Added value: litigation funding

Posted on 21 August 2015. Source: AlphaQ

Added value: litigation funding

Litigation funding is not widely thought of as an asset class in itself, however this section of alternative investments has similarities with hedge funds and private equity funds. While the purpose is to generate a return, it has, at times, been encouraged as promoting a sense of justice.

Eve Ellis, a Partner at Mishcon de Reya, explains that Litigation Funding often takes the form of a self-managed offshore company, the purpose of which is to pay out the legal fees for the cases the fund, on advice from a litigation adviser, decides to back (or to “investin”). Unlike hedge funds or private equity, these products are not financial instruments – and hence litigation advisers do not generally need to be regulated by the FCA.

Litigation funding happens more or less formally – which is why total AuMs can’t be easily quantified – and its development as a substantial and structural part of our industry may take a while. Herdman-Smith insists that she has seen cases where individuals could win cases against large companies. Some of these cases would never have been brought to justice, or would have lasted too long and been too intricate to have been sustained financially if it had not been for litigation funding.

Read the full article, available on page 22, here.