What’s Ahead in 2021 for Litigation Funding

As COVID, politics, and financial uncertainty continue into a new year, savvy predictions are the order of the day. With that in mind, CEO of Validity Finance, Ralph Sutton, shares his predictions for third-party legal funding in the coming year.

Bloomberg Tax details that in 2020, Litigation Finance saw increased transparency as well as the formation of the industry’s first international association. Portfolio funding and monetization of cases grew in number and sophistication. And of course, returns have been exceptional across the industry.

COVID has brought about much in the way of innovation. Communications have become more reliant on digital, long-distance tech. Privacy and security infrastructure has been expanded due to the absence of face-to-face meetings. Mediation also replaces litigation more often, when possible.

Litigation Finance is poised to increase its engagement with large corporations and in-house counsel. The ongoing need for liquidity brought about by COVID will likely continue as businesses and firms require ready access to operating or expansion funds.

Right now, litigation funders are flush with cash. Investments in the industry are staggeringly high, which means competition for high-profit cases may become robust. More funders will likely find themselves with fewer strong cases to choose from, creating a market where greater risk-taking is necessary.

In the coming year, more mergers are expected, as well as the addition of complementary business to existing funding firms. Litigation funders might do well to add economic experts to their repertoire. Ditto claims management professionals, asset recovery specialists, and tech experts, who might all add value to existing litigation funding firms.

Ultimately, relationships will play a key role in the success or failure of litigation funders in 2021. Building trust, a reputation for fair dealing, and strong client relationships will make all the difference.