Post by The Ultimate Nullifier on Mar 24, 2014 9:09:27 GMT -6
blogs.wsj.com/moneybeat/2014/03/24/spider-man-disappoints-hedge-fund-that-bankrolled-suit-against-disney/
Even Spider-Man got caught in the web of litigation finance.
The practice of investing in lawsuits is a big, growing field – and also involves big risks, as a case involving Spider-Man illustrates.
In that case, Stan Lee Media Inc. sued Walt Disney Co. over profits made from comic-book characters created by artist Stan Lee, who is no longer affiliated with the company that bears his name. Stan Lee Media claimed that Disney made more than $5.5 billion off movies and other ventures featuring characters including Spider-Man, The Avengers and Iron Man.
A group of investors, including hedge-fund giant Elliott Management Corp., helped bankroll the lawsuit. But last year a federal judge dismissed the case.
With no judgment, the stakes owned by investors could be worth nothing. Elliott didn’t respond to a request for comment.
So-called litigation finance involves investors either helping to pay the costs of a lawsuit or purchasing stakes in settlements or judgments at a discount in hopes of profiting from litigants eager to get their money earlier.
There are a number of firms that specialize in the business, sometimes with portfolios in the hundreds of millions of dollars, and some hedge funds like Elliott also dabble in lawsuit funding as part of a broader investment strategy.
Advocates say such investments allow clients to pursue lawsuits against opponents with deeper pockets, while some business groups say the practice gives outside undue influence over cases and drives up the cost of litigation.
The individual investments can be high-risk, high-reward wagers.
In potentially one of the biggest such bets yet, the hedge-fund firm RD Legal Capital LLC is seeking to raise as much as $100 million for a new fund to buy stakes in the litigation stemming from the 1983 bombing of the U.S. Marine barracks in Beirut, Lebanon. A U.S. federal court in Washington D.C. found Iran liable for the bombing and a judge last year ordered a $1.8 billion payment to the families of the victims. The goal of the new fund is to provide advance money to the some families and attorneys involved in the case, and eventually profit if the judgment is collected.
RD Legal previously helped finance judgments related to the BP PLC oil spill in the Gulf of Mexico. It’s not clear exactly how that investment panned out but RD Legal’s flagship fund has produced a gross average annualized return of about 22%, before fees, since being founded in 2007.
But there is no guarantee that investors will get paid in this instance, or any other.
As someone noted in a previous Journal story: “You can put a lot of money into a case and end up with zip.”
Even Spider-Man got caught in the web of litigation finance.
The practice of investing in lawsuits is a big, growing field – and also involves big risks, as a case involving Spider-Man illustrates.
In that case, Stan Lee Media Inc. sued Walt Disney Co. over profits made from comic-book characters created by artist Stan Lee, who is no longer affiliated with the company that bears his name. Stan Lee Media claimed that Disney made more than $5.5 billion off movies and other ventures featuring characters including Spider-Man, The Avengers and Iron Man.
A group of investors, including hedge-fund giant Elliott Management Corp., helped bankroll the lawsuit. But last year a federal judge dismissed the case.
With no judgment, the stakes owned by investors could be worth nothing. Elliott didn’t respond to a request for comment.
So-called litigation finance involves investors either helping to pay the costs of a lawsuit or purchasing stakes in settlements or judgments at a discount in hopes of profiting from litigants eager to get their money earlier.
There are a number of firms that specialize in the business, sometimes with portfolios in the hundreds of millions of dollars, and some hedge funds like Elliott also dabble in lawsuit funding as part of a broader investment strategy.
Advocates say such investments allow clients to pursue lawsuits against opponents with deeper pockets, while some business groups say the practice gives outside undue influence over cases and drives up the cost of litigation.
The individual investments can be high-risk, high-reward wagers.
In potentially one of the biggest such bets yet, the hedge-fund firm RD Legal Capital LLC is seeking to raise as much as $100 million for a new fund to buy stakes in the litigation stemming from the 1983 bombing of the U.S. Marine barracks in Beirut, Lebanon. A U.S. federal court in Washington D.C. found Iran liable for the bombing and a judge last year ordered a $1.8 billion payment to the families of the victims. The goal of the new fund is to provide advance money to the some families and attorneys involved in the case, and eventually profit if the judgment is collected.
RD Legal previously helped finance judgments related to the BP PLC oil spill in the Gulf of Mexico. It’s not clear exactly how that investment panned out but RD Legal’s flagship fund has produced a gross average annualized return of about 22%, before fees, since being founded in 2007.
But there is no guarantee that investors will get paid in this instance, or any other.
As someone noted in a previous Journal story: “You can put a lot of money into a case and end up with zip.”