Morgan Stanley Executive to Join Litigation Finance Firm

A senior executive at Morgan Stanley is preparing to join the field of litigation finance, a young industry in which investment firms stake millions on the outcome of lawsuits.

The executive, William H. Strong, the co-chief executive of Morgan Stanley's operations in the Asia-Pacific region, whose retirement was announced last month, plans to join a start-up firm, Longford Capital, as its chairman, the firm announced on Monday. The move is effective on May 1.

Mr. Strong, 61, who will also become a partner of Longford, is among the most prominent converts to this emerging sector of Wall Street. A big part of his job will be to draw on his Rolodex from his 35-year career in finance to help win business for Longford, which invested in its first legal dispute last year.

A handful of litigation finance shops have sprung up in recent years, finding a niche in disputes among businesses where one of the parties needs an infusion of cash or wants to hedge the risk of losing. Longford, like other firms that back plaintiffs, will agree to finance a portion of a case's legal fees in exchange for a share of any potential winnings. If the case fails, the firm walks away empty-handed.

This business, which is more fully developed in places like Australia and Britain, gained visibility in the United States after a number of prominent lawyers, including Sean Coffey, began investing behind lawsuits. Two of the biggest firms - Burford, which started in 2009, and Juridica Capital Management, which began in 2007 - have raised hundreds of millions of dollars. (Mr. Coffey, after helping to start BlackRobe Capital Partners, has since returned to the practice of law.)

Mr. Strong, who will move to Chicago from Hong Kong for his new role, said that litigation finance reminded him of private equity in its early days in the 1980s.

'It's a new, exciting asset class that is uncorrelated, where the demand for the capital greatly exceeds the supply,' Mr. Strong said in an interview on Friday. 'It looks as though the returns in the asset class are very, very attractive.'

He has already staked some of his own money on that proposition. Mr. Strong invested in Longford's fund early last year after discussions with William P. Farrell Jr., a longtime litigator who co-founded the firm. Mr. Strong said he had known Mr. Farrell and his brother, Timothy S. Farrell, also a co-founder, for years.

While the litigation finance industry is still in its infancy, Mr. Strong said he envisioned a role in the future for securitization of these claims. Longford plans to invest in a range of business-to-business claims, with anywhere from $25 million to more than $1 billion in controversy.

Mr. Strong is entering this world after decades in investment banking. He got his start at Solomon Brothers in 1979, before joining Morgan Stanley in Chicago in 1993. He joined Morgan Stanley's management committee in 2011, when he moved to Hong Kong for his current job.

William Farrell, the Longford co-founder, said in a statement that Mr. Strong's 'deep grasp of capital markets and trusted relationships within the global banking and investment communities will help us build on our strengths and accelerate the use of litigation finance as a powerful tool for companies involved in litigation.'

His successor at Morgan Stanley is Gokul Laroia, the head of the institutional equity and wealth management business in Asia, who will be co-chief executive of the region along with Wei Sun Christianson. Mr. Strong will remain a senior adviser to Morgan Stanley.

'Bill's not only a great client banker,' Colm Kelleher, Morgan Stanley's president of institutional securities, said in an emailed statement, 'he's also got strong management and strategy skills as well.'

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