23 Mar, 2022, 06:00 ET
Westfleet Advisors' 3rd Annual Litigation Finance Market Report Examines a Year of Recovery and Steady Growth for Asset Class
NASHVILLE, Tenn., March 23, 2022 /PRNewswire/ -- The number of litigation finance providers in the United States, their assets under management (AUM), and the dollars they committed to new financing deals, all grew over the last year, according to a new report from litigation finance advisory firm, Westfleet Advisors. According to The Westfleet Insider: 2021 Litigation Finance Market Report, 47 active funders managed a combined $12.4 billion in assets allocated to US commercial litigation investments, a 10% increase from the previous year. As the industry adjusted to a global pandemic and disruption to the civil justice system, the capital committed by funders to new financing deals also grew by 11% to $2.8 billion in 2021.
For the third consecutive year, Westfleet analyzed data collected directly from litigation funders to calculate the size of the U.S. litigation finance market. The most complete and rigorous analysis of the sector, The Westfleet Insider features data and commentary on the size, scope, and focus of U.S. commercial litigation finance. This year's report builds on the two prior years' analyses, and with this historical perspective, reveals signs of an industry that is maturing.
"The last three years have exposed the litigation finance industry to a significant 'stress testing' and proven the asset class to be remarkably resilient," said Charles Agee, founder of Westfleet Advisors. "Although no one would argue that conditions have returned to normal following the advent of COVID-19, litigation funders by and large have successfully adjusted to adverse conditions in the legal system as well as the broader economic environment. Indeed, the industry managed to grow despite widespread caution toward risk-taking across many asset classes."
The annual increase in capital deployments for new investments industrywide – 11% year-over-year – may suggest that the industry is approaching its full potential, particularly considering the modest 6% growth rate in 2020. Another telltale sign of maturity, albeit qualitative, is the continued mainstreaming of litigation finance utilization within the more culturally conservative arena of Big Law. However, the continued embrace of funding by Big Law does not necessarily suggest any particular amount by which the industry may expand before reaching its potential.
"One of the data points we observed that suggests the potential for a substantial amount of future growth is the nearly five-fold increase in the percentage of capital allocated to law firm portfolio deals across the AmLaw 200 relative to capital allocated to all law firm portfolio deals. We at Westfleet have seen first-hand 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," Agee added.
About Westfleet Advisors
Westfleet Advisors is a litigation finance advisory firm that was founded in 2013 to bring greater transparency and efficiency to users of litigation financing. Our core mission is to ensure lawyers and their clients have superior information and resources to make litigation finance work better for them. Our senior leadership has been active in the litigation finance industry since 1998.
SOURCE Westfleet Advisors
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