings were not champertous and hence were enforceable. Section 58B was not designed to regulate third party funding arrangements based on taking a share of the sum recovered of the kind which have been developed in the wake of those decisions, nor is it appropriate for that purpose."


"69. Henderson LJ said that he saw no reason why Parliament would have wished to regulate non-champertous third party funding in return for a reasonable share of the sum recovered. But the scheme of the legislation was that the Secretary of State was given a discretion as to what services would be made subject to regulation, and Parliament was to exercise close supervision of that choice, and there was no reason to think that the Secretary of State would seek to regulate services which did not jeopardise consumers’ interests. However, evidence might emerge of third party funders extracting more than a reasonable share of the recovery, in which case regulation would plainly be fairly and squarely within the purpose of the power in section 4 of the 2006 Act, to protect consumers of such services."


To me, these paragraphs confirm that the prospective section 58B of the 1990 CLSA, if enacted as official regulation, would almost certainly allow LCM's "rising multiple of invested capital" revenue model. The crux being that any reasonable share of recovery that can be tied to the funders expenditure incurred in supporting the case is ok but taking a 5-30% cut of a ~£14b damages claim is incomparable and not ok.

[74tom] 03/8/2023 14:31

Bottom line; I've gained a lot of comfort around LCM's short, medium & long term positioning in the UK & Europe. IMO Patrick entered the UK market fully aware of the prospective legislation contained in section 58B of the 1990 CLSA. They took a prudent position vs peers for a reason & this prudence also aligns with their historic approach to recognising revenue via cost accounting. It should stand them in very good stead going forwards...

[74tom] 03/8/2023 14:14

The sentiment expressed by UK supreme court judges who accepted the Paccar appeal tallies with a separate matter in which Therium are also involved;



"No one knows how much Therium stands to gain from this case, as the nature of the funding agreement and the origin of the claim have remained secret, while Therium was not even mentioned in the final award. According to the European Parliament’s own estimates, as set out in its proposed recommendations to the European Commission, litigation funders outside the EU typically earn a return on investment of up to 300%. Should the claimants prevail, it is likely that the Sulu case would yield an astronomical rate of return."

"But the question is – who specifically would profit if the arbitration award is enforced? Litigation funders don’t disclose who their investors are, and the origin of the claimants is also shrouded in mystery. Little is known about them, and their connection to the historic Sultan is also in question, given the Sultan died without heirs in the 1930s. They have no public profile but reportedly reside in the Philippines, according to the Financial Times."

Would any funder have been interested in pursuing a seemingly far fetched $15b claim against Malaysia if they weren't standing to profit by taking a significant % of the $15b proceeds? Indeed, if they were only taking a multiple of invested capital? Unlikely IMO. And that is almost certainly part of the problem with the current lack of regulation.

[74tom] 03/8/2023 14:05

I've spent some time reviewing the 98 page Paccar judgement discussion from 26th July & in my opinion it discloses some crucial information relevant to LIT's choice of UK revenue model. Link;



Caps emphasis is mine.

"26. Section 28 of the Access to Justice Act 1999 (“the AJA 1999”) made provision for a new section 58B to be inserted into the CLSA 1990 to make enforceable certain
litigation funding agreements which were otherwise thought to be unenforceable at
common law (“section 58B”). Section 108 of the AJA 1999 provided that section 28
should be brought into force on a date appointed by the relevant Minister, but no
commencement order has been made."

"70. Section 58B was put on the statute book in 1999 (albeit not brought into effect) as a means of permitting litigation funding by exempting it from the common law rules against champerty on a very limited basis, where damages-based remuneration would not be permitted, BUT ONLY REMUNERATION CALUCLATED WITH REFERENCE TO FUNDER’S COSTS: section 58B(3)(e). That limitation was bypassed by development of the common law in Factortame (No 8) and Arkin, which confirmed that third party funding arrangements of the kind at issue in these proceedings were not champertous and hence were enforceable. Section 58B was not designed to regulate third party funding arrangements based on taking a share of the sum recovered of the kind which have been developed in the wake of those decisions, nor is it appropriate for that purpose."


"69. Henderson LJ said that he saw no reason why Parliament would have wished to regulate non-champertous third party funding in return for a reasonable share of the sum recovered. But the scheme of the legislation was that the Secretary of State was given a discretion as to what services would be made subject to regulation, and Parliament was to exercise close supervision of that choice, and there was no reason to think that the Secretary of State would seek to regulate services which did not jeopardise consumers’ interests. However, evidence might emerge of third party funders extracting more than a reasonable share of the recovery, in which case regulation would plainly be fairly and squarely within the purpose of the power in section 4 of the 2006 Act, to protect consumers of such services."


