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Cesar Bello of Corbin Capital Discusses Litigation Funding as an Investment

September 27, 2021

Cesar Bello of Corbin Capital Discusses Litigation Funding as an Investment

On the most recent episode of the Litigation Finance Podcast, Cesar Bello, Partner and Deputy General Counsel of Corbin Capital, explained how he evaluates litigation finance investments, what his ROI expectations are, and how funders can mitigate risk. Below are some key takeaways from the discussion. What about the funding industry drew your attention and your interest? The stock answer here is that it’s non-correlated compared to a lot of other alternative assets. What else can you say about this asset class that really draws your interest—especially when compared to other alternative assets. Obviously that’s a big part of it. It’s differentiated—it’s particularly attractive in times of market volatility. When you expect more fat tails, we think there’s a good chance that that type of environment will persist in the near term. We’ve seen over the last year those kinds of spikes with meme stocks, heightened government intervention, obviously the pandemic, political climate, etc. So it was nice for us, we had some good outcomes last March and April when everything else was not working so great. So it really helps the portfolio. Beyond the uncorrelated nature of it, obviously the opportunity to earn outsized returns. Single case risk is generally structured to make a 3-5x return—so you’re getting paid well for the risk. Private lending for the more credit-oriented type of LitFin plays—you’re still getting paid, or overpaid since the sector is still largely underbanked—although increasingly less so. The underlying collateral is not well understood by traditional lenders. Back to the market as a whole, it’s still, I think, growing. The legal services industry is a $1 trillion industry worldwide. Litigation Finance has grown a lot. There’s a growing awareness among mainstream corporates, if they have assets on their balance sheets that they can monetize, Fortune 500 companies are awakening to this possibility of using Litigation Finance to bring cases without sucking up the budget or disrupting their cashflows.  How important is ESG to investors such as Corbin, and also to your LP investors?  Obviously, we do a lot more than just Litigation Finance, but with respect to Litigation Finance in particular, the easiest way to think about it is not necessarily equal access to justice in our legal system. Right? Litigation Finance helps level the playing field, so David can go after Goliath. That’s obvious and simple to understand. But it kind of flows through and manifests itself in different ways. Take mass torts—environmental cases, for example—there’s a long history of poor minority communities being used as toxic dumping grounds. We have opioids, we have sexual abuse cases, etc, so from an environmental, socioeconomic, social justice perspective—there’s a clear angle there. But back to how we think about it more broadly, our approach to ESG is focused on the thoughtful application of ESG factors to enhance our business and it takes a lot of work. We’ve been working on it over the last 2-3 years. With the help of leading experts in the space and consultants to help us navigate what remains of a pretty fragmented information environment. We believe in meaningful integration of material ESG factors that can lead to a more complete picture of risk and opportunity, driving more informed decision-making with the opportunity to get better risk-adjusted returns.  Let’s say I’m a commercial litigation funding manager. I approach you for an investment opportunity. Is there anything you wish these fund managers did more of or less of? Any advice you can give to them? I think it’s important to have a real understanding and self-awareness of where you sit in the marketplace and to be commercial—it’s hard to raise money. The safe thing to do is to give money to the bigger players, particularly if you’re just starting out. We’ve seen a lot of people try to raise funds with unrealistic expectations, and refusing to partner with people in creative ways because they want a fund and don’t want to do co-investments—not thinking about the long game, and not realizing the best path to unlock capital may not be the one that they came into the meeting with. So really listening and trying to figure out where that happy medium is, to find a way to work together. Back to the point about most of the money coming in is going to established players, that’s the nature of the asset management industry as a whole. So we also like people who can talk through a bad outcome—lessons learned—that buys some goodwill. … Find a way to get in the door, build trust, and hopefully everybody gets more comfortable and it becomes easier to build a relationship.  When you look at this industry, what opportunities are you seeing down the road for the funding industry? How do you see this industry developing in the coming years? Good question. I think everybody would tell you it’s probably going to grow and there’s probably going to be some price compression as the asset class matures. Maybe something you won’t hear as much—I really would like it to evolve into having a more active secondary market, which would help with the duration issue. As anything that helps generate liquidity, we would view as a positive. And obviously, it would help with valuation price discovery as well. So there’s a lot of activity now in private equity funds and private credit funds in terms of secondaries and continuation funds, as some of the older vintages are getting long in the tooth. It would be interesting to have some growth there, and I think similarly there’s a good amount of the bigger funds that are running up against the end of their fund life and they’re going to be motivated to sort of solve for that. I think there are some characteristics here that are going to make it harder for secondary markets to flourish in the marketplace. This stuff is idiosyncratic and hard to underwrite. You’re not buying IBM bonds. But it’s doable, and I think it’ll happen eventually. When it does I think it will be a very positive signal for the asset class.
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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.