Quinn Emanuel Urquhart & Sullivan is set to receive $40 million in litigation funding from Longford Capital, with the aim of financing lawsuits for private equity firms and their portfolio companies. The agreement, which was made public last Thursday, is designed to provide funding for private equity clients wishing to pursue litigation without impacting profit and loss statements, according to the law firm. Quinn Emanuel argues that the ongoing liquidity challenges created by high interest rates make third-party funding especially advantageous for private equity companies.
According to Jonathan Bunge, co-chair of Quinn Emanuel’s national trial practice and managing partner of the firm’s Chicago office, this funding will be accessible to private equity clients across a range of litigation types. What sets this deal apart from the firm’s previous arrangements with Longford and others is the decision not to determine funding on a case-by-case basis.
About this new approach, Bunge said, “There might be a reason, given their business model, why they don’t want to pursue a valid claim held by a portfolio company because of the impact that might have on the portfolio company’s earnings. What we’re trying to do is listen to those concerns of our clients and come up with an alternative that they might find attractive.”
Quinn Emanuel, with a lawyer headcount exceeding 1,000, is among the largest litigation firms in the United States and boasts significant private equity clientele including powerhouses like Apollo Global Management, KKR, and The Carlyle Group. The firm pulled in gross revenue exceeding $1.6 billion last year, as reported by The American Lawyer.
Aside from providing financing for attorney fees and related costs, Longford’s funding deal also allows private equity clients the opportunity to invest directly with the company. Legal claims will be monetized as corporate assets, following underwriting and due diligence.
The funding is expected to finance various business disputes, encompassing breach of contract, fraud, and intellectual property cases. Most of such private equity disputes take place behind closed doors in arbitration.
Litigation finance, estimated to be a $15.2 billion industry, involves a setup where investors fund lawsuits in return for a share of any resulting award. The industry has gradually become more attractive to Big Law firms, even as the broader market for deals slows. Bloomberg reports that the largest U.S. law firms were involved in 35% of new funding commitments compared to 28% the previous year, even as total funding commitments dropped by 14% over the same period.
Longford Capital, a private investment company providing funding to entities involved in large-scale commercial disputes, touts itself as one of the first litigation funds in the United States and among the largest worldwide. It manages $1.2 billion in assets.
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