The European Litigation Funding Association (ELFA) is very pleased to announce that Stonward, a litigation funder focusing on Spain and Latin America, has joined ELFA, as the association now builds towards becoming the collective voice of the European Litigation Funding Industry. Guido Demarco, Director and Head of Legal Assets of Stonward, explained why it was important for the funder to become part of ELFA: “we are thrilled to announce our membership in the European Litigation Funding Association (ELFA), marking a significant milestone in our journey as a litigation funder based in Spain. Joining ELFA aligns perfectly with our commitment to excellence and the pursuit of justice within the legal industry.” Demarco added, “as a member of ELFA, we are eager to collaborate with like-minded professionals and industry leaders from across Europe. By uniting our strengths and expertise, we aim to drive positive change, foster transparency, and promote the highest standards of ethical litigation funding practices. Through our membership, we seek to contribute to the development of the litigation funding ecosystem in Spain and the broader European market, while raising awareness about this legal tool among legal experts and company managers. We believe that by working closely with ELFA, we can actively shape the future of litigation funding, advocate for its recognition as a valuable tool for access to justice, and support the growth of fair and effective dispute resolution mechanisms.” Deminor Partner and ELFA Board Member, Charles Demoulin, highlighted how pleased he and the other founding members of ELFA were, to welcome Stonward to ELFA: “My co-founders and I established ELFA established to serve as the European voice of the commercial litigation funding industry and we are immensely proud to start now welcoming on board funders from around Europe who are also keen to play a part in shaping the direction of the industry. We are extremely pleased to announce that Guido Demarco and Stonward are full members of ELFA and look forward with enthusiasm to their future contributions.” ELFA was founded by three leading litigation funders with a European footprint including Deminor, Nivalion AG, and Omni Bridgeway Limited. ELFA's current directors are Charles Demoulin (Chief Investment Officer, Deminor); Marcel Wegmüller (Co-Founder and Co-CEO, Nivalion AG); and Wieger Wielinga (Managing Director EMEA Omni Bridgeway), who will serve as ELFA's inaugural Chairman. The intention of the association is to be inclusive for all professional litigation funders of larger or smaller size. Demarco further explained what he and Stonward are keen to achieve by being members of ELFA: “our core focus remains on the Spanish market, however, we recognize the importance of collaboration and exchange of knowledge at a European level. By participating in ELFA's initiatives, events, and working groups, we intend to stay at the forefront of industry trends, legislative changes, and emerging best practices. This will enable us to better serve our clients, enhance our risk management capabilities, and further strengthen our commitment to providing tailored and innovative funding solutions. We are excited about the opportunities that lie ahead and the doors that our membership in ELFA open for all of us. Together with other fellow members, we are committed to advancing the field of litigation funding, fostering a culture of integrity, and ensuring access to justice for all.”  About ELFA: ELFA was founded by three leading litigation funders with a European footprint including Deminor, Nivalion AG, and Omni Bridgeway Limited. ELFA's current directors are Charles Demoulin (Chief Investment Officer, Deminor); Marcel Wegmüller (Co-Founder and Co-CEO, Nivalion AG); and Wieger Wielinga (Managing Director EMEA Omni Bridgeway), who will serve as ELFA's inaugural Chairman. The intention of the association is to be inclusive for all professional litigation funders of larger or smaller size. About Stonward: Stonward began operations in 2020, offering bespoke solutions to access legal finance, providing clients with access to capital for commercial litigation and arbitration, focusing on Spain and Latin America. Stonward advises clients to find the angle to their legal assets so that they can capitalize on strengths, offering tailored solutions to access legal finance. Stonward manages a portfolio of claims related to commercial cases, intellectual property, restructuring and insolvency, and antitrust infringements, including the truck cartel. In addition to Guido Demarco, Director and Head of Legal Assets, other key members of Stonward include, Armando Betancor, Blas González, and Chris Garvey, [members of the Board of Investments], and Rodrigo Olivares-Caminal, and Eduardo Frutos, who are Corporate Advisors to the company.

