US Litigation Funding Investment Market 2024–2033

Reports Description

As per the current market research conducted by CMI Team, the US Litigation Funding Investment Market is expected to record a CAGR of 8.9% from 2023 to 2032. In 2023, the market size is projected to reach a valuation of USD 4.5 Billion. By 2032, the valuation is anticipated to reach USD 9.7 Billion.

The US Litigation Funding Investment Market refers to the sector where financial entities provide capital to litigants for legal expenses in exchange for a share of the settlement or judgment. This industry has gained prominence as a strategic alternative for individuals and businesses lacking the financial means to pursue legal actions.

Key players, including Burford Capital and Omni Bridgeway, navigate the complexities of legal finance, leveraging technological advancements and diversified portfolios. The market’s evolution is shaped by trends such as increased acceptance, the impact of global events, and a focus on adapting to changing legal landscapes for sustained growth and innovation.

US Litigation Funding Investment Market – Significant Growth Factors

The US Litigation Funding Investment Market presents significant growth opportunities due to several factors:

• Increasing Legal Costs: The rising costs associated with legal proceedings compel businesses and individuals to seek external funding, driving demand for litigation financing.

• Growing Complexity of Legal Cases: The surge in complex legal cases, including class actions and commercial disputes, creates opportunities for investors to fund high-value cases, stimulating market growth.

• Maturation of the Industry: The US litigation funding market is maturing, attracting institutional investors seeking diversified portfolios and contributing to overall market expansion.

• Technological Integration: Advances in technology, such as AI and analytics, enhance the efficiency of case evaluation, risk assessment, and overall management, driving increased interest and participation in the market.

• Global Economic Trends: Shifting global economic trends present opportunities for litigation funding as investors explore alternative assets, seeking stable returns amidst uncertainties in traditional markets.

• Regulatory Developments: Opportunities arise with improved regulatory clarity and support, creating a more favorable environment for litigation funding and attracting new investors to the market.

• Strategic Partnerships: Collaborations with law firms and legal service providers open avenues for strategic partnerships, fostering synergies that benefit both litigation funders and legal professionals.

• Diversification Strategies: Exploring and expanding into diverse legal sectors and types of cases allows litigation funders to mitigate risk and tap into new markets, contributing to sustained market growth.

US Litigation Funding Investment Market – Mergers and Acquisitions

The US Litigation Funding Investment Market has seen several mergers and acquisitions in recent years, with companies seeking to expand their market presence and leverage synergies to improve their product offerings and profitability. Some notable examples of mergers and acquisitions in the US Litigation Funding Investment Market include:

• In 2023, Omni Bridgeway has successfully concluded an innovative secondary market transaction involving an intellectual property (IP) portfolio. This strategic move showcases the company’s agility and prowess in navigating the complexities of the IP market, contributing to its standing as a leader in the field of litigation financing and investment.

• In 2021, LexShares has collaborated with Remote Legal, a top-tier virtual deposition services provider. This partnership aims to address the challenges in legal proceedings by combining LexShares’ expertise with Remote Legal’s technology-driven litigation support, offering enhanced virtual deposition experiences for depositions, arbitrations, and other critical legal processes.

• In 2022, Manchester’s Thaxted Capital secured a US$31.13 million investment from Sandton Capital Partners, with a primary focus on supporting Thaxted’s launch and upcoming ventures in the litigation finance realm. This significant funding underscores Thaxted Capital’s strategic positioning and future growth plans.

These mergers and acquisitions have helped companies expand their product offerings, improve their market presence, and capitalize on growth opportunities in the US Litigation Funding Investment Market. The trend is expected to continue as companies seek to gain a competitive edge in the market.

COMPARATIVE ANALYSIS OF THE RELATED MARKET

US Litigation Funding Investment Market – Significant Threats

The US Litigation Funding Investment Market faces several significant threats that could impact its growth and profitability in the future. Some of these threats include:

• Regulatory Uncertainty: Shifting or unclear regulatory landscapes pose a significant threat to the US litigation funding market. Sudden changes in regulations may impact the industry’s stability and investor confidence.

• Legal Challenges and Precedents: Adverse legal rulings or changes in legal precedents can pose a threat to litigation funders, affecting the viability and potential returns of funded cases.

• Economic Downturns: Economic recessions or downturns can impact the financial stability of potential litigants, leading to decreased demand for litigation funding and potentially affecting the success of funded cases.

• Ethical Concerns and Public Perception: Ethical considerations and negative public perception surrounding litigation funding may lead to increased scrutiny and regulatory intervention, potentially limiting market growth.

• Volatility in Case Outcomes: The inherent uncertainty in legal outcomes poses a threat, as unfavorable verdicts can result in financial losses for litigation funders, impacting their overall profitability and sustainability.

• Market Saturation and Competition: A saturation of the litigation funding market and heightened competition among funders could lead to decreased profit margins and increased difficulty in identifying high-value, viable cases. This saturation may result in more stringent terms for litigants and potentially compromise the attractiveness of the market for investors.

