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Litigation funding commitments grow, including at large law firms, according to new survey

By Stephanie Francis Ward

March 23, 2022, 9:14 am CDT

Many large law firms traditionally have been reluctant to use litigation funding, but that seems to be changing, according to a Westfleet Advisors survey released Wednesday.

Bloomberg Law, Reuters and Law.com have coverage.

Westfleet Advisors is a litigation finance advisory firm. According to a March 23 news release, Am Law 200 firms in 2021 had a “nearly fivefold increase” in the percentage of capital used for portfolio deals, which fund multiple lawsuits.

“We at Westfleet have seen firsthand how the implementation of these larger law firm portfolio arrangements can expand these firms’ capacity to accommodate client-side demand for contingent fee engagements and can make accessing litigation finance far more efficient,” said Charles Agee, founder of Westfleet Advisors, in the news release.

Also, the release claims, that in 2021, 47 funders managed a combined $12.4 billion in assets for commercial litigation funding, which was a 10% increase from the previous year.

Many predicted that litigation funding would grow during the COVID-19 pandemic, as courts were shut down, and that restricted cash flow for some lawyers in private practice.

Also, wealthy investors were faced with an unpredictable stock market. However, some have cautioned that the financing is not without its risks—while the deals are nonrecourse if the case or cases go south, if the litigation is successful, the return on investment for funders could be between 200% and 400%.