Latest news with #litigationfinance
Reuters
11-07-2025
- Business
- Reuters
Wily courtroom financiers demand wilier reforms
NEW YORK, July 11 (Reuters Breakingviews) - The marketization of everything continues apace. The business of bankrolling U.S. lawsuits for a slice of the winnings has, improbably, grown, opens new tab into an $18 billion industry, according to legal researcher Chambers and Partners. Skeptical legislators have taken notice, coming just short of slapping a 32% tax on proceeds from such transactions. Should the proposal resurface, it may simply move litigation finance offshore. Institutionalized gambling on courtroom outcomes, despite the unseemly appearance, offers one of the great prizes for active investors: returns totally uncorrelated to the broader market. The great mass of people, corporations and countries seeking their day before a judge are, in this view, an untapped well of possible investments. Major litigation funder Burford Capital runs more than $7 billion in assets, while Softbank-owned Fortress Investment Group has pumped, opens new tab $6.8 billion into cases worldwide. Typically, funders advance money to cover legal costs in exchange for a share, typically 20% to 40%, of any eventual settlement or judgement. Standing across from them are legal liability insurers. Tort costs — that is, the overall bill for lawsuits — rose, opens new tab 7% a year between 2016 and 2022, reaching $529 billion, says the U.S. Chamber of Commerce's Institute for Legal Reform. Policy providers responded with hiked premiums and skimpier coverage. Major underwriters like Chubb and Hartford Insurance Group (HIG.N), opens new tab have seen their stocks match or outperform the S&P 500 Index (.SPX), opens new tab every year since 2015. The argument against litigation finance is that dangling rewards for putting more ammo behind lawsuits will exacerbate this dynamic by encouraging frivolous claims and creating conflicts of interest between funders and plaintiffs, who may value risk and reward differently. Certainly, the reason to propose taxing the practice wasn't the revenue: the Congressional Budget Office projected that Republicans' proposed levy, stripped by arcane Senate rules at the last minute, would have raised $8.8 billion over the next decade, equal to less than .01% of federal spending. Whether it would have even stopped financiers is unclear. By establishing off-shore special-purpose vehicles in the Caymans and characterizing profits as capital gains, for instance, the Internal Revenue Service could perhaps be outfoxed. Indeed, foreign capitals may become more welcoming: in the UK, a public body recommended reversing, opens new tab a court ruling that prevented funders from claiming winnings. For more durable reforms, look at the Netherlands, which okays externally funded class action suits so long as, opens new tab the backer stays at arm's length from plaintiffs. In Ontario, weak class actions get tossed early thanks to stricter, opens new tab approval tests and fast-track dismissal hearings. The best approach is to tweak what has already become a market, not to play whack-a-mole with the returns. Follow Sebastian Pellejero on LinkedIn, opens new tab.