To me, these paragraphs confirm that the prospective section 58B of the 1990 CLSA, if enacted as official regulation, would almost certainly allow LCM's "rising multiple of invested capital" revenue model. The crux being that any reasonable share of recovery that can be tied to the funders expenditure incurred in supporting the case is ok but taking a 5-30% cut of a ~£14b damages claim is incomparable and not ok.

[boozey] 03/8/2023 08:53

On your point wolstencroft, one comment I would add is individuals in AIM companies on average across the index own 24% of shares. If you strip out Founders, Founder investors, angels and high net worth individuals that figure reduces to on average 3%. So anyone attempting to exert influence is targeting 3% of the investor base. Wasted energy in my view to say the least!

[wolstencroft] 03/8/2023 06:49

I'm not sure what jackson sounds like but he seems to be treating this share as a FTSE100 company subject to mysterious and nefarious short selling attacks. It's a tiny little share that no one much cares about. It's far too illiquid for any serious speculators to short sell. The daily erratic share price movements are simply the result of extreme illiquidity and the MMs simply not being interested in holding any stock.

all IMHO

I'm a big holder BTW.

[paradigmaus] 02/8/2023 23:31

jackson83, are you British? You sound British.

[jackson83] 02/8/2023 18:28

heading bck DOWN to 70p's or 69p's again lol


probably be some big SELLING / without fresh news / nice LOO PAPER lol

x

[jackson83] 02/8/2023 18:28

heading bck DOWN to 70p's or 69p's again lol


probably be some big SELLING / without fresh news / nice LOO PAPER lol


what number is Trish house as on way now


x

[chuckol] 01/8/2023 09:14

Well said, Maddox. And it needed to be said in explicit terms to prevent the naysayers from chipping away at LIT's fundamental stability.

[maddox] 01/8/2023 08:59

Thanks for the link - good article.

Thankfully, LITs statement states that LIT were aware of the risk of LFAs falling within scope of DBAs and thus framed their contracts to avoid this.

'The decision has the potential to impact litigation funding arrangements entered into within the United Kingdom only to the extent that the funders interest or return is solely calculated as a percentage of the Courts award in favour of the funded party.

As investors are aware, LCM structures its funding contracts so that its return is calculated as a rising multiple of invested capital over time. This has been a deliberate decision and those arrangements are unaffected by today's judgement. Therefore, LCM's existing investments and its business model moving forward is not adversely affected by the decision. This has been a focus of management discussions for an extended time and this ruling underlines the importance of this planning. The decision neither came as a surprise nor does it pose a risk to LCM's current investments or its business model. As stated above, we welcome this as a potential positive differentiator.'

[mtioc] 31/7/2023 20:35

Sorry, repeat. Will stick to PC rather than phone.

[mtioc] 31/7/2023 20:10

Obviously, there was a parting a few years ago, but I was not aware of the exact circumstances.

That said, as I understand it, he has been involved in litigation finance via Vanin, Burford, Chancery and LCM almost since its inception in the UK.

His article is an initial view on the Supreme Court decision and the potential impact on the industry in the UK, and not re any individual company. As such, I thought it helpful.

[chuckol] 31/7/2023 18:53

Don't forget that Rowles Davies was sacked, yes literally sacked, by LCM.

[mtioc] 31/7/2023 17:09

Will take some time to digest.

Link is hxxps://www.linkedin.com/pulse/what-next-uk-litigation-finance-industry-nick-rowles-davies/

[maddox] 31/7/2023 11:15

The notion that old completed cases could be revisited is novel - difficult to find a basis for that once everything is settled. Can you post the link please?

The IP would need to sue the Lit Fin Firm - and would probably need Lit Fin so to do;-)

[maddox] 31/7/2023 08:32

Welcome aboard MTIOC.

I anticipate that the results optics will be focused on the P&L rather than B/S - that should look fantastic - admittedly following a couple of Covid- effected years.

Sounds like you've been doing some detailed evaluation - be good to get your thoughts?

Collins St - looked at before - Value/low risk oriented aimed at Wealthy Individuals/Family Officers - i.e. aimed at wealth preservation rather than growth. I'd suggest it would be good to see more Funds on the key shareholders list to create more demand for the shares.

[jackson83] 30/7/2023 22:09

was great to be able to top up / buy more last week all thanks to the


SHORT SELLING / PANC EXITING OF SHARES lol


thanks for the cheap ! entry point of JUST 71p average ....

last week = I loaded up & now over 20% in profit NICE .. thank you sellers / SHORT SELLERS


welcome any short selling / panic selling on MONDAY


looking to add 750k soon / Monday to Friday