Law firm invests own capital in £150m deal with litigation funder

West: Putting our own capital at risk

Leading London law firm Mishcon de Reya is investing capital and some of the fees it receives in future from cases into a litigation funding partnership.

MDR Solutions I, launched this week, is a partnership with Harbour Litigation Funding, which has committed £150m to the fund.

Nick West, partner and chief strategy officer at Mishcon de Reya, said an undisclosed amount of partner capital had been invested in the fund, and the law firm would also be investing a proportion of its future fees to make “higher returns” through litigation funding.

This made MDR Solutions different from previous partnerships between law firms and litigation funders, which had simply “ring-fenced” a certain amount of funding for a particular law firm, he said.

“If all our cases lose, we could be significantly out of pocket,” he said. “We’re putting our own capital at risk.”

The partnership is called MDR Solutions I with a view to further funds in the future if it does well.

Mr West, responsible for technological transformation at Mishcon de Reya, said the firm’s 15-strong data science team would be contributing to the new partnership.

“A decision on whether to fund a particular piece of litigation is really an economic question. Am I going to get enough money back to merit the investment?

“We have a lot of information on clients, potential clients, and how much time we spend on what kind of tasks. By crunching a lot of historic data, we can inform the viewpoint of an individual lawyer.”

Machine learning and natural language processing could help the firm arrive at an “expected value” for the economic viability of each case, he added.

MDR Solutions, which will be operationally separate from the law firm, will invest in a broad range of the firm’s cases, including non-performing loans and asset recoveries, complex fraud, intellectual property disputes and group litigation.

Kevin Gold, executive chair of the Mishcon de Reya Group, said the fund was part of its ambition to become “one of the leading complex disputes practices internationally”.

Harbour said it has already committed around $200m to cases where Mishcon was acting for claimants, including in litigation against Hiscox, RBS and BT, and nine of the firm’s active cases.

Martin Tonnby, chief executive and founder of Harbour, said: “Our future commitment to the firm is based on the depth of our relationship, their track record and our ongoing belief in their litigation and arbitration capabilities. The scale of our investment reflects this.”

In April, Mishcon’s partners voted to explore a premium listing on the London Stock Exchange, but even if this goes ahead it will not be the first listed law firm to have its own litigation funding arm. LionFish Litigation Finance is a subsidiary of RBG Holdings plc, the AIM-listed company which owns City litigation firm Rosenblatt.

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