ILFA’s Gary Barnett Discusses the State of the Litigation Funding Sector

Despite an uncertain economic climate, and investors remaining understandably cautious about how they’re investing their capital, litigation finance continues to remain a strong alternative asset class for investors looking to escape broader market turbulence. For long-time industry leaders, the state of the industry is one of opportunity, as third-party funding is seeing wider adoption across existing and new jurisdictions.

Speaking with LegalDive, the CEO of the International Litigation Finance Association (ILFA), Gary Barnett, argues that this growth is a result of increased awareness of the practice across all sectors, and it is this education that is key to seeing that growth continue, despite economic uncertainty. Mr Barnett also points to recent decisions in the courts which have demonstrated the benefits of litigation funding, not only for smaller plaintiffs who lack the resources to fund proceedings, but also for large entities who can reap the benefits of this tool.

Responding to the frequently repeated criticism that third-party funding encourages frivolous claims, Mr Barnett points out that funders are dependent on ROI, and a firm that is spending its capital on non-meritorious claims would be running a self-defeating business model. 

Discussing the other hot topic of disclosure of involvement by litigation funders, Mr Barnett argues that courts have the ability to compel disclosure where necessary, but that a blanket requirement for disclosure in every scenario would not be beneficial and would distract from the legal merits of any given case.