Litigation Finance is a rapidly growing form of specialty finance used by companies and law firms involved in commercial litigation. Litigation finance firms provide non-recourse capital to (i) companies to pay attorneys’ fees and expenses incurred in litigation and (ii) invest in portfolios of cases managed by leading law firms.
Size and Depth of the U.S. Legal Market
Nearly 90% of U.S. corporations are engaged in litigation, and the average large company typically manages multiple cases simultaneously. Tens of thousands of civil lawsuits are filed annually; tens of billions of dollars in attorneys' fees and expenses are paid annually; and tens of billions of dollars in judgments are entered and settlements are paid annually.
Significant Demand for Litigation Finance
Public and private businesses of all sizes, leading law firms, universities, government entities, estates in bankruptcy and liquidation proceedings, and other organizations can use litigation finance for many different reasons, including: (1) to spread litigation risk and control cost, (2) to create certainty within budgets, (3) to work with law firms of their choice, (4) to overcome liquidity or budgetary constraints, and (5) to avoid adverse impact on corporate balance sheets, profit and loss statements, and earnings per share.
Limited Supply of Capital
As an asset class, litigation finance is inefficient, immature and fragmented, with only a handful of known providers. The
current supply of capital for litigation finance is limited and is believed to be greatly exceeded by existing demand.