The total investment in the litigation finance market is USD 14.5 Bn in 2021 and is anticipated to experience an average growth of 9 percent over the 2022-2028 forecast timeframe. Litigation finance is any kind of deal where an unenforceable legal claim is utilized as collateral to obtain funding from an outside entity.
The financier (or the funder) will provide capital to the claimant in exchange for an interest in the final outcome of the trial. The financing is typically provided on a non-recourse basis meaning that the financier receives the amount only in the event that the case is resolved or results in a collection judgment. If the case is not successful the plaintiff is under no obligation to reimburse the funder.
The market is growing because of an increase in demand from claimants for litigation finance. This has been fueled by a rise in legal costs, and the need of both organizations and individuals to make use of lawsuit investment to be a way of earning funds. Companies and investors alike are getting more attracted by litigation finance which is also opening up numerous investment possibilities.
With the growing demand for more advanced and innovative sources of legal financing commercial litigations, individual consumer plaintiffs are growing due to the rising costs and the length of litigation as well as the potential of receiving negative or zero results. The demand for these funding sources is predicted to continue growing since firms who have yet to utilize litigation financing anticipate using it in the near future. Alongside developments such as rising attorney advertising, and the investment in analytics and data legal firms' demand to finance their operations is increasing.