Associated Press
03-07-2025
- Business
- Associated Press
KBRA Releases Update on Potential OBBBA Implications for Litigation Finance ABS
NEW YORK--(BUSINESS WIRE)--Jul 3, 2025-- The version of the One Big Beautiful Bill Act (OBBBA) that was passed by the U.S. Senate on July 1 did not include the taxation provisions on litigation finance originating from the Tackling Predatory Litigation Funding Act (TPLFA). As we indicated in our June 27 report, Potential OBBBA Implications for Litigation Finance ABS , if the TPLFA provisions had been passed in their proposed form, this could have had notable implications for litigation finance asset-backed securities (ABS). The provisions were removed from the Senate version of the OBBBA following a ruling by the Senate Parliamentarian indicating that they were not compliant with the Byrd Rule. For the TPLFA provisions to be included in any reconciliation package, they would need to secure a 60-vote threshold. About KBRA KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions. Doc ID: 1010249 View source version on CONTACT: Joanne DeSimone, Managing Director, ABS Commercial +1 646-731-2306 [email protected] Shirazi, Managing Director +1 646-731-3326 [email protected] Development ContactArielle Smelkinson, Senior Director +1 646-731-2369 [email protected] KEYWORD: UNITED STATES NORTH AMERICA NEW YORK INDUSTRY KEYWORD: PUBLIC POLICY/GOVERNMENT WHITE HOUSE/FEDERAL GOVERNMENT PROFESSIONAL SERVICES FINANCE SOURCE: Kroll Bond Rating Agency, LLC Copyright Business Wire 2025. PUB: 07/03/2025 10:10 AM/DISC: 07/03/2025 10:10 AM
Reuters
01-07-2025
- Business
- Reuters
Ruling keeps litigation funder Burford in control of turkey price-fixing case
June 30 (Reuters) - Litigation financier Burford Capital (BURF.L), opens new tab on Monday persuaded a U.S. judge to allow one of its subsidiaries to press a price-fixing lawsuit accusing leading turkey producers of overcharging prices, even though the company has not purchased any food from them. Chicago-based U.S. District Judge Sunil Harjani rejected, opens new tab arguments from Tyson Foods, Perdue Farms, Hormel Foods, Butterball and other producers that allowing Burford subsidiary Carina Ventures to pursue the antitrust claims ran afoul of public policy. Litigation funders provide financial support to clients in exchange for a part of any settlement or judgment. Burford is the world's largest litigation finance provider. In his ruling, Harjani said that 'as litigation funders continue to be involved in the legal system, the bounds of their viability will be tested.' But he said it was up to lawmakers to craft policies restricting the extent of litigation funders' participation in lawsuits. Tyson, Perdue, Hormel and Butterball did not immediately respond to requests for comment. Burford declined to comment. Burford's Carina sued the turkey producers in 2023, after the funder acquired security rights to claims that were once held by Burford client Sysco Foods. Sysco was never a plaintiff in the turkey litigation, but Burford has spent $140 million since 2019 backing antitrust claims by food distributor Sysco against Tyson and other meat processors in other cases. Harjani said the turkey defendants have not provided any evidence that Burford and Carina engaged in any misconduct. The judge called Sysco a 'large and sophisticated corporation' that does not need the defendants or the court second-guessing its business or litigation decisions. Harjani said it was the job of Congress to write statutes and rules governing federal litigation. The case is In re: Turkey Antitrust Litigation, U.S. District Court for the Northern District of Illinois, No. 1:19-cv-08318. Read more: Litigation funder fires back at Tyson Foods over settlement interference claims Sysco can't scrap its Pilgrim's Pride price-fixing settlements, US judge rules Burford litigation funder's Carina Ventures sues US turkey suppliers in antitrust case
Reuters
18-06-2025
- Business
- Reuters
Litigation funder fires back at Tyson Foods over settlement interference claims
June 18 (Reuters) - (Billable Hours is Reuters' weekly report on lawyers and money. Please send tips or suggestions to opens new tab) A fight over the power of outside funders to influence lawsuits is unfolding in Chicago federal court, where leading litigation financier Burford Capital fired back this week against allegations that it illegally interfered with efforts to settle chicken price-fixing claims against meat processing giant Tyson Foods. Tyson sued, opens new tab Burford in April, alleging it sought to "co-opt the legal system" by blocking a potential settlement between Tyson and Burford's funding client Sysco in the chicken case in order to press for a larger recovery. Burford asked a court this week to dismiss Tyson's lawsuit, accusing, opens new tab the company of trying to divert attention away from the underlying price-fixing claims. Litigation funders provide financial support to clients in exchange for a part of any settlement or