Friday, December 28, 2007

Lawsuits as an investment asset class?
The notion of litigation as a separate asset class is a novel one. It's hard to imagine fund managers one day allotting a bit of their portfolio to third-party lawsuits, alongside shares, bonds, property and hedge funds.

But some wealthy investors are starting to dabble in lawsuit investment, bankrolling some or all of the heavy upfront costs in return for a share of the damages in the event of a win.

...Juridica will make investments in ongoing legal claims, mostly in the US, and loans to law firms to finance their costs in pursuing claims.

Profiting from other people's lawsuits, a practice known as champerty, is illegal in some jurisdictions and risks accusations of ambulance-chasing, but Juridica is concentrating on backing business plaintiffs, where the practice is better established and more accepted.
(Via Marginal Revolution.)