Litigation Funding Commitments Are Growing, Including at Large Law Firms, New Survey Finds
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Many large law firms have historically been reluctant to use litigation funding, but that appears to be changing, according to a Westfleet Advisors survey released Wednesday.
Westfleet Advisors is a litigation finance advisory firm. According to a Press release of March 23the Am Law 200 firms in 2021 had a “nearly fivefold increase” in the percentage of capital used for portfolio transactions, which fund multiple lawsuits.
“At Westfleet, we have seen firsthand how the implementation of these larger law firm portfolio agreements can expand the ability of these firms to meet client-side demand for contingent fee commitments and can making access to litigation funding much more efficient,” Charles Agee, founder of Westfleet Advisors, said in the press release.
In addition, the statement claims that in 2021, 47 funders managed combined assets of $12.4 billion for commercial litigation funding, a 10% increase from the previous year.
Many have predicted that litigation funding would increase during the COVID-19 pandemic as courts were closed, and this restricted cash flow for some lawyers in private practice.
Additionally, wealthy investors faced an unpredictable stock market. However, some have warned that the funding is not without risks – while the deals are without recourse if the case or cases go south, if litigation is successful the return on investment for funders could be understood. between 200% and 400%.