The Brief.

Litigation funding insights & news

Issue 2 – July 2016

Inside This Issue

  1. Therium launches in the US to meet the increasing industry demand for litigation funding
  2. Therium launches in Oslo as the first litigation funder in Scandinavia
  3. Litigation growth in financial markets disputes by Hanif Virji
  4. Keynote speaking engagements
  5. Press highlights
  6. In the spotlight: Q & A with Andrew Head of Forsters LLP

Therium update

We have continued to see strong growth in 2016 and we are particularly delighted to have expanded our operations in North America and Scandinavia with the launch of offices in New York and Oslo. In February, we launched Therium in New York, the first European litigation finance firm to have set-up a full service business in the States. And in April, we became the first dedicated litigation funder in Scandinavia, with our office in Oslo.

Our North American and Scandinavia teams are world-class. Therium Inc. in New York is led by Chief Executive Eric Blinderman, who joined from Proskauer Rose LLP where he was International Litigation Counsel. Eric is a highly experienced international and commercial litigator and arbitrator who has represented a multitude of international governments and private entities. He is joined by former Proskauer colleague Patrick Dempsey, who is Chief Investment Officer of Therium Inc. Patrick is an experienced litigator and trial lawyer and joined Therium from Hogan Lovells US LLP.

Therium Nordic AS is headed by CEO Henrik Berg, one of Scandinavia’s leading management consultants. Chairman of the business is Henrik Jensen, who has been admitted to the Supreme Court of Norway and is a founder and active owner of two law firms and a legal insurance company in Scandinavia. Board member Trond Jacobsen also has extensive experience as a lawyer and co-founded the insurance company and one of the legal firms with Henrik Jensen.

Business has also been developing at a fast pace for us in the UK and across Europe with particular interest in litigation finance in Spain, which has been closely followed by leading business newspaper Expansión.

In line with our growth and the development of the litigation finance industry, we are seeing a marked interest from financial directors of large companies in using their legal claims as a form of corporate finance. What’s especially attractive to them is the ability to use the funds raised against their claims to pay for cases they are defending – and sometimes for other purposes. And because funding removes the cost of claims from the balance sheet, the company’s financial metrics are improved.

We hope you enjoy this issue of The Brief, and we would like to thank Andrew Head from Forsters LLP for taking part in our Q & A, see below, where he shares some of his thoughts on litigation post Brexit. We would love to hear your comments on this or any topic. Please get in touch!.

1. Therium launches in US to meet increasing industry demand for litigation funding

Eric Blinderman to Lead Operations as CEO, Patrick Dempsey Named CIO.

NEW YORK/LONDON, April 19, 2016 – Therium Group Holdings Limited, a leading provider of litigation financing with over $300 million in committed capital, announced today that it is launching operations in the United States with the creation of Therium Inc., a U.S. subsidiary headquartered in New York City.

Founded in London and Jersey in 2009, Therium is one of the largest and most established litigation financing firms in the world. Therium is expanding its services in North America with a dedicated business in response to the increased demand for litigation financing by law firms and businesses. It is the first European firm to establish such an operation in the U.S. and aims to be a go-to litigation financier for corporations and law firms in the region within the next three to five years.

Therium Inc. will be headed by Eric Blinderman, who leaves his post as International Litigation Counsel at Proskauer Rose LLP to become Chief Executive Officer. Mr. Blinderman brings substantial expertise in litigation financing, having represented Therium for many years while at Proskauer. In addition, Mr. Blinderman is a seasoned international and commercial litigator and arbitrator who has represented a multitude of international governments and private entities.

“We are delighted to appoint Eric Blinderman CEO of Therium’s U.S. operations to build on our existing success and to extend Therium’s offering to corporations, institutions and law firms who require innovative structures to finance litigation,” said John Byrne, Co-founder and CEO of Therium Group Holdings. “I believe the opportunity is substantial. Therium is extremely well positioned to transform the litigation financing landscape in the U.S., the world’s largest litigation market.”

Mr. Blinderman added, “I am particularly attracted to Therium’s portfolio financing model because it enables law firms to take on significantly more viable cases at little or no cost to the claimant and it allows corporations to utilize funding to prosecute unrealized claims while generating cash flow for the firm and/or company.”

In addition, Blinderman’s former Proskauer colleague, Patrick Dempsey, has been appointed as Chief Investment Officer of Therium Inc. Mr. Dempsey, an experienced litigator and trial lawyer, joins Therium from Hogan Lovells US LLP.

