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Dismal Economy? Not for Companies Funding Corporate Litigation

By Martha Neil

June 2, 2009, 11:45 pm CDT

The dismal economy reportedly has offered a boost to a fledgling industry that helps fund corporate litigation.

“It’s always a good time to invest in litigation,” chief executive Richard Fields of Juridica Capital Management tells the New York Times—but a weak economy, he says, is an additional plus factor. “When the recession started to bite, the phones started ringing off the hook. Last year, we looked at 122 cases and we made 17 investments.”

Although he and others involved in the industry don’t want all their cards on the table, they report that business is brisk. David Desser, the managing director of Chicago-based Juris Capital, says his company typically provides $500,000 to $3 million to fund a case, the newspaper writes. In return, according to Desser, investors are earning “well in excess” of 20 percent annually on their overall portfolio.

Although it would be improper for investors to interfere with the way a lawyer and client handle a case, such investments may be good public policy if they encourage companies to pursue valid claims that otherwise couldn’t be brought, professor Anthony Sebok of Yeshiva University’s Benjamin N. Cardozo School of Law tells the Times.

Earlier coverage:

ABAJournal.com: “UK Hedge Fund Raises Another $47M to Invest in US Commercial Litigation”