As we enter the final months of 2024, it is only natural for industry commentators and analysts to lay out their observations on the state of litigation finance, seeking to understand how third-party funding has evolved this year.

A column in Bloomberg Law, written by former lawyer turned writer David Lat, examines the current state of the litigation funding industry and examines the changing face of the market, from its growing successes to the evolution of issues it faces. The column draws upon Lat’s time at the LitFinCon event hosted in September of this year, featuring insights from industry leaders who spoke at the conference.

One of Lat’s primary observations is the transformation of litigation funding from a fringe activity in the legal sector, to a mainstream stable that has transformed the way claimants and law firms pursue disputes. Lat highlights this change in attitudes within law firms, quoting Casey Grabenstein of Saul Ewing, who noted that his firm was somewhat reluctant to embrace litigation funding”, whilst Mayer Brown’s Michael Lackey emphasized that third-party funding “was just anathema”, a decade ago. Nowadays, these attitudes have largely been reversed, with Lackey himself noting that in today’s legal landscape “virtually every large law firm that does litigation probably has a funded case somewhere.”

Speaking to one of the prominent topics discussed at LitFinCon, Lat explains that with the startling growth experienced by the litigation finance market, the issue of the ‘commoditization’ of funding continues to be raised. Across the speakers at the event, Lat highlights that the general view of funders and other parties is that the industry has moved towards maturation rather than commoditization, with a lack of standardization across funding arrangements being absent across the industry. Looking to the future of third-party funding, Lat says that industry leaders continue to take a cautiously optimistic view, and quotes Mani Walia of Siltstone Capital who said, “ours is a young industry, and we need to make sure that there are no bad apples.”

In the spirit of this cautious attitude towards ‘bad apples’ and the potential for issues to arise, Lat also addresses the ways in which opposition to and criticism of the funding industry has changed with its maturation. Lat describes this transformation as being a move away from issues of legality to issues of disclosure, highlighting the ongoing debates among lawmakers and the judiciary as to what level of mandatory disclosure should be required for funding arrangements.

The ongoing saga of the $16.1 billion award in the case brought by investors of the YPF oil and gas company, and funded by Burford Capital, has remained one of the most high profile instances of litigation funding in history. Whilst the Argentine government continues to appeal the award, the U.S. government has now formally offered its own opinion on one of the legal issues at stake in the dispute.

An article by Reuters covers the latest development in the Argentina YPF case, as the U.S. Department of Justice submitted a statement of interest arguing against the seizure of Argentina’s shares in the oil and gas company, as part of the enforcement of the $16 billion judgment. The letter, sent to U.S. District Judge Loretta Preska in Manhattan, appeared to disagree with Burford Capital’s position that there was a commercial activity exception to the Foreign Sovereign immunities Act, and that the law was not intended to disregard immunity for foreign sovereign property. This argument seemed to reflect the DOJ’s position that carving out such an exception to immunity would create a parallel risk for U.S. property in foreign jurisdictions.

In response to media reporting on this latest development, Burford Capital issued a statement that argued the DOJ’s letter only addressed “a narrow question of law in relation to the enforcement of judgements.” Furthermore, Burford argued that the filing “does not reflect DOJ’s taking any broader position on the overall case of the enforcement campaign.” The press release from Burford Capital can be read in full below:

“Burford Capital Limited, the leading global finance and asset management firm focused on law, has noted inaccurate media reporting and subsequent market reaction to an expected court filing last night by the U.S. Department of Justice ("DOJ") in the Petersen and Eton Park matters. The filing in the U.S. District Court for the Southern District of New York restates DOJ's position on a narrow question of law in relation to enforcement of judgments. The filing pertains to one motion filed in the Petersen and Eton Park matters as part of the overall, ongoing effort to enforce the judgment against the Argentine Republic. The filing does not reflect DOJ's taking any broader position on the overall case or the enforcement campaign; indeed, DOJ has previously taken the position that pursuing Argentina in the US courts for its breach of contract in this matter was appropriate, and DOJ has not made any filing at all on the pending appeal (and the time to do so has passed). In its filing, DOJ took the view that Argentina could not be required by a U.S. court to move property presently located in Argentina into the United States so it could there be attached for creditors under New York law, which is an unsettled legal issue. The DOJ view is not binding on the court and further briefing and proceedings will ensue. The Company will provide a further update on the Petersen and Eton Park matters during today's earnings call.”

Fenchurch Legal, a specialist in litigation funding for small and medium-sized UK law firms, has partnered with Altify, a regulated South African alternative investment platform connecting retail and institutional investors with tokenised private market assets. This collaboration will offer investors access to Fenchurch Legal’s litigation funding investments via Altify’s digital platform.

Through this partnership, Altify has launched the world’s first legal finance security token on the Bitcoin Liquid network, with the ticker ALFI. Each token is 1:1 dollar-backed by Fenchurch Legal’s litigation finance loan notes. This Real-World Asset (RWA) tokenisation approach democratises access to the niche market of litigation finance—an investment category traditionally reserved for high-net-worth individuals and specialist finance institutions.

With ALFI, Altify’s 75,000 South African clients can now invest, with as little as $100, in a diversified portfolio of senior secured loans extended to vetted UK law firms. ALFI is a USD-denominated security token offering a fixed annual yield of 11% with quarterly interest payments.

The UK litigation finance market is experiencing robust growth, with increased investor demand. Fenchurch Legal’s Loan Note offering has seen investor uptake increase by 90% from Q2 to Q3 this year. This growth is driven by law firms seeking funding for increased case volumes and investors’ interest in stable, alternative assets.

