4 trends to watch in the coming decade

Technology. By 2030, effective technology usage will have become a key differentiator both in litigation finance and the legal sector overall. This trend will include the increased use of origination tools, such as LexShares' proprietary Diamond Mine technology platform, as sourcing high-quality cases grows more challenging in the face of increased competition. But it will also include data analytics tools, such as Lex Machina, as attorneys and funders seek better ways to analyze risk, including evaluating damage models, jurisdictions, counsel and beyond.
Clarity. We also expect courts and regulators to more clearly define the laws that govern litigation finance practices. As a result, it is likely that lobbying groups and industry associations will emerge to represent the varied interests of commercial funders, law firms, and corporate clients. Transaction documents, funding structures, and data utilized by litigation funders will also become more standardized, which could lead to a more efficient market for funding recipients.
General Counsels. Compared to law firms, corporate legal departments have generally been slower to adopt litigation finance. We anticipate that will change, with more GCs proactively using nonrecourse capital to offset risk, optimize litigation outcomes, and transform their departments into profit centers. Defense-side litigation finance, which has yet to be used in a meaningful way, may also draw the interest of GCs at larger corporations, as they seek to reduce litigation risks and costs.
Consolidation. As the U.S. litigation finance market becomes more competitive, we expect to see consolidation. The recent merger of IMF Bentham (one of the world's two largest funders) and Omni Bridgeway, completed in late 2019, sets the stage for further M&A activity or joint ventures among the market's more active players. Such transactions could entrench existing investment philosophies or encourage the adoption of newer offerings.

What do these trends mean for the legal sector?

The industry transformation that occurred over the past 10 years is a strong indicator that litigation finance is cementing its place as a mainstay of the modern legal system

Instant Insights /

Litigation finance: What to know about this increasingly important financial product

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