Happy Friday! The interest in novel ways for outside capital to come into law firms continues.
I teamed up with my colleague Roy Strom for a story this week about Big Law leaders’ skepticism around Burford Capital’s plan to buy stakes in US law firms. Legal leaders worry these arrangements could breach state rules against non-lawyer ownership and others are hesitant to relinquish control even if it’s just for back-office services.
Structures called “managed service organizations” separate back-office functions like billing and human resources from legal work. Outside investors can buy stakes in a company without tripping non-lawyer ownership rules.
It can be a good space for litigation funders and private equity firms to get involved. More than $100 million has been invested into legal MSOs in the last 10 to 15 years, estimated a person who requested anonymity to discuss details.
Bloomberg Law subscribers can get this Litigation Finance newsletter in their inbox on Fridays. Sign up here.
Rules Committee
On Wednesday, the advocacy group Lawyers for Civil Justice sent a comment letter to the Advisory Committee on Civil Rules of the US Courts regarding litigation funding. The Advisory Committee, a panel of judges and lawyers who study the Federal Rules of Civil Procedure and recommend changes to the Judicial Conference, is currently considering whether to adopt a rule that requires disclosure of litigation funding contracts in federal civil cases.
In the comment, LCJ pushes for the disclosure rule and includes its analysis of nine litigation funding contracts. The organization found that the contracts contain numerous provisions allowing control over the cases funders invest in, including having influence over settlements.
Last year, the Rules Committee put together a subcommittee to study whether a rule for litigation funding is necessary. The next Advisory Committee meeting is on Oct. 24.
What I’m Reading
The Arizona Supreme Court adopted an amendment to the rules of civil procedure that requires disclosure of litigation funding. The Arizona Chamber of Commerce & Industry cheered the adoption, with its CEO saying, “there will finally be greater disclosure to all parties that a lawsuit is being funded by an outside entity.”
New North Litigation Capital, a new commercial litigation finance company, launched in the UK with backing from private equity firm Pollen Street Capital. New North received a senior secured credit facility of up to £50 million from Pollen Street.
Commentary & Opinion
Big Law’s 2,400 Hours Bar Isn’t New. It’s the Path to Partnership
Kinney Recruiting’s Jessica Chin Somers writes that the reaction to King & Spalding’s “productive” hour requirement in part reflects a change in associates’ perception of what’s required to make partner since the pandemic.
Not All Big Law Leaders Will Reach the Top of Space Mountain
Disney’s price hikes are similar to Big Law’s billing rate increases.
To contact the reporters on this story:
To contact the editor responsible for this story: