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Three Case Studies (Series: Commercial Litigation Funding 101)

As the legal funding market evolves, so too do the legal/ethical jurisprudence, strategic decisions inherent in utilizing funding, financial instruments used for funding, and nature of funder/funded relationship. In this webinar, a panel of experienced litigation funding professionals examine three live legal funding deals, and discuss how they impact considerations of (i) disclosure of litigation funding, (ii) fee-splitting and non-attorney ownership of law firms, and (iii) financial engineering of innovative funding deals.

To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/three-case-studies-2020/

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Three Case Studies (Series: Commercial Litigation Funding 101)

  1. 1. 1
  2. 2. 2 Practical and entertaining education for attorneys, accountants, business owners and executives, and investors.
  3. 3. 3 Thank You To Our Sponsor
  4. 4. Disclaimer The material in this webinar is for informational purposes only. It should not be considered legal, financial or other professional advice. You should consult with an attorney or other appropriate professional to determine what may be best for your individual needs. While Financial Poise™ takes reasonable steps to ensure that information it publishes is accurate, Financial Poise™ makes no guaranty in this regard. 5
  5. 5. Meet the Faculty MODERATOR: Jeremy Waitzman - Sugar Felsenthal Grais & Helsinger LLP PANELISTS: Dave Kerstein - Validity Finance LLC Christopher Freeman - Burford Capital Joel Cohen - Stout Jeffery Lula - GLS Capital, LLC 6
  6. 6. About This Webinar Three Case Studies As the legal funding market evolves, so too do the legal/ethical jurisprudence, strategic decisions inherent in utilizing funding, financial instruments used for funding, and nature of funder/funded relationship. In this webinar, a panel of experienced litigation funding professionals examine three live legal funding deals, and discuss how they impact considerations of (i) disclosure of litigation funding, (ii) fee-splitting and non-attorney ownership of law firms, and (iii) financial engineering of innovative funding deals. 7
  7. 7. About This Series Commercial Litigation Funding 101 This webinar series discusses advanced topics in the field of litigation funding. Once a fledgling industry predominantly used in the Commonwealth nations, litigation funding has over the past ten years becomes a well-accepted and prevalent practice in the United States. As the industry has evolved, so too have the menu of available products, strategic decisions made by funders and practitioners, and types of investors. This three-part series is geared towards educating attorneys and clients on legal/ethical, strategic, and business decisions when considering litigation funding, and investors seeking to learn about an increasingly mainstream asset class. Panelists include preeminent experts in the field of litigation funding, including academics who have written on the topic, investment managers at preeminent litigation funders, litigators who have used funding products, and independent litigation funding advisors. Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and executives without much background in these areas, yet is of primary value to attorneys, accountants, and other seasoned professionals. Each episode brings you into engaging, sometimes humorous, conversations designed to entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes so that participants will enhance their knowledge of this area whether they attend one, some, or all episodes. 8
  8. 8. Episodes in this Series #1: An Introduction to a New Yet Old Funding Alternative Premiere date: 5/12/20 #2: A Menu of Products for Investors and Lawyers Premiere date: 6/9/20 #3: Three Case Studies Premiere date: 7/14/20 9
  9. 9. Episode #3 Three Case Studies 10
  10. 10. Outline • Background on litigation funding • Three case studies  Disclosure of Litigation Funding Arrangements  PWC’s Law Firm / Non-Attorney Ownership of Law Firms  “Around the Horn”: Interesting Developments 11
  11. 11. Litigation Funding: An Overview 12
  12. 12. Litigation Funding: A Broad Definition •Litigation or legal funding is the “funding of litigation activities by entities other than the parties themselves, their counsel, or other entities with a pre-existing contractual relationship with one of the parties.” •Source: American Bar Association Commission on Ethics 20/20, “White Paper on Alternative Litigation Finance.” 13
  13. 13. Litigation Funding: Applications • Single-case fundings • Portfolios of law firm and plaintiff cases • Other structures o Law firm loans o Equity ownership of law firms o Defense funding o Litigation insurance o Special situations trades 14
  14. 14. Case #1: Disclosure of Litigation Funding Arrangements 15
  15. 15. Discoverability of Litigation Funding Agreements: Work Product 16 • What is work product?
  16. 16. Discoverability of Litigation Funding Agreements: Work Product 17 • How does Work Product surface in Litigation Funding?
  17. 17. Discoverability of Litigation Funding Agreements: Work Product • Should litigation funding arrangements be discoverable? 18
  18. 18. Gharabe V. Chevron 19
  19. 19. Gharabe V. Chevron 20 • What was the plaintiff’s defense?
  20. 20. Gharabe V. Chevron 21 • What is special about class action litigation?
