Corporate investigations pioneer and ratings agency entrepreneur Jules Kroll is getting into the fast-growing litigation finance business.
Kroll announced Monday that he and several co-founders are launching BlueWhite Legal Capital to fund commercial litigation strategies. BlueWhite is backed by hedge fund firm Magnetar Capital, which will operate with committed capital, according to the announcement.
“The cost of legal services, especially from the top-tier firms, is incredible,” said Earl Doppelt, one of the co-founders of the firm, by phone. “With litigation funding, you can bridge that gap and get the counsel that you want.”
The litigation finance industry has seen a surge in growth recently: according to a 2018 survey from one of the industry's largest players, Burford Capital, 32 percent of lawyers surveyed reported using litigation funding in 2018. Just six years prior, in 2012, under 10 percent said they used funding.
“The pressure on law firms and the cost of legal services is higher than ever,” Doppelt said, at the same time that the pressure to keep costs down is more intense than ever.
BlueWhite will focus on commercial litigation, which specifically includes breach of contract, securities, M&A, antitrust, fraud, breach of duty, bankruptcy, intellectual property, and asset recovery, according to BlueWhite’s announcement. The firm will target commitments of between $5 million and $15 million but will consider potential financing outside of that if appropriate, its announcement said.
Magnetar will provide BlueWhite with up to $150 million in financing subject to certain milestones and commitments, Kroll said by phone.
According to Kroll, K2 Intelligence — his intelligence, investigations, and asset recovery firm — owns a 40 percent stake in BlueWhite. Kroll said K2 has assigned about ten people to actively look for opportunities that would be strategic for both BlueWhite and K2 in terms of litigation financing and then asset recovery.
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Kroll will be joined as a principal of the firm by Aaron Rubinstein, who was most recently a partner at Arnold & Porter Kaye Scholer; Doppelt, former executive at The Dun & Bradstreet Corporation, the Nielsen Corporation, and Walter Energy; and Jack Blackburn, who most recently worked as a managing director at Burford Capital.
Doppelt said he worked with Kroll as a client for 25 or 30 years. He knew the others through doing business together, he added.
“Jules is the businessman and entrepreneur, I am the general counsel, Aaron is the big firm litigator, and Jack brings in the financial side with his experience at Citi, Merrill Lynch, and Burford,” Doppelt said.
According to Kroll, the expertise among the principals is a strength of BlueWhite.
“It's our intent to be a source of substantive advice and support, so it’s more than just the money,” Kroll said. “It’s about the expertise, the judgment, and the experience.”
