Lawsuit investment and the limits of innovation

As you probably know by now, I’m a big fan of innovation in the law. But there’s good innovation and there’s bad innovation, and what’s emerging in the litigation field in the US and the UK looks to me like it belongs in the latter category. LegalWeek reports that UK hedge funds are lining up to provide funding for lawsuits . This idea in itself isn’t breaking news: several US companies, often backed by massive hedge funds, already provide financing for plaintiffs in personal injury suits — and arguably, contingency fee arrangements in class actions accomplish the same end, providing funding in return for a piece of the expected damages award. Hedge fund investments in plaintiffs’ lawsuits has recently spread to the UK . But this newest British development contains a twist: the investors are looking to finance the defendant. Here’s how LegalWeek’s Editor’s Blog explains it : The investor is likely to be a hedge f...