Around the world, antiquated champerty laws are being struck down in favor of allowing third-party litigation funding. In the late-1990s, litigation funding gained popularity in Australia, England, Wales, and the United States. Since then, it has grown in acceptance and familiarity—and is now a multi-billion dollar industry.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
Around the world, antiquated champerty laws are being struck down in favor of allowing third-party litigation funding. In the late-1990s, litigation funding gained popularity in Australia, England, Wales, and the United States. Since then, it has grown in acceptance and familiarity—and is now a multi-billion dollar industry.
Asia Business Law Journal explains that both Hong Kong and Singapore have taken steps to invite participation from the Litigation Finance industry. Both allow for third-party funding in international arbitration proceedings, including enforcement and mediation. Hong Kong later made a clarification that court approval for funding is not required for liquidators.
Harbour Litigation Funding founder, Susan Dunn, has seen banks, corporations, and even governments leverage funding in order to pursue legal matters they could not otherwise afford. Some of the newfound growth of litigation funding can be traced back to COVID and the financial turmoil it caused. Cash-poor businesses are looking to free up operating funds and monetize legal or IP assets that are currently sitting dormant. Litigation Finance is also becoming commonplace for collective actions—though this practice continues to rankle detractors.
Julien Chase, professor of law at City University of Hong Kong, feels that Asia should take steps to expand the scope of litigation funding. The industry, he says, is moving away from strict regulation toward flexibility and self-regulation. When legislation works with third-party funders instead of against them, the result is better for funders, lawyers, and clients alike.
Several sectors have already experienced increased interest in obtaining funding–including insolvencies, intellectual property disputes, and patent law. Any jurisdiction looking to become a litigation destination would do well to welcome third-party litigation funding. Not everyone has a choice, but those who do will be more likely to choose a place that allows for multiple types of fee arrangements, including third-party Litigation Finance.
