Regulations & Trends — Article
The Biggest Litigation Finance Stories of 2022
Just as the pandemic began fading from memory last year, a new public enemy quickly emerged: inflation.
In the last monetary policy meeting of 2022, the U.S. Federal Reserve continued to combat inflation with a seventh consecutive rate hike, with an expectation that interest rates could approach 5% in the coming months.
While these rate increases have dampened investor sentiments, they also highlight the need for businesses to source capital more creatively in the current environment. It's a challenge litigation funders are uniquely suited to help law firms and clients surmount.
As we enter a new year, this month's Slip Opinion newsletter will provide a roundup of 2022's most notable developments in the litigation funding space.
Comprehensive litigation funding news and insights, delivered to your inbox every month → subscribe here.
THE BIG PICTURE
CBS NEWS →
Litigation Funding: More Investors Fund Lawsuits, as Rules and Transparency Lag Behind
In a pivotal moment for industry visibility, 60 Minutes ran a segment on litigation finance in December, introducing the concept to an estimated 11 million live viewers on CBS.
The Litigation Funding Barometer: A Special Report
LexShares' industry-first intelligence report analyzed the funding potential of more than 30,000 state and federal cases using the firm's proprietary case assessment software. Our findings were covered by Law.com and Legal Dive, among other outlets.
BLOOMBERG LAW →
Out of Prison and Broke, Wrongly Convicted Sell Their Cases
Exonerated prisoners were among those benefiting from litigation funding this year, with upfront capital helping to fill financial gaps that can exist in wrongful conviction cases.
As Bellwether Trials Resume, Mass Tort Lawsuits Soar Due to Litigation Funding
Mass tort litigation emerged as a particularly robust practice area in 2022, according to Law.com, thanks in part to funders subsidizing key growth and marketing costs for plaintiffs lawyers.
THE ETHICS & ECONOMICS OF FUNDING
REUTERS LEGAL →
The Entrepreneurial Attorney: Insider Tactics for Obtaining Litigation Funding
Former litigators Allen Yancy and Matthew Oxman describe how attorneys and their clients can better position themselves to secure outside financing in this brass-tacks look at claims assessment.
BLOOMBERG LAW →
Analysis: Are Boom Times Ahead for Litigation Finance?
In a November survey, 75% of litigation funders said business performance has increased over last year. Combined with a "steady pattern of interest and acceptance among law firms," these factors suggest continued growth of the U.S. market.
The Need—and Cost—for Lit Funding Has Risen for Plaintiffs Firms
Funding became a key factor for contingency firms facing mounting expenses and court delays. As one firm co-founder noted, recipients "can hedge the risk by having some part of the case funded."
BLOOMBERG LAW →
Big Law Warms Up to Litigation Finance as Deals Pot Hits $2.8B
According to a report published by Westfleet Advisors, more than 40% of the capital deployed by U.S. litigation funders went to BigLaw firms — a marked increase over the prior year.
DISCLOSURE & DISCOVERABILITY
Del. Judge Requires 3rd Party Litigation Funding Disclosures
In the biggest regulatory development of the year, Delaware's top federal judge issued a standing order requiring all litigants to disclose any receipt of non-recourse funding for attorney fees or expenses. The LexShares team explored the move's potential fallout before it was ultimately challenged before a U.S. appeals court in November.
N.Y. Ruling Correctly Deems Legal Finance Docs Irrelevant
The New York Appellate Division's first ruling on the discoverability of litigation finance materials continued a trend of courts denying such requests due to a lack of relevance to the underlying dispute. LexShares explored this topic further in its in-depth "Litigation Funding 201" resource on U.S. case law and statutes.
A FINAL WORD FROM LEXSHARES
As economic uncertainty looms, what does 2023 hold for the litigation funding industry?
Optimists will note that the practice grew rapidly following the 2008 financial crisis. Skeptics might counter that the commercial funding space was largely nonexistent prior to 2008 and thus has not experienced a true market downturn.
We believe the growing number of people learning about and using litigation funding reflect the industry's long-term stickiness. Monthly Google searches for "litigation finance" continue to rise. This newsletter alone had more than 22,000 subscribers last year.
And speaking of our readers: thank you for following along with us. We wish you the very best in 2023.
More from the LexShares team: The Entrepreneurial Attorney: Insider Tactics for Obtaining Litigation Funding