The Power of Perspectives

The Canadian Bar Association

Yves Faguy

Legal marketplace

Third-party litigation funding enters a new chapter

By Yves Faguy December 22, 2016 22 December 2016

Last week, Burford Capital, the world’s largest litigation finance company the world, Ltd., bought its main rival Gerchen Keller Capital for $US 160 million. The tie-up is being hailed as  a sign that the litigation funding industry is maturing in the U.S (it is far more established in other jurisdictions, namely Australia and the UK).

Alison Frankel reported on the reasoning behind the tie-up:

The two companies operate via different business models - and the combined Burford plans to continue to use them both. Burford's management owns 13 percent of its publicly traded equity, so its principals make money alongside investors when the firm's investments pay off.

Gerchen Keller, by contrast, is structured like a hedge fund. It has raised more than $1 billion in a handful of closed-end investment vehicles, mostly from large institutional investors such as university endowments and public pension funds, including Michigan and Texas municipal employee funds.

Gerchen Keller earns a stream of income from the 1-to-2 percent management fees it charges for deciding how to invest the money it has raised. It may also bring in performance fees of 15 to 50 percent if its investment decisions pay off. Gerchen's funds have not been in operation long enough to have kicked off performance fees, which will belong in the future to the combined entity.

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Legal marketplace

Looking to 2017: Jordan Furlong on the state of the legal marketplace

By Yves Faguy December 21, 2016 21 December 2016

Looking to 2017: Jordan Furlong on the state of the legal marketplace

 

As we close out the year, it’s time to take a look at where the legal market is at, and where it might be going. I caught up with legal market analyst and principal of Law21.ca, Jordan Furlong, for what is becoming an annual year-end tradition, where we discuss key developments in the legal industry.

CBA National: Where do you see the legal market going in 2017?

Jordan Furlong: There are probably two parallel tracks of change. Within the legal profession, law firms and the legal community, my sense is that we will continue to see a slow but steady evolution of service provision. I’m not seeing any imminent sign of major change or extraordinary innovation. For the most part the profession’s leadership — law societies, courts and judges, attorneys general, and of course bar associations such as the CBA — generally seem to be positioning themselves in favour of cautious, careful progress towards a number of broadly stated goals. That seems to be consistent with what we’ve seen in the past few years.

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Corporate taxes

Apple's legal challenge to EU's Irish tax decision

By Yves Faguy December 20, 2016 20 December 2016

 

Apple and the Irish government are challenging the European Commission’s August ruling, published yesterday, ordering Ireland to recoup undue tax breaks to the tune of $13 billion euros. The Commission found that the Irish government had selectively conferred an advantage on the iPhone maker – a measure, it says, that carries the risk of distorting competition and affecting trade between EU member states.

Under the terms of the Treaty on the Functioning of the European Union, the measure amounts to state aid, which is forbidden under the common market’s rules.

Apple has responded by charging that the EU has “retroactively changed the rules, disregarding decades of Irish tax law, U.S. tax law as well as global consensus on tax policy." The Irish government is making the case that tax matters are for each member state to decide.

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Conflicts of law

Battle to rule the splinternet

By Yves Faguy December 6, 2016 6 December 2016

Battle to rule the splinternet

 

Ever since the world went online, free-speech enthusiasts have worried about national governments legislating the internet, and domestic courts enforcing those laws beyond their territory.

The first signs of this appeared with libel cases. Media companies were especially spooked in 2002 after an Australian court allowed a Melbourne businessman to sue New York publishing company Dow Jones & Co for online defamation. Critics of the ruling at the time declared it a tragedy for free speech, and warned of the demise of the internet and its fragmentation. Before long, media companies adjusted themselves and the internet continued on its path to become the global mass medium of choice.

Still, anxiety over the legal fragmentation of the internet keeps returning to the fore, with national courts now targeting the likes of Google and Facebook.

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Q&A

Q&A with Daniel Martin Katz: The finance of law

By Yves Faguy December 6, 2016 6 December 2016

Q&A with Daniel Martin Katz: The finance of law

 

Lawyers need to pay more attention to the financial industry, do better at predicting and pricing risk for their clients, and limit their own exposure to swings in the business cycle. Daniel Martin Katz, an associate professor of law at Illinois Tech – Chicago Kent College of Law, sat down with Senior Editor Yves Faguy to discuss some of the lessons fintech offers for the future of law.

CBA National: You say we are beginning to see the financialization of legal services. What do you mean by that?

Daniel Martin Katz: So in one bucket we’re seeing fintech removing meaningless frictions from various types of financial processes, by trying to work around banks – in mortgage underwriting, and peer-to-peer lending, that sort of thing. In the other bucket, there’s what we previously thought of as exotic risks or uncharacterizable risk. With data analytics, we’re able to predict or characterize them. There are aspects of those two branches in law. Financialization [of legal services] deals mostly with the risk part – predicting risk, which is a big thing that enterprise lawyers in particular do for people.

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