US hedge fund Gramercy has struck one of many largest ever litigation funding offers to again separate trials beginning subsequent yr in mass environmental claims towards miners BHP and Vale and 14 international carmakers.
The $552.5mn funding is within the type of a secured mortgage to legislation agency Pogust Goodhead, and is the most important ever to a UK legislation agency within the practically $16bn litigation funding market.
The legislation agency is bringing the UK’s greatest opt-in class motion lawsuit on behalf of 700,000 Brazilian claimants from the 2 mining corporations over the 2015 collapse of the Fundão tailings dam on the Samarco Mariana mine complicated. The eight-week trial is scheduled to begin in London in October 2024. The claimants are looking for recompense for alleged injury to their properties and livelihoods from the catastrophe.
Pogust Goodhead can also be behind greater than a dozen lawsuits on behalf of 1mn UK prospects of 14 carmakers concerned within the dieselgate scandal. The agency has already struck a £193mn settlement with Volkswagen over claims it misled customers about nitrogen oxide emissions from its diesel automobiles. A declare towards Mercedes is scheduled to go to trial subsequent yr.
The funding dedication is a considerable one for Gramercy, which has $6bn in property below administration and is greatest identified for its rising markets bets on Russia and Argentina. The mortgage consists of co-investments from a few of its purchasers.
Such investments have grow to be a key a part of Gramercy’s pitch to purchasers that it could possibly ship returns, it doesn’t matter what the broader market does. “It’s changing into an essential space for us in international markets,” stated founder Robert Koenigsberger. “We really feel like we’re coming into the candy spot of litigation funding.”
In response to an investor, Gramercy’s flagship fund is up 15 per cent yr so far.
The litigation funding market was $15.8bn final yr and is predicted to develop by 9 per cent yearly over the subsequent 5 years, in line with RationalStat.
Within the mine case, Pogust Goodhead stands to share as a lot as 30 per cent of the settlement with native Brazilian attorneys if their case is profitable.
“This transaction with Gramercy . . . provides us the power to convey the battle to any wrongdoer,” Harris Pogust, the agency’s chair, stated in a press release.
The construction of Gramercy’s funding as a secured mortgage avoids the authorized considerations raised by a UK Supreme Court decision over the summer about litigation funding preparations that contain a share of the proceeds. That call voided the funding settlement in a contest case introduced by the Street Haulage Affiliation and different hauliers towards DAF and different truckmakers.
Pogust Goodhead has beforehand acquired two rounds of funding totalling £150mn from NorthWall Capital, a London-based credit score specialist.
“These claims are actual however [the law firm] was financially depleted,” stated James Taylor, who heads particular conditions at Gramercy. “This provides them the monetary energy to complete the job. The defendants aren’t going to have the ability to wait them out.”