Litigation financing?
Wasn’t sure which forum to ask this under. I have an interview with a litigation financing firm doing due dilligence and other analysis of law firms and possible counterparties.
it’s labeled as an asset manager, but I can’t find a ton of info on salary, interviews, and information about the role beyond the job description. Does anyone here work in the LitFin space that would be willing to answer a few questions? Just wanting to know what kind of modeling, analysis, etc is required.
I know a few people doing litigation finance at hedge funds, most of them are or were lawyers. Assuming you don’t have a legal background, and based on what you mentioned (due diligence on law firms), the role will likely focus on credit analysis of the borrowers.
There’s a range: some large law firms handle major cases, while others (like mass tort firms) manage a high volume of smaller cases and clients. In either scenario, the funder needs to diligence the law firms themselves, and in many cases, those firms have shaky balance sheets.
That said, most funders don’t have the capability to do this well. Only a few have dedicated “investment/finance” professionals on the team; others rely on lawyers who try to do the analysis themselves, often without a strong financial background.
This is helpful information. By chance do you know what comp is like for this type of role for a finance background and not legal?
No clue. Attorneys typically make less than they did as senior associates (at least initially). For finance roles, it likely depends heavily on your experience since there isn't a standardized comp structure in the industry yet. If I had to guess, unlike law firms where most of the paycheck comes from the base, the roles would typically offer a higher % of comp through bonuses.
Makes sense. Apperciate your insights!
thank you
Litigation funding was big in 2017-2018, but then during the Covid era, the entire sector went radio silent due to heavy backlog of cases in the court system. Hard to predict when the sector will experience the next boom again. Litigation funding used to be illegal in the UK for example since funding agreements were regarded as 'champertous agreement' which is deemed void by law and thus the funder can no longer enforce it to recover the share of litigation proceeds after providing the funds to the litigant.
The ruling was subsequently reversed by UK courts just a few months ago: https://www.reuters.com/world/uk/uk-reverse-top-courts-ruling-litigatio…
We could see another 2017-2018 happening again for litigation finance as an asset class soon so who knows. But it is important to note that litigation funding is not something new/innovative at all, the concept literally existed back in the 1800s. And that the execution part is fundamentally flawed - case judgements are almost impossible to predict without having personal relationships with the judge for instance.
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