London’s litigation financiers primed to profit on global downturn, Therium chief says
London’s litigation funders are in a prime position to capitalise on the global economic downturn, the founder of one the UK’s top lawsuit financiers told City A.M.
The economic slump threatens to stretch in-house legal budgets and drive an uptick in legal battles, Therium founder Neil Purslow said, which could force companies and litigants turn to third-party funds to bankroll their claims.
Purslow explained that “when there’s economic strain, litigation goes up” as fraudulent activity is revealed and deals turn sour.
He said companies seeking to cut costs may also aim to reduce their legal spending by shifting potential litigation costs over to third-party funders.
Litigation funders bankroll lawsuits, on a ‘no-win, no fee’ basis, with a view to taking a cut of any winnings.
Third-party financiers are currently driving a boom in London’s legal sector, particularly through a new wave of UK class-action lawsuits that require outside cash to get off the ground.
Established in 2009, Therium is one of the UK’s oldest litigation funders in a relatively new sector, and has funded around $100bn worth of claims.
The fund has bankrolled an array of high-profile cases including a lawsuit against EY on behalf of investors in collapsed German payments processor Wirecard.
Purslow, a former lawyer, co-founded Therium more than a decade ago and currently acts as the litigation fund’s chief investment officer.
The fund founder was adamant there are still significant sums of money available for third-party funders to draw on, despite the economic slump.
“There’s plenty of money available,” Purslow said, brushing aside concerns the downturn might make it harder for litigation funders to raise money.
He explained that pensions funds, institutional investors, and sovereign funds continue to see litigation financiers as counter-cyclical investments that deliver returns that are not linked to the wider economy.
Purslow also predicted a wave of ESG related litigation, which could also bolster the funding sector.
Therium has financed major ESG focused lawsuits against Volkswagen over the dieselgate emissions scandal and against Dominos Pizza over claims it underpaid its delivery staff.
“A lot of the cases litigation funders are backing touch on an ESG theme,” Purslow said. “ESG is everywhere.”