This partnership marks a strategic milestone for Fenchurch Legal, aligning with its vision to expand and connect with a wider pool of investors. By joining Altify’s platform, Fenchurch diversifies its funding sources and strengthens its ability to support law firms in the rapidly growing litigation finance sector.

Louisa Klouda, CEO of Fenchurch Legal, said: “This partnership with Altify marks a key growth milestone for Fenchurch Legal, and we are delighted to be the first company to join their new private debt offering.

Being on the Altify platform allows us to diversify our funding sources and increase our lending power, allowing us to further support law firms and meet the growing demand for litigation finance in the small consumer claims market. Altify investors will benefit from Fenchurch Legal’s investment structure, where loans are secured against case proceeds, proceeds of insurance policies, law firm assets and PGs of shareholders, enhancing investor capital protection. We look forward to collaborating with Altify, a company that shares our commitment to technology and innovative financial solutions.”

Sean Sanders, CFA Charterholder and CEO of Altify, adds: “Fenchurch Legal’s exceptional track record in funding UK law firms and delivering steady returns within a niche alternative asset class makes them an ideal partner for Altify. Legal finance is a compelling investment category for portfolio diversification, as it is largely uncorrelated with traditional economic cycles. However, minimum investments in this category have historically been in the six figures making it a largely unattainable asset class for most investors.

The ALFI token addresses the accessibility challenge, by providing South African clients with the opportunity to own a single token and start investing with the equivalent of $100. This partnership also shifts the landscape of legal finance, as traditionally only the lawyers profit from legal disputes, but with ALFI, both lawyers and investors can earn an attractive return. This is a new era for portfolio diversification, and we are thrilled to be at the forefront.”

Reporting by Law.com International reveals that claimants in a class action brought against the Swiss Financial Market Supervisory Authority (FINMA) have formally accepted a funding agreement with Omni Bridgeway to support the legal action.

The class action is seeking to represent 400 investors who are challenging FINMA over the writing down of $17 billion worth of AT1 bonds issued by Credit Suisse, following the 2023 emergency takeover of Credit Suisse by UBS. The claimants, who are mostly based in Singapore, are being represented by Drew & Napier.

Mahesh Rai, lead partner at Drew & Napier, spoke with Law.com and stated that the value of the class action is set to exceed $250 million, saying that “this claim value will rise as additional investors continue to sign up.” Rai went on to confirm that as part of the funding agreement, Omni Bridgeway “is entitled to a share of any damages recovered by the investors in their claims against Switzerland.”

Whilst the total amount of funding provided by Omni Bridgeway has not been confirmed, the funder’s Singapore investment manager Arvindran Manoosegaran explained to Law.com that it would depend on the number of claimants who register for the lawsuit and the economic viability of the case from Omni Bridgeway’s perspective.

Whilst family law is not always an area of the legal system that is top of mind for litigation funders, the appetite for outside funding to support these disputes continues to be reinforced by specialised firms who are raising capital to grow their services.

In an announcement posted on FinTech Australia, JustFund announced a $92 million capital raise that will allow the family law funder to accelerate the growth of its services and expand operations. The capital raise includes $5.7 million in seed round financing led by Xilium Capital, a $75 million senior debt facility from Global Credit Investments (GCI), and another $11 million in mezzanine funding from family offices. The announcement also explained that the capital raise included investments from Startmate, The Legal Tech Fund (USA) and Tripple, among other startup investors.

JustFund was founded in 2022 by the trio of Andy O’Connor, Jack O’Donnell and Craig Carroll. O’Connor and O’Donnell both formerly practiced as lawyers, whilst Carroll brought his experience as a fintech entrepreneur and investor. According to the announcement, in the two years since its founding, the Sydney-based funder ‘has approved more than $95 million in legal funding to support its clients to access more than $1 billion in relationship property settlements.’

Commenting on the capital raise, Carroll explained that the additional funding “will enable JustFund to help thousands more Australians to achieve a fair and equitable distribution of relationship assets and to rebuild their lives following a divorce or separation.” Gavin Solsky, Co-founder of GCI Funds, stated that his firm is “pleased to be aligning with JustFund and supporting their mission to help Australians access legal representation during a challenging time in their lives.”

Investment treaty disputes between mining companies and nation states have continued to provide legal funders with opportunities to support valuable arbitration claims across the globe. This has once again been demonstrated by an announcement from one such company intending to pursue a dispute with Morocco, enlisting the services of a law firm with a track record of working with funders to support these claims.

An announcement from Emmerson plc reveals that the potash development company has notified the Moroccan government of its intent to pursue an investment dispute over the government’s alleged breaches of a bilateral investment treaty (BIT) between Morocco and the United Kingdom. The mining exploration and development company stated that it “has engaged Boies Schiller Flexner LLP as its litigation counsel and is examining various funding avenues for an investment dispute.” Emmerson’s announcement does not provide any significant details about the nature of the investment dispute but does refer to the development of the Khemisset Potash Project in Northern Morocco, which is likely where the dispute’s origins lie with this project. 

Emmerson stated that it had provided this notification to the Moroccan government so that the two parties could “engage in discussions regarding cash compensation for the damages incurred because of Morocco's breaches of the BIT, with a view to achieving an amicable resolution of the dispute.” However, Emmerson asserted that if these discussions cannot find a resolution, then the company “intends to submit a claim for arbitration under the BIT, seeking damages for the harm described above, plus interest, costs, and any such further relief as the Tribunal may deem appropriate in the circumstances.”

The announcement also references Boies Schiller Flexner’s involvement in two other investment treaty disputes: the GreenX Metals arbitration with Poland and the dispute between an Indiana Resources subsidiary and Tanzania. As LFJ has previously reported, both the GreenX Metals and Indiana Resources arbitration claims were funded by Litigation Capital Management (LCM).