US hedge fund Gramercy has entered into a funding agreement with UK law firm Pogust Goodhead. The hedge fund provided Goodhead with $552.5 million in funding to support the firm’s upcoming cases against BHP and Vale and 14 automakers for climate and environmental lawsuits. While the cases are varied, it is clear investors see big returns in climate litigation. The cases against BHP and Vale stem from the company’s involvement in the dam collapse at the Samarco Mariana mine complex in Brazil. The automaker cases revolve around allegedly misleading statements by automakers regarding vehicular emissions.
Goodhead represents 700,000 Brazilian claimants against Vale. Gramercy views such investments as key to its strategy of investing in emerging markets. Financial Times reported on the investment stating:
“Such investments have become a key part of Gramercy’s pitch to clients that it can deliver returns, no matter what the broader market does.”
Litigation funding is a fast-growing market in the financial services sector, totaling $15.8 billion last year with growth projections of 9% annually. The secured loan signals that financial backers see great possibility in environmental and climate litigation. Many large companies with vast resources attempt to wait plaintiffs out until they no longer have funds to continue litigation. Litigation investments may serve to counter this tactic and ensure more environmental cases see trial.
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