Author: TSA Press

It looks like staff layoffs aren’t the only way law firms are dealing with the financial ramifications of the global pandemic. U.K.-based law firm Gateley, which is a publicly traded entity, announced that they would not be giving its shareholders their interim dividend due to the economic fallout from the coronavirus.

As reported by Law.com, the move is designed to maximize liquidity:

A dividend of 2.9 pence per share was due to shareholders on March 31. However, in a protective move, the firm announced via the London Stock Exchange on Tuesday that it was now “prudent” to cancel the payout in order to “maximize the group’s short-term liquidity.”

It also said that it would “suspend financial guidance going forward until both the impact and duration of the COVID-19 pandemic becomes clearer.”

Michael Ward, the firm’s CEO, said the firm’s financials are poised to weather the financial turbulence:

“As a board, we consider these measures to be in the best interests of all our stakeholders. Gateley is a resilient and well-balanced business and our economic and geographically diversified business model is well-placed to withstand difficult economic conditions.”

And despite the firm’s stock prices taking a COVID-19 related hit — 20+ percent of the firm’s value was depleted over a two-week period — the financials seem solid. In the firm’s statement on the suspension of dividend payments they also touted their low levels of debt and “a solid first half performance.” This past year saw Gateley’s revenue climb an impressive 19 percent, breaking the 100 million mark — revenue was £102 million — for the first time.

---

Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).

Ed. note: Litigation finance is transforming the fields of both law and finance. To help our readers gain a better understanding of what litigation finance entails, we’ve partnered with Lake Whillans to present a new series so you can better understand how litigation funding works, its pros and cons, and its past, present, and future.

In our first article in this series, we explained what litigation financing is and the various structures or “flavors” that are typical in the market.   But why are companies using it? Is it only cash-strapped companies that look to litigation funding? While filling the budget gap is certainly one benefit, there are multiple reasons why litigation finance is gaining in popularity with corporate general counsels’ offices

Risk Mitigation 

First, using outside financing allows companies to mitigate the risk from litigation. It’s a fact of life for large companies that they will eventually have to sue somebody. But even when the claim has merit and it’s important to protect the business, it’s not news that the C-suite will not cheer the budget drain, even if it’s a healthy company.  Further, litigation is inherently unpredictable; there may be unpleasant surprises during discovery, and in the end, the case is in the hands of a judge or jury. Corporate officers don’t like that risk, or the unpredictable costs that come along with litigation, which make budgeting difficult.

Litigation finance solves those problems. In the typical litigation finance deal, the plaintiff in a complex commercial lawsuit (or portfolio of claims)  with a high value — Lake Whillans looks for cases or portfolios with damages in excess of $20 million — receives capital in exchange for allowing the financier to share in the proceeds of the litigation.   The capital can be used to pay the legal fees and expenses of the litigation, and in some instances, used by the company for other corporate purposes. Lake Whillans typically supplies $1 million to $15 million for single case financing. The financing is non-recourse, meaning that the company has no obligation to the funder if the claim isn’t successful or doesn’t yield a sufficient amount.

The Benefits of Off-Balance Sheet Financing 

Litigation financing has clear advantages for the plaintiff company, starting with the fact that it enables the company to take the litigation cost off its balance sheet. At a publicly traded company, litigation costs are reported on the company’s statement of profits and losses as an expense against profits. Any eventual financial recovery from the litigation would be reported too—but it would be reported as an “extraordinary event” rather than profit, and that could be years down the road. Thus, litigation drags down the company’s profitability without a corresponding benefit at the end. By financing the litigation, however, a corporate law department can cover its legal costs using the litigation funder’s capital and take the litigation expense off its balance sheet entirely. That means the statement of profits and losses more accurately reflects the company’s true profitability.  For companies focused on valuation, for example if the company is anticipating a capital raise, acquisition, IPO, or other strategic transaction where its valuation is important, keeping costs off-balance sheet has huge benefits. Especially when valuation is calculated by applying an earnings multiple, every dollar not subtracted as legal costs means multiple dollars of value in a valuation.

