Commercial Litigation Finance

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Executive Summary

  • Our Commercial Litigation Finance Team has represented clients in nearly 100 discrete litigation funding matters since  2016. 
  • Our work in the Litigation Funding Area involves:
  • Transactional work (documenting funding deals and sales of fund portfolios);
  • dispute resolution and settlements (negotiating and litigating) for both funders and client counterparties; and
  • rendering internal advice (including on ethics and tax issues).
  • The underlying litigation has included: commercial disputes (including breach of contract), antitrust, intellectual property (including patent infringement), and Hatch-Waxman litigation.   
  • Our principal clients in the space include three of the largest funds in this space in the world. We identify them here as “Client 1,” “Client 2,” and “Client 3.”

The Development of our Practice

Our commercial litigation finance practice began in 2016 when Client 1, one of the world’s largest litigation finance firms at the time, sought our assistance working out a problem investment. This representation included: (a) documenting settlement terms of a multi-party dispute in connection with litigation funding for pharmaceutical litigation; and (b) restructuring a prepaid forward purchase agreement to protect Client 1 from potential counterparty insolvency or bankruptcy-related issues.

Client 1 subsequently asked us to represent it in connection with bidding in a litigation funding related-bankruptcy sale.  After nearly 15 years of litigation, a chapter 7 bankruptcy trustee had won a jury verdict for more than $200 million. The defendants appealed. The trustee, before oral arguments in the appeal, determined to reduce its litigation risk by selling a portion of any recovery proceeds.  The trustee selected Client 1 to serve as the stalking-horse bidder in the §363 sale auction of the share of the recovery proceeds being sold. Using our knowledge regarding distressed debt investing, our team helped Client 1 structure its initial offer, accompanied Client 1 to the auction, and advised it through its winning the auction.  Following the auction, we advised the client on  the negotiation of definitive documents, obtaining court approval of the sale, and the ultimate consummation of the sale. Client 1 is no longer a client, as it was sold and our four primary client contacts subsequently resigned.

In early 2017, Client 2, another very large litigation funding pioneer, after learning about our work for Client 1, asked us for advice on complex tax issues related to the structure of its prepaid forward funding agreements. Our innovative and multi-disciplinary approach has prompted Client 2 to ask us to assist in multiple litigation funding transactions and disputes.

We were subsequently approached by former Client 1 executives to represent their newly formed entity, Client 3, in negotiating and documenting many of its litigation funding transactions.

Our expertise in the commercial litigation financing space has led to our receiving a steady stream of litigation funding-related referrals.

We have since worked with a variety of smaller litigation funders, intermediaries, law firms seeking portfolio financing, and counterparties (i.e., fundees).  In 2021, for example, we represented a counterparty on the other side of the table from its funder. Our client was holding a $150 million+ judgment against a publicly-traded company and wished to de-risk. The funder tried to control the defunding in a way that we and our client believed was overreaching and prejudicial. The client, a small cash-strapped concern, was a figurative David facing a Goliath funder. Through our counsel and negotiating, the matter was resolved quickly in our client’s favor.

In sum, our team has a robust practice in this space greater than most firms ten times our size, with the experience and market knowledge that allows us to deliver excellent advice and top-quality work efficiently.