Executive Summary

• Consumer legal funding is a much more consistent and predictable asset class
• Headline risks, while real in the earlier days of the industry’s evolution, are now consistent with more mature consumer finance asset classes
• Consumer legal funding has a strong ESG component through the social benefits provided to the segment of society that relies on it the most

Slingshot Insights:

• On a risk-adjusted basis, factoring in volatility and predictability of returns, the pre-settlement advance industry outperforms the commercial legal finance industry
• Duration predictability, return rates and loss rates are the main factors for out-performance
• Investors would be mistaken to overlook the consumer legal finance market in assessing various non-correlated investment asset classes
• As with any asset class, manager selection is critical to investment success

In part 1 of this article, I provided some background on the consumer litigation finance market, with a focus on the pre-settlement advances sub-sector which is the largest segment of the consumer legal finance market.  Part I also discussed how the market has regulated, evolved and bifurcated. In the second part of this two part series, I discuss the underlying economics of the pre-settlement advance subsegment, the status of regulation and some thoughts on how the market continues to evolve and why institutional investors are increasingly getting involved. Underlying Economics One of the first research reports that attracted me to the PSA market was a 2018 study that was undertaken by Professors Ronen Avraham and Anthony Sebok entitled “An Empirical Investigation of Third Party Consumer Litigant Funding”.  It was the first large scale empirical study of consumer legal funding in the United States which analyzed over 100,000 funding requests over a 12-year period provided by one of the largest consumer legal funders in the US.  While the analysis was inherently skewed because it came from a single funder, the large size of the data set is likely representative of the broader market, and hence many of the insights highlighted by the authors are likely true of the broader market to one degree or another, with certain insights being specific to the funder and its approach. Without going into the details of the report (see highlights below), suffice it to say the report demystified much of the industry and debunked many of the criticisms that were levelled at the industry by naysayers and those with an economic incentive to ensure the industry was not successful. Perhaps “lying” is a bit harsh, but there were certainly many distortions being promulgated about the industry that were neither present in the data nor a reflection of the specific funder’s business. Source: https://www.americanlegalfin.com/alfaresources/ On the plus side, the research discovered that while loss rates were relatively high at 12% (again, possibly a consequence of the risk & return threshold of this particular funder) there were numerous instances of the funder taking “hair cuts” (i.e. reducing their accepted returns to below contracted levels) for the benefit of the consumer.  In other words, the funders ‘have a heart’ and will proactively reduce their return expectations to leave the injured party in a position that is more equitable than if they stuck to their contracted terms.  On the negative side, the net return profile was 44% per annum, which suggests that even after losses and “hair cuts” this is an expensive form of financing. Keep in mind, this study was over a 12-year period prior to 2018, and the rates today are likely not as high as they were in the beginning of the industry due to competition and regulation. A second explanation for the relatively high rates is that depending on the funder’s risk profile, the funder may be willing to take on more risk (i.e. accept more losses) than another funder in return for a higher rate of interest. Whereas another funder may be more conservative and have stricter underwriting standards, accepting fewer cases and lower loss rates, but also charging lower rates of return. Also keep in mind that given how litigious a society the US has become, we must appreciate that inherent in the personal injury system is a higher level of frivolous claims than you might fund in other jurisdictions which could also explain a higher loss rate. For me, this report legitimized (i) the need for, and societal benefits of, this form of financing, (ii) the size of the total addressable market, and (iii) that the competitors in this market (while likely earning an oversized return in the early days of the industry) were flexible with consumers and willing to forego returns to make the outcome fair for all interested parties. In other words, it appeared the market was functioning similar to other consumer-facing finance markets. Benefits of Diversification, Loss Rates & Durational Certainty As I looked at the PSA market, I looked at it through the lens of both the private equity market and the commercial legal finance (CLF) market, and there a few notable differences that make this a more attractive market than commercial legal finance.  First, the portfolios inherent in many funders’ businesses are highly diversified.  With an average financing size of $3,000, there are hundreds to thousands of claims in any given portfolio.  