A Few Immediate Questions about Litigation Finance
Is the Market saturated with financers?
The consensus, overall, seems to be yes, at least for now. There are still many plaintiffs who are using litigation financing for the first time. Because of this, the market is still growing. However, it is unsure about how much the market will grow. Litigation finance will either become a bigger hit or it will plateau in a few years (and still stay popular).
Is there room for expansion (geographically)?
Established, common-law jurisdictions like the United Kingdom is saturated or close to saturated. Currently, attention is starting to turn to Hong Kong and Singapore. They recently allowed litigation financing for international arbitrations. Also, there is the potential that South America will follow suit with these other countries.
Is there room for innovation off the traditional litigation finance model?
Traditionally, litigation financing has been based on single-case, plaintiff side funding arrangements. Recently, there has been talk about defense-side arrangements. But these have yet to be used widespread. Further, there is an increased interest in portfolio form of arrangement with law firms as a whole, opposed to single cases. One innovation that might have some promise in the near future is secondary market sales. This arises when a funder buys a claim from another funder.
Will regulation affect litigation finance?
There are individuals that are optimistic that the industry can self-regulate with the development of a principal of ethical guidelines that all financers would follow. On the other hand, others expect a third-party form of regulation to be created to police the industry. One area in particular that may be affected by regulation in the future are portfolio arrangements. As this industry has grown, there has been more calls for disclosure. Some jurisdictions have adopted local rules requiring this. Portfolio arrangements will likely bear the burden of such regulation because financers have the potential to be involved in such a range of cases rather than just being involved in a single-claim.
Keywords: litigation finance, market, regulation, innovation
Work Cited: David Lat, 4 Questions About the Future of Litigation Finance, Above the Law (Sept. 24, 2018)