  21. 21. Gharabe V. Chevron 22 • Did the litigation funding arrangement matter?
  22. 22. Litigation Funding Disclosure: Opioid MDL 23
  23. 23. Litigation Funding Disclosure: Opioid MDL • What did the court order? 24
  24. 24. Litigation Funding Disclosure: Opioid MDL 25 • What did the court prohibit?
  25. 25. Litigation Funding Disclosure: UAT vs. AT&T • AT&T’s motion to compel litigation funding-related discovery from plaintiff United Access Technologies (“UAT”) in the patent infringement suit was denied. • The decision follows a trend of courts rejecting defendants’ efforts to uncover details about their opponent’s litigation finance arrangements and communications. • The court rejected AT&T’s position that the court’s 2018 decision in Acceleration Bay LLC v. Activism Blizzard Inc. held that communications with potential litigation funders are always relevant to issues in a patent infringement case.
  26. 26. Litigation Funding Disclosure • What about other areas of law?  Patents  Bankruptcy 27
  27. 27. Case #2: PWC’s Law Firm/Non-Attorney Ownership of Law Firms 28
  28. 28. PWC’s Law Firm/Non-Attorney Ownership of Law Firms 29 • How has the non-attorney ownership of law firms been historically prohibited?
  29. 29. Non-Attorney Ownership of Law Firms • How does the UK differ from the US?  Endorsed litigation funding as a mechanism for leveling the playing field  Ushered in alternative business structures  Reformed draconian fee shifting of legal fees, expenses, and insurance premiums  Made available damages based fee agreements 30
  30. 30. Non-Attorney Ownership of Law Firms • How does the UK differ from the US? 31
  31. 31. Non-Attorney Ownership of Law Firms • How does Washington D.C. differ from the 50 states? 32
  32. 32. Non-Attorney Ownership of Law Firms • How can an attorney in a Model Rule jurisdiction partner with an attorney in a non-Model Rule jurisdiction? 33
  33. 33. PWC’s Law Firm/Non-Attorney Ownership of Law Firms • What did PWC do? 34
  34. 34. PWC’s Law Firm/Non-Attorney Ownership of Law Firms • Will the rules on fee-splitting become more liberal? 35
  35. 35. Case #3: “Around the Horn”: Interesting Developments 36
  36. 36. “Around the Horn”: Magcorp Sale of Judgment to Litigation Funder 37
  37. 37. “Around the Horn”: New York Legislation on Consumer Litigation Funding 38
  38. 38. “Around the Horn”: Securitization of Litigation Funding Claims 39
  39. 39. “Around the Horn”: Economic Uncertainty and COVID-19
  40. 40. About the Faculty 41
  41. 41. Jeremy Waitzman - jwaitzman@sfgh.com Jeremy Waitzman advises his clients on significant transactions and operational issues in their businesses. Described by clients as “an essential business advisor” and “a partner in the success of my business,” Jeremy has substantial experience representing businesses of all types and sizes from inception, guiding them through significant growth, and often through ownership’s exit. His clients include privately-held middle market and emerging growth companies, family offices/funds, investors, C-level executives, boards of directors, family-owned businesses and entrepreneurs. Jeremy counsels clients in the areas of corporate law, mergers & acquisitions, private placements, general contract law and often acts as outside general counsel for his clients. Jeremy represents individuals, closely held businesses, start-up companies and serves as outside counsel to several large corporations. His work with companies often includes strategies for creation of enterprise value. A big firm-trained corporate and M&A deal attorney, his experience is transactions-intensive and includes work involving business and capital structure, mergers and acquisitions, indemnification, private equity and venture capital, private placements and securities offerings, investor rights and preferences, licensing and subscription agreements, intellectual property protection, customer agreements and T&C’s, joint ventures, distribution and supply, executive employment, management equity and incentive compensation, corporate governance including board and advisory boards, and corporate contracts and agreements including enforcement. Jeremy has been included in various panels and lectured on topics related to corporate law, venture & angel financing and mergers & acquisitions. Industry sector experience includes software, healthcare, specialty chemicals, mobile, IT, eCommerce, transportation, insurance, marketing and public relations, construction, auto body, specialty consumer, real estate, manufacturing, distribution and tech-enabled services. Prior to law school, Jeremy worked at a Fortune 500 company where he gained invaluable insight into the operations of large business. 42
  42. 42. About The Faculty Dave Kerstein - dave@validity-finance.com As Chief Risk Officer and Senior Investment Manager at Validity Dave brings unparalleled experience helping clients and law firms mitigate litigation risks with innovative funding models. Prior to joining Validity, Dave was an Investment Manager for four years for a leading litigation finance company. In addition to designing financial solutions to litigation, Dave provides strategic advice in cases funded by Validity. With fifteen years experience handling complex commercial disputes at Gibson Dunn, Dave has litigated on behalf of both plaintiffs, for whom he has recovered substantial sums, and defendants, for whom he has achieved trial court victories or favorable outcomes. He also possesses extensive experience across jurisdictions, having tried cases in state and federal courts and before arbitration panels across the US and internationally. Dave earned his J.D. from Penn Law where he was a Toll Scholar, and his B.A. in diplomatic history from UPenn, where he was a BFScholar. 43
