• Fortress has committed $6.6 billion to legal assets and $2.9 billion focused on intellectual property.

• The group is backing top law firms, particularly in mass tort and patent litigation.

• Fortress has closed out about 40% of its litigation finance deals and even on deals that haven’t fully realized, it’s returned a significant amount of capital to investors.

Fortress Investment Group has quietly become one of the most significant players in the litigation finance sector, with an astonishing $6.6 billion committed to legal assets, and an additional $2.9 billion dedicated to intellectual property (IP) litigation, according to an exclusive Bloomberg Law report.

Litigation finance, where third parties fund legal claims in exchange for a portion of the recovery, has exploded in recent years. Fortress, self-described as the world’s largest institutional investor in patents, has made a name for itself in this field, having a reputation as a tough investor, but efficient in ensuring rigorous compliance and efficiency.

“We’re a tough counterparty if you don’t do what you say you’re gonna do,” Jack Neumark, a Fortress managing partner and co-CIO, said during a nearly three-hour interview with Bloomberg in which Fortress discussed litigation finance activities in depth for the first time. “We see where funds go. If you do something you’re not supposed to do, we’re gonna be upset.”

Who Fortress Is Funding

Fortress is particularly known for backing top-tier law firms involved in mass torts and intellectual property disputes. Mass tort litigation—cases involving large groups of plaintiffs seeking damages, often for defective products or harmful substances—has become an area where Fortress’ deep pockets make a significant impact. 

A review of Uniform Commercial Code filings by Fortress over the past decade found seven law firms to which it has provided loans, some of which have terminated. The filings don’t specify the amount of the loans or how the money is used:

• Texas-based Johnson Law Group, involved in many major mass tort cases, including talcum powder, Camp Lejeune toxic-water claims, and sexual assault claims against Uber Technologies Inc.

• Napoli Shkolnik, whose partners are on executive and steering committees for many of the biggest mega-cases, including ones over PFAS water contamination and opioids. Napoli said it no longer has a loan with Fortress but credits the asset manager with putting it on a self-sustaining path.

• Smith Law Firm, a co-counsel of Beasley Allen, which has led the J&J talc litigation

• St. Louis-based OnderLaw

• Personal injury firm Weitz & Luxenberg. 

• California-based Dan Johnson Law Group, who had a lien with Fortress in 2020. Dan Johnson said the firm had a small funding effort during the pandemic. 

• Mike Papantonio of Florida mass tort law firm Levin Papantonio says his firm has a line of credit with Fortress for only operational expenses. 

Fortress has also loaned to firms with specializations other than mass torts, the UCC filings show. One of them was civil rights lawyer Ben Crump, who represented the families of George Floyd, Trayvon Martin, and Breonna Taylor. 

The group is also funding other litigation funders, with one person with knowledge of investor arrangements telling Bloomberg that there are at least four funders who’ve received capital from Fortress.

What’s Next 

• Fortress has closed out about 40% of its litigation finance deals, Neumark said. On the deals that haven’t fully realized, it’s returned a significant amount of capital to investors.

• “As long as people are happy with the product, I think there’s going to be more and more uptake and so I think the asset class is going to grow for sure over time,” he said. 

Disclosure Issues

Some states and judges have tried to force funders to operate more openly. The U.S. Chamber of Commerce has for years fought an industry it views as funding frivolous lawsuits against its members, the Bloomberg report says. 

Congress has tried at least four times to pass legislation that would regulate the industry. One of the proposed bills that would have required disclosure from a foreign person or entity funding litigation in federal courts, could have put Fortress out of the legal assets business.

“I’m continually confused as to why someone decided that this was the most credible threat that they could have come up with,” Neumark said. “We’re not fearing disclosure, but I just worry it distracts the judge or delays the case and ultimately results in the defendants being able to create more leverage to slow down a verdict or a settlement that is ultimately going to benefit the plaintiff,” he added.