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GAO Releases Study of Litigation Finance Market

January 20, 2023

GAO Releases Study of Litigation Finance Market

Litigation funding has reached a level of maturity where it is now viewed as a common feature of many jurisdictions’ legal systems, rather than a rare occurrence, leading to wider conversations about how its use should be regulated by national governments. Whilst criticism of the practice exists from politicians and third-party pressure groups in the U.S., it is important to note the role of government agencies in shaping the future of regulation, including the Government Accountability Office (GAO). At the end of last year, the GAO released its study into the characteristics and trends of third-party litigation funding, aiming to provide an overarching picture of the current state of the market and the connected policy implications. The GAO stated that the purpose of this study was to fill the gap in public data about the industry, and to examine the issues raised by critics of litigation finance, such as questions around transparency and disclosure. The GAO’s study, which included an analysis of previously collected data by funders, reports by outside parties, and direct interviews with those involved in the industry, looked at all aspects of litigation finance between 2017 and 2021. The report included an examination of the advantages and disadvantages of third-party funding of litigation, as well as existing gaps in the markets and potential policy solutions and regulatory options. The GAO report is already receiving praise from industry participants. “The GAO report illustrates that proper regulation of the industry is welcome. The Alliance for Responsible Consumer Legal Funding (ARC) and its member companies welcome appropriate regulation,” said Eric Schuller, President of ARC, who added that “ARC members follow a set of best practices that are the industry standard.” The full report can be found here.
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Commercial Deals

Loopa Finance Backs $1.4B Climate Case in Chile Over Ventanas Pollution

By John Freund |

In a high-stakes move that could redefine climate litigation in Latin America, Loopa Finance has announced it will fund a series of civil claims tied to environmental and human health damages stemming from the Ventanas thermoelectric complex in Chile. The lawsuits seek multimillion-dollar compensation for over 1,000 individuals in the so-called “sacrifice zones” of Quintero and Puchuncaví, alleging direct harm from toxic emissions over a seven-year period.

In a press release, Loopa Finance announced the litigation is built on a landmark study from the Centre for Research on Energy and Clean Air (CREA), which uses advanced atmospheric modeling to directly link emissions from the Ventanas facility to 563 deaths, hundreds of adverse birth outcomes, and an estimated USD 1.4 billion in economic losses between 2013 and 2020. The findings provide the first scientifically verified causal link between the plant’s pollution and measurable human and environmental harm—spanning as far as Santiago, 300 kilometers away.

The legal action, Arellano v. Empresa Eléctrica Ventanas SpA (Case No. C-8595-2025), was filed in the 18th Civil Court of Santiago in September 2025 and is led by attorney Miguel Fredes of the Climate Defense Program. Backed by precedent from Chile’s Supreme Court and UN findings on regional human rights risks, the plaintiffs seek environmental remediation, full compensation, and permanent closure of the Ventanas facility.

Loopa Finance—formerly known as Qanlex—brings its cross-border litigation funding model to bear, combining legal and engineering expertise across Latin America and Europe. “This is a landmark case,” said Loopa investment manager Federico Muradas. “We’re backing it because we believe in effective and restorative environmental justice.”

Announcements Commercial

Burford Issues YPF Litigation Update Ahead of Pivotal Appeal Hearing

By John Freund |

Burford Capital has released a detailed investor update ahead of a key appellate hearing in its high-profile litigation against Argentina over the renationalization of YPF.

According to Burford’s press release, oral arguments in the consolidated appeal—referred to as the “Main Appeal”—are scheduled for October 29, 2025, before the US Court of Appeals for the Second Circuit. The hearing will address Argentina’s challenge to a $16 billion judgment issued in 2023, as well as cross-appeals concerning the dismissal of YPF as a defendant. The release outlines the appellate process and timelines in granular detail, noting that a ruling could come months—or even a year—after the hearing, with additional delays possible if rehearing or Supreme Court review is pursued.

Burford also clarified the distinction between the Main Appeal and a separate appeal involving a turnover order directing Argentina to deliver YPF shares to satisfy the judgment. That order has been stayed pending resolution, with briefing set to conclude by December 12, 2025. Meanwhile, discovery enforcement is proceeding in the District Court, where Argentina has been ordered to produce documents—including internal and “off-channel” communications—amid accusations of delay tactics.

International enforcement efforts continue in at least eight jurisdictions, including the UK, France, and Brazil, where Argentina is contesting recognition of the US judgment.

The update serves both as a procedural roadmap and a cautionary note: Burford stresses the unpredictable nature of sovereign litigation and acknowledges the possibility of substantial delays, setbacks, or settlements at reduced values.

Commercial Regulatory Issues

FCA to Take Over AML Oversight of Legal Sector, Drawing Industry Backlash

By John Freund |

The UK legal profession is bracing for sweeping regulatory changes after the government announced plans to transfer anti-money laundering (AML) supervision of lawyers and accountants to the Financial Conduct Authority (FCA).

An article in Legal Futures details the surprise decision, which has sparked widespread criticism from legal regulators including the Solicitors Regulation Authority (SRA), the Council for Licensed Conveyancers (CLC), and the Law Society. SRA Chief Executive Paul Philip, speaking at the regulator’s compliance conference, described the change as “very different” from existing oversight, warning that the FCA’s rules-based approach could upend how legal firms manage AML compliance. SRA Chair Anna Bradley echoed this sentiment, highlighting the potential for friction in adapting to the FCA's framework.

Currently employing 30 AML specialists, the SRA may redirect those resources elsewhere, but clarity remains lacking on how the FCA will structure and fund its expanded mandate. Law Society President Mark Evans cautioned that the move could raise compliance costs and create a burdensome dual-regulation environment, sentiments echoed by the CLC and the Law Society of Scotland.

The FCA, for its part, says the consolidation will streamline AML oversight and bolster enforcement capabilities. However, several experts—including former SRA AML director Colette Best and compliance professionals across the sector—warn that the FCA’s unfamiliarity with legal practice, possible under-resourcing, and the need for new legislation may delay implementation and sow confusion.

While anti-corruption advocates like Spotlight on Corruption welcomed the move, calling it a long-overdue shakeup, industry voices argue the transition must be carefully managed to avoid disrupting one of the UK’s most respected professions.

For litigation funders, the development underscores a trend toward stronger centralized oversight in areas intersecting with financial crime enforcement. Questions remain over how the FCA’s broader enforcement style might influence law firms—and by extension, the funders who work with them.