Woodsford’s latest white paper takes a global view of what is happening in the world of litigation funding.
In recent years, a growing number of claimants have begun to use litigation funding to finance their legal disputes. For many organisations, such is the complexity and resource intensity of bringing a large-scale claim, litigation finance is the only viable method by which they can obtain access to justice. Even if their claim has merit, often no other source of funding is appropriate or available. Furthermore, large corporates with relatively deep pockets are increasingly seeing the risk-sharing and accounting advantages of thirdparty litigation funding.
Globally, there are three wider market drivers behind the growth of litigation funding – which also includes arbitration funding. Firstly, and most importantly, litigation funding is becoming accepted, understood and utilised in an ever-increasing number of jurisdictions. Secondly, as the litigation finance market has matured, it has begun to expand its investor base beyond its historical reliance on high net worth individuals.
Today, banks and hedge funds are increasingly willing to finance meritorious claims, because such claims now constitute a relatively less-risky asset class, uncorrelated to the capital markets and offering more determined positive returns. This, in turn, has enabled litigation funders to invest in an increasing number of disputes. Finally, litigation funders have begun to support a broader range of disputes than previously. Besides financing individual disputes, many ligation funders are now looking to invest in portfolios of similar claims. Increasingly, well-financed law firms and corporates are turning to litigation funding to manage risk and boost their balance sheet.
Nevertheless, inhibitions remain. Even now, the availability and take-up of litigation funding continues to vary from jurisdiction to jurisdiction. Additionally, litigation practitioners are not yet entirely familiar with the full range of funding options available to their clients – even in markets where third party financing is well-established. For both of these reasons, litigation funding has not yet reached its full potential, either globally or in specific markets.
Our latest white paper explores the differences in litigation funding regimes, how global litigation funding markets are evolving and why there will be a shift towards greater risk sharing.
You can download the full white paper here