Risky Business. Law fi rms are increasingly interested in litigation fi nancing, but some could be playing with fi re.

• Author: Stephanie Francis Ward
• Pages: 54-59

D

o you want to  ght for your clients but are short on

cash? Call litigation  nance groups today and get

$500,000 or signi cantly more!

But not if you have public discipline, bad credit, too

much debt or a dog case . Or if the other side is known for

slash-and-burn legal tactics. Or if it looks like your case won’t

bring in enough damages to satisfy the client after the funder

gets paid.

The caution is understandable. The loans are nonrecourse ,

so if the case or cases go south or the attorney breaks the

agreement, the funder loses its investment.

But if the litigation is successful, the return on investment

could be between 200% and 400% , lawyers interviewed by

the ABA Journal say.

Interest in litigation  nance has grown in the past few years.

The pandemic shut down many court matters in 2020, which

meant some lawyers in private practice earned less. Additional-

ly, wealthy investors faced various unusual circumstances—not

just the COVID-19 crisis but also a nation sharply divided

over the 2020 presidential election, and both made the stock

market unpredictable.

In addition, litigation  nance is attractive as a high-risk

investment because of the certainty that one side will come

out on top, and the variables for the most part are limited to

counsel, evidence, judges and juries.

Some lawyers who review proposed litigation  nance deals

say they are busier than ever, with hedge funds and wealth

managers looking for cases to fund. And commercial litiga-

Photo illustration by Sara Wadford/ABA Journal

ABA JOURNAL | FEBRUARY–MARCH 2022

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