There is an ongoing argument against the global litigation finance community purporting that litigation investment is a key driver of social inflation. Many critics of the growing litigation finance ecosystem include lobbyists who aim to usher in strict regulation, possibly targeted at dampening innovation in the space. Keeping this in mind, the idea that litigation finance prompts social inflation is counter-intuitive, according to a new report.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
There is an ongoing argument against the global litigation finance community purporting that litigation investment is a key driver of social inflation. Many critics of the growing litigation finance ecosystem include lobbyists who aim to usher in strict regulation, possibly targeted at dampening innovation in the space. Keeping this in mind, the idea that litigation finance prompts social inflation is counter-intuitive, according to a new report.
CarrierManagement.com’s insights explore a multifaceted deep-dive look into litigation finance regulation as a social inflation mitigation tool. The logical premise contends that ligation investors must review the metrics of each case for funding. The business case for litigation finance hinges on third party investor’s high certainty of the claimant’s case success. Therefore, social inflation fails the logic test, at the most basic level.
CarrierManagement.com’s research does suggest that mindful regulation in the space is necessary for litigation finance to thrive well into the future. However, Carrier seems to suggest that litigation finance is an investment in social capital, rather than social inflation.