With diversification comes stability, and with the inherent low overall loss rates comes a predictability of returns – all music to the ears of an investor. The one significant problem that appears to be persistent in the commercial legal finance market is the prevalence of overly concentrated portfolios and high concentration limits within fund documents. The consequence of high concentration is high volatility, and that is exactly what is present in most CLF portfolios, hence the increasing need to apply expensive insurance.  The other issue for most CLF investments is uncertainty about duration. The personal injury legal market is fairly predictable from a timing perspective, and because the financing is interest rate based (as opposed to tied to a fixed multiple of capital), time is not your enemy (with some exceptions) from an investor’s perspective. CLF on the other hand is very unpredictable from a duration perspective, varying from months to several years. As many commercial funding contracts cap returns to a multiple of drawn capital, time is initially your friend but ultimately your enemy. The unpredictable nature is the bane of the existence for publicly listed commercial legal finance firms, as their shareholders want predictable case outcomes generating predictable returns and cashflows, but the portfolios are inherently unpredictable, and so many times the public shareholders are disappointed. Accordingly, their inherent cashflow volatility prevents their stock prices from reflecting true value (said another way, their stock prices reflect the true value of their businesses after adjusting for the unpredictability of their cashflows). The PSA market, on the other hand, is very predictable, which is why it has been able to obtain risk ratings and thereby attract conservative institutional capital at a relatively low cost of capital.  As an investor, I would take a stable 10-15% return all day along in the face of a volatile return profile in the CLF market that can vary from -10% to +30%. They may (emphasis on “may”) both average out to the same return over the long run, one just allows you to sleep much better at night. Similarly, from a business owner’s perspective, stable and predictable returns will always be more highly valued than volatile returns, and so as a business owner, you are significantly better off aiming for predictability for a given return profile.  In addition, this will allow business owners to create equity value that they can later monetize through the sale of their business, which is something CLF managers will have difficulty doing due to the volatility of their portfolios. Regulation Another aspect of an industry’s underlying economics is the consistency of the regulatory regime and the potential impact changes in regulations could have on the industry and its economics. On this item, there was less certainty at the time I made my first investment, but as time has progressed, it is clear that more and more states are considering or implementing new regulations for the PSA industry. Legal doctrines of champerty and maintenance are generally being set aside, but not always. Some states view PSA as loans, and hence subject to usury limitations, whereas other states have determined they are not loans because they are non-recourse other than to the outcome of the case, which precludes them from the definition of loans. Some states, like West Virginia, have placed onerous interest rate limitations which have essentially decimated the industry, whereas others have put in place more reasonable limitations.  Some states have come out against PSA and others believe it is a necessary part of a functioning economy and supportive of individual rights (Minnesota is still ruling on whether funding is a loan). The Consumer Finance Protection Bureau (CFPB) has been monitoring the PSA market since 2011, but it is not quite clear whether they have the authority to regulate the industry and attempts by the CFPB to do so have been rebuffed for the most part – the key distinction seems to be whether these are recourse loans or non-recourse advances. The first is a loan product arguably under the purview of the CFPB, and the second is not contemplated under the CFPB’s mandate. It appears to date the CFBP has only pursued post-settlement lenders and structured settlement providers, which are a different part of the consumer market. Today, regulatory risk remains in the market as most states have not contemplated or implemented regulations, but no different than the payday loan market, done properly and without undue influence from interested parties but in the context of the market’s economic reality and keeping consumer rights in mind, a regulated marketplace brings stability to the market and standards that are ultimately beneficial for consumer and market participants who rely on stability. A ’Feel Good’ Asset Class Beyond the hard numbers, the risk profile and the cash-on-cash returns, lies the “feel good” nature of this asset class, which is what attracted me to the commercial legal finance market.  For all of the headline risk and the early profiteering that happens in every industry, PSA is a necessity in the market and becomes increasingly important as our societies become further economically stratified and the middle class continues to thin. Despite its costs, and there are good economic reasons for its cost (within reason), it provides a strong societal benefit to allow those whose lives have been turned upside down as a result of an accident that has had health (mental & physical), financial and personal costs that most of us cannot imagine. The industry represents a ‘ray of hope’ for someone who may have lost hope due to their circumstances.  