December 13, 2021

Mark Howe of Cadwalader discusses the tax aspects of litigation finance with Phil Balzafiore, Head of Tax for Tetragon Financial Group, examining the tax consequences and tax trade-offs for investors and law firm borrowers, as well as tax mitigation considerations.
Andrew Mizner of ICLG shares highlights from the 2021 edition of the Global Class Actions Symposium. Third-party funding is “changing the market significantly”, opening a wider range of cases, explained Chris Warren-Smith, a London partner with Morgan Lewis & Bockius, in particular for securities and tax claims. We are starting to see a lot more types of actions funded,” he continued, describing funders as sophisticated operators, making “a very intelligent deployment of capital".
Ian Garrard of Innsworth Advisors argues that the criticism levelled at litigation funders for involving themselves in large groups or opt-out claims such as the recent Lloyd v Google case is ironic in that those levelling the criticism have benefited enormously in comparison to the returns for funders, who facilitate access to compensation for the class who have been wronged.
A U.S. appeals court last week shut down a Chapter 7 debtor’s challenge to a litigation funding agreement between his trustee and a creditor, finding that the agreement had no financial impact on William Berry Dean III, the debtor. The dispute stems from Dean’s 2019 Chapter 7 bankruptcy in Texas, where the trustee assigned to Dean's estate struck a deal with one of Dean’s creditors, Reticulum Management LLC, to fund litigation aimed at collecting money that could be used to pay off Dean’s debts. Reticulum agreed to put forward $200,000 in exchange for 30% of any litigation proceeds the trustee managed to collect.
Australian Funding Partners (AFPL) has declared bankruptcy and gone into administration after being fined $11.7 million. AFPL was the funder behind the Banksia Securities class in which an Australian Supreme Court judge found that AFPL, as well as five lawyers, engaged in “egregious conduct in connection with a fraudulent scheme” whereby they intended to claim over $19 million in legal costs and funding commission from the Banksia settlement.

Before You Go

Never miss a thing in the litigation finance market.