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As an attorney* defending corporations and banks, Boaz Weinstein began to feel as though he was on the wrong side of the fight. The graduate of Columbia Law School and former clerk for federal judge Robert P. Patterson Jr. admits that the concept of litigating on behalf of the investor was more appealing during his time at Cleary Gottlieb Steen & Hamilton. Today, Weinstein is Director and Chief Underwriting Manager at BlackRobe Capital, an investment group that funds litigation attempts on behalf of investors.
When he took a position with Bernstein Litowitz Berger & Grossman in New York and changed sides of the aisle, he soon became aware of an emerging legal development – a sea change in how cases can be paid for. The concept was alternative litigation financing (ALF), sometimes called third party funding. While not universally embraced in all legal circles and jurisdictions, it is becoming an accepted method of litigating. Again, he was intrigued.
“It was, and still is, a very exciting opportunity to be in the nascent stages of an industry that’s developing,” he said. “It truly is revolutionizing the legal markets.”
Weinstein was introduced to attorney* Sean Coffey, who would later run for Attorney* General of New York state, and Timothy Scrantom, founder of groundbreaking ALF fund Juridica. Coffey pitched Weinstein the opportunities in ALF and where a company like BlackRobe could fit in.
“When he says something, people sit up and listen,” said Weinstein, who did the same.
Weinstein will be a featured speaker at the upcoming IAAR 3rd Annual Conference, Nov. 17-18 at the Planet Hollywood Resort in Las Vegas. He will take part in a panel of speakers during a learning session titled Third-Party Funding of Fraud and Matrimonial Asset Recovery* Cases – Best Practices on Using It and Building Protections. But Weinstein says even part of that title can be misleading in an area of law that is still not commonly understood.
“When explaining it an emerging field like this you have to be cognizant of what you say because you are setting the terminology that will be used,” he said. Weinstein and his colleagues prefer the term “alternative litigation financing” because third party funding technically happens whenever contingency fees are structured into an agreement. But it remains a poorly-understood arena.
“Most lawyers aren’t even aware of this,” Weinstein said.
It’s a process that has its place, if you ask some legal experts, despite the traditional (some say outdated) legal tenets of champerty and maintenance, concepts that prohibit profiting from others’ cases.
“Whatever cases we accept, we are always very aware of the legal landscape. Some jurisdictions have champerty in effect, but many do not,” Weinstein said.
The potential benefits of ALF are compelling, including an increased access to the courts for some litigants who might not have had it. Some plaintiffs like this find themselves in a “war of attrition” where their larger opponents grind them down until they are without the resources to continue litigation.
“It comes to a point where you’re out of money,” Weinstein said. “The attorney* is forced to say, ‘we love you, but if you can’t pay us, we can’t continue.’”
Not all cases are ripe for ALF funders, Weinstein says, estimating only about 5-10 percent are financed. But the business proposition can work. Weinstein recounts a recent case where a $6 million investment yielded a judgment of $108 million – a hefty amount that went back to the investors.
“The plaintiff had to pay some of that to the funders,” Weinstein said. “But it was a lot more than he would have gotten.”