Key Takeaways
- • Latham & Watkins LLP published an analysis framing litigation funding as a private equity investment opportunity and a tool for managing portfolio risk, according to JD Supra.
- • The publisher's own context argues that PE firms should treat litigation funding as a growth sector and as a means to de-risk portfolio company claims.
- • Litigation finance is described as a niche alternative asset class built on debt and equity investments in litigation claims and law firms, with claims that it can diversify portfolios and reduce overall risk.
- • Third-party funders provide capital to claimants for litigation costs in exchange for a percentage of any recovery, a structure that has supported mass tort litigation growth.
Summary
A Latham & Watkins LLP article, republished on JD Supra and dated March 13, 2019, presents litigation funding as an investment opportunity for private equity firms and as a portfolio risk management tool. The available source text is largely the publication's landing-page material, so the specific deal figures, fund names and case examples are not available in this summary.
The publisher context frames the thesis directly: PE firms should consider litigation funding as a growth sector and as a valuable tool for de-risking portfolio company claims. In this framing, a third party unrelated to the underlying dispute supplies capital to a claimant to fund the costs of pursuing the case.
Related materials in the publisher's catalogue describe litigation finance as a rapidly growing niche asset class encompassing both debt and equity investments in litigation claims and law firms. They argue that the asset class can diversify investment portfolios and reduce overall risk. Third-party litigation funding (TPLF) is described as allowing hedge funds and other financiers to invest in lawsuits in exchange for a percentage of any recovery.
The same materials note that outside funding has enabled the growth of mass tort litigation by covering upfront costs. They also point to the regulatory and ethical questions surrounding single-case and portfolio funding models, including funder returns and due diligence, which are central considerations for institutional investors evaluating the sector.
The publisher context frames the thesis directly: PE firms should consider litigation funding as a growth sector and as a valuable tool for de-risking portfolio company claims. In this framing, a third party unrelated to the underlying dispute supplies capital to a claimant to fund the costs of pursuing the case.
Related materials in the publisher's catalogue describe litigation finance as a rapidly growing niche asset class encompassing both debt and equity investments in litigation claims and law firms. They argue that the asset class can diversify investment portfolios and reduce overall risk. Third-party litigation funding (TPLF) is described as allowing hedge funds and other financiers to invest in lawsuits in exchange for a percentage of any recovery.
The same materials note that outside funding has enabled the growth of mass tort litigation by covering upfront costs. They also point to the regulatory and ethical questions surrounding single-case and portfolio funding models, including funder returns and due diligence, which are central considerations for institutional investors evaluating the sector.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.