Before everyone jets off for the long weekend, here’s what’s been happening in the litigation finance space.
Every year I like to file a public records request with the Arizona Supreme Court to see the applications they’ve received for non-lawyer owned law firms, also known as alternative business structures. For about four years now, Arizona has allowed non-lawyers to own law firms, something most other states prohibit, and they have a pretty intensive application process.
When I received the applications this week, I began going through them and noticed that one of the law firms, Esquire Law, listed CF ESQ Holdco as an authorized person. The authorized signatory for it was Jack Neumark, Fortress Investment Group’s president, managing partner and co-head of asset-based credit. CF ESQ has a 20% economic interest in the firm.
I’ve interviewed Jack before about Fortress’ investment in the legal assets and IP space, but I didn’t know they’d also delved into alternative business structures. It’s an interesting development.
On Thursday I spoke with some experts in the space who put it into context. Lucian Pera, a partner at Adams & Reese who consults with businesses forming alternative business structures, said he’s not surprised big investors would want to put money into ABS’.
“What I’m hearing from investors is that there is a growing interest in the legal space and they are exploring all kinds of ways to put their funds at work,” he said.
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What I’m Reading
Omni Bridgeway released it’s fiscal year 2025 results this week, reporting an income of A$651.3 million. It’s total portfolio value is up 29% from FY24 to A$3.6 billion.
Consumer legal funding and law firm financing platform Cartiga announced it’s going public in a $540 million deal with SPAC Alchemy Investments. Cartiga provides consumer legal funding to plaintiffs pursuing claims so they can pay personal and medical bills while waiting for recovery. It also provides financing to contingency law firms against their docket of cases.
The Solicitors Regulation Authority in the UK released a report stating law firms specializing in mass claims have poor practices on funding and referral fees, according to The Times. The report found that there’s been a lack of due diligence on funding and referral arrangements.
Forbes had an interesting article out on tech startup Darrow, which uses artificial intelligence to identify potential class action lawsuits and then finds attorneys and plaintiffs through digital advertising. Darrow makes money through a subscription but also takes a cut of attorney fees through an Arizona alternative business structure.
Leading the News
Latham Shows How Big Law Cashes In on AI-Driven Data Center Boom
“We’re finally having our time in the sun,” Latham & Watkins partner Michael Rechtin said of real estate lawyers working on data center projects.
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