Hedge fund bets $100 million on lawsuit against Iran new wave of litigation finance

Litigation finance is a growing business in which hedge funds and equity funds bankroll lawsuits and settlements to collect from the damage awards when paid. ΠOne U.S. hedge fund is betting more than $100 million that it can collect on a court judgment against Iran for a terrorist attack killing 241 American servicemen at a Marine barracks in Beirut.

RD Legal Capital LLC is raising $100 million to buy a stake in the long and slow litigation. A Judge found Iran liable for the bombing in 2007 and ordered a $1.8 billion payment to the families of the victims.

Iran appealed and the case is still pending. RD Legal has brought rights to some of the payments to families and their counsel. If the case is successful, the fund will receive millions.

Founded by a lawyer, RD Legal has invested in cases from the BP PLC oil spill cases to the Bernard Madoff case. It has produced an annual return of 22% before fees.

Jeffrey Newman represents whistleblowers.