Validity Finance Adds $70 Million to Litigation Finance Coffers

Validity Finance, a litigation funding company started in 2018 with the backing of TowerBrook Capital Partners, has raised $70 million as betting on lawsuits continues to attract investors.

Backers in the new fund include TowerBrook and a new, unnamed family office. The new funds follow the $100 million Validity raised in July 2020 as commitments surged during the early days of the pandemic.

“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,” Ralph Sutton, who runs the fund, said in a statement.

The news comes the same month that Longford Capital said it had raised an additional $250 million to close a $682 million fund. Longford and Willkie Farr & Gallagher announced a partnership earlier this year in the first instance of a prominent Big Law firm publicly acknowledging its work with a funder.

In litigation finance, investors pay lawyers’ fees or expenses in exchange for a share of a lawsuit’s potential rewards.

Validity invests in contract disputes, antitrust claims, trade secret and misappropriation claims, insurance coverage cases and intellectual property matters. The company has committed nearly $300 million in more than 40 investments, it said.

The firm has committed around $150 million in the past 18 months, driven by pandemic-related interruptions to court dockets, Sutton said. The company has reviewed more than 1,500 investment opportunities since it launched.