Optimal Pursuit of the Claims

Litigation finance can enable companies to make optimal decisions with respect to litigation.  To start, a company can choose the best lawyers suited for its case, rather than ones that fit within a constrained budget or are willing to work on a contingency.  Further, with the department’s legal costs covered, it no longer has to weigh its legal strategy against the costs created by a hostile opponent, such as extended discovery or aggressive pretrial motions.  Every decision can be made according to the best interests of the litigation, even if that means spending that might have otherwise pushed the legal budget into the red. A company can avoid being forced to accept an under-value settlement offer because the legal spend is ballooning at an inopportune time for the company and/or the litigation is dragging on longer than expected.  And if the case unexpectedly ends with a loss, the department loses no money, because the legal fees were already paid through litigation financing.

Raising Capital

Furthermore, because litigation finance raises capital, it can allow the company to pursue priorities that it might otherwise not be able to afford. That starts with the litigation itself. Sometimes, a lawsuit may be meritorious but too expensive to pursue, particularly for a smaller company without a lot of excess capital.  Or, for some larger companies, where legal spend is apportioned or siloed among different business entities, one business line’s budget may be insufficient to fund the litigation. Litigation finance can fill that gap, freeing companies to vindicate their rights without stretching themselves thin financially.

Even without that issue, extra capital (either as saved litigation expense or infused capital) can fund an expansion of a business, cover operating expenses or finance any other company priorities that might otherwise be out of reach. By monetizing its litigation asset, companies can unlock the value of that asset at a time that fits their needs.

An Experienced Ally

Finally, litigation finance can provide more expertise to bear on litigation decisions, validating a corporate legal department’s decision to pursue claims. Because litigation finance firms have every incentive to value a claim properly and accurately predict its success, you can be assured that we will thoroughly and critically analyze your claim’s chances as well as collection and enforcement risks. Lake Whillans employs a team of lawyers experienced with the kinds of claims we finance, so that opinion will be highly informed, providing an objective opinion before the company makes a decision to pursue litigation, which may have economic, reputational, and opportunity cost risks.  The funder’s imprimatur on a case may help a GC or other advocate of the litigation overcome internal skepticism and disputes within the organization about the worthwhileness of pursuing the claims. An experienced funder can also add value in selecting counsel, setting and negotiating realistic budgets with law firms, and can help prepare the attorneys litigating the case by asking the hard questions during the diligence process, and can be a knowledgeable sounding board for strategic and settlement decisions. (Lake Whillans does not control settlement or strategy of the cases it funds, but will offer its input when asked). By partnering with a litigation finance company like Lake Whillans, the corporate legal department is recruiting an experienced ally that shares the same incentive to maximize the value of the claims, which is ultimately the goal of any litigation.

To learn more about how litigation finance could help your company, please contact us at drucker@lakewhillans.com.

You probably already know how tough it is to keep your practice going when people are hunkering down in their homes. It’s why companies are out here offering $1M in aid to keep clients covered in these times. But every attorney’s experience practicing in the age of COVID will be a little bit different.

Bloomberg Law put together a short video interviewing attorneys coming at this from a lot of different angles and it’s a nice slice of life for the profession.

More than ever, we need to be there for our colleague’s friends and loved ones. There is a huge difference between solitude by choice and being forced into it. The latter can result in intense feelings of loneliness that can exacerbate underlying mental health issues in a profession already beset with mental health issues higher than the national norms. Being an active participant in a compassionate community is more important than it ever has been in most of our lifetimes. I am particularly concerned about those who may consider suicide. I’ve already received several suicide-related social media messages. I’ve struggled with my own feelings of despair and hopelessness. I get it.

It seems that at least once a month I read about a lawyer dying by suicide. Tragic, but unfortunately, not surprising in a profession that is third in terms of suicide (out of professions adjusted by age). I  may see it on Facebook, Twitter, or a news article. It is rare that suicide is specifically mentioned, but there may a request to in lieu of flowers for a donation to a mental health organization or and there will be a commentary about the person’s struggle with depression, substances, or both.

We just can’t bring ourselves to say the word. We make the donation. Grieve for our friends or colleagues. Maybe we tweet out or Facebook post a suicide crisis line. We talk about reaching out. Then we lose another. And another.

Of course, whether it’s depression, addiction, or any other mental health/environmental variable that plays into these issues, the hard reality is that we can love, monitor, and even intervene if everything comes together at the right moment as it, fortunately, did when my friend and brothers saved my life. We, however, can’t be there every moment, and those tragic and life-changing/ending thoughts can come quickly, without warning.

