Investing in Lawsuits, for a Share of the Awards

Richard W. Fields says he has come up with a win-win financial strategy for the downturn. He is investing in lawsuits.

Not in trip-and-fall cases, mind you, but in disputes that are far larger, more costly and potentially more lucrative, often pitting major corporations against each other.

Mr. Fields is chief executive of Juridica Capital Management. which runs a fund that invests in one side of a lawsuit in exchange for a share of any winnings.

“It’s always a good time to invest in litigation,” Mr. Fields said, though he added that the weak economy helped. “When the recession started to bite, the phones started ringing off the hook. Last year, we looked at 122 cases and we made 17 investments.” A small but growing number of investors are exploring this idea, helping companies avoid some of the risks and costs of litigation in exchange for part of any money paid out when the case is settled or resolved by a court. After all, it can be costly to hire lawyers, who may charge close to $1,000 an hour at the most elite firms.

Credit Suisse has a unit devoted to this kind of investing. Juris Capital, a Chicago firm backed by two hedge funds, also does it. Several other hedge funds do, too.

“Given the conditions in the economy, you have a set of circumstances that are pushing both clients and law firms” to look for outside investor help, said David Desser, managing director of Juris.

Companies often jump at the chance to have an investor help pay for litigation, and lawyers usually appreciate having money set aside to pay them.

More: http://www.nytimes.com/2009/06/03/business/03litigate.html?src=sch

Investing in Lawsuits, for a Share of the Awards

Investing in Lawsuits, for a Share of the Awards

Anarcho-Capitalist Categorical Imperatives

AnCaps' Laissez-faire Free Trade Zone