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- đ°ď¸ Taking the âFunâ out of âLitigation Fundingâ
đ°ď¸ Taking the âFunâ out of âLitigation Fundingâ
TOGETHER WITH...
In todayâs email:
Interest rates go up (shock!)
Are fast food ads lying to you?
Watch TV from your childhood
Litigation funders arenât having fun
AstraZeneca gets a new pair of genes
The most addictive game on the internet
Jones Day and Freshfields build the train of the future
Facebook gets caught stealing data from its users, again
Magic Circle revenues go up but theyâre making less money
⌠and more!
If you take just one thing from this emailâŚ
Imagine youâve been wronged and want to sue someone for a big amount of money. There are companies called litigation funders that will help you pay for that. Why? Well, they can afford better lawyers than you can, so theyâll give you the best chance of winning. In return, theyâll ask for a proportion of the money you receive as compensation. These guys are profit-making companies but, generally, theyâre good for regular people cause they can give them the financial fire power to compete with the big corporations.
EDITORâS RAMBLE đŁ
I saw this tweet about a class action false advertising lawsuit in New York against Taco Bell (you can read the actual complaint that was filed here).
Taco Bell was sued today in a false advertising class action.
Consumers allege that Taco Bell misrepresents the amount of beef in the Crunchwrap Supreme "by at least double the amount."
â Rob Freund (@RobertFreundLaw)
4:26 PM ⢠Jul 31, 2023
The claim is that Taco Bell advertise that their food will look like this đď¸ đ
But it ends up looking like this đď¸ đ¤Ż
So, what do you think?âŚ
Are these sorts of differences just to be expected when buying from fast food places like Taco Bell, which are moving fast to sell a lot of volume?
Or is this actually false advertising?
Is Taco Bell guilty of false advertising?Once you've voted, you can share your reasons too! |
- Idin
đď¸ Quick shoutout â Big thanks to Dorothy Nsumbu for sharing the newsletter. Weâre now just a few subscribers away from 8,000. If you know anyone whoâd be interested, be sure to send them your referral link below.
FEATURED REPORT đ°
đ°ď¸ Taking the âFunâ out of âLitigation Fundingâ
Whatâs going on here?
Litigation funders are companies that pay the claimantâs costs in a lawsuit in exchange for a share of any payout from the case.
This week, the UKâs Supreme Court ruled that the agreements litigation funding companies are using with their clients are unenforceable.
So, that basically pulls the rug from underneath all these litigation funders and all the people who were relying on them to fund their case.
What do litigation funders do?
Litigation funders are companies that pay the costs for of a legal case in exchange for a share of any money won in the case.
Whatâs in it for the funders? The funders will hear out a case and if they think itâs got a strong chance of a big payout, theyâll pay for top lawyers to help out. If the case is won, theyâll get a portion of the payout.
Whatâs in it for the recipient? Well, theyâll get you better lawyers than you could probably afford yourself. Also, they make the whole thing less risky because you donât pay them back if you lose.
They usually fund big class-action claims against major companies including Mastercard, Apple and BT â so the role funders play is important.
Whatâs the Supreme Courtâs beef?
Say youâre an English lawyers and youâre helping someone with a case. You agree that your fee will be a percentage of the amount that you win for them. Thatâs called a damages-based agreements (or DBA).
DBAs need to satisfy certain strict conditions (if you want to nerd out by reading the relevant section of the Act, here you go!).
The Court said that all the agreements that litigation funders have in place with their clients are considered DBAs.
The issue is most of these agreements that the litigation funders use do not satisfy the DBA requirements â so theyâre unenforceable.
What are the lawyers saying?
đŁď¸ Alice Darling (senior associate at Clifford Chance): âLitigation funding has become increasingly prevalent in recent years across all industries and types of claims, and this decision has rendered many funding agreements currently in place unenforceable.â
đŁď¸ Tim West (commercial litigation partner at Ashurst): â[Litigation funders will need to] move quickly to review and potentially replace their funding arrangements and ensure they are in an acceptable form. Otherwise, there is a risk their action could be dismissed as existing claims will not be immune from todayâs decisionâ.
