Latest news with #litigationFunding
Bloomberg
8 hours ago
- Business
- Bloomberg
‘Big Beautiful Bill' Raises Threat of Default for Litigation Asset-Backed Securities
Legislation tucked inside President Donald Trump's landmark tax bill could make it difficult for asset-backed securities tied to litigation funding to make timely interest payments, according to a note by Kroll Bond Rating Agency. The Tackling Predatory Litigation Funding Act, which is part of the One Big Beautiful Bill Act currently in the Senate, would impose substantial new taxes on profits from third-party litigation funding, says the June 27 note by authors including Joanne DeSimone and Zara Shirazi.
Reuters
8 hours ago
- Business
- Reuters
Litigation funders get a boost in budget bill drama, court wins
July 3 (Reuters) - (Billable Hours is Reuters' weekly report on lawyers and money. Please send tips or suggestions to opens new tab) The U.S. litigation funding industry is basking in a string of favorable developments this week, including a major legislative reprieve in Washington and courtroom victories for its most prominent player, Burford Capital. On Capitol Hill, the U.S. Senate's parliamentarian struck a hefty proposed tax on litigation financiers from the massive pending budget bill before Senate Republicans approved the legislation on Tuesday. The provision, championed by retiring Republican Senator Thom Tillis, would have initially imposed a 40.8% tax rate on all "qualified litigation proceeds" received by any third party through a litigation financing agreement. Senate parliamentarian Elizabeth MacDonough on Monday ruled the measure violated budget reconciliation rules, forcing Republicans to drop it from the final text. Democrats had objected to the proposed tax, Sen. Jeff Merkley, the ranking member on the Senate Budget committee, said in a statement last week. The move was praised by litigation funders and their backers, who warned the tax would chill investment and undermine access to justice. "The only thing this provision would have done is discourage investment in justice by burdening funders," said Paul Kong, executive director of the International Legal Finance Association, a trade group for the industry. The Senate bill, which nonpartisan analysts say will add $3.4 trillion to the nation's debt over the next decade, is now back before the House, which advanced the bill toward a final yes-or-no vote early on Thursday morning. Burford, meanwhile, is another step closer to collecting its massive share of a $16.1 billion court judgment against Argentina, after the South American country seized a majority stake in oil and gas company YPF in 2012. U.S. District Judge Loretta Preska on Monday ordered Argentina to give up its 51% stake in YPF to partially satisfy a $14.39 billion award to Petersen Energia Inversora and a $1.71 billion award to Eton Park Capital Management, both of whom were minority investors in YPF. Burford is poised to receive around 35% of Petersen's award and 82% of Eton Park's award, a spokesperson for the litigation-financing firm said. That comes out to a potential payday of more than $6 billion, not including interest, which Petersen and Eton Park said is accruing at more than $2.5 million a day. Argentina is appealing Preska's September 2023 decision to award the $16.1 billion to the investors. Burford also scored a litigation win in Chicago, where a judge ruled that a subsidiary of the company can retain control over one of its former clients' claims in a price-fixing lawsuit against leading turkey producers. Burford had acquired rights to the claims from food distributor Sysco. The turkey producers had argued it was against public policy to allow a Burford subsidiary to serve as the named plaintiff when it never bought products from the defendants. Burford CEO Christopher Bogart, whose company is the largest publicly traded litigation funder, with a $7.2 billion portfolio as of March 31, said the "basic recurring theme" of the week is that large institutions "have long enjoyed a structural advantage in the litigation system, and they're very unhappy about losing it." There are now more than 42 active funders managing a total of $16.1 billion in assets, litigation finance firm Westfleet Advisors said in an annual report in March. The funding industry still faces regulatory headwinds. Business groups have pushed for mandatory disclosures of litigation funding agreements, arguing litigants require greater transparency about the interests that may be guiding settlements and other courtroom tactics. Indiana, Louisiana and West Virginia have enacted laws regulating litigation financing in recent years. In Washington, Republican U.S. Rep. Darrell Issa earlier this year introduced legislation that would require civil litigants to disclose any litigation funding agreements. Issa's bill is backed by the U.S. Chamber of Commerce's Institute for Legal Reform, whose president in February said the legislation "will help protect the integrity of our judicial system by ensuring that outside financiers are not secretly directing or profiting