With demand for litigation finance continuing to grow among businesses of all sizes, dispute funder Validity Finance has raised a new managed fund of USD70 million in capital commitments.
The newly raised “sidecar” fund further diversifies Validity’s business and advances its experience as an alternative asset manager. To date, Validity’s third-party managed funds total nearly USD150 million of assets under management, in addition to its permanent capital base.
Validity’s latest fund investors include its original private equity investors, as well as previously committed third-party investors and a prominent family office.
Since its launch in mid-2018, Validity has committed nearly USD300 million towards clients in more than 40 separate investments, helping clients in scores of commercial disputes, backing law firms as well as businesses, individuals and institutions. In the past 18 months, the firm has evaluated hundreds of potential investments and committed approximately USD150 million toward a wide span of cases, including contract disputes, antitrust claims, trade secret and misappropriation claims, insurance coverage cases and intellectual property matters. The firm has also supported civil rights cases.
Validity CEO Ralph Sutton says: “The pandemic created enormous challenges for pending cases, with trial dockets slowed and financial pressures weighing on many claimants. We’re fortunate to have maintained a strong pipeline of capital and a circle of investors who support our approach to fairness and client needs. We’re especially pleased to welcome some prominent new investors into the fold.”
Sutton notes the high demand from law firms seeking funding – for individual matters as well as portfolios.
“We can finally say that Big Law understands our business, and even many of the biggest, most profitable firms understand the value of non-recourse funding to help their clients and their own profitability, especially as time horizons for financial outcomes have stretched,” he says.
He also noted a pronounced uptick in funding requests from larger corporate clients seeking alternatives to conventional lenders or commercial finance companies.
“Corporates have come to appreciate the sophistication and focus of high-quality dispute funders,” he says. “Even well-capitalised businesses understand the economic advantages of lit funding to move risk off their balance sheets.”
Since its founding, Validity has reviewed over 1,500 investment opportunities, reflecting the firm’s exacting due diligence process. That process also reflects the caliber of Validity’s team of portfolio advisers, consisting of experienced trial lawyers from the country’s preeminent litigation firms, many of whom served as federal law clerks. The firm has backed commercial matters across federal and state courts, as well as domestic and international arbitrations.