đŁď¸ Glenn Newberry (head of costs and litigation funding at Eversheds Sutherland): â[The decision] will send shockwaves through the funding industry and may lead to number of smaller operators going out of businessâ.
Whatâs the big picture effect?
For litigation funders: Most of their agreements with their clients are unenforceable. So, funders need to act fast to solve this issue in one of two ways:
Sign new agreements that do tick all the DBA requirements, or
Get creative with their agreements so the payout that the funder receives isnât related to damages (for example, by agreeing to receive a multiple of the amount invested instead).
Both of these routes will mean that existing claims where litigation funders are involved are going to be delayed, which means courts are going to be delayed â thatâs why some people think the Supreme Court has kind-of shot itself in the foot with this decision.
For me and you: Generally, litigation funders back class action claims against big corporations that have been acting badly. They donât do this out of kindness - they do this cause it gives them most money. BUT, fewer litigation funders = more freedom for corporations to act badly (at least in theory).
TOGETHER WITH 1440* đ¤
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IN OTHER NEWS đ
đŞ London's Magic Circle law firms are feeling the pinch as they try to expand into the US market. Despite rising revenues, profits are falling due to higher staff costs and reduced demand, especially as the M&A boom from 2021 slows down. Big moves like Allen & Overy's planned $3.4bn merger with Shearman & Sterling, and Freshfields' new offices in the States, are part of a critical effort to increase their market share in the US, where they currently generate only about 15% of their revenue.
đŚđş An Australian court has imposed a fine of A$20m (ÂŁ10.4m) on Facebook and its parent company Meta for not telling its users about its data collection sharing practices. Meta created a free VPN app called Onavo Protect which claimed to keep usersâ data safe. The app, which was downloaded by over 270,000 Australian users, actually shared data with Facebook for business intelligence purposes. The court found that the app store descriptions of Onavo Protect were misleading, which led to the fine.
đ Renault Group and Geely, advised by Jones Day and Freshfields, have inked a 50/50 joint venture deal to establish a leading powertrain technology company. The new company will focus on creating hybrid and highly efficient powertrain solutions to meet global demand. The joint venture aims to manufacture a bunch of internal combustion, hybrid, and plug-in hybrid engines and transmissions. Jones Day and Freshfields both made announcements about deal.
đ AstraZeneca, advised by US law firm Covington & Burling, is making a $1bn purchase of a gene therapy business from Pfizer. AstraZeneca will buy Pfizer's early-stage gene therapy projects for rare diseases for up to $1bn. As part of the deal, AstraZeneca will take on some Pfizer employees who worked on these projects. Itâll also pay Pfizer for any successful therapies it sells from this deal in the future. Hereâs the law firmâs announcement about the transaction.
đŞđş The European Central Bank (ECB) delivered its ninth consecutive rate hike. The ECB went ahead with its widely expected quarter-point rate hike last week. That took the central bankâs deposit rate up to 3.75%, matching a record last reached in 2001 â that was when it was trying to prop up the value of the newly launched euro. A few months back, we covered the impact of interest rate rises.
AROUND THE WEB đ
đşď¸ Cool: If youâve got some time to kill, and want to unlock a load of core memories, watch actual TV from the 90s (and every decade all the way back until the 50s).
đťď¸ Fun: I think this might actually be the most addicting online game Iâve played in years (although, the voice when you complete a round is⌠kinda weird? If youâre at work, probably best to mute it).
đď¸ News: Letâs just admit it⌠the news takes too long to read. The Bay Area Times solves that by covering business and tech news with visuals, not words. Fewer words and sentences, more charts and images. Check out the Bay Area Times.*
Credit: r/internetisbeautiful
* This is sponsored content
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