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Globally, litigation funding market has a significant growth and is expected to maintain its dominance during the forecast period. Litigation funding or legal financing is a process in which a third party provides the financial assistance in order to solve costly litigation or arbitration cases in the market. In addition, litigation funding allows investors to avail extended range of a new asset class which are generally not covered under traditional form of market instruments such as property, equities, bonds, or commodities. Furthermore, litigation funder receives an agreed share of the proceeds of the claim during the financing process and has no direct interest in the proceedings of the claim.
The litigation funding market is segmented on the basis of service type, organization size, application, end user, and region. On the basis of service type, it is categorized into pre-settlement financing, law firm financing, post-settlement financing and others. On the basis of organization size, it is divided into small & medium enterprises and large enterprises. On the basis of application bfsi, travel & hospitality, manufacturing, it & telecommunication and others. On the basis of industrial vertical, it is classified into individuals and corporates. On the basis of region, it is studied across North America, Europe, Asia-Pacific, and LAMEA.
The key player covered in the litigation funding market share are Apex Litigation Finance Limited, Deminor, Longford Capital Management, LP, Augusta Ventures Ltd., VALIDITY FINANCE, LLC, Woodsford Litigation Funding Ltd., Pravati Capital LLC, IMF Bentham Limited, Harbour Litigation Funding Limited, Burford Capital, SWIFT Financial, and Balance Legal Capital LLP.
Increase in awareness toward litigation funding & access to new asset class, surge in number of claimants, and increased understanding of third-party financing are some of the factors propelling the growth of global litigation funding market growth. However, non-acceptance of third-party funding as a form of alternate dispute resolution and lack of regulation in terms of fees & interest are some of the factors hampering the market growth. Conversely, several banks & hedge funding companies are expected to provide lucrative opportunity to the market, as these business verticals are expected to finance claims at a relatively less-risky asset class and continuing to rise in the upcoming years.
The litigation funding market is growing tremendously due to increased acceptance & understanding of third-party financing. For instance, a survey conducted across U.S., Canada, and the U.K., by OmniBridgeway which is a law firm, covering over 500 chief financial officers (CFOs) and senior finance professionals. In addition, the survey projected that two-thirds of these segments were “very likely” to use litigation finance in the next two years. Moreover, several large multinational companies are expanding their business & utilizing the funding to minimize the overall litigation risk and monetize litigation claims in the market.
Increase in understanding and utilization of litigation financing have led to massive growth of capital investments, which fuels the market growth. Moreover, investors are continuing to litigate funds in the alternate asset class which is expected to grow exponentially in the upcoming years. Furthermore, capital investment in these asset class are unaffected by the fluctuations in the interest rates.
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