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'Entrepreneurial' law firms diving into litigation funding

By providing funding for the clients the law firms are taking on more financial risk, but the potential returns are greater.
'Entrepreneurial' law firms diving into litigation funding
  • Mishcon de Reya and Gateley both launched partnerships with litigation funds
  • Will help them profit from any wave of insolvency cases

In 2019, Carson Block's fund Muddy Waters took a short position against litigation funder Burford Capital (BUR) and accused it of misreporting the value of the cases it had funded. The company, which forcefully denied it was overly ambitious in booking realised gains, has not seen its share price fully recover beyond half of its 2019 value. This tale is well known to UK investors and has created a knee-jerk cynicism towards any company that funds legal cases.

Burford may have increased the scrutiny surrounding the industry, but this hasn’t perturbed listed law firm Gateley (GTLY) and soon-to-be-listed Mishcon de Reya from announcing the launch of their own litigation funding partnerships this month. Gateley will be partnering with Bench Walk Advisers to create a £20m funding facility and Mishcon de Reya has paired up with Harbour Litigation Funding to launch a £150m fund. 

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