other judgment. Burford is the world's largest litigation finance provider. The clash is part of a broader, long-running litigation accusing Tyson and other meat processors of price-fixing in a variety of meat industries. Some of the cases have generated tens of millions of dollars or more in settlements. Tyson has denied any wrongdoing. Burford has spent $140 million since 2019 backing antitrust claims by food distributor Sysco against Tyson and other meat processors, court documents show. Sysco's contract with Burford allowed the funder to participate in some of Sysco's settlement discussions, Burford said in court papers. In 2023, Burford successfully blocked Sysco from settling with a different defendant in the price-fixing litigation for an amount that the funder thought was too low. Sysco is no longer a party in the case, after transferring its litigation rights to a Burford affiliate called Carina Ventures. Burford and Sysco declined to comment, and Tyson did not immediately respond to a request for comment. Burford in its filing this week denied it had interfered with Sysco's settlement plans and called Tyson's claims 'threadbare' and 'rank speculation.' Burford said it was Tyson that declined Sysco's last settlement offer in late 2021. – U.S. Senate Republicans on Monday included a provision in proposed changes to President Donald Trump's sweeping tax-cut and spending bill that would raise the tax third-party litigation funders pay on litigation proceeds to nearly 41%. Republican Senator Thom Tillis in a May statement introducing the bill said the legislation would curb "abusive practices" and promote transparency in the industry. Paul Kong, executive director of the International Legal Finance Association, a trade group for commercial litigation funders, in a statement said the tax would undermine access to justice by placing "significant barriers in front of small businesses, inventors, startups, and other less well-resourced claimants seeking redress." – Houston-based law firm Jackson Walker has been hit with another civil lawsuit, opens new tab over its failure to disclose a romantic relationship between one of its partners and former U.S. Bankruptcy Judge David Jones. Bondholders of financial services company GWG filed the lawsuit in Houston federal court last week, accusing Jackson Walker, former firm partner Elizabeth Freeman, and Jones of deceiving them and the public by keeping the romance hidden "and taking millions from distressed entities for their own benefit." The bondholders' lawyers at the Bandas Law Firm have brought two previous cases against Jackson Walker on behalf of shareholders who said their investments in certain companies were wiped out in bankruptcy cases where Jones was involved before he resigned from the bench in October 2023. One lawsuit, filed by Morton Bouchard, is still pending. A federal judge last year dismissed a similar lawsuit brought by Michael Van Deelen, who first brought Jones' relationship with Freeman to light. Mikell West, a lawyer at the Bandas Law Firm, did not respond to a request for comment. A spokesperson for Jackson Walker and a lawyer for Freeman both declined to comment. Attorneys for Jones and a spokesperson for Porter Hedges, a Houston-based law firm that was also named in the GWG investors' complaint, did not immediately respond to requests for comment. – U.S. District Judge John Tunheim in Minnesota has awarded $23 million in legal fees to plaintiffs firm Sanford Heisler Sharp McKnight for its work on a $69 million class action settlement involving the UnitedHealth Group. Lawyers for the plaintiffs in a court filing, opens new tab this month called the $69 million deal the "largest-ever ERISA settlement alleging breach of fiduciary duty for failure to remove underperforming investment options." The plaintiffs' teams said they dedicated more than 12,800 hours on the litigation, which focused on participants who were invested in a certain Wells Fargo fund. UnitedHealth denied any wrongdoing in agreeing to settle the litigation, which began in 2021. Kirkland represented UnitedHealth. Read more: Oregon contract shows law firms' stake in Coinbase securities fight Madison Square Garden wants sanctions, lawyers' fees in ex-NBA player's case Wegovy maker Novo faces fee demand after losing copycat drug lawsuit
Wall Street Journal
04-06-2025
- Business
- Wall Street Journal
Ending a Tax Break for Lawsuits
Why are foreign investment funds that finance predatory lawsuits against U.S. companies allowed to dodge taxes on their legal payouts? Good question, and now North Carolina Sen. Thom Tillis and Oklahoma Rep. Kevin Hern are seeking to close this anti-growth loophole. Third-party litigation financing has exploded in recent years as private investment funds chase high returns goosed by America's tort-friendly legal system. Investors give law firms money to recruit plaintiffs and file often meritless lawsuits against companies in return for a share of the eventual settlement or judgment.
