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The Impact of Insurance on the Litigation Finance Market

The Impact of Insurance on the Litigation Finance Market

The widespread adoption of insurance products within the litigation finance space has been one of the hot topics recently, as it opens the door to a range of opportunities for funders and LPs. IMN’s panel discussion on insurance explored how funders can use these products to lower their rates and hedge investments, the solutions available to de-risk and monetize litigation and arbitration, what is covered and how much coverage is needed, and more. The panel consisted of Brandon Deme, Co-Founder and Director at Factor Risk Management, Sarah Lieber, Managing Director and Co-Head of the Litigation Finance Group at Stifel, Megan Easley, Vice President of Contingent Risk Solutions at CAC Specialty, and Jason Bertoldi, Head of Contingent Risk Solutions at Willis Tower Watson. The panel was moderated by Stephen Davidson, Managing Director and Head of Litigation and Contingent Risk at Aon. The discussion began with the products on offer. Those include judgement preservation insurance (JPI), where a judgement has been reached and the client is looking to insure the core value of that judgement.  Insurers can also protect portfolios of judgements, or even pre-judgement, for example if there is a substantial amount of IP that is expected to generate value, that can also be insured. On the defense-side, clients can use products to insulate them from liability and ring-fence their exposure and damages. ATE is one of the earliest products available in the market—going on 20-25 years now. This applies to adverse costs regimes, which is a huge risk to third-party funders who have to assume that risk, given that they put up the capital. As a result, many funders are approaching insurers looking for ATE insurance.  Some less well-known reasons for procuring insurance include enabling one firm to purchase another firm’s docket, which makes the transaction more attractive to the purchasing party. There is also the opportunity to insure against the risk of a specific motion—in one example, Sarah Lieber of Stifel pointed to a case where the likelihood of a certain motion being adverse to the claimant was less than 1%, but the client wanted a ‘sleep well at night’ type of insurance. The insurer was thrilled to write it, obviously, and from the claimant’s perspective, it was a minimal capital output which protected against a low probability event that would have a devastating outcome if it came to fruition. The good news is that these policies are intended to be very straightforward. For example, JPI is supposed to be a math problem: at final adjudication of a case, you’re supposed to have X. If you don’t, insurance will cover a portion of the rest. Portfolio insurance will include a duration element, but it’s still relatively straightforward. This is not mortgage insurance—these agreements are 10 pages long. The policies are designed to be simple. Typically, the only exclusion is for fraud, as that is what insurers are most concerned about. Perhaps that is one reason they are so popular. Speaking on the London ATE market specifically, Brandon Deme, of Factor Risk Management noted, “The insurance market is expanding. We’ve got insurers that can go up to $25MM in one single investment. When you put that together with the six to seven insurers who are active in the space, you can insure over $100MM. And that wasn’t possible just a few years ago.” The discussion then turned to how we can engender more cooperation between insurers and litigation funders, given that the two parties are at odds on issues relating to disclosure and regulatory requirements. Jason Bertoldi of Willis Tower Watson noted that almost every carrier who offers this product will have some sort of interaction with funders, either directly or indirectly. And while there is opposition to litigation funding from insurers around frivolous litigation and ethical concerns, there are similarly concerns amongst insurers around adverse selection and information asymmetry. So the insurance industry has to get more comfortable with litigation finance, and vice versa. “The funders that we’ve worked with that have looked to insure their investments directly, they’ve been succeeded because by being very transparent in what they provide,” said Bertoldi. “And they’ve dedicated a lot of time to getting insurance done, making sure all litigation counsel is involved on the underwriting side. Doing that, and making sure all information is on a level playing field makes the process go a lot better.” Sarah Lieber took this opportunity to highlight the importance of treating an insurer as a valuable partner, rather than as a means of shifting risk. “We use insurance for financial structuring and accounting, more so than shifting risk,” Lieber noted, “because shifting risk—you’ll do that once, and you’ll never be a participant again in this market. Insurers aren’t stupid, if you give them a pile of crap, they’ll remember you for it.” Megan Easley CAC Specialty pointed out that capacity is a challenge on some risks right now.  The market caps out around $300-$400MM. And while it is very unlikely that there will be total loss risk, insurance in general is very conservative, so there is a gradual shift towards the idea of a total loss. Brandon Deme added that it’s about having the right capacity as well.  You want your insurer to pay the client if everything goes wrong. Some insurers go broke, so having the right capacity is key. One final point from Jason Bertoldi highlighted what he felt is the “most important, and perhaps most unexamined phenomenon happening in our industry,” which he believes is contingent risk. “A lot of carriers are dabbling in contingent risk, who aren’t super active in the space, and they are really trying to get involved,” Bertoldi explained. “Many carriers are hiring dedicated personnel to do contingent risk, because they have the appetite but not the expertise to handle that. That will change over the course of the year as new underwriters come into the space with a litigation background.” In the end, these are two markets—insurance and litigation finance—that must grow comfortable with one another. Insurers are looking for funders who want cheaper capital, or are looking to offload concentration risk, and must be assured that funders aren’t simply shifting the riskiest cases in their investment portfolio over to the insurance side of the equation. For more on insurance and litigation funding, register for our complimentary digital event: Litigation Finance and Legal Insurance. This hour-long, audio-only event will be held on Wednesday, June 14th at 11am ET, and will feature key stakeholders across the insurance space who will discuss the interplay of insurance and legal claims in greater detail. All registrants will receive a recording of the event as well.   *Editor’s Note: A previous version of this article suggested that Brandon Deme’s comment on the size of the Legal Insurance market was in relation to the US market, where there is over $750m in available insurance capacity across two to three dozen insurers.  Mr. Deme was speaking specifically to the London ATE market. That correction has been made. We regret the error. 

