Litigation Finance to Double

Litigation financing is becoming a popular asset class and the market is primed to double in the next five years.  Litigation financing takes place when a disinterested, third party, finances the cost of litigation for a share of the claim rewards (if the litigation is successful).

As Mr. Massand states, “what is clear is the direction of travel: litigation finance is now undeniably emerging as a mainstream asset in its own right on a global level… In Australia, the market is already heavily developed, but even the Australian market is expected to grow.”

The United State accounts for around 40% of all litigation finance.  Growth is expected to increase considerably due to it being the largest litigation market in the world.

Further, at 5%, the United Kingdom ‘s market is growing.  Elsewhere, litigation finance has been approved of in countries such as Singapore and Hong Kong.  Besides the growing global reach of litigation financing, there are other “pull factors” for investors.  One of these big pull factors is the uncorrelation to traditional capital markets, thus allowing for greater portfolio diversification.  Also, if the economy were to descend, it is expected to actually increase litigation finance businesses because economic downturns present more opportunities for litigation.

However, the market is expanding and the fact that there will always be legal claims, and that it represents an attractive alternative for investors, Mr. Massand contends that litigation finance is expected to double.   It is exciting to see what the future holds for this industry.

Keywords: Litigation finance, double, market, pull factors

Work Cited:  John Freund, Litigation Funding to Double in Five Years as Asset Class Becomes Mainstream, Litigation Finance Journal (March 20, 2019)