“With the U.S. litigation finance market still relatively young, Therium’s funding model and expertise make it ideally situated to capitalize on the untapped potential here in the U.S. I’m also very much looking forward to being reunited with my former colleague and friend, Eric Blinderman, to grow Therium’s footprint in the U.S.,” said Mr. Dempsey.

Neil Purslow, Co-Founder of Therium Group Holdings, said, “We are thrilled that Eric and Patrick have joined Therium at this time to lead the expansion of our business in the U.S. Eric is a world-class attorney with an impressive track record of advising on highly complex litigations and international commercial arbitrations. Patrick’s litigation expertise and judgment across a wide range of industries will be invaluable as Therium grows.”

In addition to the hiring of Blinderman and Dempsey, Robert Dwyer has agreed to join Therium Inc. as chairman of the investment committee and Non-Executive Chairman of the Board of Directors of Therium Inc. Mr. Dwyer, retired from the practice of law, is the former head of Dorsey & Whitney’s New York Office and a past member of Dorsey’s Management and Policy Committees. He brings decades of finance, structuring and corporate experience to Therium as he spent his entire career advising clients on mergers and acquisitions, venture capital financing, tax planning and compliance, and has represented dozens of start-up and development-stage companies. He has a degree in Business Administration, summa cum laude, from the University of St. Thomas, a law degree, cum laude, from the University of Minnesota, and is a certified public accountant on inactive status.

2. Therium launches in Oslo as first litigation funder in Scandinavia

Henrik Berg, Henrik Jensen and Trond Jacobsen to lead Therium in Scandinavia

OSLO/LONDON, June 1, 2016. Therium Group Holdings Limited, a leading global provider of litigation finance globally with over $300 million in committed capital, is launching operations in Scandinavia as Therium Nordic AS, headquartered in Oslo. Therium Group Holdings is one of the largest and most established litigation financing firms in the world.

Therium has identified a substantial market for litigation funding in Scandinavia, with demand being driven by the increasing number of legal disputes, especially in energy and construction, and the high and rising costs of legal claims. Litigation can be lengthy and the costs can be prohibitive. Litigation funding or litigation finance, as it is sometimes referred to, allows individuals and companies to take on litigation and arbitration cases that
they might not otherwise be able to afford, and/ or to hedge the costs and risks involved in such matters. Therium pays for all of the costs, including adverse costs in the event that the case is lost, and only receives payment if the case is won.

Henrik Berg is joining Therium Nordic as CEO, Henrik Jensen is joining as Chairman, and Trond Jacobsen as board member. Henrik Berg has more than 20 years of experience as a management consultant in Scandinavia, having worked for firms including PA Consulting Group, Qvartz and Pareto Group. He holds an MSc in economics and business administration from the Norwegian School of Economics and Business Administration, with studies at the London School of Economics. Henrik Jensen is an experienced lawyer and has been admitted to the Supreme Court of Norway. Henrik founded and is an active owner of two law-firms (Legalis and Legal24) and a legal insurance company (Legal Insurance Group) in Norway and Scandinavia. Henrik completed his first degree in law in Oslo, followed by a Master of Law at the Max-Planck-Institute in Munich, with a thesis on EU copyright-law. Trond Jacobsen has extensive experience as a lawyer and entrepreneur. In addition to Therium Nordic AS, Trond, together with Henrik, founded Legal Insurance Group and Legal24. Trond graduated in law from the University of Oslo, specialising in international law.

John Byrne, Co-founder and CEO of Therium, said: “We are delighted to launch Therium Nordic and introduce litigation finance to law firms, companies and individuals in Scandinavia under the leadership of Henrik Jensen, Henrik Berg and Trond Jacobsen. Scandinavia is an important market for Therium and is a focal point for key sectors that we focus on, such as oil and gas.”

Henrik Berg, CEO of Therium Nordic, said: “Litigation funding will help to solve a key challenge facing claimants when deciding whether or not to pursue a claim, without undermining the law firm industry’s hourly fee business model. Crucially, funding provides access to justice for those who might not otherwise be able to meet the costs of a claim. Therium is the pre-eminent global litigation funding firm and we are excited to develop Therium’s funding
propositions to meet the needs of the Scandinavian market.”

