This week, we take a closer look at news that Kirkland & Ellis is bidding for contingency work. Want to share your thoughts? Email me here. Eager to get this dispatch in your inbox every Thursday? Sign up here.

Kirkland's Contingency Plan

Kirkland & Ellis' announcement earlier this week that the firm is “doubling down” on contingency-fee commercial litigation certainly caught my attention.

Why?

➤➤ It's Kirkland. When the legal world's revenue giant says it's doing something new, your ears perk up too, right?

➤➤ The timing was interesting. Likely to the chagrin of leaders and partners alike, the wider public has been hearing a little more about Kirkland & Ellis than usual this week, thanks to the involvement of past and present litigators in the egregious previous prosecution of Jeffrey Epstein.

➤➤ Folks within Kirkland called the move “disruptive.” How could I not flag it for the Law Firm Disrupted?

But the news also fit together with some of my recent conversations about the boom in commercial litigation finance. Businesses clearly have an appetite to bring affirmative claims—they just don't want to tag up the balance sheet to pay for it.

Even companies that have lent their name to a U.S. Chamber of Commerce letter pushing for transparency in the use of third-party finance have approached funders about supporting some of their own potential lawsuits, I've recently been told.

While litigators at some firms are increasingly open to bringing in third-party funding on behalf of existing clients, and clients are also introducing their lawyers to financers, that's not part of Kirkland's new program.

And why would it be? The firm is closing in on $4 billion a year in revenue. As Kirkland partner James Hurst told my colleague Jenna Greene, “We're more than capable of financing our own litigation.”

In announcing its decision to launch a plaintiffs-side trial group and embrace contingency work, Kirkland noted that its decision was buoyed by “a string of plaintiff-side successes.” In one of those, partners Reed Oslan and Mark Premo-Hopkins won an $82 million verdict in Delaware Superior Court in June on behalf of private equity firm Bracket Holding Corp in a case that alleged fraud during an M&A transaction.

Just as interesting is Kirkland's adversaries in the Bracket trial. Oslan and Premo-Hopkins bested a trial team from Quinn Emanuel Urquhart & Sullivan. The litigation powerhouse has long had a reputation for having a vibrant contingency fee practice (although Philadelphia plaintiffs' attorney Max Kennerly pointed out over a decade ago that a contingency business that comprises 10% of the firm's total hours shouldn't earn the firm the sobriquet “swashbuckling.”)

Should we read the news as a sign that Kirkland is concerned that it can't count on private equity to fuel its surge forever? I wouldn't go that far.

But the Epstein case—as it throws up reminders of Kirkland litigation alums including William Barr and Alex Acosta—is a reminder of how much litigation is a part of the firm's DNA. And while it clearly has the chips to make a bet on contingency-fee work, the fact it feels compelled to sit at the table should be eye-opening to every other firm out there.

In the News

More on litigation financing. Based on my conversations, I now sometimes forget that there's two sides to the industry: not just the large commercial funders, but also those players that support consumers' claims. (And I used to cover product liability trials in the busy tort destination of Philadelphia.) My colleague MP McQueen reports that a number of the commercial finance companies think the aforementioned U.S. Chamber of Commerce also has their operations in its sights as it pushes for “consumer protection” measures that strike at these smaller investments.

I also regularly speak to critics of the billable hour in the industry. Those who find hope in signs that firms are devaluing the metric won't be thrilled with recent news from Cadwalader, Wickersham & Taft. Kathryn Rubino over at Above the Lawreports that the New York firm has actually gotten stricter with the billing requirements its associates must hit to land their full bonuses.

And, at the ABA Journal, Indiana University Maurer School of Law scholar-in-residence Randy Kiser, promoting his new book, talks about how the Great Recession transformed American law firms. Have a listen.

Back again next Thursday! What do you want to hear about? Tell me at [email protected]. Sign up here to receive The Law Firm Disrupted as a weekly email.