Who is litigation funding for?
For many, litigation funding will be a term regularly associated with high value disputes and group actions. Previously viewed as a tool for those involved in the most complex disputes, access to funding may not have seemed a realistic possibility for some. However, the tide is changing. Litigation funding is increasingly being viewed as an avenue to promoting access to justice across a diverse range of disputes.
It is true that litigation funding is an opportunity for investors to make profit, and the obvious hurdle to receiving litigation funding is having a case regarded as worthwhile for the investor. In the past, funders will have been particularly interested in cases of a particular type (in which they have experience or expertise) and size (those of high value, which are more likely to result in high return).
The evolution of litigation funding
While the above might have been true of the past, the evolution of litigation funding means it is less true of the present or the future. The litigation funding market is growing, and rapidly. With that growth comes greater opportunity. An analysis of the total assets held by the top 15 largest UK litigation funders in March 2020 found that the value of cases and cash held by those funders had more than doubled over three years and reached a record £2 billion.
One of the factors that attracts investors to litigation funding is its diversity. Litigation funding is an investment asset that is not directly linked to the performance of the economy. During a time of economic uncertainty, a diverse portfolio is of paramount importance to investors and litigation funding is regularly viewed as contrarian and therefore a valuable piece of the puzzle. If it is diversity that investors are after, then diversity within litigation funding itself is also important. This is something we are seeing more and more. In the past, litigation funding may have been reserved to certain sectors and cases valued in the millions of pounds. Now, litigation funding is available for a greater range of sectors and values.
Many businesses may have understandably avoided pursuing worthwhile disputes through lack of funds and the fear of adverse costs. The cost of pursuing litigation for a small business is often cited as a barrier to access to justice. With litigation funders now open to funding disputes of a ‘lower value’, many small businesses would be wise to consider litigation funding as an option.
Shepherd and Wedderburn has a proven track record in assisting clients with funded disputes. Our client’s disputes vary from high value to low, and are spread across a broad range of sectors. If you would like to speak to one of our experts about the possibility of pursuing a funded dispute then please do not hesitate to contact us.