There's nothing wrong with the act of taking out the funding per...

There's nothing wrong with the act of taking out the funding per se. However, you can't take out that kind of facility without proper disclosure to the plaintiff group and expect to take such a huge sum out of their compensation settlement. Shine has a duty to disclose those matters to its client, who they run the litigation on behalf of. It's true that Shine took on this risk; not out of the goodness of its heart, but for profit. Like some commercial ventures this one turned out unprofitable. Shine's primary duty is to the court, not the shareholders. That is the law and the commercial environment they operate in. If that means not paying dividends so that it has cash on hand, that would have been the prudent thing to do!

I do not agree with your reasoning that this would effectively prohibit the payment of dividends by listed law firms. Their circumstances were not the norm. Rather, it highlights the importance of retaining sufficient cash reserves to fund long term litigation without the need to access cash at 30% interest. Shine was not sufficiently prepared in the circumstances. Rather than pandering to SHs, Shine's cash would have been better invested in the litigation for an eventual payoff, without taking on the high interest liability. Perhaps they did not see the litigation dragging on for so long, but that is part of their business risk. You can't make that kind of mistake and then ask the plaintiffs to pay up.
I say this as an ex-SH. I sold out recently after the judgment was issued. I may buy back in once I have a better grasp of their financials.