Litigation Funding – A Look Back and to Note Chicago is Now Home for the World’s Largest
Chicago is now home to the world’s largest litigation funding source. It is Gerchen Keller Capital LLC. which just announced raising a new fund of $475 million, and that it and adjuncts have an additional $800 million under management. The new press release is pasted below. For even more color on Gerchen Keller and its people, there is an ancillary story in the Chicago Daily Law Bulletin.
For more global color on the broader topic of litigation funding, here’s a quick look back at some of the many posts on GlobalTort about litigation funding.
Remember all the way back in 2009, when RAND sponsored a conference on litigation funding? Back then, I said:
“Litigation funding is a topic I’ve mentioned before in a Corporate Counsel “special section “article and on this blog. The existence of material amounts of capital available for litigation funding is in my opinion a huge development in and driver for litigation of all kinds, ranging from intellectual property to securities class actions to mass tort personal injury claiming. Moreover, this trend is only going to accelerate as the UK’s legal reforms will soon (not later than 2011) allow direct outside investment in UK law firms.”
Or, later in 2009, Burford Capital went public in the UK, and the always astute Alison Frankel declared litigation funding a “bona fide investment class.” Then, back in 2010, numerous events litigation funding events occurred. I wrote:
Then, back in 2010, several litigation funding events occurred. I wrote:
It’s not quite the rock star niche Dr. Hook described when he sang about the status achieved from appearing on the cover of Rolling Stone, but litigation funders Selvyn Seidel and Rick Fields did make the cover of American Lawyers’ supplement magazine, Litigation 2010. The related article is titled “London Calling, (paywall)” a reference to Messrs. Seidel and Fields leading litigation funding businesses which are public companies registered on the UK’s AIM market.
The article, by Richard Lloyd, is preceded by this teaser: “Two publicly listed funds are investing in early-stage commercial litigation. Is this the start of a revolution, or a sideshow for a few former Am Law 100 lawyers?”
The answer, in my view, is pretty plain. Over time, litigation funding will cause as much of a revolution as can possibly occur in the already massive litigation industry that is tied up in hundreds of years of precedent and balkanized legal systems. In saying that, I’ll admit to some possible bias because my professional life brought me into contact with both gentlemen, and Selvyn Seidel was kind enough to accept an invitation to speak at a litigation seminar I chaired last year in London.
Meanwhile, as 2014 progressed and Gerchen raised more money, the US Chamber of Commerce and some of its friends once again complained about litigation funding, even though plenty of companies love litigation funding as a way to hedge risks and take on cases that might otherwise not start or succeed.
Now back to 2015. Pasted below is the press release from Gerchen Keller. Not so many words, but they speak volumes about the present state of the litigation financing industry as an adjunct to the litigation industry.
“CHICAGO, Feb. 10, 2015 /PRNewswire/ — Gerchen Keller Capital, LLC (“GKC”) today announced the close of its newest private investment fund, GKC Credit Opportunities, LP, with more than $475 million in commitments. Together with its two litigation finance funds and other pooled vehicles, GKC has invested or manages more than $800 million in assets. GKC is now the world’s largest investment firm focused exclusively on legal and regulatory risk.
“As we continue to expand the suite of products we offer, we are grateful for the support of the institutional investor community and pleased by the strong demand from companies and law firms,” Chief Executive Officer Adam Gerchen said.
Using capital from its latest fund, GKC purchases legal fee, judgment, and settlement receivables in connection with litigation matters that are largely resolved—providing liquidity to companies and law firms that seek to monetize litigation proceeds or legal fees and recognize revenue immediately.
GKC also helps structure litigation settlements where the parties have differing cash flow needs—for example, providing a lump-sum settlement payment to a plaintiff while allowing the defendant to spread its settlement payments over time.
GKC already has invested more than $100 million in these post-judgment and post-settlement opportunities, in transactions involving organizations ranging from Am Law 25 law firms to closely held corporations.
“This new pool of capital continues our commitment to constant innovation in serving the legal community,” Managing Director Ashley Keller said. “Our range of capital solutions now includes traditional financing for litigation, arbitration, and transactional matters, as well as products to reduce appellate risk, protect against outsized liability, guarantee payment of adverse fee awards, structure settlements, and accelerate receivables.”
With the launch of its latest fund, GKC now provides capital at any point in the litigation process, with differing investment terms that correspond to the relative level of legal risk.
“From the complaint phase to the settlement table, our products help companies and law firms manage risk and stabilize cash flows,” Managing Director Travis Lenkner said. “GKC’s unique approach goes well beyond traditional ‘litigation finance.’ We are the market leader in providing creative, non-recourse solutions in connection with legal and regulatory processes.”
About GKC: Gerchen Keller Capital, LLC is the largest investment firm focused exclusively on legal and regulatory risk. GKC provides capital and other financing solutions to companies, law firms, and investment funds involved with or invested in complex litigation, arbitration, and transactional matters. Through various private vehicles, the firm has invested or manages more than $800 million in assets for family offices, financial institutions, public pensions, endowments, and foundations.
Media contact: Travis Lenkner, Managing Director, (312) 757-6073, firstname.lastname@example.org.
GKC is registered as an investment adviser with the Securities and Exchange Commission. This release is for informational purposes only. Nothing herein should be construed as a solicitation to offer investment advice or services. Information about investing in GKC-managed funds is available only in the form of private placement memoranda and other offering documents.”