As the federal government in Australia sets up new regulations governing the Litigation Finance industry, some fear that class actions will be much more difficult to pursue. One major change requires that all funders be licensed by ASIC—and meet its expectations of competence, honesty, fairness, and efficiency. That may not seem like a tall order, but it’s not yet certain what hurdles must be cleared to obtain the required licenses.

As the financial impacts of COVID span the globe, one industry is thriving: Litigation Finance. This year alone, the total raised by Litigation Finance firms has surpassed $1 billion. An impressive feat, though not necessarily a surprising one. Litigation Finance has grown by leaps and bounds in recent years, as funders and legal professionals alike realize the myriad benefits of the practice.

Startups are often strapped for cash and rushing to meet deadlines, so what happens when your startup suddenly has to fund an unexpected legal battle? That’s what happened when video startups Eko and Quibi found themselves in a legal skirmish. Both companies are relatively new, and each has a huge corporate entity at its back (Disney/eBay and Walmart, respectively).

The concept of Litigation Finance is a simple one. A plaintiff with a valid claim can seek third-party financing to take that claim to court. If the claim is successful, the funder gets an agreed-upon percentage of the award, or a multiple of the investment, or some combination thereof. If the claim isn’t successful, the funder walks away with nothing. That simple model has grown by leaps and bounds in recent years, and is now even more powerful given the pandemic and subsequent lockdown.

Trucking-related lawsuits are on the rise, as are the potential awards. When a driver is negligent, the company pays the price. This has led to a comparable increase in insurance premiums and shipping costs, much of which is passed down to the consumer. What’s causing this? Some point the finger at Litigation Finance.

Singapore is a relative newcomer to the Litigation Finance party. Still, the industry is growing fast, illustrating that there is certainly a real need. The changes brought about by the Insolvency, Restructuring, and Dissolution Act have taken effect as of July 30th. This paves the way for a multitude of advancements in how the law deals with bankruptcy, insolvency, and corporate restructuring.

This past Thursday, July 30th, Litigation Finance Journal held a special digital conference covering the key issues facing the commercial funding industry.

The Australian government has had Litigation Finance in its sights for some time. After third-party-funded class actions won huge judgments against the government, the country is attempting to reduce the prevalence of the practice—ostensibly to stop the rise of insurance prices.

After gaining considerable steam during the economic crisis of 2008, the Litigation Finance industry has only increased in popularity since. Predictions suggest that by 2027, the litigation funding sector will be worth more than double what it is now.