Representative Example of our Experience

  1. (2017-2018) Represented Client in connection with structuring and documenting an investment in entities providing financing to generate qui tam whistleblower cases
  1. (2017) Represented Client in selling a portfolio of partially-funded litigation finance investments to a European investment advisor and European fund in a secondary market transaction
  1. (2018) Represented Client in connection with the negotiation and documentation of prepaid forward purchase agreement in the approximate amount of $5 million to fund a dispute over a swap execution facility
  1. (2018) Represented Client in connection with documentation of prepaid forward purchase agreement with respect to a law firm seeking approximately $3.5 million to fund patent enforcement litigation
  1. (2018) Represented Client in connection with restructuring a finance arrangement relating to the sale of the counterparty’s patent
  1. (2018) Represented Client in connection with documentation of prepaid forward purchase agreement with respect to a law firm seeking approximately $2.5 million to fund commercial litigation
  1. (2018) Represented Client by documenting prepaid forward purchase agreement with respect to a law firm seeking approximately $55 million to fund commercial insurance litigation
  1. (2018) Represented Client by documenting prepaid forward purchase agreement with respect to a manufacturer seeking approximately $4 million to fund a patent infringement dispute
  1. (2019) Represented Client in connection with an approximately $8.5 million funding agreement for a privately held medical device company focused on developing innovative implants
  1. (2019) Represented Client in connection with license, development, and commercialization agreement to finance approximately $7 million for pharmaceutical company’s generic drug patent lawsuit
  1. (2019) Represented Client in connection with the drafting of prepaid forward purchase agreement providing approximately $12 million to finance commercial lawsuits; and negotiated and drafted co-investor agreement for Client with respect to this funding opportunity
  1. (2019) Represented Client by documenting a prepaid forward purchase agreement with a counterparty seeking approximately $3 million to fund commercial insurance claims
  1. (2019) Represented Client in connection with a second-round investment in the amount of approximately $4.5 million to pursue patent litigation claims
  1. (2019) Represented Client in connection with documentation of prepaid forward purchase agreement with respect to law firm seeking approximately $24 million to fund multiple international arbitrations
  1. (2019) Represented Client in connection with documentation of prepaid forward purchase agreement with respect to law firm seeking approximately $10 million to fund plaintiffs’ antitrust lawsuits
  1. (2020) Represented Client in connection with documentation of prepaid forward purchase agreement with respect to counterparties seeking approximately $3 million to fund litigation accusing officers of a state’s Department of Fish and Wildlife of illegally bulldozing hundreds of acres of a hemp crop worth approximately $1 billion
  1. (2020) Represented Client in connection with an approximately $3 million funding agreement for the plaintiff to finance patent and trademark litigation
  1. (2020) Represented Client in connection with an approximately $14.5 million funding agreement to finance a patent dispute, including the negotiation of a settlement agreement with a prior litigation funder
  1. (2020) Represented Client in arbitration it brought against counterparties to a litigation funding agreement relating to qui tam cases. Counterparties accepted approximately $1 million in funding from our client and then sold their rights to the proceeds of those cases to another funder in contravention of both anti-assignment and other provisions of our client’s funding agreement. We successfully arbitrated the issue, with the arbitrator awarding our client over $1 million in monies funded plus interest and fees
  1. (2020) Represented Client in a dispute with a counterparty to litigation funding agreement relating to a right of first refusal to fund future litigation
  1. (2020-2021) Represented Clients in a variety of other litigation-related engagements such as:
  1. Formulating and pursuing objections to subpoenas issued in cases funded by Client that sought disclosure of funding agreements and surrounding negotiations
  1. Reviewing proposed revisions to the standard dispute resolution clauses contained in Client’s funding agreements
  1. Consulting concerning strategies to be used in disputes with funding counterparties resulting in early resolution of disputes
  1. (2020-2021) Represented Client in negotiating and documenting a multiple payout structure where funder deployed multiple rounds of financing in different stages  to finance investment manager’s prosecution of lawsuits related to the bankruptcy of a former employer
  1. (2021) Represented Client in connection with approximately $5 million funding agreement for the counterparty to finance arbitration related to London Stock Exchange
  1. (2021) Represented Client in connection with structuring potential stock escrow arrangement to hold OTC securities for counterparty (a penny-stock company) and counseled Client on its remedies under the financing agreement to collect approximately $2.5 million second round recourse financing
  1. (2021) Represented Client in connection with approximately $2 million funding agreement for the counterparty to finance anti-trust litigation; and provided secured transaction advice to Client to secure its lien position in the collateral
  1. (2021) Represented Client in connection with approximately $4.5 million funding agreement to fund patent litigation and breach of contract claims with fund’s co-investor
  1. (2021) Counseled Client on potential funding of approximately $12.5 million financing facility for the prosecution of post-judgment issues in a litigation

About Our Firm

Sugar Felsenthal Grais & Helsinger’s practice areas include Commercial Litigation Funding; Commercial Litigation; Commercial Transactions; Corporate Transactions; Estate Planning, Administration & Litigation; Federal Income Tax Planning & Litigation; Labor & Employment; Real Estate & Community Development; and Restructuring, Insolvency & Special Situations

Many excellent law firms can boast about their experience, knowledge, judgment, creativity, and responsiveness. SFGH certainly can, with numerous client testimonials and professional accolades to the firm’s credit. To that end, the firm still represents nearly all the clients it started with the day it opened its doors in 1981.

