Validity Finance, a two-year-old litigation funder led by industry veteran Ralph Sutton, has hired a former Boies Schiller Flexner attorney to evaluate cases and added a former Kirkland & Ellis patent trial lawyer as a senior investment advisor.
Joshua Libling, a commercial and appellate lawyer who was counsel at Boies Schiller, will be a New York-based portfolio counsel at Validity. James Amend, who was a partner in Kirkland’s IP practice for nearly 40 years until 2007, will be a Chicago-based senior investment advisor.
The hires come as Validity says it has seen an uptick in demand for litigation funding, a relatively young industry in the U.S. that allows third party financial interests to invest in the outcome of court cases.
A recent survey said funders spent nearly $2.5 billion in a 12-month period from mid-2018 to mid-2019. Roughly 40 litigation funders surveyed by Westfleet Advisors had access to nearly $10 billion in capital to put toward cases. Still, there were signs that funders may have too much money for the number of cases available to them.
Validity said it has screened 650 potential matters since its launch in June 2018, including reviewing more than 120 cases in the fourth quarter of 2019. The firm said it has an “acceptance rate” of less than 5% of those cases.
Validity CEO Sutton said he does not think there is too much capital in the funding space. But if there is, it will benefit clients and cause more competition among funders.
“It’s not something to worry about. The market will take care of overcrowding, and the funders who treat their clients well will succeed and get better opportunities through their reputation,” Sutton said in an interview.
“I also think clients will begin to distinguish with more care between hedge funds and others that are specializing in this finance area so they will know over time where to go for their kind of case.”
Litigation funding entities have grown by hiring lawyers from Big Law firms who make predictions on case outcomes and help price their investments.
Sutton said Validity plans to hire more investment managers and portfolio counsel over the next year.