London law Firm Mishcon de Reya has teamed up with litigation funder Harbour to create a £150 million litigation funding arm, reports the Law Society Gazette.
The new venture, called MDR Solutions I, “will fund litigation and arbitration cases for Mishcon de Reya’s clients, including complex fraud cases, intellectual property disputes, group litigation, and asset recoveries. Harbour – which describes itself as the largest privately-owned litigation and arbitration funder in the world – has committed £150m to the venture, while Mishcon has contributed an undisclosed sum which will be drawn down as needed.”
Mishcon de Reya is not the first London firm to enter into a litigation funding venture. “A number of City firms have established litigation funding units in recent months. In August 2020, DLA Piper teamed up with two third-party funders to help clients pursue cases that would otherwise be too expensive, while PGMBM secured a £45m investment in March from North Wall Capital. In its annual report published this week, listed firm Gateley said it is currently in discussions regarding a litigation funding facility of up to £20m.”
The Law Gazette points to the “growing popularity” of class action lawsuits and “a series of judgments in favour of mass action”, as the driving factors for litigation funding.
The increasing partnerships between law firms and litigation funders, however, raises serious ethical concerns. The announcement of this new venture led to an editorial in the Financial Times, calling for regulation of the litigation funding industry in the UK.