JPMorgan Unit Wades Into Legal Funding: Litigation Finance

Happy Friday! A big-name investor just waded into legal finance, and it could be a sign of a larger trend.

The asset arm of JPMorgan Chase & Co. advanced two mass tort law firms money tied to expected attorneys’ fees. I wrote about how the transactions show that large investors are growing more comfortable with legal industry investment.

These deals are much less risky than your typical litigation funding deals since they’re done after a settlement and not tied to the outcome of a case. It’s also a win for attorneys who can get their cut of settlements a little faster.

Attorneys’ fees, especially for those in mass tort leadership, can be quite large, said Justin Brass, co-founder of JBSL Legal Finance. “Why shouldn’t this avenue be available to lawyers who have already settled something and now they’re just waiting for a payment stream?”

Bloomberg Law subscribers can get this Litigation Finance newsletter in their inbox on Fridays. Sign up here.

Illinois ABS Drama

I also wrote about a bill in Illinois aimed at regulating non-lawyer investment in law firms that’s gaining momentum. On Wednesday, a House judiciary committee approved the measure (HB5487), moving the bill to consideration on the House floor.

The legislation bans attorneys from sharing fees with out-of-state alternative business structures owned or operated by non-lawyers, such as private equity firms and hedge funds. Though the bill targets managed service organizations and alternative business structures, some of its language could effectively ban the practice of litigation finance in Illinois altogether.

“This would just have absolutely massive implications for the industries that service the profession of law,” said Trisha Rich, a partner at Holland & Knight who advises on alternative business structures and managed service organizations.

What I’m Reading

• Tom Lenfestey of the Law Practice Exchange argues in a a Bloomberg Law Insight that MSOs and outside capital could solve law firm succession. “MSOs aren’t perfect, and they’re not for everyone,” Lenfestey writes. “But for well-run firms with no succession plan, they’re becoming one of the only viable exits in a market where 40% of law firm partners expect to retire in the next decade.”
• A previously undisclosed litigation funding arrangement could jeopardize a lawsuit accusing the University of Pennsylvania of participating in a price-fixing scheme, according to The Daily Pennsylvanian. Two law firms representing the plaintiffs said that they “deeply regret” failing to disclose that a third law firm had worked with a litigation funder.
• Holland & Knight has a piece about how a South Carolina ethics opinion signals growing opposition to alternative business structures. The opinion concluded that South Carolina lawyers may not serve as local co-counsel with an ABS that has non-lawyer owners or partners, owns an interest in an ABS that practices law, or splits fees with an ABS.
• The American Property Casualty Insurance Association expressed support for a uniform federal rule requiring disclosure of litigation funding in US federal courts, according to Insurance Business. APCIA said increased transparency around litigation funding is necessary to ensure fairness and accountability in the legal system.

Business & Practice

Susman Godfrey Jumps Off Speedy Law School Recruiting Track

Susman Godfrey wants to see law students’ full first-year transcripts before hiring summer associates, bucking the trend among top firms vying to land candidates early.

Wilkinson Shuns Trump Deals, Billable Hours to Grow Her Boutique

A decade after one of the most prominent US litigators broke away from Paul Weiss to co-found her own firm, Beth Wilkinson said she grew an unexpectedly deep base of clients.

White & Case Accused of Hostile, Discriminatory Workplace

A White & Case LLP employee claims the firm discriminated and retaliated against him when he demanded an investigation into the dissemination of intimate photos taken of him at a firm party.

Deepfakes Grow More Sophisticated, Putting Companies on Alert

Companies are bracing for attacks as deepfake technology has become cheaper, more prevalent and more convincing. Fintechs and insurers have become popular targets, security specialists say.

Commentary & Opinion

Prediction Market Prosecutions May Be Curbed by Decades-Old Case

Depending on the language of prediction markets’ user agreements and terms of service, and the timing of users’ execution, prosecutors may find that charging insider trading as wire fraud is constrained by a precedent in a 2016 case that reversed a highly publicized jury verdict.

New York Legal Malpractice Cases Need Clear Causation Standards

Patterson Belknap attorneys write that in New York malpractice claims against a law firm, most courts have maintained traditional causation standards, but others have lowered the bar and quietly deviated from established principles of attorney liability. Practitioners need to remain vigilant to ensure these remain exceptions.

Vibe Coding Taught 1Ls as Much About AI Limits as AI Potential

Lawyers don’t need to become software engineers, but they do need to understand how AI systems behave when tasked with solving legal problems.

AI-Native Firms, Built by Private Equity, Will Strain Legacy Model

AI-native law firms represent a new strategic paradigm—one that sidesteps both the cultural resistance of established law firm partnerships and the circuitous investment models that try to work around them, Cox Media Group GC Eric Greenberg writes.