Portfolio yields $100 million in recoveries for the year – IP, breach of contract, commercial disputes; Bentham commits to 10 new investments in 2014 – three of which successfully monetize this year; nearly 200 cases reviewed; firm names new investment manager, former Gibson Dunn trial lawyer David Kerstein
Leading litigation funder Bentham IMF is ending 2014 on a strong note in the U.S., with robust dispute recoveries, a set of freshly completed cases and the addition of an experienced new member to its U.S. investment management team.
The firm’s calendar-year performance for dispute funding in the U.S. has shown strong metrics in all key areas. In just its third year of U.S. operations, Bentham has achieved:
- Ten American deals funded in 2014, with additional commitments expected to fund early in the New Year. Cases backed include major contract disputes, a patent infringement jury trial for a prominent technology company, partnership disputes, and five law firm case portfolios.
Ø Client recoveries of nearly $100 million resulting from jury verdicts and settlements.
Ø Gross returns of more than $31 million for the year, with a net profit of $17 million.
Ø Clients and outside counsel returns of 69% of recoveries, with Bentham drawing the remaining 31%.
Ø Four U.S. cases resolved in 2014 – including three that also commenced in the same year.
Ø Nearly 200 total cases reviewed for possible funding in the U.S., from a pipeline of major law firms, corporate counsel, businesses and individual claimants.
With its 10 new commitments added in 2014, Bentham IMF has now invested in 20 American-based disputes.
Further expanding its U.S. presence, the firm announced that David Kerstein, former litigation counsel at Gibson Dunn & Crutcher in New York, has been added to its investment team. Mr. Kerstein brings an extensive background handling complex commercial disputes, with a focus on corporate control contests, bankruptcy matters, shareholder disputes, trade secrets, employment cases and other business matters.
Bentham launched in 2011 as the U.S. arm of leading Australian dispute funding firm IMF Bentham Limited. Since its founding in 2001, Bentham has invested in nearly 200 cases worldwide, securing approximately $1.5 billion in recoveries for litigation claimants. The firm has enjoyed a success rate exceeding 95% in wins and settlements.
“Without question, this has been our breakout year in the American litigation funding market, with a robust portfolio of new commitments and cycled returns,” said Ralph Sutton, Bentham’s Chief Investment Officer. “The pace and volume of new funding opportunities has grown sharply in the past year, and so has the range of cases and their origination, as major law firms and companies have come to recognize the value of funding to lower litigation risk.”
Mr. Sutton noted the data point that surprised him the most. “Bentham has a historically strong track record in case selection, so we’ve come to expect high-octane returns, reaching almost 3x annually over 14 years. But what really stands out are the three cases that went from commitment to financial return in the same year,” he said.
“Litigation is not normally known for quick results and investors in dispute funding should also not be looking for fast turnarounds,” added Mr. Sutton, himself a former commercial litigator. “However, to have three major matters monetize in the same year of funding is a reflection of the strength of our investment team in identifying cases with significant potential and aligning our capital and expertise with the law firms and businesses with whom we partner.”
Charlie Gollow, a Bentham investment manager since 2003 and a key driver of the firm’s U.S. agenda, said the 2014 numbers indicate the changing nature of litigation funding economics. “We’re seeing success not only among large law firms and corporations looking to cover the enormous up-front costs associated with their biggest cases, but with smaller businesses and even individuals with serious claims that require funding in order to match up with their adversaries,” he said. “The U.S. market has matured to the point where there are now enough case studies and outcomes that make third-party funding a necessary part of the equation for all types of disputes. We expect to see an even larger set of opportunities and results in 2015.”
Mr. Kerstein, the firm’s newest investment manager, brings substantial courtroom experience, having recovered large financial sums and injunctive relief for plaintiffs, as well as scoring major defense wins. His clients included private equity funds, investment managers and other financial industry clients in numerous complex cases. A graduate of the University of Pennsylvania for both his B.A. and J.D., he also spent time on Capitol Hill, interning for Wyoming Senator Alan Simpson and New York Senator Alfonse D’Amato.
“We are excited to add Dave Kerstein to our U.S. team,” said Allison Chock, who heads Bentham’s Los Angeles office. “Like our other investment managers, Dave has a serious litigation background in complex, large-scale cases that are challenging to run as well as to fund, and scoring major financial outcomes. He’s handled a wide range of matters in venues in the U.S. and internationally. As our purview and portfolio of cases continues to grow, we see a terrific upside in having Dave part of our U.S. braintrust, not only for case selection but in working closely with the counsel and companies in the trenches as their matters proceed.”
Earlier this fall, Bentham named a new investment advisory panel in the U.S., bringing together a group of leading litigators nationally. They include: Stephen Susman of Susman Godfrey; Reed Oslan of Kirkland & Ellis; Roman Silberfeld of Robins Kaplan; Peter Ostroff of Sidley Austin; Peter Gillon of Pillsbury Winthrop; and noted legal ethicist W. Bradley Wendel of Cornell Law School. Here is more on the panel: http://www.benthamimf.com/docs/default-source/default-document-library/advisor-press-release.pdf?sfvrsn=8