After a tie-up two years ago, Arizona-based litigation financier Pravati Capital and litigation boutique Pierce Bainbridge Price & Hecht are going their separate ways.
“We funded Pierce Bainbridge Beck Price & Hecht’s significant growth following our disciplined methodology for selecting, underwriting, and structuring investments. We have been recently fully paid out and are not currently partnering with the firm,” said John Lovallo, a spokesman for Pravati Capital.
Pravati made its statement after dueling lawsuits were filed by the Los Angeles-based boutique law firm and former partner Donald Lewis. Lewis accused the firm and individuals of fraud and financial wrongdoing, and alleges the firm inflated the value of its case portfolio to litigation funders like Pravati.
John Pierce, founder and global managing partner of Pierce Bainbridge, said, “The firm’s repayment of the Pravati-invested funds was completed for ordinary-course business reasons that are entirely unrelated to Lewis’s complaint. Pravati provided invaluable start-up capital that played a meaningful role in our growth, and the firm paid down that debt regularly over the course of many months. The final payoff arrangements were made prior to the filing of this threatened litigation by Lewis or his attorneys.”
Pierce said he “vigorously” denies the allegations in the lawsuit. The firm is suing Lewis over charges of defamation and “outright extortion.” The firm claims Lewis is seeking revenge for his termination from the firm after he was allegedly accused of sexually assaulting another employee.
“Mr. Lewis’s allegations about Pravati Capital are not true,” Pierce said. “Pravati is a sophisticated litigation funder that has been in business for years. They perform their own robust diligence on each case they fund, and they know what they’re doing. The notion that they could have been hoodwinked into making a bad investment is nonsense. And, since Mr. Lewis’s departure, the firm has fully repaid the funding that Pravati provided—with a handsome return—and maintains a good business relationship with the Pravati team.”
He added that the firm and Pravati have left open the possibility of further collaboration in the future.
Shortly after Pierce Bainbridge set up shop in January 2017, the firm and Pravati teamed up in May in what was one of the first public announcements of a litigation funder financing a firm’s portfolio of contingency fee cases.
Pravati would fund a portfolio of current and future contingency cases against some high-profile companies and their high-priced lawyers. Pierce Bainbridge, then known as Pierce Sergenian, would “receive substantial infusions of capital as an as-needed, ongoing basis” to fund a growing number of cases, the press release announcing the initial tie-up stated.
In return, Pravati would receive a cut of the damages awarded in those cases.