Litigation Finance: Growth Expected after Tough Year

• Author: Daniel S. Wittenberg
• Pages: 26-27

In the wake of the turbul ent COVID-19 pandem ic, the

coming year is ex pected to bring i ncreased demand for

litigation na ncing. Insolvenc y, layoffs, and pay cuts

continue to be potentia l solutions for law rms look-

ing to normaliz e their nancial situations. Fi rms are

encountering liqu idity constra ints, and some attor neys need

funds to resolve clai ms through litigation or arbitration.

Enter the funder s.

The Market by the Num bers

While th ird-party l itigation funding arose out of jurisd ic-

tions where contingenc y fee arrangements with counsel

were prohibited, the indust ry has matured. Third-pa rty

funding is i ncreasingly bei ng used to afford claimants and

counsel more choice —not simply as to whether t hey might

pursue their cla ims, but also as to how and whe n they can

do so. Accordingly, third- party fu nding has seen signica nt

growth, and it s uses have expanded i n recent years. A mong

the major players in this a rena are Burford Capit al, Curiam

Capital, GLS C apital, Lake Wh illans, Longford Capital

Management, Om ni Bridgeway, Parabellum Capital, Tenor

Capital Management, Therium Capital Management,

Validity Finance , and Woodsford Litigation Fund ing.

In 2019, the global litigation f unding market reaped

$11.14 billion. The ma rket is expanding on ac count of

the growing need for l itigation funding among claim ants,

rising legal cos ts, and the need to ge nerate a source of

income through litigation investment. The global litigation

funding inves tment market is anticipated to grow with a

compound annual g rowth rate (CAGR) of 8.76 percent dur-

ing the forecast p eriod from 2020 to 2028, ac cording to

information from Re search Nester.

The North A merica market is projec ted to grow with

a CAGR of 9.19 percent during the projected p eriod. The

market in the reg ion accounted for $6.3 bi llion in 2019,

and in 2021 is anticipated to acc ount for 55.38 percent of

the global market sh are. During t he 12 months from July 1,

2018, to June 30, 2019, $2.3 billion was c ommitted to com-

mercial litigation  nance transactions in the U. S. market.

The largest se gment of the global l itigation fundi ng

investment market i s commercial liti gation with a value of

$6 billion in 2019. It is expec ted to grow with a CAGR of

8.5 percent with a n expectation that the value in the Un ited

States will cro ss $7 billion by the end of this year.

When looking at at torneys with r sthand exper ience

working with litig ation nance  rms, accordi ng to Lake

Whillans’s 2020 Litigation Fin ance Survey Repo rt, the

largest proport ion of lawyers are at rm s with 51–100

attorneys and the sm allest are at rms with 500 or more

attorneys. By indust ry sector, those prac ticing in telecom

reported the most  rsthand experience, with t hose in

banking repor ting the least. Of those report ing rsthand

Litigation Finance: Growth Expected

after Tough Year

By Daniel S. Witte nberg, Litigation News Associate Editor

© matejmo/Getty Images

26 | SECTION OF LITIGATIO N

Published in Litigation News Volume 46, Number 3, Spring 20 21. © 2021 by the American Bar A ssociation. Repr oduced with permissi on. All rights reser ved. This informati on or any portion the reof may not be copie d or disseminated in any

form or by any means or sto red in an electronic da tabase or retrieval sy stem without the ex press writt en consent of the Amer ican Bar Associatio n.

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