The recent Bluberi decision regarding litigation funding arrangements is still making news. The decision, which approved the use of litigation finance in a Canadian insolvency case, was appealed after a reversal by the Quebec Court of Appeal. In May of this year, the reversal was rescinded and the lower court ruling was upheld.

Trends in the legal or business world often begin as adaptations to some outside event or circumstance. The early stages of COVID brought about a trend of firms moving away from billable hours and toward contingency fees. Another growing trend is the use of Litigation Finance to manage balance sheets and continue to pursue viable litigation without tying up liquid assets. When law firms opt to ignore trends, they can miss out on advantageous developments.

Litigation Finance has exploded since the pandemic spurred massive shutdowns and kickstarted a flurry of litigation. The practice of third parties funding meritorious legal action in exchange for a share of the award is expected to become better understood and more utilized in 2021.

Pending legal claims and potential awards are considered uncertain. They lack liquidity and a surety of success, but they’re also vital corporate assets. With the effective use of monetization capital, these assets can be used to access quick cash.

Despite the widespread acceptance of third-party litigation funding, some remain skeptical. Accusations of promoting frivolous legal actions and unfair recoupments are common.

It’s no secret that big law firms are enjoying growing revenue during the COVID pandemic. The top 50 firms have grown by more than 7% during the first half of 2020, while the next 50 biggest firms have grown roughly half that. Larger firms are handing out bonuses and hunting for new talent in numbers that pandemics would normally preclude. How is this possible?

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.

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.