New Income Opportunity for Banks and Hedge Funds…Investing in Lawsuits

[The Straight Story]

New Income Opportunity for Banks and Hedge Funds…Investing in Lawsuits

Wanting to get in on the billion-dollar action, banks and hedge funds are backing lawsuits against corporations, hospitals, doctors and other deep-pocketed interests in order to create new streams of income. Investments in civil cases now total $1 billion, and while no one knows for sure how much of this is provided by lenders, financial institutions are definitely becoming a key player in lawsuits, according to experts.

A lawsuit brought by ground zero workers was aided by $35 million loaned from Counsel Financial, a Buffalo company financed by Citigroup, and that investment helped produce a $712.5 million settlement. Counsel Financial’s take was $11 million.

Another example is Ardec Funding, a New York lender connected to a hedge fund, which lent $45,000 to a Manhattan lawyer helping parents pursue a medical malpractice case. The plaintiffs won $510,000 in damages, and Ardec is collecting interest at an annual rate of 24%, or $900 a month, until the award is paid.

Lawsuit lending is becoming increasingly controversial. On the one hand, it allows regular citizens to stand up to large companies who employ many full-time lawyers. On the other hand, there is evidence that some lawsuit investors are creating lawsuits and then looking for plaintiffs to represent.

http://www.allgov.com/Top_Stories/ViewNews/New_Income_Opportunity_for_Banks_and_Hedge_Funds__Investing_in_Lawsuits_101116

[The Straight Story]

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