What to do? Not only about our profession but against the backdrop of overall suicide rates that have risen twenty-eight percent over the past twenty years. According to the study, middle-aged adults are at the highest risk.

Unfortunately, I don’t have a magic cure for what ails the human condition, and I don’t see that solution, if there is one, happening in my lifetime. I, however, do believe that we, as a profession and society, can do little things that can have a huge impact. Whether it’s a struggle with depression, anxiety, addiction, or the next crisis we will face, supporting our baby boomer legal colleagues for whom aging has taken a toll on mental acuity must begin at the most basic human level. We can look within ourselves and pledge to pay attention and open ourselves up to being part of a compassionate community.  To not mind our own business.

If you need to talk, email me, and we will set up a Zoom chat. I am here for you.

---

Brian Cuban (@bcuban) is The Addicted Lawyer. Brian is the author of the Amazon best-selling book, The Addicted Lawyer: Tales Of The Bar, Booze, Blow & Redemption (affiliate link). A graduate of the University of Pittsburgh School of Law, he somehow made it through as an alcoholic then added cocaine to his résumé as a practicing attorney. He went into recovery April 8, 2007. He left the practice of law and now writes and speaks on recovery topics, not only for the legal profession, but on recovery in general. He can be reached at brian@addictedlawyer.com.

There will be no Olympics this year. No more opera or orchestral performances. No March Madness. No Eurovision Song Contest, although that’s probably for the best. No St. Patrick’s Day parades. No South by or Glastonbury (and no Coachella until October). No Google I/O or E3. No Sohn or really any other conferences, at least for now. And now, for the second time in three years, albeit for somewhat different reasons (albeit not entirely, given the Donald Trump factor in both cases), no SALT.

“The well being of the SALT community is our first priority, and after consulting with numerous experts, we determined cancellation is the best course of action,” spokeswoman Jami Schlicher said in a statement Monday. The event, in its 11th year, was to be held May 19-21.

It is hard to overstate how significantly the ongoing COVID-19 pandemic has affected the legal industry. Most courts are all but closed, and many states are suspending jury trials for both civil and criminal matters. In addition, numerous law offices are shuttered as attorneys and staffers are forced to get by from working at home. Firms of all sizes are being impacted by the COVID-19 pandemic, and many small firms are experiencing a number of unique consequences from the unfolding crises.

Impact Of Court Closures

As many people within the legal industry are already aware, most courts have suspended in-person appearances for the foreseeable future. The last court appearance I attended in person was on March 13th, and the courthouse at that time was so deserted, it looked like The Shining. Although many courts are still deciding motions on submission, and are holding hearings, conferences, and the like through remote means, court appearances are not happening in all but emergent matters.

Most big firms can get by without court appearances. Indeed, many Biglaw firms and other larger shops do not rely on court appearances for significant billable hours and rather churn their bills mostly on memos, letters, and briefs that need to be written even if physical court appearances are suspended. However, a number of smaller firms rely on volume in order to make money, and need physical court appearances, and travel time to and from those appearances, for a huge chunk of their billable work.

When I was a “street lawyer,” I regularly had three or four court appearances a week, and a deposition every few weeks. Since most of my 44 cases were not too complicated, the vast majority of the hours I billed on these matters were related to court appearances. The average court appearance would take two or three hours, and usually I could bill at least half of my travel time too, so I ended up billing a substantial sum for each appearance. In addition, there are numerous per diem attorneys that almost exclusively rely on court appearances to make a living. Without physical court appearances, many small firms and per diems are only going to bill a fraction of the hours they billed during normal operations, and such attorneys are going to be hardest hit by the COVID-19 pandemic.

Increases In Certain Types Of Work

Although many firms are experiencing business interruptions and other negative effects from the COVID-19 crisis, ironically, one type of legal work has seen an uptick of activity in recent weeks. Many businesses and people hoped to hold events over the next several months, whether it be conferences, weddings, or other types of gatherings. Because of crowd restrictions that have been put into place in many jurisdictions, and other impracticalities, numerous parties are attempting to terminate a variety of event contracts.

