WASHINGTON, D.C. Nov. 26 (DPI) – A New York Times reporter did a huge favor to a relatively new and unknown Hollywood-based enterprise that helps finance divorce fights by highlighting its role in post-settlement litigation against hedge fund titan Steven A. Cohen.
Cohen is being sued by an ex-wife – they divorced 20 years ago – over what she now says is an insufficient settlement. Her lawyers claim Cohen hid a real estate transaction at that time that netted him $5.5 million; the ex-wife, Patricia Cohen, wants half of the value of that transaction and accrued interest.
Cohen last year settled federal insider-trading charges by coughing up $1.2 billion to securities regulators; he is still worth several billion and continues to manage his own money, although his old firm, SAC Capital Advisors, has been dissolved.
All of that underscores the unique characteristics of the Cohen litigation. Divorce lawyers say that only a handful of cases nationally will ever merit the involvement of a private lender to fund matrimonial litigation, which by nature is high stakes and often yield no payoff.
Three firms that either lend directly to plaintiffs or take stakes in contingent settlements were mentioned in the report, which appeared in the DealBook blog of NYtimes.com yesterday.
But even though they may welcome third-party financing to their specialty, divorce lawyers say they don’t expect a deluge of such financing activity, except perhaps in a post-settlement dispute like Cohen’s, in which a billionaire is fighting an ex-spouse over tens of millions.
Divorce lawyers generally receive initial retainer payments for their work, but it’s routine for them to extend credit to their clients after the retainer period has run out.
And they say it’s common for clients – even well-off clients – to stiff lawyers of tens of thousands in legal fees. Divorce lawyers say they try to take fee disputes to arbitration, but even that process can yield little, lawyers say. Said one New Jersey-based lawyer: “We’re the bank already in a lot of our cases – if someone wants to start taking the risk of getting paid, they can be my guest.”
http://dealbook.nytimes.com/2014/11/25/steven-cohens-ex-wife-gets-outside-financing-for-lawsuit/
http://dealbook.nytimes.com/2013/11/04/sac-capital-agrees-to-plead-guilty-to-insider-trading/