Most excellent law firms can also point to the credentials of their partners. SFGH certainly can, with partners hailing from law schools such as the University of Chicago, Harvard, Northwestern, and the University of Pennsylvania and being alumni of some of the most widely respected law firms in the world. But what sets SFGH apart from other law firms?

  • Our keen insight, enthusiasm, and intensity?
  • Our collaboration with clients to develop strategic and cost-effective answers to their legal and business needs?
  • Our judgment, depth of experience, and our ability to see and hear our clients’ personal vision and business goals?
  • Our constant mission to deliver even more than we promise?
  • Our ability to solve clients’ complex problems with a creative, interdisciplinary approach?
  • Our focus on training, mentoring, and coaching our people?
  • Our policy to staff leanly and provide excellent value?

No. The truth is that these things are true for most excellent law firms such as ours. So, what is it that sets SFGH apart from other firms? FIRST, we understand it is less costly to retain a client than to win a new one. We spend more time tending to our current clients than looking for new ones. SECOND, we understand how important it is to collaborate and row the proverbial boat in the same direction to get our clients to their goals. Our culture and structure motivate everyone at SFGH to treat each client as everyone’s client.

Our Team

The partners on our Commercial Litigation Funding Team, who are supported by several capable and seasoned associates, are:

-Etahn Cohen. Etahn is an experienced business attorney with extensive venture capital and lending experience that he uses to help our clients analyze and structure litigation finance investments.  In addition to working with litigation funding opportunities as loans and purchases of capital assets, he has negotiated and documented settlements with feuding parties; assisted the sale of litigation funding portfolios by funders seeking to diversify; and negotiated issues with senior lenders of plaintiffs seeking funding. He was previously with Sonnenschein Nath & Rosenthal LLP before joining SFGH in 1990 and is a graduate of the University of Chicago Law School. Etahn’s other primary practice area is Corporate/Transactional.

-Jonathan Friedland. Jonathan founded our Commercial Litigation Practice by bringing in Clients 1, 2, and 3, and continues to lead it. He provides general guidance and consults with other members of the team on specific matters as necessary and provides high-level strategic advice to our clients. He was a Kirkland & Ellis partner earlier in his career and is a graduate of the University of Pennsylvania Law School. Jonathan’s other primary practice area is Corporate Restructuring & Insolvency.

- John Martin. John represents litigation funders in litigation to which they are parties.  He has successfully represented funders in arbitrations with counterparties and defended against attempts to discover funding agreements.  John has also advised clients concerning ethical issues arising from funding arrangements and served on the  ABA Ethics 20/20 Working Group on Litigation Financing.  He was a Schiff Hardin partner earlier in his career and is a graduate of the University of Chicago Law School.  John is the head of the litigation practice group at SFGH.

-Eric Peterman. Eric draws on decades of experience as a finance lawyer to find solutions that address novel situations. He has extensive experience in structuring, negotiating, and documenting a wide variety of litigation finance transactions (e.g., individual litigations, commercial litigation portfolios, intellectual property portfolios, secondary sales, and restructuring of existing transactions).  He was a Weil, Gotshal & Manges partner earlier in his career and is a graduate of Harvard Law School. Eric’s other primary area practice is Structured Finance and Derivatives.

- Jeremy Waitzman. Jeremy assists our client with the structure, negotiation, and documentation of litigation funding transactions from letter of intent through execution of definitive documentation. He regularly advises on issues related to transaction structure, funding disbursements, and investment return.  Jeremy is also called on regularly to educate counterparties on the particulars of litigation funding and the legal necessity of certain clauses that may appear atypical even to other seasoned contract attorneys.  He was previously a partner with a predecessor firm to Saul Ewing earlier in his career and is a graduate of Chicago Kent College of Law.  Jeremy is the head of the corporate practice group at SFGH.

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