Today, we are pleased to announce a strategic partnership with Mustang Litigation Funding (“Mustang”), a company focused on providing capital to plaintiffs, attorneys, and legal vendors. A core focus for Mustang is sourcing, underwriting, and building diversified portfolios of pre-settlement litigation advances, further representing Percent’s continued asset class expansion into the litigation finance vertical.
Established in 2018, Mustang is managed by a seasoned team of industry veterans with substantial experience in litigation finance, private equity, and specialty finance. Mustang has funded pre-settlement litigation advances to plaintiffs and attorneys on over 1,500 cases. The originator’s most common cases focus on third-party personal injury pre-settlement funding, with personal injury cases typically targeting motor vehicle accidents, premises liability, and product liability.
In litigation finance, a third party provides capital to a plaintiff to help with their legal, medical, and life expenses while the litigation is ongoing. The capital advanced is sized according to the third party’s expectations of the case’s settlement value, and any returns on it are 100% contingent on the plaintiff winning the case – if the case is lost, for example, the third party does not get any money back, and has no recourse to the plaintiff. If the case is won, however, the expected payment from the settlement is usually structured as a multiple of the capital advanced. This multiple typically increases with the time it takes to win the case, according to a preset schedule. The contingent nature of returns aligns the third-party’s incentives with those of the plaintiff.
As an alternative asset class, litigation finance is well established, with numerous recent securitization transactions to note. One hallmark of the asset class is its cyclical resiliency, as individual case settlement values have had historically low correlation to each other, as well as to the broader equity and debt markets.
According to Alex Pirro, VP of Capital Markets at Percent, “We have been impressed by Mustang’s prioritization of developing long-lasting relationships with law firms and origination partners to source a continuous flow of valuable cases, combined with its experienced management team and proven risk management framework.”
“Percent’s financing partnership allows a larger investor audience exposure to an asset class that has historically benefitted from consistent returns and minimal correlation to other investment types or asset classes. We are excited to be an inaugural partner to this new endeavor” said Jimmy Beltz, Co-Founder and Managing Partner of Mustang Litigation Funding.
As an alternative investment platform, Percent continues to offer accredited investors uncorrelated, high-yield investment products while providing non-dilutive growth capital to its origination partners. This new partnership with Mustang demonstrates Percent’s commitment to providing a variety of asset classes to investors and expanding into new avenues, while adding Mustang to an extensive network of best-in-class partners across different corners of private credit.