An article by Kate Ploud in the January edition of CFO magazine puts an interesting spin on how some look at the mass of corporate litigation in the United States. While much has been said disparaging the number of corporate lawsuits, Juridica Capital Management, Ltd., takes a different view.
Ploud’s article quotes the founder of Juridica, Richard Fields, as seeing this litigation as a type of asset sitting on the books of a company because it provides another way for companies to hedge their litigation risk and finance their own litigation expenses. Companies in the United States can apply to Juridica directly or through their law firm for coverage of a portion of their litigation legal fees in exchange for “sharing” 25-40% of any proceeds obtained in the litigation.
According to the company’s Web site, Jurdica is “a lawyer-owned financial services company operated in an investment banking tradition and focused exclusively on capital and finance for corporations, law firms, lawyers, and claim-holders worldwide.” Juridica is based in the United Kingdom but the company’s top management team, including the founder, is composed of American lawyers.
Jurdica’s Web site says it “prefers to examine potential business-related claim investments that have been vetted and accepted by qualified lawyers” and “ordinarily does not structure investments in personal injury claims.” It also states that the company’s due diligence process “is carefully designed to preserve client confidentiality, lawyer-client privileges and work product protections. Our due diligence process normally takes 30 to 60 days but can be completed in less time where conditions permit.”
Fields says the company strategy of investment only in certain types of business-to-business cases, thoroughly screened by outside lawyers, has been very successful. In two cases, which settled, according to Fields, the company made a $5.25 million profit.