Here’s a novel idea: instead of thinking that litigation is a money drain, how about thinking of it as an important corporate asset? The Rand Institute, a think tank, and the UCLA School of Law recently teamed up to identify and analyze the most influential trends in civil justice. One such trend, labeled “litigation claim transfer,” and perhaps better known as “third-party litigation funding,” is grabbing hold right here in America.
What’s making conditions so ripe is a nearly perfect confluence of credit shortage, the enormity of the market for legal services, and an unrelenting search for investment opportunities—all of which spells money for smart risk takers. Richard Fields, the chief executive of Juridica Capital Management, and former plaintiffs’ bar attorney, is now advising law firms and corporate clients on how to maximize their investment in litigation. “Why should any lawyer risk $10 million for a $10 million return?” he asks. Fields, who runs the New York office of the London-based firm, says he would never take a case “that would keep us out of a general counsel’s office.”
Juridica is not a hedge fund. Instead, the public company manages a permanent closed-end fund of some $200 million that Fields says “we get to recycle.” Juridica employs only a few staff and hires a third-party firm to conduct rigorous due diligence. Last year, Juridica evaluated 170 cases in the United States, opting to invest in 17. So far, three of those 17 cases have paid off, returning a 4.6 percent dividend to investors.