  43. 43. About The Faculty Christopher Freeman - CFreeman@burfordcapital.com Christopher Freeman is a Vice President with responsibility for assessing and underwriting legal risk in patent matters. As part of Burford’s investment team, Christopher evaluates intellectual property cases and patent monetization campaigns and crafts investment structures that align incentives between funder, law firm and claimant. Prior to joining Burford, Christopher was Vice President and Head of Litigation at Blackbird Technologies, a company he co-founded in 2014. At Blackbird, Christopher oversaw all business operations and successfully built and managed one of the most prominent patent acquisition and licensing entities in the US, growing the firm to a dozen employees and a portfolio of over 100 patents and applications. Earlier in his career, Christopher was an IP partner at Kirkland & Ellis and practiced at Latham & Watkins and at Quinn Emanuel. Christopher graduated from the Boston University School of Law and earned an undergraduate degree from Northwestern University in Industrial Engineering and Economics. 44
  44. 44. Joel Cohen - JCohen@stout.com Joel Cohen is a Managing Director in the Dispute Consulting group. Joel comes to the firm with over 17 years of experience in the dispute, forensic, and insolvency practice areas, most specifically focused in the financial services and asset management industries. His experience encompasses a number of significant cross-border insolvency and litigation matters, where he has served as financial advisor and consulting expert to fiduciaries, offshore liquidators, bankruptcy, and litigation trustees. He has assisted these clients in a variety of litigation consulting services, including asset tracing, fraud, Ponzi schemes, industry custom and practice for investment managers, and forensic analysis. Joel has also led several internal investigations within the context of family office, investment advisors, and various corporate structures. Before joining Stout, Joel was a Managing Director at a boutique financial advisory and consulting firm. Prior to that, he spent a number of years with a global financial advisory firm in its Dispute & Investigations group where he helped manage a team of CPAs, economists, attorneys, and finance professionals in executing a diverse array of complex engagements related to the various hedge fund/private equity fraud, insolvencies, and litigations that characterized the global financial crisis of 2008-09. He was a leader in the disputes practice at a Big 4 accounting firm and senior vice president at a prominent investment bank in charge of internal investigations. Joel has worked with premier law firms on accounting malpractice, business insurance disputes, fraud detection, and economic investigations. Joel has expertise in managing the expectations of various stakeholders involved in insolvency proceedings, liquidations, litigation settlements, and receiverships, namely in his capacity of assisting a board, trustee, receiver, or official liquidator with their duties, including U.S. and cross border considerations. He has extensive experience within the offshore world, regularly handling cases out of the Caribbean. 45
  45. 45. Jeffery Lula - jlula@glscap.com Jeffery Lula serves as a Principal at GLS and is responsible for due diligence and monitoring of commercial litigation and arbitration-related investments. Prior to joining GLS, Jeff was a litigation partner at Kirkland & Ellis LLP in Chicago. During his nine years at Kirkland, Jeff’s practice focused on a wide variety of complex commercial litigation, including contract disputes, bankruptcy litigation, corporate mismanagement, fraudulent transfer litigation, and insurance litigation. His experience extends to all stages of litigation and appeal, and he also counseled clients during internal investigations prior to litigation or arbitration. He has represented clients in a variety of fields, including private equity firms, insurance carriers, and large Chapter 11 debtors. Jeff holds a J.D. from the University of Chicago Law School, where he served as an Articles’ Editor of the University of Chicago Law Review, and a B.S. from University of Illinois. 46 About The Faculty
  46. 46. Questions or Comments? If you have any questions about this webinar that you did not get to ask during the live premiere, or if you are watching this webinar On Demand, please do not hesitate to email us at info@financialpoise.com with any questions or comments you may have. Please include the name of the webinar in your email and we will do our best to provide a timely response. IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education. 47
  47. 47. About Financial Poise 48 Financial Poise™ has one mission: to provide reliable plain English business, financial, and legal education to individual investors, entrepreneurs, business owners and executives. Visit us at www.financialpoise.com Our free weekly newsletter, Financial Poise Weekly, updates you on new articles published on our website and Upcoming Webinars you may be interested in. To join our email list, please visit: https://www.financialpoise.com/subscribe/

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