Most landlords and licensors have been relatively agreeable to cancelling events or postponing them free of charge to a point in the summer or fall. However, some of these parties are less willing to cancel agreements to hold such events. In addition, even if parties are willing to cancel events, there are oftentimes disagreements about how much deposit money should be refunded because of the COVID-19 pandemic. My firm and other small shops have seen an uptick in inquiries about event cancellations, and this work can somewhat help blunt the immediate financial impact of the COVID-19 pandemic.

Business Development

The COVID-19 pandemic is also having a substantial impact on the way that small law firms conduct business development. Under normal circumstances, small firm lawyers will typically take business contacts to coffee, lunch, or dinner in order to talk about the potential client’s legal needs and how the firm can help. Now that most restaurants, coffee shops, and other establishments are closed because of the COVID-19 pandemic, face-to-face meetings to discuss new business have become extremely difficult to arrange. Of course, this development is also impacting larger firms, but bigger shops are more likely to have a few large, institutional clients who may go through a traditional request for proposals and pitch process. However, smaller firms that often rely on a variety of clients in order to stay busy are facing a number of challenges in developing new business.

Better Ability To Adapt

It should be noted that on a certain level, smaller law firms may be able to better adapt to the COVID-19 pandemic than many Biglaw shops. For instance, numerous solo practitioners and small firm lawyers already work from home to save on real estate costs and because of convenience. As a result, the home confinements required by the COVID-19 pandemic may not create as much of a disruption for small firms as many Biglaw shops currently face. Furthermore, smaller law firms often have fewer redundant employees and are financially leaner than many larger shops. This may allow smaller firms to better deal with harsher economic realities that everyone may soon face as a result of the COVID-19 pandemic.

In any case, the COVID-19 pandemic is affecting firms of all sizes, and each shop faces its own challenges based on its practice area, size, and a number of other factors. Solo practitioners and small firm lawyers are facing unique difficulties due to the pandemic. However, because smaller firms are often more flexible in their operations, these shops may be better able to weather the storm caused by the COVID-19 pandemic.

---

Jordan Rothman is a partner of The Rothman Law Firm, a full-service New York and New Jersey law firm. He is also the founder of Student Debt Diaries, a website discussing how he paid off his student loans. You can reach Jordan through email at jordan@rothmanlawyer.com.

HARARE, Zimbabwe 

As the World TB Day commemorated on March 24 every year kicks in, many children like Tinago and Thembi Gwenzi, have the disease to contend with.

In one room of their house in the capital Harare, Tinago Gwenzi coughs uncontrollably. His sister, Thembi Gwenzi in the next room is in even worse condition, coughing and spitting blood – her eyes welling up with tears.

Their parents died of TB four years ago and they are under the care of their aunt who moved in to stay with them.

Both parents had toiled for years as panners at a gold mine in the outskirts of Harare where they made the little money they needed to support their family.

Later on, the couple contracted TB, a common disease across the mining areas in Zimbabwe.

In this Southern African country, TB continues to be the leading cause of death among people living with human immunodeficiency virus (HIV).

With no choice and no means to survive even as they lived with their aunt at home, the siblings went down to the neighboring mines where they panned for gold, and like their parents, contracted the disease.

“They both have TB; I can tell you they are better now; they were worse two months ago. People think they have AIDS. That’s not the case at all,” Miriam Chaota, the aunt, told Anadolu Agency.

– Difficult diagnosis

Four years ago, Zimbabwe’s Health Ministry launched a project Catalyzing Pediatric TB, to scale up the diagnosis and treatment of the disease among children.

However, to many health workers like Bhekimpilo Sibanda, a laboratory technician at a top private hospital in Harare, children remain the country’s underreported victims of TB.

“Children even as they may show signs of having TB, here in Zimbabwe, it’s difficult to diagnose them of the disease,” Sibanda told Anadolu Agency.

Of Zimbabwe’s approximately 16 million people, 48% are children, according to official figures.

The Health Ministry says some 20% of those infected with TB are children.

Their aunt, now their ultimate guardian, has pinned the blame for the marauding TB on Zimbabwe’s defunct public healthcare system.

“If one gets admitted in hospital with TB, that person is sure to die even earlier because there is no medicine nor proper care given to people with the disease, worse still for children,” said the aunt.