I would posit that the industry itself is not predatory (although I will admit there are profiteers), but in fact is a tool to be used against the predatory insurance companies who are not being held accountable by state regulators because it is impossible for the regulators to respond to every single personal injury claim.  If nothing else, insurance is designed to help the injured and the remediation should be swift and commensurate with the financial damage.  Having to wait 3-4 years for a settlement outcome and pay out of pocket for hospital bills is anything but swift or commensurate, and is merely a tactic by insurance companies to benefit from the time value of money (i.e. a dollar today is worth less in a year’s time).  Investors can take comfort in the fact that funders do not pursue frivolous claims because the risk/reward of doing so upsets the predictability of the industry’s cashflows. Then there are Environmental, Social & Governance (ESG) considerations….  In a world full of ‘ESG washing’, legal finance is perhaps one of the most ESG compliant asset classes that exist.  The underlying nature of the claim is rooted in justice, and pre-settlement advances allow for justice to prevail by leveling the playing field between the impecunious injured party and the wealthy insurer with time, money and lawyers at their disposal. The social benefits of litigation are clearly in good alignment with investing in those activities that have a positive impact on society, even if imperfect.  As strong as the ESG characteristics are in the commercial legal finance markets, they are even stronger in the PSA market because the impact is measurable and directly impacts an individual’s life.  All one has to do is review some of the industry testimonials to understand the impact this form of financing can have on one’s life, and there are tens of thousands of examples of this impact occurring on a yearly basis. As investors consider the headline risk, they should also give weight to the ESG benefits of the asset class. PSA Today While many facets of the PSA market look similar today to what they were at inception, underneath the exterior is a tale of two worlds. From a competitive perspective, there is a segment of the market that has clearly positioned themselves as market leaders and have achieved a level of scale and efficiency that has allowed them to tap into the most conservative and sophisticated levels of capital, in part due to an overall low risk profile and in part due to being strong operators. From a regulatory perspective, this industry will likely be regulated at the state level and that regulation is well underway. I would expect by the end of this decade a majority of states will have some form of regulation or guidance in place and by the end of next decade most, if not all, will. From a competitive perspective, we are now seeing some level of consolidation as some of the larger players are starting to acquire competitors either to bulk up their own operations or to expand into adjacent markets like medical receivables/liens.  Regulatory standards will force all market participants to behave appropriately and will generally raise the standards in the market for the benefit of funders and consumers. From a funding perspective, we will continue to see larger funders tap the securitization market for relatively inexpensive financing, or to align themselves with captive sources of financing from institutional investors.  In other words, as much as the industry has changed in the last two decades, we should expect to see a similar level of change going forward, but we should never lose sight of the end consumer and the benefits it brings to their lives. After all, someone needs to counter the vast resources of the insurance companies, which left unchecked, will silently inflict damage upon individuals and their families. Slingshot Insights  I have often wondered why institutional investors quickly dismissed the consumer legal finance asset class solely due to headline and regulatory risk.  I came to the conclusion that the benefits of diversification are significant in legal finance, and so this factor alone makes consumer legal finance very attractive.  Digging beneath the surface you will find an industry that is predicated on social justice (hence, strong ESG characteristics), and while there has and continues to be some bad actors in the industry, there has been a clear bifurcation in the market with the ‘best-in-class’ performers having achieved a level of sophistication and size that has garnered interest from institutional capital as evidenced by the large number of securitizations that have taken place over the last few years (7 by US Claims alone).  This market has yet to experience significant consolidation, and recent interest rate increases have likely had a negative impact on smaller funders’ earnings and cashflow, which may present an impetus to accelerate consolidation in the sector. As always, I welcome your comments and counter-points to those raised in this article.  Edward Truant is the founder of Slingshot Capital Inc. and an investor in the consumer and commercial legal finance industry.  Slingshot Capital inc. is involved in the origination and design of unique opportunities in legal finance markets, globally, investing with and alongside institutional investors. Disclosure: An entity controlled by the author is an investor in the consumer legal finance sector.

