Wednesday, March 18, 2015

Roiling the dice

Hedge funds cash in on others' legal problems, what could be more American;
For better or worse, the lawsuit-finance market continues to grow. Hedge funds and others speculating on litigation are making more and larger bets. ....
Burford Capital, the largest player in the nascent U.S. litigation-finance business, today reported strong results for 2014. Revenue rose 35 percent, to $82 million, with a 43 percent rise in operating profit, to $61 million, Burford said.
Except for the fact that Burford is based in the UK, that is. Also, that Burford funded the Ecuadoran extortion of Chevron (and then got out while the getting was good);
Burford invested $4 million in the long-running pollution suit in 2010. Led by New York-based plaintiffs’ attorney Steven Donziger, a group of Ecuadorians won a $19 billion judgment against Chevron in 2011. (Ecuador’s top court later halved the amount to $9.5 billion and upheld Chevron’s liability.) The oil company, however, turned the tables on Burford, Donziger, and his clients. In March 2014, Chevron persuaded a U.S. federal judge in New York that the Ecuadorian suit had evolved into an extortion scheme involving coercion, bribery, and fabricated evidence. By then, Burford had sold off its interest in the Ecuadorian judgment to another investor and accused Donziger of deceit.
Not too surprisingly, Donziger has denied that, and has appealed the federal court ruling.
The Chevron case notwithstanding, Burford’s “business model is helping large corporate litigants monetize legal claims,” [Bueford CEO Christopher] Bogart says.
 In itself, just another business that needs financing.

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