If you listen to the United States Chamber of Commerce, insurance industry lobbyists, or any number of defense attorneys, you might think that litigation finance is a somewhat sleazy, back-alley operation, populated only by the unscrupulous. To be sure, this is the message, either express or implied, when someone tries to equate litigation finance and payday lending by using the term “lawsuit loan.” But a recent trend in the legal profession belies this suggestion and demonstrates that the most elite lawyers now recognize that litigation finance is a legitimate part of the legal system and that it is capable of making important contributions to the pursuit of justice. The recent trend is that more and more established attorneys are leaving large, successful law firms – “Big Law” – and taking positions with litigation finance enterprises. As more and more investment capital flows to these enterprises, they are playing a more influential role in litigation at all levels and in all areas.
Prominent attorneys are noticing, and they are recognizing litigation finance as a legitimate career alternative to big-firm practice. The migration of established attorneys from big firms to litigation finance is significant because such attorneys have traditionally been willing to explore only a couple of alternatives to law firm practice. Of course, there is a well-worn path from big firms to in-house counsel offices. Similarly, attorneys are often willing to leave their firms for some form of government or public service. But, for many years, these have been the two principal exit doors for attorneys who seek alternatives to practicing with a large or boutique firm. Now litigation finance is emerging as “door number three.”
For example, a London-based litigation finance company recently opened an office in New York, and it hired three highly regarded associates from prestigious firms, including Arnold & Porter and Kay Scholer. Another British litigation financier expanded its New York office by hiring a attorney from Proskauer Rose. American litigation finance companies have recently made hires from firms such as Paul Hastings, Latham & Watkins, Gibson Dunn, and Akin Gump.
The influx of Big Law attorneys means a couple of important things for litigation finance. First, well-trained, highly regarded lawyers are not going to waste time or fritter away investors’ dollars on specious cases. Hiring good attorneys is a sign that litigation financiers are interested in high-quality cases. Second, when a litigation finance enterprise has a direct connection to a well-regarded law firm, it has a better pipeline for cases to fund. Finally, the willingness of good, young lawyers to join litigation financing companies shows that there is a solid expectation among attorneys that litigation finance is here to stay.
Topics: litigation finance, legal reform, third-party funding, litigation costs, alternative litigation finance, big law