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Key Takeaways from LFJ’s Special Digital Event: ESG in Litigation Funding

October 6, 2022

Key Takeaways from LFJ’s Special Digital Event: ESG in Litigation Funding

On Wednesday October 5th, LFJ hosted a panel discussion and audience Q&A covering various aspects of ESG within a litigation funding framework, including how funders consider ESG claims, how serious LPs are when it comes to ESG-related criteria, and the backlash swirling around the topic itself. Panelists included Andrew Saker (AS), CEO of Omni Bridgeway, Neil Purslow (NP), CEO of Therium Capital Management, and Alex Garnier (AG), Founding Partner and Portfolio Manager of North Wall Capital. The event was moderated by Ana Carolina Salomao, Partner at Pogust Goodhead. Below are some key takeaways from the digital event: How do you consider ESG being relevant to litigation funding? AS: It’s a truism that litigation funding provides access to justice. By definition it’s a social benefit. Litigation acts as a deterrent, and leads to environmental, social and governance improvement. So financing that through litigation funding assists with the achievement of various ESG goals. ESG can both be a goal to be achieved through litigation funding, and also internally to be used to identify risks internally, and to inform decision-making. How do your LPs consider ESG? Is ESG part of their mandates? Is it truly something that benefits your fundraising? AG: We at North Wall are launching the third vintage of our legal assets fund, having deployed the first two vintages. There is strong investor demand for ESG-compliant and ESG-focused litigation financing. The questions asked on ESG are the same as with litigation financing – we’re asked how we screen deals, how we incentivize counter-parties to continually improve on ESG. In our partnership with Pogust Goodhead, you have given us an undertaking to pursue only ESG-compliant cases (not that that was required, because that is the whole philosophy of the firm). But we have put that in place in documents in a non-litigation financing context. For example, when investing in e-commerce businesses, we have put in place interest rate ratchets linked to measurable goals such as environmental and social factors—achieving carbon neutrality, etc. And then actively seeking cases that meet ESG criteria as well. Cases around recompense for exploited workers is an example. I think investors are also concerned about people going too far the other way—about greenwashing, tokenism, at taking positions at the expense of returns and downside protection. Do you see that because you have an ESG awareness, you are able to access different investment pools than you otherwise would? Can you use it as leverage when fundraising? NP: From Therium’s perspective, we see that some of our LPs are very focused on ESG-compliant criteria. We’ve been reporting to them for years on ESG compliance in different ways and how we think about that in our asset class. But you have to be careful here about what ESG means in the context of this particular asset class. What we’re doing is very different vs. a private equity fund or something like that. So you have to answer investor concerns very specifically for our asset class. And you also have to be careful about making ESG claims in a way that makes sure they are properly understood to our audience (particularly if you are addressing a retail audience). There is a danger there, that we all need to be very cognizant of. How do managers and investors think about supporting a case that has strong ESG components to it, but doing so for a plaintiff that is non-ESG (for example, an Oil & Gas claimant)? AS: The perception of what ESG is, needs to be taken in context of that particular case. Supporting a coal company would not be considered an ESG strategy. But if that coal is being used to provide power and heat and electricity in the middle of winter to Ukraine, then yes it could be considered a socially important strategy. So it is a challenge. In some of our funds, that decision is taken away from us – our LPs have very strict no-go zones. That does assist us in identifying those claimants we’re able to support. In other funds, we have a great degree of discretion. Generally, we try to balance what we consider to be competing ESG requirements and objectives.   Will the International Legal Finance Association look to establish ESG criteria or metrics for the industry? NP: That’s a very interesting question. I am not aware of any discussion to do that yet. I think it’s extremely important how the industry engages with this topic. There is also another side to this—the greenwashing aspect. We need to be very careful that our industry is not representing itself to be something it is not. So there is a very strong case for a strong ESG narrative here. How ILFA engages with that in best practices has not yet been discussed. What are the particular challenges or hurdles which funders, law firms or claimants might face in environmental suits specifically, in addition to the usual financing criteria? AG: You tend to have very deep-pocketed defendants, which requires a level of stamina. You also tend to have a very wide group of claimants, because so many people have been affected by the environmental disasters in question. The flipside of that of course, is that the public relations impact of a defendant digging its heels in when they’ve done something of that sort means that a settlement is much more likely, as the liability and causation is much clearer than it is in other cases.