TB remains the world’s deadliest infectious killer, with over 4,000 people losing their lives daily to the pandemic while 30,000 people fall ill with the disease, according to World Health Organization (WHO).

Compounding Zimbabwe’s war against TB in children, is inflation hovering above 300%, according to the International Monetary Fund last year.

Doctors and nurses in the country have since last year been downing tools every now and then, demanding improved wages to match with the country’s spiralling inflation.

In 2016, according to WHO, an estimated one million children below 15 years were infected with TB globally, but only 434,044 cases were reported, with over 253,000 children dying annually from the disease.

Zimbabwe has so far confirmed two cases of Covid-19, with one having already succumbed to the virus.

Stanbic Bank, a unit of South Africa’s Standard Bank, was one of the first to announce preventive measures, telling customers on Monday that paper-based transactions would no longer be accepted.

“In the interest of public health, and with immediate effect, please be advised that we will only be accepting payments via Business Online.

“All other bank instructions and letters must be sent on email and accompanied by the attached email indemnity form, which must be completed and signed by the authorised signatories,” read a notice send to customers by the Bank.

Cabs, a subsidiary of Old Mutual Zimbabwe, announced similar measures, telling its customers that hard copy instructions would not be accepted until further notice.

“Due to the Covid-19 outbreak we shall not be accepting hard copy instructions, all communications and instructions are to be sent as soft copies going forward. We will advise once it becomes safe for us to accept hard copies,” read a note from Cabs.

Other banks are taking precautions further, with First Capital Bank (FCB), formerly Barclays Bank, temporarily closing at least four branches.

“To protect Clients & Staff from spread of Covid-19, we are reducing our Branch Network by temporarily closing Belmont,B/ Dale, Harare St, First St from 24/03/20,” read a note from FCB.

Stanbic also temporarily shut down its Victoria Falls and Hwange Branches, while Nedbank has announced the closure of six of its branches.

Zimbabwe’s first case of Covid-19 was recorded in the resort town of Victoria Falls, in the north-west of the country.

Head Corporate Affairs at Stanbic Bank, Palmer Mugavha, said the decision was testament to the fact that the bank would put human life “ahead of any potential to earn profit”.

President Mnangagwa has also announced measures to combat the pandemic, including the closure of bars and other entertainment establishments.

Post published in: Business

Zimbabwe’s second coronavirus patient, a 30-year-old man, has died in the capital Harare, the government said on Monday, as borders were closed to curb the spread of infection.

Health Minister Obadiah Moyo “has confirmed the death of Zororo Makamba, who was the second person to test positive for COVID-19 in Zimbabwe,” his office said.

Makamba, a broadcaster and son of a business tycoon and politician, was confirmed positive with the virus on Saturday.

He had travelled to New York late last month and returned home on March 9, transiting through Johannesburg in neighbouring South Africa.

The government said he began showing mild flu-like symptoms on March 12 that progressively worsened. He consulted a doctor and was instructed to self-quarantine.

On Friday the country reported its first coronavirus case, a 38-year-old man who returned from Britain to his home in the tourist resort town of Victoria Falls.

President Emmerson Mnangagwa announced the closure of borders to human traffic on Monday as part of a new raft of measures to step up the country’s response to a pandemic that has hit more than 190 countries worldwide.

“We have decided to ban all non-essential traffic and travel, both inbound and outbound, except for the movement of cargo,” Mnangagwa said in a televised address to the nation.

He added that public gatherings of more than 50 people would be prohibited and encouraged residents to avoid in-country travel.

“Government has put a blanket ban on gatherings around nightclubs, bars, beer halls, swimming pools, gymnasiums and sporting activities until further notice,” Mnangagwa said.

Zimbabwe’s government previously ordered schools closed and cancelled public and sporting events.

It has also prohibited government officials from travelling outside the country, although Mnangagwa flew to Windhoek at the weekend to attend the inauguration of his Namibian counterpart Hage Geingob.

Zimbabwe’s public health system has been suffering for years from a lack of equipment and drugs and there are fears it will struggle to cope with the outbreak.

“The system… is overstretched and inadequate to deal with a coronavirus epidemic,” Norman Matara, secretary general of the Zimbabwe Association of Doctors for Human Rights, said at the weekend.