Chicago-based litigation finance firm Longford Capital says it has raised $682 million to close its third private fund, signaling that investors continue to view litigation as a ripe asset for returns.
The figure includes $434 million that Bloomberg Law reported in January, meaning Longford added about $250 million in additional fundraising before closing the fund.
“There has absolutely been an increased interest on the part of more institutional investors,” Timothy Farrell, a co-founder and managing director of Longford, said in an interview. “It is another indication of the evolution of the asset class.”
The fund marks another success for litigation finance, where investors pay lawyers’ fees or expenses in exchange for a share of a lawsuit’s potential rewards. Litigation finance companies have attracted more than $11 billion in capital, according to a survey by an industry consulting firm.
Longford invests in commercial disputes, civil antitrust cases, and intellectual property matters. The company also uses its capital to purchase litigation assets from corporate clients seeking a quicker return on litigation claims, an industry practice known as “monetization.”
The company launched in 2013 with less than $60 million in assets. The amount of the new fund brings Longford’s assets under management to more than $1.2 billion, the company said.
Longford said it has already committed nearly $270 million of the new fund, its third. The fund brought in about 36% more than the $500 million raised in 2017 for its second private fund.
The money was raised from state and municipal pension funds, university endowments, foundations, single and multi-family offices, and high-net-worth individuals, the company said in a statement.
VIDEO: Bloomberg Law’s Roy Strom gives a peek inside the growing practice of litigation finance and explains what it means for the future of the business of law.
In June, Longford publicly announced an agreement to fund up to $50 million in cases from Willkie, Farr & Gallagher, a high-end law firm, in a deal that generated attention for the industry. Top law firms have been reluctant to publicly discuss their relationships with funders.
“We were almost done fundraising by the time we made that Willkie announcement, but existing investors and prospective investors without exception viewed the announcement with Willkie very positively,” William Farrell Jr., a Longford co-founder, said in an interview.
The company has also grown in headcount by recruiting litigators from law firms who review investment opportunities. Its underwriting team now counts 12 members, including lawyers who formerly worked at Kirkland & Ellis, Jenner & Block, Ropes & Gray, and others.