Artificial Intelligence and Litigation Funding
When they evaluate a case for investment, litigation funders must account for a variety of contingencies about the case itself and the litigants. Perhaps the most important of these contingences relates to judicial decision-making at all phases of the case and to the jury verdict at the conclusion of a trial. Sophisticated data analysis promises to improve the predictability of both judicial decisions and jury verdicts. Such analysis creates opportunities for better case evaluation by litigation funders.
Recent research suggests that it may be possible to predict judicial decisions with a high degree of accuracy. In May 2017, Daniel Katz, a professor at the Chicago-Kent College of Law at the Illinois Institute of Technology, used the Supreme Court Database, which has case data beginning in 1791, to create an algorithm designed to predict the vote of any justice. The analytic model predicted more than 240,000 votes by individual justices and the outcomes of approximately 28,000 cases between 1816-2015. The model made correct predictions about case outcomes just over 70 percent of the time, and it was just under 72 percent accurate in predicting the votes of individual justices.
Professor Katz is not alone in trying to use machine learning and other artificial intelligence technologies to predict case outcomes. A recently published report, The Global Litigation 50, tracks trends and developments among the worlds fifty largest law firms. It notes that many firms are attempting to use data to predict case outcomes and other elements of the litigation process.
For litigation funders, the question is when such analytics will prove valuable and under what circumstances. One of the founders of a large litigation finance firm believes that predictions of case outcome can be immediately important in reducing the uncertainty around investment, and he concludes that its importance will only increase in the future. Others are more skeptical, believing that investment decisions in litigation finance require highly complicated and variable judgment that will not be replicated by computers anytime soon.
As the last couple of decades have shown, computerized data analysis is here to stay in the legal profession. There is no doubt that litigation funders have used sophisticated data analysis and will continue to do so, including analytic models that predict judicial decisions and case outcomes. But it is equally certain that there is no computerized substitute for the experience and judgment of investment professionals.
Works Cited: Matt Byrne, Why AI Will Turbocharge the Litigation Funding Market, The Lawyer (July 20, 2017) available at https://www.thelawyer.com/ai-will-turbocharge-litigation-funding-market/