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Omni Bridgeway Posts Record Q3 FY26 Pipeline as A$391 Million in New Commitments Drives 2.5x Returns

By John Freund |

Omni Bridgeway has reported its Q3 FY26 portfolio update, headlined by an exclusive term sheet pipeline of more than A$600 million — roughly twice the firm's average quarterly pipeline — alongside A$391.8 million in new commitments contracted across 27 investments year-to-date. The Sydney-listed funder, which manages A$5.5 billion in assets across ten funds and operates from more than 20 offices in 15 countries, framed the update as a sign of accelerating deployment and capital formation.

According to GlobeNewswire, the firm has recorded 59 full and partial completions year-to-date, generating A$268.4 million in cash investment proceeds at a 2.5x multiple on invested capital and a 108% fair value conversion ratio. Operating expenses of A$51.2 million remain on track to land below the firm's A$80 million FY26 budget, while management fees of A$27 million are tracking toward an upgraded A$35 million full-year target.

On the capital side, Omni Bridgeway said the full and final close of Funds 4/5 Series II remains on track for FY26, and that more than A$150 million in additional sidecar and overflow capital structures are at advanced diligence stages. The combination of an unusually deep pipeline, strong realizations, and disciplined cost performance positions the funder to defend its narrative of platform scale at a moment when listed peers are under pressure on both fundraising and case-realization timelines.

Jonathan Sablone Launches Sablone Advisory LLC, a Boutique Law and Advisory Firm Focused on Litigation Finance

By John Freund |

Jonathan Sablone, a commercial disputes attorney with three decades of cross-border, financial services, and litigation finance experience, has launched Sablone Advisory LLC — a Boston-based boutique positioned to serve claimants, funders, and insurers across the legal finance ecosystem under the tagline "at the intersection of law and finance™."

According to Sablone Advisory LLC, the new firm offers underwriting, diligence, monitoring, and asset management services to litigation funders and to insurers offering contingent risk products. On the claimant side, Sablone Advisory works with plaintiffs and their counsel to position cases for funding, including packaging case portfolios for cross-collateralized funding and insurance wrappers — services that have become increasingly central as funders and insurers structure deals across multiple matters and risk layers.

"I founded Sablone Advisory to assist clients with the most intractable problems and issues facing the legal finance industry," said Sablone in announcing the launch. "'At the intersection of law and finance' is not just a slogan, but a practical, commercial approach to legal problem-solving that I have practiced for decades."

The launch reflects a continuing trend in the litigation finance industry: senior practitioners with capital-markets and complex-litigation backgrounds spinning out of large institutional platforms to offer specialized, independent advisory and underwriting services. As funders increasingly structure portfolio-level deals, layer ATE and contingent risk insurance into capital stacks, and pursue cross-border recoveries, demand for senior independent diligence and asset management — particularly from professionals fluent in both legal strategy and structured finance — has grown.

For claimants and their counsel, the firm's case-positioning services are likely to resonate in a market where funders are increasingly selective about case quality, structure, and counsel pedigree. For funders and insurers, an independent boutique offering monitoring and asset management — separate from origination — represents the kind of service-provider infrastructure that more mature alternative-asset markets typically develop as they scale.

Inquiries can be directed to Jonathan Sablone at jsablone@sabloneadvisory.com or via www.sabloneadvisory.com.

Colorado HB 1421 Targets PE and Non-Attorney Funding of Law Firms in Bipartisan Push

By John Freund |

Colorado lawmakers have introduced HB 1421, a bill that would sharply restrict the ability of state law firms to enter financial or contractual arrangements with alternative business structures (ABS) and any entity in which non-attorneys hold ownership stakes or exert direction over legal practice. The bill is notable both for the reach of its restrictions and for the unusual coalition behind it.

As reported by The Sum and Substance, the legislation is sponsored by Democratic Rep. Javier Mabrey of Denver and Republican House Minority Leader Jarvis Caldwell of Monument, with active support from the Colorado Chamber of Commerce and the Colorado Trial Lawyers Association — typically opposing forces in business-litigation policy debates. The bill was scheduled for its first hearing before the House Judiciary Committee on April 29.

HB 1421 would prohibit Colorado law firms from entering arrangements with ABS-style structures relating to legal services, practicing in professional companies where non-lawyers own interests or direct lawyer judgment, or compensating any party where compensation depends on a percentage of legal fees or case recoveries. The bill would also empower courts to halt offending arrangements, order fee reimbursement to clients, and disgorge ABS profits derived from prohibited activities. The article specifically references Burford Capital's litigation funding presence in framing the bill's broader policy concern with non-lawyer financial stakes in legal outcomes.

The legislation lands at a moment when private equity ownership of legal services is expanding rapidly in jurisdictions that permit it — Arizona, Utah, and the District of Columbia — and where PE-backed national platforms are increasingly partnering with firms in non-ABS jurisdictions to extend their operating reach. The Colorado bill, if enacted, would cut against that expansion model by restricting how Colorado firms can collaborate with out-of-state, non-attorney-owned platforms.

For the litigation finance community, the bill is a meaningful data point. Although disclosure-based reform has dominated state-level TPLF debate in 2025-26, HB 1421 reflects a parallel and somewhat different policy thrust: not transparency about funding, but structural limits on the ownership and economic relationships that surround legal practice. The convergence of plaintiffs' bar and chamber-of-commerce support behind a single bill is itself rare, and may presage similar coalitions in other non-ABS states facing PE-driven consolidation pressure.