“The emergence of legal insurance products has been a game changer in allowing both clients and law firms to lock in judgments, ring fence potentially deleterious outcomes, and provide for certainty where uncertainty used to be the rule.” - Ross Weiner, Legal Director at Certum Group  Uncertainties abound in today's complex legal landscape, leaving individuals and businesses vulnerable to the high costs associated with legal disputes. A pair of innovative solutions–litigation funding and litigation insurance–have emerged as powerful tools that, when utilized in tandem, can offer peace of mind to those involved in legal proceedings. In this article, we delve into the benefits inherent in synergizing these two forms of financial assistance, exploring the various types of litigation insurance, the individuals and entities that benefit from these products, and the numerous advantages they bring to the table.  Types of Litigation Insurance Products Below are popular forms of litigation insurance: 

• After-the-Event (ATE) Insurance: ATE insurance policies are designed to protect litigants against the opposing side’s costs and expenses, should the claimants fail to win their case. It is typically purchased by plaintiffs, though some insurers do issue ATE insurance to defendants. These policies typically cover adverse costs, including the opponent's legal fees and disbursements. ATE insurance is purchased after the event which prompts the claim, but before the legal proceeding initiates (the closer to the start of the proceeding, typically the more expensive ATE insurance becomes). As ATE insurance protects against an adverse costs award, it is not applicable in the United States, which does not have a cost-shifting regime in place (except in extremely rare circumstances). 
• Before-the-Event (BTE) Insurance: BTE insurance, also known as legal expense insurance, offers coverage for potential legal costs before a dispute arises. This product provides coverage for legal expenses in various scenarios, such as personal injury claims or contract disputes. 
• Judgement Preservation Insurance (JPI): JPI is exactly as it sounds–insurance that protects a claim or group of claims which have already received judgements. JPI is very straightforward, and essentially meant to be a math problem: If your judgment is X, and you receive Y, the insurer will cover the difference or a portion thereof. As such, documentation is minimal, with fraudulent activity being the primary exclusion inserted into the agreement.  According to Stephen Kyriacou, Jr., Managing Director and Senior Lawyer at Aon: “Judgment preservation insurance can be used for more than simply mitigating appellate risk. Judgment holders have used it to accelerate the recognition of judgment-related gains in their earnings, to monetize judgments while appeals are still pending, and even to convert more expensive unsecured debt into less expensive debt secured by the policy, since the policy effectively guarantees a minimum recovery so long as there is no collection or enforcement risk associated with the judgment.”
• Litigation Funding Insurance: Litigation funding insurance is a specialized form of coverage designed to protect litigation funders, who provide financial support to claimants in exchange for a share of the proceeds, if the case is successful. This insurance safeguards funders against the risk of losing their investment in the event of an unsuccessful outcome. It provides critical protection against adverse cost orders and helps to minimize the financial risks associated with funding litigation. Stephen Kyriacou explains: “It has been a years-long challenge persuading certain insurers to consider insuring litigation finance-related risks, but we’ve seen recently that insurers have become much more willing to consider high-quality risks from funders when all parties work together to creatively structure coverage and properly align interests and incentives. As more insurers continue to come around to the idea of insuring funders over the coming years, the litigation and contingent risk insurance market will continue to grow, and even more value-creating solutions will become available to litigation finance firms.”
• Portfolio Insurance: Portfolio insurance, also known as litigation risk portfolio insurance, is a comprehensive solution that covers multiple litigation cases within a portfolio. This type of insurance allows law firms, corporations, or litigation finance companies to spread the risk across a range of cases, reducing their exposure to any individual matter. Portfolio insurance offers cost predictability and stability, enabling stakeholders to manage their litigation risks more effectively and allocate resources strategically.

There have been other ancillary uses of insurance, such as when one firm looks to purchase the docket of another firm’s cases, or to insure a portfolio of IPs that have an associated value. As the Insurance and Litigation Funding industries continue to become intertwined, expect more bespoke products to emerge.   Users of Litigation Insurance Products There are three typical users of litigation insurance products: 

• Individual Litigants: Individuals involved in legal disputes, such as personal injury claims or family law matters, can benefit from litigation insurance products. ATE and BTE insurance provide financial protection, enabling individuals who seek justice without the fear of exorbitant legal expenses.
• Businesses and Corporations: Litigation can pose significant financial risks for businesses and corporations, diverting resources from core operations. Litigation insurance products help shield companies from the potentially crippling costs associated with commercial disputes, professional negligence claims, or intellectual property conflicts.
• Law Firms: Law firms can also benefit from litigation insurance products. By offering these products to their clients, law firms enhance their value proposition, differentiate themselves in the market, and provide an additional layer of protection to their clients.

Benefits of Litigation Insurance Products The benefits of utilizing litigation insurance are clear-cut: 

• Cost Mitigation: Litigation insurance products alleviate the financial burden associated with legal disputes. They cover legal costs, including solicitor fees, expert witness expenses, court fees, and opponent's costs, reducing the financial risks for litigants and providing access to justice for those who might not have the means otherwise.
• Risk Management: Litigation is inherently uncertain, with outcomes dependent on various factors. Litigation insurance acts as a risk management tool, providing litigants with the confidence to pursue their case knowing that their financial interests are protected. It enables litigants to make informed decisions based on the merits of their case rather than financial constraints. 
• Enhanced Negotiation Power: Litigation insurance empowers litigants during settlement negotiations. With insurance coverage in place, litigants can approach negotiations from a position of strength, knowing that they have the financial resources to endure protracted litigation. This can lead to more favorable settlement outcomes and increased bargaining power.
• Access to Justice: Perhaps one of the most significant benefits of litigation insurance is its role in ensuring access to justice for individuals and businesses. By removing financial barriers, these products level the playing field and enable litigants to pursue their legal rights, even against well-funded opponents.

