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Willkie, Longford Reach $50 Million Litigation Funding Pact (1)

June 23, 2021, 1:30 PM; Updated: June 23, 2021, 2:05 PM

Willkie Farr & Gallagher is partnering with litigation funding firm Longford Capital to offer $50 million in financing to clients pursuing big-money lawsuits in what is believed to be the largest publicly announced deal between a major law firm and litigation funder.

The money will be spent to pay for lawyers’ fees and expenses on cases where Willkie’s clients request it and Longford and Willkie agree the case is worthwhile. It could also be spent to monetize claims or awards that haven’t been paid yet. Typically, litigation funding agreements involve non-recourse loans that entitle a funder to a portion of a lawsuit’s monetary returns.

While the precise details of the agreement are scarce, the Willkie-Longford announcement is still a significant indicator of how widespread litigation funding has become. Many Big Law firms use litigation funding, a roughly decade-old business in the U.S. that has attracted more than $11 billion in capital, according to a survey this year. Longford itself has raised more than $1 billion since it was launched in 2014.

Still, law firms rarely discuss these relationships, and no firm the size or stature of Willkie has publicly announced a partnership with a funder. Willkie in 2020 brought in $868 million in revenue, making it the 44th largest firm in the U.S., according to AmLaw data. Its equity partners earned $3.5 million on average over the year, making it one of the 20 wealthiest firms by that measure.

Craig Martin, a high-profile litigator who joined Willkie last year in Chicago as the firm’s Midwest chair, spearheaded the deal with Longford, which is also based in the Windy City. Martin has grown the firm’s Chicago office to nearly 45 lawyers. He said in an interview his team of litigators spends about a third of its time representing large corporations and private equity firms as plaintiffs in disputes involving patents, trade secrets, and commercial contract disputes.

Martin represented manufacturer Olin Corp. in a case that earlier this year resulted in a nearly $50 million final judgment after a decades-long dispute over environmental clean-up liabilities. He also won a federal bench trial on behalf of an investment arm of Aon plc that had been accused of mismanaging a pension fund for Foundation Resolution Corp.

The firm will continue representing clients in those types of cases and is not taking on plaintiff-side class-action cases, according to Martin. The partnership with Longford was designed to provide clients more flexible ways to pay for legal services other than the traditional billable hour, he said.

“We want to make sure we are at the cutting edge of innovation in the litigation market and make available to our clients everything that should be available to them, whether it be A-plus litigation services, A-plus appellate services or the best litigation funding choices,” Martin said in an interview. “That’s the space we want to occupy for their most important matters.”

Martin will separately join Longford’s board of independent advisors. He will not be involved in reviewing potential investments in that role.

Firms have been reluctant to admit they have relationships with funders, largely out of fear that a defendant would use the information to dig for documents in discovery. Burford Capital, a publicly traded litigation funder, said in 2016 it struck an agreement with an unamed law firm to invest as much as $100 million in the firm’s cases.

The disclosure of funding for individual lawsuits is a hot-button issue. New Jersey’s federal court this week signed into effect a local rule that will force plaintiffs to disclose when they’ve received financial backing. That rule was opposed by the litigation funding industry.

But judges have more often struck down those efforts in individual cases, which William Farrell Jr., a co-founder and managing director of Longford Capital, said has diminished firms’ concerns of being associated with funders.

“What we are seeing is that courts, both state and federal courts, are not allowing litigants to go outside the traditional bounds of discovery to seek information related to the means by which a litigant is paying for its lawyers,” Farrell said in an interview.

The U.S. Chamber of Commerce, a critic of litigation funding, has said disclosure should be required to avoid conflicts of interest or unethical fee-splitting with non-lawyers.

VIDEO: A look at the growing field of litigation finance and what it means for the future of the business of law.

$1 Billion a Year Business

Litigation funding firms attracted more than $1 billion in new capital in 2020. But its unclear how many Big Law firms and their clients are actually turning to funders for cash.

A survey from litigation funding brokerage Westfleet Advisors last year showed that only 9% of so-called portfolio deals, in which funders provide capital to back a number of a law firm’s cases, are executed with the country’s 200 largest firms. Large firms much more commonly receive funding for single cases at the direction of their clients, the survey shows. Of those types of one-off financings, 43% involved the 200 largest firms.

The new deal will likely be seen as a coup for Longford, which has attracted a prestigious firm and well-known litigator to give it a public stamp of approval—even if the relationship between Martin and Farrell dates much longer. Longford in 2018 hired a Jenner & Block partner, Justin Maleson, as a director. Maleson had tried cases with Martin, whom Farrell said he has known for “decades.”

Before launching Longford in 2014, Farrell was a litigation partner at Neal Gerber & Eisenberg, a midsize law firm based in Chicago.

“We believe that working with first-class, highly accomplished trial lawyers is critical to our success,” Farrell said. “And working with those law firm partners that we know and trust is equally important.”

(Updates state of New Jersey federal court's disclosure rule. )

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com

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