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Key Takeaways from LFJ’s Digital Event: Legal Tech and LitFin

December 7, 2023

Key Takeaways from LFJ’s Digital Event: Legal Tech and LitFin

On December 6th, 2023, Litigation Finance Journal produced its final event of the year: Legal Tech and LitFin: How Will Tech Impact Litigation Finance Globally? Tets Ishikawa moderated an insightful and pertinent discussion on the use of legal tech in the litigation finance industry. Panelists included Nick Rowles-Davies (NRD), Founder of Lexolent, Isabel Yang (IY), Founder of Arbilex, and Joshua Masia (JM), Co-Founder and CEO of Dealbridge.ai. Below are some key takeaways from the event (answers have been truncated for the purpose of this article): Legal tech is quite a broad term.  What does the legal tech landscape mean to you, and how does it fit into your business? IY: We’re in a very exciting time in legal tech. Where I sit, I primarily deal with the underlying technology being artificial intelligence (AI). The primary advances in advanced AI have primarily occurred out of language being the source data. A lot of these text-based AI advancements all hold great significance for the practice of law. At Arbilex, we are taking advantage of large language modeling (LLM) to reduce the cost of data acquisition. When we take court briefings and unstructured data and try to turn that into structured data, the cost of that process has dramatically decreased, because of Chat GPT and the latest LLMs. On the flipside, because AI has become so advanced, a lot of off-the-shelf solutions have tended towards a black box solution. So the model’s output has become a more challenging task. At Arbilex, we have always focused on building the most stable AI—so we focus on how we can explain a particular prediction to our clients. We are increasingly investing a lot of our time and human capital into building that bridge between AI and that use case. How relevant has legal tech been, and will it be, in the growth of the litigation finance sector?  JM: When we look at scaling operational processes, a lot of times we have to put our traditional computer science hat on and ask, ‘how have we historically solved these problems and what has changed in the past several years to evolve this landscape?’ A lot of the emphasis with technology has been about normalizing and standardizing how we look at these data sets. There’s a big issue when you look at this approach and what existing platforms have been doing—this is a very human business. Because of that, there’s a lot of ad hoc requests that get mixed in. So what gen-AI is doing, we’re getting to a point where you don’t have to over-structure your sales or diligence process. Maybe the first few dozen questions you’re asking of a given data set are the same, but eventually we want to be able to ask questions that are specific to this deal. So being able to call audibles and ad-hoc analysis of data sets was really hard to do before the addition of generative AI. NRD: Legal tech is becoming increasingly relevant, but the real effect and usefulness has grown over time. It makes repetitive tasks easier, and provides insights that are not always readily apparent. But in terms of the specific use of AI to triage outcoming matters, we identify matters in different areas—is this something we simply aren’t going to assess, will it be sent back for further information, does it fit the bucket of something we would fund per our original mandate, or does it go on the platform for the purpose of others to look at and invest in that particular matter. AI is having an increasing impact and is being used with more regularity by litigation funders who are funding they can increase efficiency and get to a ‘yes’ much more quickly. A lot of lawyers would say, this is fascinating, but ultimately this is a human industry. Every circumstance will be different, because they will come down to the behaviors of human beings in that time. Is there a way that AI can capture behavioral dynamics? IY: In general, we need to have realistic expectations of AI. That comes from, what humans are uniquely good at are not necessarily the things that AI is good at. AI is really good at pattern-spotting. Meaning, if I train the model to look for recurring features of particular cases—say, specific judges in specific jurisdictions, when coming up against a specific type of argument or case—then AI in general has a very good ability to assign the weighting to a particular attribute in a way that humans instinctively can come to the same place, you can’t really quantify the impact or magnitude of a specific attribute. The other thing that we need to be realistic about, is that cases are decided not just on pattern, but on case-specific fact attributes (credibility of a witness, availability of key evidence). If you train AI to look for things that are so specific to one case, you end up overfitting the model, meaning your AI is so good at looking for one specific variable, that it loses it general predictive power over a large pool of cases. What I would caution attorneys, is use AI to get a second opinion on things you believe are a pattern. In arbitration, attorneys might use AI on tribunal matters—tribunal composition. AI models are way better at honing in on patterns—but things like ‘do we want to produce this witness vs. another witness,’ that is not something we should expect AI to predict. For the full panel discussion, please click here.
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Omni Bridgeway Secures EU Victory as Commission Declines Regulation

By John Freund |

Litigation funders scored a major win in Europe this week as the European Commission confirmed it will not pursue new regulations targeting third-party funding. In a decision delivered at the final session of the Commission's High-Level Forum on Justice for Growth, Commissioner Michael McGrath announced that the EU executive will instead focus its efforts on implementing the recently adopted Representative Actions Directive (RAD), which governs collective redress actions brought by consumers and investors.

