“Those hedge funds that are out there are investing in cases where they can invest $3 million,” Greenberg said. “There’s a huge demand and a short supply of capital… Right now, we’re very picky.”įounders of these sites say they contribute value because they focus on a segment of the legal arena that the big litigation-investment hedge funds pass over because the individual cases are too small. “It’s primarily a function of a huge inefficiency in the market,” he said. ![]() Hakimi said that his firm has a perfect track record of investing in winning cases so far. “It’s not easy to do, although I do think that more data can be of some help in increasing the reliability of projections about litigation outcomes,” he said. “There is always a strategic factor in litigation that can reduce the reliability of statistical analysis because you have to account for multiple possible outcomes depending on what the counter-party does,” Geoffrey Miller, a professor at New York University’s School of Law, pointed out via email. The final aspect is the defendant’s creditworthiness, since winning a case against an insolvent defendant wouldn’t really be a victory in the sense that investors wouldn’t be able to get a return on their investment. We’re also looking at the plaintiff’s counsel’s track record,” he said. “The first thing we’re looking at is through the legal merits of the case. There are three main criteria Greenberg said his company weighs when determining whether or not to fund a case. ![]() “Our team’s been investing in legal claims since the late 90s, we have a tried and true underwriting process to vet these claims,” said Jay Greenberg, CEO and co-founder of, a litigation finance company for commercial cases. They engage in various ways of vetting the most likely prospects out of the hundreds of applicants that contact them. Most litigation-funding investment sites focus on either commercial suits - breach of contract and the like - or personal suits like civil-rights violation and injury cases. “There never would’ve been such a thing as litigation funding because the courts took the view and lawmakers took the view that the courts exist for the purpose solely for enabling people whose rights have been violated to get relief of some kind,” he said. ![]() “Historically, this would have been a nonstarter,” said Stephen Gillers, a professor at New York University School of Law. ![]() Boyzell Hosey / Pool via APįounders of these sites say their business model benefits investors because investing in lawsuits is decoupled from the broader market, meaning that economic downturns wouldn’t hurt their returns, and they argue that the field is still open enough for them to be very selective in the cases they take on. Former professional wrestler Hulk Hogan and his attorney Seema Ghatnekar prepare to take a break just after the jury was handed Hogan's case against Gawker Media for deliberations on Friday, March 18, 2016, in St. As a result, start-ups in the field of litigation-finance investment have gained prominence, with a simple pitch to investors: Put up as little as $5,000 to fund lawsuits, and make money.
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