Henrik added: “The sharp downturn in the Norwegian oil and offshore industries has given rise to a growing number of claims. Conflicts in onshore infrastructure construction contracts, such as in road and rail projects, are also at a record high. This rising tide of disputes, as well as the fee pressure on law firms, make this an ideal time to launch Therium Nordic.”

Therium Nordic’s initial focus will be to fund individual litigation and arbitration cases. The firm will also review group litigation and class action cases, an area which is expected to see increased activity. Core litigation cases will include breach of contract cases within the oil and offshore industries as well as cases in construction and real estate, seafood-industry insolvency cases, commercial torts, complex commercial litigation, domestic
and international arbitral matters, as well as insurance disputes.

Neil Purslow, Co-Founder of Therium, said: “As well as providing funding to meet the costs of a claim, financial directors of companies in the UK, the US and other jurisdictions look to Therium to transform a claim into an asset, by removing the cost of litigation from the company’s balance sheet and freeing up cash flow. We look forward to working with our partners in Scandinavia and helping Scandinavian companies to use litigation funding for such strategic purposes and give them a competitive advantage.”

3. Litigation growth in financial markets disputes by Hanif Virji

By Hanif Virji, Co-Founder, Therium AHV Financial Markets

This article first appeared in the June 2016 edition of Litigation Funding magazine.

Major global banks and brokers may have already paid in the region of $20 billion of fines and litigation expenses for Libor and forex rigging but the pay outs are set to increase from a rising tide of legal claims in relation to these offences and the manipulation of indices such as ISDAFix, the global benchmark for fixed interest rate swaps.

The growth in disputes to come is because interest rate benchmarks like Libor and ISDAFix are integral to a vast range of global financial products, from relatively simple to more complex and highly structured products. Whilst the value of Libor related global financial contracts was revised down after the Wheatley review, they are still worth at least $450 trillion. Potentially, millions of people and organisations across the world could be claimants in interest rate benchmark cases, from individuals and small businesses to large corporations and highly sophisticated global investors and asset managers.

Banks and intermediaries could be the source of legal claims linked to a panoply of areas, including hire purchase agreements, mortgages and pensions, structured credit products, corporate loans, taxation products, private banking and the full range of interest rate derivatives. There will be some very big and multi-jurisdiction disputes. Claimant allegations will include being mis-sold products, mis-valuation, or simply being over-charged for a service.
A good example of the latter is “closet tracking” also known as “index hugging”. Asset managers have been found to charge fees on the basis of providing active portfolio management services whereas in fact the portfolio to a large extent simply tracks a benchmark market index. The difference in fees for the two services can be around 1 per cent per annum and it is estimated that approximately 10 per cent of the U.K.’s £6.6 trillion of assets under management could be closet trackers. Whilst difficult to estimate, it would imply an over-charging of around £6.6 billion per
annum. Finanstilsynet, the Danish regulator, estimated a third of the domestic funds in Denmark are closet trackers.

A number of current cases in London are being watched very closely. Wingate, a subsidiary of Guardian Care Homes, has brought an interest rate swap claim, against Lloyds, alleging that a 2011 settlement over swap mis-selling should be overturned because of the bank’s libor fixing. There are many other such cases predicated on Libor or the manipulation of other benchmarks either already in court, with some at an advanced stage, or at various stages of
preparation. The Financial Conduct Authority’s compensation scheme has led to the settlement for over 13,000 claimants with interest rate swap agreements worth about £2 billion, so if Wingate is successful the case could become a catalyst to further similar legal claims against the banks.

Recognising the importance and complexity of such cases and the swelling case-load, the English Judiciary announced the High Court Financial List in July last year for important and financial markets claims of more than £50 million. While London will already be a natural centre for many Libor claims, the list will clearly add to the city’s attractiveness for financial markets litigation.

However, whilst one of the objectives of the Financial List is to reduce the time and cost of litigation through learning from test cases, financial markets disputes will remain extremely expensive, often with costs of more than £10 million attached.

Litigation funding has a major role to play in large scale financial disputes and this is why we recently launched Therium AHV Financial markets, the first litigation financing business dedicated to the full spectrum of complex financial markets litigation and arbitration. In just a few months we have seen a huge demand for well-funded cases for corporate, institutional and private clients across a range of jurisdictions. These cases demand the ability to make early decisions about the viability of providing finance, innovative funding structures, and the experience and expertise to develop models that maximise the returns for winning claimants.