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Omni Bridgeway Spotlights the Demands of Funding International Arbitration

Omni Bridgeway, one of the world's largest legal finance providers, has released new content underscoring the specialized expertise required to fund international arbitration — disputes that frequently span multiple jurisdictions, legal systems, and languages. The piece positions the funder's cross-border capabilities as central to navigating an increasingly complex global disputes market.

According to Omni Bridgeway, funding international arbitration effectively demands a combination of "global expertise and local knowledge." The firm — listed on the ASX with 24 offices worldwide — points to a team that includes former arbitration lawyers and litigators, arbitrators, leaders of arbitral institutions, and business users of arbitration as the basis for its claim to be a global leader in the space.

The content emphasizes capabilities that distinguish arbitration finance from domestic litigation funding: risk assessment across multiple jurisdictions, cultural and multilingual fluency, and access to worldwide professional networks. Each reflects the reality that an arbitration award secured in one forum may still require enforcement efforts in several others before a funder or claimant sees a return.

While the material is promotional in nature, it reflects a broader trend: rising demand for capital and risk-sharing in cross-border disputes as international arbitration continues to grow. For claimants weighing whether to pursue complex multinational claims, the involvement of specialized funders increasingly shapes which cases move forward — and how far they can be pressed.

Commercial

Privilege Expert Argues TPLF Agreements Are Not Automatically Shielded From Disclosure

A new comment letter to the Advisory Committee on Civil Rules contends that third-party litigation funding (TPLF) agreements do not automatically qualify for protection under the attorney-client privilege or the work-product doctrine — directly challenging one of the funding industry's central objections to a federal rule mandating disclosure.

According to AskAboutTPLF, an initiative of Lawyers for Civil Justice, the letter was authored by Bradley partner and privilege specialist Todd Presnell, who takes no position on whether a disclosure rule should be adopted. Presnell argues that TPLF agreements fail all four requirements needed to trigger attorney-client privilege: they are not communications, they are not between a client and lawyer, they lack confidentiality because funders are not parties to the litigation, and they do not contain legal advice or strategy. On that basis, he writes that he does "not perceive the attorney-client privilege or work-product doctrine as a barrier to adopting a mandatory-disclosure rule."

Two recent rulings are cited as support. In *Entangled Media, LLC v. Dropbox Inc.* (N.D. Cal., April 13, 2026), a court permitted a funded plaintiff to seal specific financial terms after in camera review while ordering production of the remainder of the agreement. In *A Co. Hungary KFT v. Bespalov* (Cal. App. 2d Dist., April 22, 2026), an appellate court affirmed $8,000 in sanctions against a judgment debtor who asserted work-product privilege as a blanket objection, holding that privilege claims over funding records must be made document by document.

The campaign argues these cases show courts already redact, seal, and log privileged materials routinely, and that TPLF agreements require no different treatment.

Commercial

Coalition Urges Congress to Curb Foreign Third-Party Funding Targeting the Energy Industry

A coalition of 21 organizations led by the American Energy Alliance (AEA) has called on congressional leaders to close a tax provision that allows third-party litigation financiers to treat their profits as capital gains rather than ordinary income. The group argues the loophole enables foreign investors to extract effectively tax-free returns from U.S. court outcomes, with the American energy sector squarely in the crosshairs.

According to the American Energy Alliance, the letter was sent on June 22 to House Speaker Mike Johnson, Senate Majority Leader John Thune, and the tax-writing committees in both chambers. The coalition contends that foreign sovereign wealth funds and geopolitical rivals have deployed substantial capital into U.S. energy-related litigation, creating national security vulnerabilities through undisclosed financing arrangements.

"Foreign nationals and foreign corporations with no U.S. presence pay no U.S. withholding tax on these gains," said AEA President Tom Pyle. The letter frames third-party litigation funding as a high-yield alternative asset class and warns that foreign entities are weaponizing it in disputes over climate claims, intellectual property, mergers, and environmental regulation.

The campaign reflects the growing convergence of litigation finance, tax policy, and national security in Washington. While the letter does not cite a specific bill, its focus on capital gains treatment signals that funders' tax positions — long a secondary concern in the disclosure debate — are emerging as a distinct front in the broader fight over third-party funding.