London lawyers Mishcon de Reya, already preparing for a stock exchange float, has started a litigation funding division with Harbour Litigation Funders, one of the largest litigation funding operations in the world.
A report in the FInancial Times says that Harbour is to invest £150m in the new fund which will see Mischon de Reya trim its usual handsome fees in return for the usual litigation funders’ share of proceeds from major class action lawsuits.
Mishcon de Reya Mishcon de Reya is set for £750m London listing and has invested a small amount of partner capital into the venture.
Litigation funding has become increasingly attractive for many investors in the current, low-interest climate, as well as helping to finance otherwise costly legal fights, even for well-heeled corporates. The funded cases will involve major cross-border legal fights and international arbitrations as well as cases in the UK.
The FT report that UK litigation funders had a pipeline of court cases and cash worth £2bn in April, double the sum three years previously.
The new venture with Harbour, called MDR Solutions, and is at least the third law firm to publicly team up with a big litigation funder in about a year. US-based Willkie Farr & Gallagher entered into a $50 million agreement with Longford Capital Management LP and in August 2020, DLA Piper partnered with Litigation Capital Management and a new third-party funder, Aldersgate Funding Limited, led by a former DLA Piper corporate partner. That deal also set out to offer clients access to about $200 million.
Mischcon has been involved in other litigation deals with Harbour, who invested about $200m in Mishcon cases in the past, including a successful trial on behalf of UK businesses claiming insurance payouts for pandemic-related losses.
Richard Leedham, (pictured left) Mishcon’s disputes partner, said winnings on future cases would be used to pay back losses.
He said the unit would operate separately from the firm itself, but Mischon’s 280-lawyer team of litigators and arbitrators, who are based in its London and Singapore offices, would be involved at different times.
Leedham said Mishcon benefited from a history of litigating complex cross-border disputes, which would help it to select cases. “We know how to litigate in different parts of the world and we think we can open up claims that wouldn’t have been traditionally funded,”he told the FT. “We are doing it because we think it will be a commercial success.”
However, the practice of profiting from disputes has also attracted controversy, illustrated by short-seller Muddy Waters’ attack on Burford Capital over its accounting methods in 2019. LawFuel recently reported on Harbour’s pullout from a major New Zealand case against building supplier James Hardie Industries, which created considerable controversy in that country.
The Mischcon move however is bound to add luster to the firm’s forthcoming float – along with its ability to generate healthy fees.