Litigation Finance; a Financial Perspective

Lee Drucker

On November 20th, the Center on Civil Justice at NYU School of Law hosted an in-depth conference dedicated to the subject of litigation finance, Litigation Funding: The Basics and Beyond.  It was a great opportunity to interact with many of the people that are devoting their time and energy to thinking about and building this new ecosystem of law and finance. David Lat (among others) covered the event, and you can read some of his takeaways here.

Personally, I was able to glean from the perspective of other professionals in the industry; some perspectives were new and interesting, and other perspectives I disagreed with, but in either case it was it was worthwhile to learn what perspectives others were bringing to bear. One of the big take-aways for me was that each funder seems to be taking a slightly different approach to the industry. Next week, I will write an article to distill these differences.

This week, I would like to share my presentation at the conference. I was there to present a paper, A Financial Perspective on Commercial Litigation Finance. I examined:

  1. How a company can benefit from transferring the risk associated with an investment in a legal claim
  2. Why an entity holding a portfolio of legal claims is more capable of bearing and managing such risk, and
  3. Why litigation financiers are well suited to aggregate portfolios of legal claims.

In the paper, I explored how the redistribution of risk to the party that is most willing and able to bear it allows companies to more efficiently allocate capital resources to their highest and best use, permitting companies to invest in projects that optimize returns and promote general economic growth. I think the paper is useful for any lawyer that is working with the general counsel or CFO of a mid-cap company. I wrote it with the purpose of bridging the sometimes treacherous gap between law and finance. Here is the paper. As always, happy to answer any questions: drucker@lakewhillans.com

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