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Commercial Finance

Wall Street Bets on Plaintiff Financing

June 17, 2014
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2min read

Former Wall Street execs are betting on plaintiff financing,as there is a growing trend on both sides of the Atlantic for ex-bankers to become  risk-preferring plaintiff patrons.

That plaintiff financing is attracting investment fund managers seems to be self-evident, as commercial litigation financing  is simply investing equity in an alternative asset class – and one that has the potential for impressive returns for investors.

The actions of former Wall Street executive, William H. Strong affirms this. The former Vice Chairman and Co-CEO of Morgan Stanley Asia-Pacific Operations came out of retirement to take on the role of chairman and partner at Longford Capital, a new litigation finance firm focusing on B2B claims in matters with over $25 million in controversy. Mr. Strong officially took his post May 1st.

In a Dealbook piece profiling the move, Strong says plaintiff financing reminds him of the early days of private equity in the 1980s. Longford Capital, itself only started in 2013, brought Strong on to uses his rolodex to build its business and investor pool.

Strong isn’t the first private equity veteran to make the transition to legal finance.

In fact, one legal investor, Parabellum Capital, started as practice group inside Credit Suisse in 2006 specializing in financing  large commercial litigation. As a result of its success, Credit Suisse spun it off as a wholly independent company in 2012.

Gerchen Keller Capital focuses on complex commercial litigation finance and launched in 2013.  They have already raised over $300 million in investment assets.

With such great talent and large sums of capital entering litigation finance, expect the growth in commercial litigation finance to continue.

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