Litigation funding has a checkered past. For centuries it was a crime to fund someone else’s lawsuit, under ancient English “champerty and maintenance” laws created to stop noblemen from meddling in each other’s quarrels. ... By the 20th century, legal and accountancy firms started buying and selling insurance and bankruptcy claims informally, but champerty rules remained a barrier to trading in legal claims. Then, during the late 1990s and early 2000s, a string of British and Australian court rulings held that it wasn’t a bad thing for claimants with legitimate grievances to get external financial help, even if the helpers were out to make a profit. ... Although litigation funding remained impossible in some jurisdictions, it spread quickly in others. Early investors in lawsuits were mostly opportunistic hedge funds and wealthy individuals whose involvement was private and confidential. It was a good deal for litigants, who no longer had to worry about spiraling legal costs; for lawyers, who got paid no matter the outcome; and for the funders, who could get back multiple times what they paid for a share of the suit if it succeeded. ... True to the maxim that lawyers make money in good times and bad, litigation funding is impervious to recessions and other economic shocks. Managed well, litigation funds can offer returns that are hard to find anywhere else.
Barely seven hours had passed since the gunmen had taken the ship. But already an international cast was activating: salvors from the region’s cutthroat ports, to scavenge millions from the wreckage; U.S. military investigators, to determine if Somali pirates had adopted brutal new tactics; and most urgently of all, an operative from the stony world of London insurance, to discover what really happened aboard his clients’ $100 million liability. Because if the hijacking of the Brillante Virtuoso wasn’t a case of fumbled piracy, it would be the most spectacular fraud in shipping history. ... The events of July 6, 2011, set in motion a tangle of lawsuits and criminal investigations that are still nowhere near conclusion. Six years after it was abandoned, the Brillante Virtuoso is an epithet among shipping veterans, one that reveals their industry’s capacity for lawlessness, financial complexity, and violence. This account is based on court evidence, private and government records, and more than 60 interviews with people involved, almost all of whom asked not to be identified, citing the sensitivities of nine-figure litigation and, in some cases, concern for their own safety. Everyone at sea that night survived. But the danger was just getting started.