An article in Law.com notes that the move is being hailed as a significant victory by litigation funders, particularly Omni Bridgeway. Kees de Visser, the firm's Chair of the EMEA Investment Committee, described the decision as a clear endorsement of the litigation funding model and a green light for continued expansion across European jurisdictions. Funders had grown increasingly concerned over the past year that the EU might impose strict rules or licensing requirements, following persistent lobbying by industry critics and certain member states.

Supporters of the Commission’s stance, including the International Legal Finance Association, argue that additional regulation would have harmed access to justice. They contend that third-party funding helps balance the playing field, especially in complex or high-cost litigation, by enabling smaller claimants to pursue valid claims that would otherwise be financially out of reach.

Although concerns around transparency and influence remain part of the wider policy debate, the EU’s current position sends a strong signal that existing legal tools and the RAD framework are sufficient to safeguard the public interest. For funders like Omni Bridgeway, this regulatory reprieve opens the door to deeper engagement in consumer and mass claims across the bloc.

Commercial

Daily Caller Slams Third Party Funding as Funders Face Mounting Media Attacks

By John Freund |

In a harsh opinion piecd, the conservative outlet The Daily Caller blasts third party litigation funding (TPLF), casting the practice as a “scam” that feeds frivolous lawsuits, burdens the economy, and unfairly enriches hidden investors at the expense of all Americans.

The op-ed, penned by Stephen Moore, draws a dire picture: trial lawyers allegedly “suck blood out of the economy” through class action suits that generate millions for attorneys but little for the plaintiffs. The piece points to numbers — a projected $500 billion hit annually to the U.S. economy, and tort cost growth more than double the inflation rate — to argue that the scale of litigation has outpaced any legitimate quest for justice.

Where TPLF comes in, according to Moore, is as the lubrication for what he sees as a booming lawsuit industry. He claims that unknown investors donate capital to lawsuits in exchange for outsized shares of any settlement, not the injured party. These hidden financial interests, he argues, distort the incentives for litigation, encouraging suits where there is no “real” corporate villain, a concern especially pointed at class action and litigation targeting major media or tech firms.

Moore cites roughly $2 billion in new financing arranged in 2024 and a fund pool of $16.1 billion total assets as evidence TPLF is growing rapidly. He endorses the Litigation Transparency Act, legislation introduced by Darrell Issa, which would require disclosure of such funding arrangements in federal civil cases. In Moore’s view, transparency would strip the “cloak of secrecy” from investors and curb what he describes as “jackpot justice,” lawsuits driven less by justice than by profit.

But the tone is unmistakably critical. Moore frames the practice as a parasitic industry that drains capital, discourages investment, and suppresses wages. He cites recent reforms in states like Florida under Ron DeSantis as evidence that limiting litigation can lead to lower insurance premiums and greater economic growth.

For legal funders, this op-ed and others like it underscore a growing media trend: skepticism not just of frivolous lawsuits but of the very model of third party funding. To preserve reputation and legitimacy, funders may need to do more than quietly finance cases. They may need to publicly engage, explain their business model, and advocate for regulatory standards that ensure transparency while preserving access to justice.

Commercial

Global Litigation Funding Thrives, Yet Regulation Still Looms

By John Freund |

The global litigation funding market is experiencing strong growth, yet lingering regulatory uncertainties continue to shadow its trajectory. According to the Chambers Global Practice Guide, the market was valued at approximately US $17.5 billion (AUD $26.9 billion) in March 2025 and is projected to surge to US $67.2 billion (AUD $103 billion) by 2037.

An article in LSJ states that major drivers of this expansion include rising legal costs, complex cross-border commercial litigation, and increased demand from small and mid-sized law firms seeking external funding to build out specialist teams. While funders embrace the growth opportunity, critics raise concerns around transparency, claimant autonomy, and potential conflicts of interest.

In Australia, a notable development occurred on 6 August 2025 when the High Court of Australia in Kain v R&B Investments Pty Ltd clarified that federal courts may make common fund or funding equalisation orders for the benefit of third-party funders (but not for solicitors) in class actions—except in Victoria, which still allows contingency fees. This decision is seen as a win for litigation funders, providing greater clarity across most Australian jurisdictions. Australia also saw regulatory reform in December 2022 when the Corporations Amendment (Litigation Funding) Regulations came into force, exempting litigation funding schemes from the MIS/AFSL regime under specific conditions and emphasising the mitigation of conflicts of interest as a compliance feature.

On the regulatory front, the Australian Securities and Investments Commission (ASIC) is considering extending relief instruments that exempt certain litigation funding arrangements from the National Credit Code and financial services licensing until March 2030. Meanwhile in the UK, the proposed Litigation Funding Agreements (Enforceability) Bill 2024 seeks to remove the classification of third-party funding agreements as “damages-based agreements” under the Courts & Legal Services Act – a move which proponents say will enable greater access to justice and clear the path for global funders.