from litigation they are funding." The International Legal Finance Association opposes the bill, arguing it would hurt small businesses and erect a "financial barrier to entry to civil litigation." -- Litigator Roberta Kaplan is giving the New York Metropolitan Transportation Authority and the Triborough Bridge and Tunnel Authority a discount on her customary $2,000 hourly rate as she helps them defend New York's congestion pricing program, according to a contract obtained by Reuters. Kaplan, co-founder of the small law firm Kaplan Martin, is billing at $1,450 an hour, a 27.5% discount from her normal hourly fee, the contract records showed. It's common for lawyers to reduce rates for government clients. Kaplan's firm declined to comment. Kaplan, who represented writer E. Jean Carroll in defamation lawsuits against Trump, formed Kaplan Martin last year with Tim Martin, Steven Cohen and Mitra Hormozi. The congestion pricing program, which the Trump administration has moved to kill, generated $48.6 million in revenue for New York City in its first month, MTA said in February. -- Legal technology company Clio on Monday said that it has agreed to acquire legal AI and research company vLex in a deal valued at $1 billion. British private equity firm Oakley Capital agreed to sell Barcelona-founded vLex to Clio, a Vancouver, Canada-based company that said the deal marks a 'new era for AI-powered legal technology.' Clio, founded in 2008, offers a platform for law firms to manage clients and cases and process payments, among other capabilities. The company last July raised $900 million at a $3 billion valuation. In other recent legal tech news, AI company Harvey said last week that it raised $300 million at a $5 billion valuation. Read more: How much does Hunter Biden's lawyer charge? Litigation funder fires back at Tyson Foods over settlement interference claims Oregon contract shows law firms' stake in Coinbase securities fight
Reuters
02-06-2025
- Business
- Reuters
UK urged to reverse ruling on litigation funding, introduce 'light-touch regulation'
LONDON, June 2 (Reuters) - Britain should urgently reverse a landmark ruling that threw third-party funding of lawsuits into disarray, an influential advisory body recommended on Monday in a report which was welcomed by funders and industry critics alike. The Civil Justice Council (CJC) also called for "light-touch regulation" of the litigation funding sector, which is currently self-regulated, particularly where funding is provided for class action-style lawsuits or to consumers. Monday's report comes after Britain's funding industry was dealt a surprise blow in 2023, when the UK Supreme Court ruled that agreements used to fund many mass lawsuits were unenforceable as they did not comply with rules on so-called damages-based agreements. The CJC said the government should pass legislation to overturn the Supreme Court's decision "as soon as possible", citing the importance of funding for access to justice. Britain's previous government, which asked the CJC to review the sector, said last year it would reverse the Supreme Court decision, before the current government put legislation on hold pending the CJC's report. The Ministry of Justice said in a statement that it welcomed the report and would "outline next steps in due course." The CJC – which advises the government and judiciary on the civil justice system – called for some regulation, including requirements for funders to have adequate capital and provisions to prevent conflicts of interest. It also recommended that class action-style cases need court approval of funding agreements, to allow the court to consider whether the funder's return is fair, just and reasonable. The report rejected, however, the introduction of caps on funders' returns, which the CJC said could not properly take account of the risks of funding cases and was unnecessary for consumer protection if courts had to approve funding deals. Neil Purslow – chair of industry body the International Legal Finance Association, who also founded litigation funder Therium – welcomed the CJC's recommendation to legislate to reverse the Supreme Court ruling. Seema Kennedy, executive director of Fair Civil Justice, which has called for greater regulation of litigation funding, said the CJC's call to regulate the industry was "long overdue". She said: "Proper oversight is essential to protect consumers, ensure transparency, and restore public confidence in a sector that currently operates without sufficient safeguards." Litigation funding is increasingly used in Britain, with the CJC citing figures that funders in England and Wales had assets of 2.2 billion pounds ($3 billion) in 2021. English courts have repeatedly recognised the need for funding to bring mass lawsuits, where the case's total value is often in the billions but payouts to individual consumers can be as low as double figures. The CJC report comes after court approval of a 200 million-pound settlement in a case against Mastercard, despite the opposition of funder Innsworth, which stands to receive around 68 million pounds.
