“Legalized” Gambling

Earlier this week the New York Times reported on a new “investment fund.”

“Investing in Lawsuits, for a Share of the Awards”

Instead of investing in stocks or bonds or even mortgage-backed securities, Juridica Capital Management invests in lawsuits.  Juridica, says the New York Times, “invests in one side of a lawsuit in exchange for a share of the winnings.”  To the legally unitiated, this may seem bizarre.  But lawyers who take cases on a contingent fee basis and who enter into co-counsel arrangements in order to finance high-cost litigation, such as class-action lawsuits, do much the same thing.

Juridica seems to be going down a road that is very similar to the one previously taken by bankrupt and near-bankrupt financial services companies, which never seemed to run out of new investment ideas.  Will we soon have a new financial market for lawsuits?  Will we soon pool together legal risks and sell and resell them so that no one can determine their true value?

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~ by Dennis Taylor on 12 June 2009.

One Response to ““Legalized” Gambling”

  1. […] Sachs and the “free” market On 24 July 2009 In my first blog post, I questioned whether investment houses might create a new speculative market by betting on the […]

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