New Litigation Fund Shows Investor Desire for Stock Alternatives

Corbin Capital Partners is intensifying its push into litigation finance with the closing of its first fund dedicated to the practice, showing the growing popularity of lawsuit investing on Wall Street.

The $342 million fund has deployed 26 investments, with just under 30% going to mass tort cases. The other areas the fund targets include antitrust, business disputes, and intellectual property.

“We can really differentiate ourselves from the type of sponsored lending, direct lending stuff that has say more exposure to software or other sectors that people think are vulnerable,” said Cesar Bello, Corbin’s director of litigation finance. “It’s a nice reminder of why people like the asset class.”

Alternative asset managers such as Corbin have been increasingly looking to litigation finance as a way to reap returns uncorrelated to stocks. While lawsuit investments carry risk and can take years to pay out, the practice has become increasingly popular, with $16.1 billion of assets under management as of mid-2024, up from less than $10 billion five years earlier, according to Westfleet Advisors.

San Francisco-based Legalist last week closed on its fourth and largest litigation finance fund worth $415 million that focuses on single cases and portfolios of matters. JPMorgan Chase & Co.'s asset management division advanced two mass tort law firms money tied to expected attorneys’ fees, filings from 2024 and 2025 show.

Corbin is pursuing a credit-style strategy with the new fund and is able to avoid the type of concerns investors had with private credit’s exposure to software companies. Some asset managers capped redemptions of private credit funds after investors attempted withdrawals because of the software concerns.

Litigation funding “is very different than the things that are giving folks problems now on the private credit side,” Bello said. “The risk is legal risk, and hopefully you’re playing it the way we are—diversified across a bunch of different type of legal risks.”

Tough Build

Corbin, with $10 billion in assets under management, has been investing in litigation finance since 2018 as part of its broader credit strategies. The firm deploys investments in portfolios of cases and through loans to law firms to pay the cost of bringing cases.

Corbin spent nearly two years building the $342 million fund, Bello said. Institutional investors, high-net-worth individuals and family offices are among the backers, he said.

Cesar Bello

The firm attracted investors at the beginning and end of the process though hit a rough patch in the middle, Bello said. Corbin had to educate some investors on the sector, and those who ultimately joined were impressed by the performance of firm portfolios, he said.

“This stuff is not for everybody,” Bello said. “But the folks who understand it and get it—a lot of ‘em tend to be super users.”

The new fund will put some proceeds into sexual abuse cases, which are often filed against government institutions, religious organizations and school districts. Corbin has previously helped finance a law firm litigating against the Boy Scouts of America.

“Those are compelling investment opportunities that actually let us do a lot of good with our money kind of writ large,” Bello said.

Even though the firm is growing its exposure to litigation finance, it’s unlikely that such investments will ever grow to be the majority of its assets, he said. Legal assets are harder to scale and don’t lend themselves well to multi-billion dollar funds, he said.

“We’re thinking about different ways we can continue to grow smartly,” Bello said. “But it’s not ‘Let’s push all of our chips in on litigation finance.’”