As noted in the recent GAO report, there is a distinct lack of publicly available data about the litigation funding industry, which has contributed to the lack of awareness and understanding of the practice by policymakers and legal professionals outside of the industry. However, a new report by Westfleet Advisors provides new insights into the most recent state of the market, and offers some interesting takeaways as to the current direction of litigation finance in the U.S.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
As noted in the recent GAO report, there is a distinct lack of publicly available data about the litigation funding industry, which has contributed to the lack of awareness and understanding of the practice by policymakers and legal professionals outside of the industry. However, a new report by Westfleet Advisors provides new insights into the most recent state of the market, and offers some interesting takeaways as to the current direction of litigation finance in the U.S.
Westfleet Advisors’ 2022 Litigation Finance Market Report provides an overview of the American third-party funding industry, highlighting that the market continues to demonstrate strong growth, as new capital commitments from funders grew by 16% last year, to reach a total of $3.2 billion. Not only has the scale of new commitments continued to grow, but the average size of these investments has also risen to $8.6 million per transaction.
Interestingly, the percentage of client-directed deals has dropped down to 31%, as lawyer-directed deals have become the dominant deal type, reversing the trend of 2021 which saw a near 50/50 split between client and lawyer-directed deals.
Given the regularity with which patent litigation dominates the headlines for litigation funding, 2022 actually saw a decline of that market share down from 29% in 2021 to 21% last year. Westfleet suggests that this outsized representation of patent litigation cases being funded in 2021 may have been the result of several portfolio funding deals for patent lawsuits.
More insights into the U.S. litigation finance market can be found in the full report.
