A federal judge in the United States District Court for the Southern District of New York has provided a simple yet forceful vindication of the role of litigation finance as corporate finance for law.
The headlines covering the September 8, 2023, ruling issued by the court in connection with the Petersen and Eton Park cases against the Republic of Argentina and YPF have—thus far—focused on the significant scale of the damages. That is an understandable journalistic emphasis given that the approximately $16 billion damages ruling is the largest such judgment in the history of the Southern District of New York.
But there is an important affirmation of the role that litigation finance played in this case in a footnote on page 14 of the ruling:
In this thoughtful and exceptionally pragmatic aside, the court offers a welcome confirmation that litigation finance is simply corporate finance for law, nothing more and nothing less. It allows a meritorious case to proceed—it doesn’t change the underlying facts of the case or the merits. Like any form of corporate finance, it is a passive tool to enable a business process to occur—and in the case of commercial litigation finance, to enable businesses that have been harmed by wrongdoing to recover what they are owed. However much a litigation opponent may try to inject the fact of litigation funding into the proceedings to distract from that wrongful conduct, this ruling affirms and perfectly explains the role of litigation finance for what it is—a necessary and salutary form of corporate finance. The decision and the court’s reasoning have been extensively covered by the press, including the Wall Street Journal and Law.com.