US litigation funding capital commitments jump by 16% to $3.2bn

Assets under management climbed to $13.5bn last year as activity shows 'no signs of slowing down' report finds
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Capital committed to new litigation financing deals in the US grew by 16% last year to $3.2bn representing a sharp increase on the previous year, according to newly published research.

Total assets under management also accelerated, rising by 9% to $13.5bn, litigation finance advisers Westfleet Advisors has found. The 16% rise in capital commitments was particularly notable, Wesfleet said, given rises of 6% and 11% in 2020 and 2021 respectively.

However, Charles Agee, founder and CEO of Westfleet Advisors, warned against assumptions that this growth would continue to accelerate.

"It remains to be seen whether last year's uptick in investment activity merely reflects a temporary acceleration or recovery from the various pandemic-related disruptions in recent years, or whether it's a sign of more substantial growth rates in the years ahead,” he said.

“I tend to think it's the former. Nonetheless, I am highly confident that demand for commercial litigation financing among law firms and their corporate clients shows no signs of slowing down.”

The Westfleet Insider: 2022 Litigation Finance Market Report covers the period 12 months from 1 July 2021 to 30 June 30 2022 is based on a survey of the 44 litigation funders active in the US.

Westfleet said the pool of funders had remained stable and pointed out that the number of litigation funding deals remained small.

‘Compared to the millions of civil cases filed annually in the US and the hundreds of billions of dollars spent litigating these cases, the US commercial litigation finance industry is but a rounding error,’ the report states. ‘While we expect the industry to continue to grow, we do not expect its size relative to the US civil litigation system to materially change.’

The average deal size was $4.3m for a single matter and $10.5m for portfolio transactions with single matters representing a third (32%) of all deals. Client-directed matters, meanwhile, accounted for 39% of the capital allocations with 61% channelled into lawyer-directed cases.

The 200 largest US law firms stood at ‘historical norms’, according to the report, accounting for 28% of total commitments. 

A report published by RPC last June found that UK-based litigation funders have amassed record war chests to finance the growing interest in class action law suits.

Funders' assets jumped 11% in 2021 to hit £2.2bn, almost double the £1.3bn that had been built up in 2017/18 and a more than ten-fold increase over the past decade. 

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