Litigation funders understand the ‘access to justice’ problem quite well. Litigation insurance further contributes to the democratization of our legal system by ensuring that even if the claim is unsuccessful, claimants are protected from the potentially crippling costs of litigation. This assurance encourages claimants who may be otherwise deterred by the financial risks associated with litigation to pursue their claims with confidence. Consequently, the collective impact of litigation funding and insurance is an increased participation of claimants, a broader range of cases being pursued, and a more inclusive legal system. As Rebecca Berrebi, Founder and CEO of Avenue 33 points out, "The increased availability of insurance has enhanced the options available to claimants and law firms when it comes to protecting the downside of litigation. Only time will tell whether or not the litigation-focused products offerings will remain cost-effective additives to litigation finance." Litigation Funding & Litigation Insurance Litigation insurance products have emerged as valuable tools in the legal landscape, offering financial protection and peace of mind to those navigating the complexities of litigation. Whether individuals seeking justice, businesses guarding against commercial risks, or law firms enhancing their service offerings, litigation insurance provides a range of benefits.  Similarly, litigation funding affords plaintiffs the opportunity to see their case to fruition, when there might otherwise be no avenue for remuneration. By combining litigation funding and litigation insurance, claimants gain access to a tailored financial solution that meets their specific needs. Each claim has unique financial requirements, and the flexibility of these tools allows claimants to structure a financial package that aligns with their case's dynamics. This synergy offers claimants the freedom to allocate capital as required, covering legal costs, expert fees, and other case-related expenses while safeguarding against the risk of adverse costs. As the demand for these products continues to grow, they will mature into an integral part of the litigation landscape, empowering litigants and transforming the dynamics of legal proceedings for years to come. According to Boris Ziser, Partner and Co-Head of Finance and Derivatives at Schulte Roth and Zabel: “The growth of insurance products for the litigation funding space can be a real game changer, impacting not only the cost of capital, but expanding the universe of investors able to add this sector to their portfolios.” By integrating these two solutions, claimants can significantly enhance their prospects for success while reducing financial risks. This harmonious approach not only levels the playing field between claimants and well-resourced opponents, but also promotes a fairer and more accessible legal system.

On Wednesday, June 7th, IMN hosted its 5th annual Financing, Structuring and Investing in Litigation Finance conference. LFJ attended the event and covered various panel discussions on topics ranging from key trends and developments, ESG initiatives and insurance products. Below are some key takeaways from the event. The first panel of the day focused on broader trends and developments impacting the Litigation Finance industry. The panel consisted of Douglas Gruener, Partner at Levenfeld Pearlstein, Reid Zeising, CEO and Founder of Gain (formerly Cherokee Funding & Gain Servicing), William Weisman, Director of Commercial Litigation at Parabellum Capital, Charles Schmerler, Senior Managing Director and Head of Litigation Finance at Pretium Partners, and David Gallagher, Co-Head of Litigation Investing at the D.E. Shaw Group. The panel was moderated by Andrew Langhoff, Founder and Principal of Red Bridges Advisors. One of the most interesting back-and-forths came on the issue of secondaries, as Doug Gruener noted that 'There were a large number of investments made five to seven years ago, so the opportunity is ripe both on the demand side and supply side." Andrew Langhoff, the moderator, responded that there are major hurdles involved in facilitating a secondaries market, such as questions around pricing, execution and management of the claims, to which other panelists agreed. However, Charles Schmerler pointed out that this industry is like any other capital markets industry, and to the extend that a secondaries market can provide liquidity and be a useful resource, he would be surprised if five years from now we're not all reminiscing about how we once questioned the efficacy of a secondaries market in Litigation Finance. Perhaps the most timely panel of the day was on insurance, and its impact on the Litigation Finance market. 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. Brandon Deme pointed to the rapid growth of the industry: “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.” One interesting point of discussion was on how to 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 panel on ESG consisted of Viren Mascarenhas, Partner at Milbank, Nikos Asimakopoulos, Director of Disputes at Alaco, and Rebecca Berrebi, Founder and CEO of Avenue 33, LLC. The panel was moderated by Collin Cox, Partner at Gibson Dunn. This discussion touched on the opportunities afforded to funders by ESG efforts, as well as the challenges this emerging sector presents, such as diligence problems and confusion around how multinational ESG initiatives might impact state and local laws. Examples were provided around whistleblower claims, international arbitration efforts, supply chain issues in foreign jurisdictions. Other panels included discussions on the economics of the Litigation Finance market, strategies for mass torts investments, regulatory issues, and a small group meeting on women in Litigation Finance. Overall, IMN's 5th annual Litigation Finance event highlights the growth and maturation of a nascent industry, and the range of interested parties in attendance (from funders to law firms to insurance providers to asset allocators) underscores the sector's long-term sustainability.