April 9, 2012 7:06 PM
Litigation Finance Start-up Snags Retired Simpson Thacher Partner
Posted by Brian Baxter
Michael Chepiga, who retired from Simpson Thacher & Bartlett on January 1, will join BlackRobe Capital Partners this month. A New York–based private investment firm specializing in litigation finance, BlackRobe was started last year by former plaintiffs lawyer and ex-federal prosecutor Sean Coffey.
BlackRobe officially announced Chepiga’s hire in a press release on Monday. Chepiga, 64, is a 30-year veteran of Simpson Thacher, where he headed the firm's securities litigation practice and spent time on its executive committee. He will become a managing director at BlackRobe.
Our colleagues at The Am Law Litigation Daily broke the news last summer of Coffey’s entry into the increasingly hot market in the United States for third-party litigation financiers. Coffey was a top partner at plaintiffs firm Bernstein Litowitz Berger & Grossmann until he left in October 2009 to run for attorney general of New York State. Coffey and Timothy Scrantom are also managing directors at BlackRobe, which now has nine employees.
While cleaning out his office at Simpson Thacher on Monday, Chepiga told The Am Law Daily that he has been friendly with Coffey for years. While both have been adversaries in court, they’ve also attended New York Yankees games together. Chepiga adds that he also backed Coffey’s ultimately unsuccessful bid for attorney general. (Coffey was one of five candidates vying to replace Andrew Cuomo as attorney general, a post that was eventually won by Eric Schneiderman.)
New York State Board of Elections financial disclosure records show that Coffey’s campaign received at least $1,000 from Chepiga. Fellow Simpson Thacher litigation partners Roy Reardon and Bruce Angiolillo contributed $2,000 and $1,000 to Coffey, respectively.
Chepiga says that he had spoken with Coffey at various times over the past few months about joining him at BlackRobe. In his new role as managing director, Chepiga says he’ll be tasked with making decisions on what cases the firm should invest in, as well as taking part in the current fund-raising process. He declined to comment on how BlackRobe raises its money and makes its investment decisions.
Chepiga adds that he’s told his new colleagues that he would not be comfortable bringing cases against former clients. Like most third-party litigation financiers, BlackRobe makes its money by backing suits in exchange for a share of any potential recovery. It’s a business that has traditionally been used by plaintiffs’ lawyers in pursuing expensive cases against well-heeled corporate clients, but Chepiga says he’s also interested in catering to corporate clients, as third-party litigation financing becomes more ingrained in the U.S.
“Clients are experimenting in all sorts of things, and at the end of the day they want the best representation at the best prices,” Chepiga says. “The billing relationship between clients and firms is changing dramatically, and over the next couple of years [BlackRobe] hopes to become part of that process.”
Litigation finance is not without its critics. Serious questions have been raised over attorney-client privilege and potential conflicts of interest. In a feature story two years ago, The American Lawyer wrote about the rise of third-party litigation funders like Burford Capital Limited and Juridica Capital Management, of which Scrantom was a founding partner before joining BlackRobe. Since then Juridica has been the target of a suit exposing potential flaws in its litigation funding model.
BlackRobe’s Coffey told Bloomberg on Monday that his firm targets investments between $2 million and $8 million in complex antitrust, breach-of-contract, and IP commercial litigation cases that have the potential to yield damages in excess of $50 million. BlackRobe has looked at about 80 cases since opening last year, and has since closed investments in two, Coffey told Bloomberg. The addition of Chepiga gives BlackRobe the expertise of a former corporate defense lawyer, along with the perspective of a former plaintiffs lawyer in Coffey and a commercial claims expert in Scrantom.
A past president and director of The Legal Aid Society, Chepiga has also been a playwright for some Broadway productions. He’s married to Allen & Overy partner Pamela Chepiga, who, like her husband, specializes in criminal, civil, and regulatory securities litigation.
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