Last month, we experimented with a new format by publishing a collection of our favorite articles about legal funding from around the web.
Thank you to everyone who wrote back. You speak, and we listen. So back by popular demand, here's your November Legal Funding News Roundup.
Litigation Finance Valuation and Modeling
A major challenge facing the legal funding industry is the lack of consensus from capital markets, and even across industry players, on how to value the asset. This limits liquidity and drives up the price of capital. Professor McDonald provides thoughtful prescriptions in the following pieces.
- Forget Where's the Beef? Where is the Alpha?! -This article argues that for the industry to grow, investors must be able to identify the driving force behind a legal funder's returns - skill or risk - and, thus, there must be a way to measure risk adjusted returns. Additionally, funders should eventually be able to present to investors their portfolios' returns compared to a relevant benchmark, most simply, the broader stock and bond markets.
- Appeals Court Throws Out Debt Lawsuit By Litigation-Finance Outfit - New York's highest court upheld the dismissal of a $300 million lawsuit brought by Justinian Capital against defunct German bank West LB under the doctrine of champerty. While the ruling will have a limited domino effect, it's still a warning to funder not to get too "creative" with deal structures.
- In Pursuit of a 10,000% Return - Bloomberg covers how commercial litigation funder Bentham Europe is the driving force behind shareholders' class action suit against Volkswagen.