When Stacey Napp founded Balance Point Divorce Funding in Beverly Hills six years ago, she couldn’t catch a break. Today, business is booming.
Napp was among the first to introduce Los Angeles to the growing field of litigation finance, in which third-party investors pay the costs of litigation in exchange for a share of the winnings. Specifically, Balance Point invests in high-net-worth divorce disputes.
The firm endured a sluggish launch in 2009, a time when litigation finance was still a novel concept locally.
“It took over a year to get the first client because they didn’t know the service existed,” Napp said. “It’s not like I opened shop and everyone said, ‘Oh, thank God.’”
But once word spread, Balance Point took off.
Asta Funding Inc., a publicly traded asset management company in Englewood Cliffs, N.J., provides much of the financial backing for Balance Point, but Napp said she also raises capital from hedge funds and private equity firms.
Last year, Balance Point invested $1.2 million to back Patricia Cohen in litigation against her ex-husband, billionaire hedge fund manager Steven A. Cohen, according to a November New York Times report.
Litigation finance deals, however, are confidential and Napp declined to comment on that deal.
In general, though, she said her firm has lately seen tremendous growth, adding that Balance Point has yet to lose money on a divorce case. That doesn’t mean the firm does not face challenges.
“There is still an education process, or an awareness issue, that we need to continue to address,” she said.
The same is true at Bentham IMF, a commercial litigation funder that opened an office in Los Angeles about a year ago. Much of the legal and business communities are still unaware of the emerging litigation finance field, said Allison Chock, the investment manager heading the local office.
Still, Bentham boasted a whopping $17 million profit last year from its U.S. operations, which include the L.A. office and another in New York, according to the company.
At least thus far, Angelenos have shown strong interest in litigation finance, Chock said, noting that more than half of the profits came from Los Angeles.
“It’s our cowboy spirit,” she said. “The lawyers, generally speaking, are a little more willing to try new ways of doing business.”
By the end of the month, downtown L.A. litigation technology firm e-Stet plans to launch an e-discovery platform designed to process the ever-expanding amount of data that could be relevant to lawsuits.
The time it takes to sift through massive amounts of data through the discovery process can end up costing millions of dollars, an expense that has given birth to the booming e-discovery market. The industry nationwide brought in $5 billion last year, according to market research firm IBIS World Inc.
Still in its beta phase, e-Stet’s new platform – Wind – is based on document-reviewing technology developed by Chicago’s kCura that processes and stores data on secure servers in the firm’s office, said Aria Safar, e-Stet’s head of corporate communications.
“We called it Wind because we wanted it to be very transparent,” he said. “It’s also just so sleek and simple. Design is key for us.”
The platform will be available to law firms and companies on a month-to-month contract basis. Exact prices haven’t yet been finalized, Safar said, but the goal is to offer Wind at a price well below the market rate – oftentimes more than $1,000 a month.
Salim Elkhou, e-Stet chief executive, founded the company in 2007, working from home initially. Now the company has more than 20 employees, Safar said, and hopes to stay on the cutting edge of the growing e-discovery market.
“All of the electronic data is so critical for litigation,” he said. “It’s projected to grow into a $15 billion industry in the next few years.”
A handful of attorneys began transitioning into more prestigious roles this month after several firms welcomed a new class of partners to start the new year. Atlanta law firm Alston & Bird has named Clark R. Calhoun, Casondra K. Ruga and Nathan D. Sinning to partnerships at its downtown L.A. office. … Kristen Nesbit is now a partner in the downtown L.A. office of labor and employment law firm Fisher & Phillips. … Tampa, Fla., law firm Holland & Knight has elevated associate Stacey Wang to partner at the firm’s downtown L.A. office. … Munger Tolles & Olson has promoted Anjan Choudhury, Jacob S. Kreilkamp, Laura D. Smolowe and Jeffrey Y. Wu to partners. … Business litigation firm Quinn Emanuel Urquhart & Sullivan has promoted former associate Joseph C. Sarles to partner in its downtown L.A. office. … Attorneys Christina M. Craige and Erin F. Natter have been made partners in the downtown L.A. office of Chicago law firm Sidley Austin. … London firm DLA Piper has promoted Jackie K. Park to co-managing partner of its downtown L.A. office.
Staff reporter Cale Ottens can be reached at email@example.com or (323) 549-5225, ext. 221.
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