Our own recent research of litigators from the UK’s leading law firms conducted in partnership with Just Costs Solicitors highlights the growing recognition of the contribution that litigation finance has to make to financial markets disputes and bringing access to justice. Most of the partners (79%) we surveyed had seen new funded cases in the last year, with funding being most prominent in financial services; and three quarters of the litigators said that funding is now core to their discussions with clients.

Many potential claimants simply do not have the funds to launch a case. For others there is too much risk to bear from the cost of a dispute, especially when the total running cost and the disclosure demands of a case can never be determined at the outset, and the adverse costs of losing a claim to a financial institution can be high (and the insurance to cover them). Litigation funding solves these problems. Almost a quarter of litigators (23%) we surveyed said that the ability to meet costs was the most important function of third party litigation financing and this was closely followed by the risk transfer benefits of funding. Meeting costs has already been crucial for large group actions to seek justice against financial institutions and this will continue to be the case. One of the challenges in such situations is finding other claimants to join a case. Rapid book-building is critical to making a claim viable and this is something sophisticated litigation finance providers can do.

Even for global businesses and investors that may well have large litigation budgets there is a huge benefit to be gained from turning to a well-capitalised litigation finance provider to fund disputes. This is because litigation finance removes the cost of the dispute from the claimant’s financial statements, thereby transforming the litigation into an asset, freeing up the cash for more strategic uses and boosting the organisation’s financial metrics.

It is impossible to forecast the volume of financial markets claims that will be launched in the coming months but our experience tells us that there will be considerable activity, involving many different financial products and a wide range of claimant types. There will be a great deal of complex, cross-continent, high value cases, and third party funding will be seen in an increasingly number of these matters.

4. Keynote speaking engagements

Therium is regularly invited to speak about litigation funding at law firms, barristers’ chambers and industry events. Do get in touch if you are interested in us speaking to your colleagues, or at one of your events.

Our speaking engagements in the last quarter included the following:

1 July, Barcelona.
Neil Purslow spoke about funding financial markets disputes at the Banking Litigation Network Conference.

19 May, Warsaw.
John Byrne spoke at CEE Consulting Group’s Introduction to Third Party Litigation Funding Conference.

18 May, London.
Tim Mayer was a panellist on the ‘Getting the client paid’ debate at the 6th annual GAR Live London event.

12 May, London.
Neil Purslow and Hanif Virji spoke about financial markets and funding at JLT’s Commercial Litigation Conference.

5. Press highlights

The media follows Therium’s news and views. Below is a selection of press highlights this year.

13 June.
Financial News. Hanif Virji and Neil Purslow quoted on litigation finance for pension fund claims against European closet indexers.

1 June.
Finansavisen. Launch of Therium Nordic AS featured in Norway’s Finansavisen.

22 May.
The Sunday Times. Neil Purslow quoted on rising number of legal claims against banks.

18 May.
Expansión. Therium featured in Spain’s Expansión.

30 April.
The Times. Neil Purslow quoted on the development of litigation funding.

19 April.
The American Lawyer. Therium launches in the USA.

24 February.
Legal Community. Therium featured in Italy’s Legal Community magazine.

18 February.
The Lawyer. Therium in talks with firms to launch funding ABS.

6. In the spotlight

Q & A with Andrew Head, Partner at Forsters LLP

What are the key trends that you are seeing in litigation?

We expect to see an increase in joint venture disputes and pension related disputes post pension liberation. We are also seeing more fraudulent investment and mis-selling schemes.

Do you expect Brexit to have an impact, and if so in which areas of litigation?
It’s probably too early to tell, but any uncertainly is fertile ground for litigators! More specifically property transactions, with and without Brexit clauses, are likely to be scrutinised more carefully by the purchasers which may well lead to more litigation.

What are the most appealing benefits of litigation funding from your clients’ perspective?
Our clients like the fact that litigation funding takes the risks off balance sheet and of course they appreciate that high quality funders have deep enough pockets to see a case through. Funding is critical when it comes to group actions where individual funding is not economic and it sends a message to defendants which in many cases encourages settlement. As the market has matured, more flexible products are being offered, decision making is quicker and the big and trusted players are more clearly identifiable.

What’s on your summer reading list?
Earthly Powers by Anthony Burgess is wonderfully erudite and sprawling. The Caliphate by Hugh Kennedy is required reading for anyone who wants to understand the Middle East today.

And your favourite London lunch spot is?
I love Café Murano and the Clove Club to name two and I urge everyone to try the recently opened and uber-trendy Hatchetts in Shepherd Market.