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Cormac Leech on Litigation Funding as an Investment

July 21, 2021

Cormac Leech on Litigation Funding as an Investment

AxiaFunder is a new and innovative investment platform that focuses on litigation funding as an asset class. Founded by Cormac Leech, the UK startup caters to sophisticated investors. UK Investor Magazine explains that as an asset class, the main strength of litigation funding is its lack of correlation to the larger market. For the most part, the need for litigation is not dependent on any specific economic conditions. The following are some key takeaways from the podcast episode with Leech:   Q: Are there [investment] solutions for people who are looking into funding? CL: Absolutely, there are. Litigation funding is a relatively new asset class. As an industry it’s really only been active in the UK for around 15 years or so. It’s certainly grown strongly over the last five or ten years. Most of the providers of litigation funding are operating on a traditional model where they have a permanent pool of capital…they’re really only catering to private equity firms, which means lots of sophisticated investors cannot get access to the asset class. Q: How are cases vetted?  CL: So far, we’ve funded 12 cases based on having looked at over 300 cases. We have a very high rejection rate in terms of the number of cases we accept.  We talk through the process of how we vet cases. The first thing we look at are the legal merits of the case. The way we think about legal merits—there are two parts: we want to make sure that the claimants have the high moral ground. It has to be a case where you look at the story of the case, the claimants and the defendants, and there’s a clear indication that the defendants treated the claimants badly. You know it when you see it. The second question is to make sure the legal technical merits stack up. Other aspects include whether the defendant has money, and the ability and willingness to pay if there’s a settlement or judgement. There’s no sense winning the case if the defendant doesn’t have any money. We also look at the case economics to make sure that the value of the claim is big enough compared to what it’s going to cost to litigate. There needs to be a solution for adverse costs risk.  Q: Litigation funding is classed as an alternative asset class. One of the attractions typically is the low correlation with traditional assets such as stocks and bonds. How is that seen in the real world? CL: It’s interesting in terms of investor’s perceptions. It’s a very unusual period right now because equities have had a very strong run recently, and residential properties have had a strong run. Virtually every asset class has been increasing in value. Forward looking investors will probably realize that there’s limited upside for equities, and arguably limited upsides for property, at least on a real, inflation-adjusted basis. These asset classes have already had a tremendous run. I think smarter investors will be looking around for alternatives. It does make sense for investors to make some allocation into litigation funding—2% up to 5% of their portfolio. It is non-correlated, and the returns are very substantial.
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Commercial

Courmacs Legal Leverages £200M in Legal Funding to Fuel Claims Expansion

By John Freund |

A prominent North West-based claimant law firm is setting aside more than £200 million to fund a major expansion in personal injury and assault claims. The substantial reserve is intended to support the firm’s continued growth in high-volume litigation, as it seeks to scale its operations and increase its market share in an increasingly competitive sector.

As reported in The Law Gazette, the move comes amid rising volumes of claims, driven by shifts in legislation, heightened public awareness, and a more assertive approach to legal redress. With this capital reserve, the firm aims to bolster its ability to process a significantly larger caseload while managing rising operational costs and legal pressures.

Market watchers suggest the firm is positioning itself not only to withstand fluctuations in claim volumes but also to potentially emerge as a consolidator in the space, absorbing smaller firms or caseloads as part of a broader growth strategy.

From a legal funding standpoint, this development signals a noteworthy trend. When law firms build sizable internal war chests, they reduce their reliance on third-party litigation finance. This may impact demand for external funders, particularly in sectors where high-volume claimant firms dominate. It also brings to the forefront important questions about capital risk, sustainability, and the evolving economics of volume litigation. Should the number of claims outpace expectations, even a £200 million reserve could be put under pressure.

Commercial

Katch Liquidates Consumer Claims Fund Amid Mounting Delays and Pressure

By John Freund |

Katch Fund Solutions, one of the most prominent players in consumer litigation funding, has placed its consumer claims fund into liquidation.

According to Legal Futures, the move comes in response to mounting liquidity pressures caused by prolonged delays in resolving motor-finance claims and increased uncertainty surrounding major group litigation efforts. The Luxembourg-based fund confirmed it is winding down the portfolio and returning capital to investors on a pro-rata basis.

Katch had been a key backer of large-scale consumer legal claims in the UK, supporting firms such as SSB Law and McDermott Smith Law. Both firms ultimately collapsed, with SSB Law owing £63 million including £16 million in interest, and McDermott Smith Law owing £7 million. Katch’s portfolio also included a substantial stake in the ongoing “Plevin” litigation, a group of cases alleging unfair undisclosed commissions tied to the sale of payment protection insurance. That litigation, initially estimated at £18 billion in value, suffered a blow earlier this year when the High Court declined to grant a group litigation order, further delaying resolution timelines.

The firm’s consumer claims fund held over £400 million in assets as of mid-2025, but was hit hard by increasing investor redemption requests. Katch’s team cited concerns that payouts from major motor-finance cases could be delayed until 2026 or later due to regulatory and judicial developments. With limited short-term liquidity options, the fund concluded that an orderly wind-down was the only viable path forward.

Case Developments Commercial

Omni Bridgeway Backs New Zealand Class Action Against Transpower, Omexom

By John Freund |

Omni Bridgeway is backing a newly launched class action in New Zealand targeting Transpower New Zealand Limited and its contractor Omexom, following a major regional blackout that occurred in June 2024.

According to Omni's website, the outage, which affected approximately 180,000 residents and 20,000 businesses across Northland, was triggered by the collapse of a transmission tower near Glorit during maintenance activity conducted by Omexom.

Filed in the High Court in Wellington by law firms LeeSalmonLong and Piper Alderman, the case alleges negligence on the part of both defendants. The plaintiffs claim that Transpower failed to adequately oversee the maintenance, and that Omexom mishandled the work that led to the tower’s collapse.

The class action is proceeding on an opt-out basis, meaning all impacted Northland businesses are automatically included unless they choose otherwise. Under Omni Bridgeway’s funding model, there are no upfront costs to class members, and fees are contingent on a successful outcome.

The economic impact of the outage has been pegged between NZ$60 million and NZ$80 million, according to various estimates, with businesses reporting power losses lasting up to three days and in some cases longer. In the aftermath of the blackout, Transpower and Omexom jointly contributed NZ$1 million to a resilience fund for affected communities, a figure the plaintiffs argue is woefully inadequate compared to the losses incurred.