Funds have turned lawsuit bets into a USD 39bn sector

Hedge funds, private equity and sovereign wealth funds are piling billions into the outcome of high stakes court cases at a faster rate than ever before.

Photo: Sojka Libor/AP/Ritzau Scanpix

Litigation finance -- the practice of paying legal fees up front with a promise to share in any eventual payout --  soared to become a USD 39bn global industry in 2019, according to law firm Brown Rudnick. It's being used to fund everything from Russian oligarch's divorces to take on banks in fraud suits. Now, regulators are asking whether there’s enough oversight.

"More companies than ever before are exploring how legal finance can help their bottom line," said Jack Neumark, head of Fortress Investment Fund LLC's legal assets business. "We lose money if the claims we fund are unsuccessful, so we only finance claims that are supported by strong evidence and the law."

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