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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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Case Developments Commercial

YPF Dispute Under Consideration in US Court

By John Freund |

A three‑judge panel of the U.S. Court of Appeals for the Second Circuit is weighing whether the case involving the Argentine nationalisation of oil company YPF should have been litigated in the U.S. in the first place. The original ruling awarded approximately $16.1 billion to minority shareholders.

An article in Finance News highlights that Burford Capital—which provided substantial litigation finance support for the plaintiffs—is now under scrutiny, and the uncertainty has already knocked more than 10 % off Burford’s share price.

According to the report, two of the appellate judges expressed scepticism about whether U.S. jurisdiction was appropriate, signalling a possible shift in the case’s trajectory. The funding provided by Burford makes this more than a corporate dispute—it's a pivotal moment for litigation funders backing claims of this magnitude. The article underscores that if the award is overturned or diminished on jurisdictional grounds, the returns to Burford and similar funders could shrink dramatically.

Looking ahead, this case raises critical questions: Will funders rethink backing multi‑billion‑dollar sovereign claims? Will lawyers and funders factor in jurisdictional risk more aggressively? And how will capital providers price that risk? The outcome could influence how global litigation finance portfolios are structured—and the appetite for large‑ticket sovereign cases.

Commercial

FIO Flags Rising “Tort Tax” Driven by Third‑Party Litigation Financing

By John Freund |

A recent industry move sees the Federal Insurance Office (FIO) of the U.S. Department of the Treasury warning that the growth of third‑party litigation funding is putting fresh stress on the U.S. property‑casualty insurance sector. The FIO’s 2025 Annual Report on the Insurance Industry highlights the so‑called “tort tax” as a new burden, with insurers and consumers increasingly feeling the cost.

An article in Insurance Business explains that third‑party litigation funding—in which outside investors finance lawsuits in exchange for a share of potential settlements—is now viewed by federal regulators as a significant factor driving up claims costs for insurers.

The report quantifies the burden, pointing to an average annual cost exceeding $5,000 per household. In response, insurance trade groups like the American Property Casualty Insurance Association (APCIA) are throwing their weight behind federal bills such as the Litigation Transparency Act of 2025 and the Protecting Our Courts from Foreign Manipulation Act of 2025, both of which aim to bring greater scrutiny and disclosure to litigation funding practices.

The report also draws on lessons from state-level reforms. In Florida, new legislation that slashed legal filings by over 30% has already helped insurers reduce premiums and issue customer refunds—offering a case study in how tort reform can yield near-term results. While the report also examines the insurance industry’s evolving role in climate resilience and loss mitigation, it makes clear that rising legal system costs remain an urgent and unresolved challenge.

For the legal funding sector, the report underscores a shifting regulatory landscape. With calls for federal oversight gaining traction, funders may soon face new transparency requirements, rate limitations, or reporting obligations. The FIO’s framing of litigation finance as a systemic cost driver is likely to spark renewed debate over how to balance consumer protection, insurer stability, and access to justice.

Commercial Deals

ClaimAngel Hits 18,000 Fundings, Sets New Transparency Benchmark in Litigation Finance

By John Freund |

The plaintiff‑funding marketplace ClaimAngel announced it has surpassed 18,000 individual fundings—a milestone signaling its growing influence in the legal funding arena. The platform, founded in 2022 and headquartered in Boca Raton, Florida, positions itself as a disruptor to traditional litigation finance models.

An release in PR Newswire outlines how ClaimAngel offers a single standardized rate of 27.8% simple annual interest and caps repayment at two‑times the amount funded after 46 months—significantly lower and more predictable than many legacy funders. The platform also claims to bring efficiency and transparency to the market by hosting a marketplace of over 25 vetted funders, allowing competing offers, and integrating directly into law‑firm workflows.

How claimants benefit: The core value proposition is to give plaintiffs “breathing room” when insurers use time as a weapon, enabling lawyers and clients to press for better settlement outcomes rather than settling prematurely under financial pressure. With over 500 plaintiff‑side law firms now using the platform, ClaimAngel is positioning itself as a credible alternative to more opaque “Wild West” funding practices—where a $5,000 advance could balloon into a $30,000 repayment by settlement.

ClaimAngel is striking at the heart of two key pain points: (1) lack of standardized pricing and (2) lack of transparency in funding terms. By offering a fixed rate and capped repayment in a marketplace format, it may prompt other players to rethink fee structures and disclosure practices. The milestone of 18,000 fundings also signals broader acceptance of tech‑driven innovation in a space often slow to modernize.