Private Equity Funds Deploy New Investment Strategy: Financing Lawsuits

Private Equity Funds Deploy New Investment Strategy: Financing Lawsuits

by | May 30, 2018 | Lawsuits, Legal

Private equity and hedge funds have found a new way to get richer: Financing lawsuits in exchange for a cut of the winnings.

The investment funds, which have raised billions of dollars to funnel into promising cases, have become a rich source of cash for lawyers to acquire cases, buy advertising, recruit clients and underwrite litigation expenses. If the lawyers win, private equity backers can pocket up to six times their initial investments, amounting to as much as 50 percent of a settlement or trial verdict.

This large and growing pool of money has opened the door for lawyers to gamble on big cases against big companies involving thousands of victims and millions of dollars in damages, but it also raises questions of whether lawyers will act in the best interest of clients or their financiers, who might prefer a quick settlement over a lengthy trial. In addition, the cuts taken by private equity and hedge funds can be so high that clients who win big awards on paper may end up with as little as 10 cents on (sic) dollar, legal experts say.

“Litigation finance has been around for more than a decade, but only in recent years has it taken off as private equity and hedge funds seek better returns beyond stock, bond and commodity markets, according to legal and finance specialists. By some estimates, more than one-third of U.S. law firms used litigation financing in 2017, up from 7 percent four years earlier, while private equity and hedge fund investments in lawsuits have surged to about…read more

Source: L.M. Sixel, San Antonio Express News
Originally Published: May 29, 2018

Want new articles directly to your inbox?
Subscribe to our Publishing Service.

3 + 10 =

Gov. Abbott Sets HD 125 Special Runoff Election Date for March 12th

Gov. Abbott Sets HD 125 Special Runoff Election Date for March 12th

Governor Greg Abbott set the special election runoff date for Texas House District 125 for March 12, 2019 with early voting by personal appearing starting on March 4, 2019. The seat was vacated by (then) Rep. Justin Rodriguez following his appointment as Bexar County Commissioner in January. The 5-way special election was held February 12th, with Ray Lopez (D-San Antonio) and Freddie…

Governor Abbott Appoints Brett Busby To Texas Supreme Court

Governor Abbott Appoints Brett Busby To Texas Supreme Court

Governor Greg Abbott has appointed Brett Busby to the Supreme Court of Texas for a term set to expire on December 31, 2020. Busby’s appointment follows the retirement of Justice Phil Johnson. “It is a distinct honor to appoint Brett Busby to serve on the Supreme Court of Texas,” said Governor Abbott. “Brett’s respect for the Constitution and his…

Pin It on Pinterest

Share This