Report Scope

Category-Wise Insights

By Type

• Commercial Litigation: Commercial litigation funding involves providing financial support for legal disputes within the business realm. A notable trend in the US litigation funding market is the increasing demand for commercial litigation financing. This is driven by the escalating legal costs associated with business disputes, attracting institutional investors seeking diverse investment opportunities and contributing to the maturation of the industry.

• Bankruptcy Claim: Funding for legal actions related to bankruptcy proceedings characterizes bankruptcy claim litigation funding. In the US market, a noteworthy trend is the growing interest in financing bankruptcy-related legal cases. Economic uncertainties and market fluctuations have led to increased demand for bankruptcy claim funding, with litigation funders leveraging advanced technologies for efficient case evaluations to navigate the complexities of such cases.

• International Litigation: International litigation funding involves financing legal actions that span multiple jurisdictions. A prominent trend in the US litigation funding market is the rising interest in international litigation funding. Globalization has increased cross-border legal disputes, creating opportunities for investors to participate in diverse and complex cases. This trend reflects a strategic move by funders to expand their portfolios beyond domestic legal actions.

• Others: The category of ‘Others’ encompasses diverse legal cases beyond the major segments. A prevailing trend in this aspect of the US litigation funding market is the pursuit of varied cases, including environmental litigation and intellectual property disputes. Litigation funders are increasingly exploring opportunities in niche areas, allowing them to diversify their portfolios and adapt to the evolving landscape of legal disputes.

By Enterprise Size

• Large Enterprises: Large enterprises, with substantial financial resources, increasingly leverage litigation funding in the US to manage legal costs and optimize capital allocation. A trend involves strategic partnerships between large corporations and litigation funders to address high-stakes, complex legal matters efficiently.

• SMEs (Small and Medium-sized Enterprises): SMEs in the US Litigation Funding Investment Market are utilizing funding solutions to navigate legal challenges without straining financial resources. An emerging trend involves tailored funding packages and technology-driven solutions, enabling SMEs to access litigation financing more flexibly and cost-effectively, enhancing their legal capabilities.

By End User

• BFSI: The Banking, Financial Services, and Insurance sectors utilize litigation funding in the US to manage legal costs, with a growing trend of leveraging funding for complex financial disputes, regulatory challenges, and insurance-related claims.

• Manufacturing: In the US manufacturing sector, litigation funding supports companies facing product liability claims and supply chain disputes, with a rising trend in funding high-stakes cases to mitigate financial risks.

• Media & Entertainment: Media & Entertainment firms in the US employ litigation funding for intellectual property disputes, defamation claims, and copyright infringement cases. The trend involves funding high-profile media-related lawsuits to protect intellectual assets.

• IT & Telecom: In the IT & Telecom sector, US companies utilize litigation funding for patent litigation, antitrust cases, and contractual disputes. The trend includes an increasing reliance on funding for strategic legal actions, especially in the tech industry.

• Healthcare: Healthcare entities in the US turn to litigation funding for medical malpractice claims, product liability suits, and regulatory challenges. The trend involves funding complex healthcare-related cases to navigate legal complexities and manage costs.

• Others: Various industries beyond BFSI, Manufacturing, Media & Entertainment, IT & Telecom, and Healthcare also benefit from litigation funding in the US The trend shows a diversification of funding applications, encompassing a wide range of legal challenges across different sectors.

Competitive Landscape – US Litigation Funding Investment Market

The US Litigation Funding Investment Market is highly competitive, with a large number of manufacturers and retailers operating. Some of the key players in the market include:

• Burford Capital
• Gerchen Keller Capital LLC
• Bentham IMF
• Omni Bridgeway
• Longford Capital Management
• Calunius Capital LLP
• Therium Capital Management
• Lake Whillans Capital Partners
• Parabellum Capital LLC
• Juridica Investments Limited
• IM Litigation Funding
• Legis Finance
• Curiam Capital LLC
• Redress Solutions
• Augusta Ventures Ltd
• Others

These companies operate in the market through various strategies such as product innovation, mergers and acquisitions, and partnerships.

New entrants like LexShares and Legalist are leveraging innovation in technology and data analytics to penetrate the US litigation funding market. These players focus on streamlined case evaluations and risk assessments.

Dominant key players, such as Burford Capital and Omni Bridgeway, maintain market supremacy through established track records, extensive experience, and strategic collaborations with law firms. Their global presence, diversified portfolios, and ability to navigate complex legal landscapes contribute to their dominance.

The combination of innovation for new entrants and strategic positioning for key players shapes the competitive dynamics of the market.

The US Litigation Funding Investment Market is segmented as follows:

By Type

• Commercial Litigation
• Bankruptcy Claim
• International Litigation
• Others

By Enterprise Size

• Large
• SMEs

By End User

• BFSI
• Manufacturing
• Media & Entertainment
• IT & Telecom
• Healthcare
• Others