2017 was a record-breaking year for many industries. One such sector: litigation funding was on the rise and continues to grow. The industry saw one of its most significant years in 2017 and hopes to continue its growth in 2018. Third-party litigation funding is not a novel concept. What is new is the number of law firms that are turning to the industry to help cover litigation cost particularly in significant civil cases. Law firms can obtain hundreds of thousands and even millions of dollars to help finance legal fees and expenses as they try to secure even larger settlements or jury verdicts.
Litigation Funding: Past, Present, and Future
Litigation financing or litigation funding is when capital is provided by a third-party, uninvolved in the lawsuit, to finance the cost of litigation. This can involve money for legal fees, expert witness fees, attorneys’ fees, court costs and any other legal expenses related to the case. The third-party receives a return on its investment from the outcome of the lawsuit. As the price of litigation soars, the need for litigation financing becomes inevitable. As the demand rises, so does the need to look to the future in the industry.
2018 will be marked, not by a cash flow problem in the industry, but rather by a need to bring awareness to the availability of capital. Numerous conferences across the nation are now featuring litigation funding break-out sections, panel discussions and spotlight sessions to bring recognition to the trade. While the market in the United States is growing, the industry has been flourishing in other countries for decades.
Trends and Takeaways
As awareness grows, so does the competition. 2018 will undoubtedly see new companies enter the field and try to take a slice of the growing market. The market is large enough to take on some players but investing in the right cases may be an art. Some investors will count on a quick turnaround in a field where that doesn’t exist. It can take years before a plaintiff sees a dime out of a large civil lawsuit, this means that investors will have to be patient and see many of the cases as a long-term venture. Some investors may be tempted to take on shorter-term matters or those that have a higher risk to obtain a quicker return on their investment.
As we mentioned, litigation funding has established markets across the globe, but a new frontier for 2018 may be areas like Singapore and Hong Kong. In 2015, the Queen Mary University of London and White & Case conducted a comprehensive survey on International Arbitration. The findings concluded that the five most preferred and widely used seats for international arbitration included London, Paris, Hong Kong, Singapore, and Geneva. Hong Kong and Singapore had historically been against litigation funding but in recent years have begun chipping away at the long-standing common law.
2018 may see the requirement of disclosing third-party litigation. However, it is unclear whether this will be decided anytime soon. The current administration has backed away from supporting any regulations that could hinder economic growth. Despite a petition organized by the U.S. Chamber for Legal Reform and submitted to the Committee on Rules of Practice and Procedure of the Administrative Office of the United States calling for a rule requiring the disclosure of third-party funding in federal lawsuits, the question remains unanswered. The Committee assigned the issue to a subcommittee for further discussion.
An Even Playing Field
One major victory for the entire legal community is that litigation funding evens the playing field. The exorbitant costs of doing litigation today require a lot of capital that most individuals and many law firms just do not have access to. The availability of a third-party to come in and assume those costs can mean that more people will be able to seek justice.
You could be doing a disservice to your firm and your clients by not utilizing the resources and capital available. Amicus Capital Group is a private banking company that specializes in legal finance. We are dedicated to providing trial lawyers the capital they need to pursue justice for their clients. Call us today to learn more about our innovative solutions.
This blog post does not contain legal or financial advice. Author and publisher disclaim any and all warranties, liabilities, losses, costs, claims, demands, suits, or actions of any type or nature whatsoever, arising from or any way related to this blog, the use of this blog, and/or any claim that a particular technique or device described in this blog.