As litigation finance grows, Big Law wants to be a part of it. Paul Hastings has been offering litigation finance to its clients for about a year now according to the firm. Obviously, not every client uses it but for some it can be a very successful option.
Although, little snippets from firms or financiers have come out about the use of litigation finance in big law, much is still unknown. For example, there is little published information about what firms are using litigation finance and if they are how much or what kinds of cases the money is going to.
As litigation finance has been around much longer in Australia and the U.K., some details are a little clearer in those markets. A commercial dispute publication from 2014, noted that White & Case had used financing from Vannin capital (a London based company) to represent Pakistani drinks manufacturer in a licensing dispute. Vannin CEO Richard Hextall has said that the firm has relationships with “top-tier law firms” in multiple markets including the U.S., U.K., and Australia.
Some argue that the lack of transparency calls for more regulation of the industry. The U.S. Chamber of Commerce in particular has been arguing to regulate litigation finance as they say it increases the overall volume of litigation and presents ethical issues. The Chamber is specifically arguing for disclosure regulations saying that no one with financial stake in an outcome of litigation should be anonymous.
However, litigation financiers argue that they do not fund cases without merit. As it is a risk for the funder, most litigation financiers will do extensive research and investigating before deciding whether or not to get involved.
Litigation financing is beneficial to Big Law because it allows attorneys to take on cases that they usually wouldn’t be able to take on while still getting paid at their hourly rate. Litigation funding is attractive to funders as well as the law firms because it spreads out risks. Thus, making it an appealing investment.
Topics: litigation finance, alternative litigation finance, third party funding, big law
Works Cited: Stephanie Russell-Kraft, Big Law Embraces Litigation Finance, Big Law Business (March 23, 2018).