Litigation funding on the up

The New York Times has reported that investors are looking to litigation for new investment opportunities. They fund a wide range of litigation, from medical malpractice claims, divorce battles and class actions against corporations – for new opportunities. Large banks, hedge funds and private investors are pumping millions of dollars into lawsuits in the hope of sharing in the potential winnings. At the large end of the scale are lenders like Counsel Financial, which provided $35 million for the lawsuits brought by ground zero workers, making profit of around $11 million after the matter settled. Most investments are significantly smaller, such as the $45,000 sum from New York lender Ardec Funding, which paid for expert testimony in a medical malpractice suit. Ardec is collecting interest at an annual rate of 24 percent, or $900 a month until the award is paid. While outside funding can allow people to pursue claims regardless of the state of their personal finances, it can also lead abuses, with investors initiating and controlling cases, or plaintiffs becoming overburdened with the high interest rates on litigation loans.

Litigation funding on the up Tue, Nov 16, 2010