Third-Party Litigation Funding Picks Up as UK Investors Eye US Cases
Third-party litigation funding has gained steam as two UK-based investment companies have committed more than $160 million to play the stakes in at least 30 legal disputes, many of which are international arbitrations.
Juridica Investments and Burford Capital are now on the hunt to finance U.S. litigation in return for a percentage of any settlement or judgment, the New York Law Journal reports.
Juridica committed nearly $123 million to 15 investments in 22 cases by March 2010, including one in New York. Burford, which raised about $130 million in an October IPO, has invested $40 million in 10 cases and plans to fully commit its capital by October 2011.
The firms’ efforts are not without critics, as the U.S. Chamber of Commerce called for a ban in October of third-party litigation financing at all levels. The U.S. Chamber Institute for Legal Reform also warned in a report that inaction against outside investors “could open the floodgates for third-party litigation financing of mass and class actions and in personal injury cases.”
It’s not a coincidence that interest in litigation investments picked up just as the U.S. economy began to bottom out, Patton Boggs partner James Tyrrell Jr., who acts as outside counsel to both funds, told the Law Journal. Tyrrell said the failure of the derivative and mortgage-backed securities markets prompted investors to seek out new sources of potentially huge financial gains.
“There’s a lot of money out there that’s looking to find a home,” Tyrrell said.
