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Highlights from IMN’s 3rd Annual International Litigation Finance Forum

By Harry Moran |
October 25, 2024

Highlights from IMN’s 3rd Annual International Litigation Finance Forum

Earlier this week, Legal Funding Journal attended IMN’s 3rd Annual International Litigation Finance Forum in London, which brought together senior executives and thought leaders from across the legal sector to discuss the industry’s most pressing issues and developments. The one-day conference featured a wide array of discussions covering everything from the broader state of the funding market and external attitudes towards it, to nuances around the evolving relationships between funders, insurers, law firms and claimants.

An overarching point of discussion across the day was whether the market is still growing and if it is still heading in a broadly positive direction, or if there are warning signs on the horizon such as potential regulatory expansion. 

Rose Ioannou, managing director at Fortress Investment Group, made the important point of defining what is meant by ‘growth’, noting that in terms of the number of market participants and wider understanding of litigation funding there is certainly growth, whilst she also cautioned that it was less clear if there would still be continued growth in the volume of available capital. Across these categories, Ioannou emphasised that the most exciting area of growth is in the broader acceptance of funding in the dispute resolution community and that despite the industry’s “naysayers”, there was an increased “sophistication and understanding” of funding participants.

Looking at the near-future for the European funding market, an audience question prompted a discussion about whether we would continue to see gradual growth across the continent or if there was an explosion of activity around the corner. Iain McKenny, founding director of Profile Investment, offered the boldest prediction and suggested that whilst European funding has been “slow and steady for a long time”, renewed activity in individual jurisdictions could indicate that “we may be approaching a tipping point”. Other speakers were more hesitant in predicting a major increase in funding activity across the region, with Paul de Servigny from IVO Capital Partners explaining that it will continue to vary between European countries, with the Netherlands being an example of a jurisdiction where there has been a tangible market boom.

Outside of the European mainland, the issues facing the UK funding market were another hot topic, with speakers reflecting on how the industry has adapted to living in a post-PACCAR world and speculating on how the new government will approach litigation funding. 

Woodsford’s Steven Friel acknowledged that whilst it was disappointing that the election and change in government had resulted in the Litigation Funding Agreements bill being forced down the agenda, it is encouraging that Kier Starmer’s legal background means that the new Prime Minister “intrinsically understands” the issues at play. When asked to speculate on whether we would see legislation to solve PACCAR be introduced in 2025, the panellists were split down the middle, with half agreeing that it would follow the CJC review next year and the other speakers suggesting it would likely get delayed until 2026.

On the subject of future regulations, the recommendations outlined in the recent European Law Institute report were discussed, with the issue of disclosure as one of the key topics. Lerika Le Grange, partner at Taylor Wessing, highlighted that whilst there was a general openness to some level of disclosure, an attempt to mandate the disclosure of the source of investment funds could create a sense of nervousness among investors.

The dynamics of the relationships between funders, insurers and law firms was another frequently discussed area at the conference, with one of the primary questions being: are funders and insurers increasingly competing against one another? Most speakers at the event shied away from describing the two business models as being in direct competition, with Verity Jackson-Grant from Simmons & Simmons describing them aptly as businesses that serve different purposes whilst still supporting and facilitating cases between them. In a similar vein of thought, Kerberos Capital Management’s CEO Joseph Siprut acknowledged that whilst there can be “some tension” between funders and insurers, he highlighted that from a funder’s perspective “the ability to layer in insurance is value additive”.

Overall, IMN’s International Litigation Finance Forum once again succeeded in delivering a full day of informative and engaging discussions, whilst providing the opportunity for key stakeholders to network and exchange ideas as they continue to try and shape the best path forward for the industry.

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Harry Moran

Harry Moran

Commercial

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Commercial

Innsworth Loses High Court Challenge to £200M Mastercard Settlement Distribution

By John Freund |

The High Court has rejected litigation funder Innsworth's judicial review challenge to the Competition Appeal Tribunal's distribution of the £200M Merricks v Mastercard settlement, ending the first substantive test of a CAT settlement decision and handing class representative Walter Merricks what he called "a total victory."

As reported by Legal Futures, the CAT's January ruling allocated the first £100M to consumers, repaid Innsworth its estimated £46M outlay, and capped the funder's profit at 50% — roughly £23M — for a guaranteed total return of about £68M. In setting a 1.5x return, the tribunal noted that the settlement of a claim originally valued at £14bn was "very far from a success" for the 44M-member class.

Lord Justice Males rejected all three grounds of review, observing that a 50% profit "was not a bad result" for a funder that would likely have lost its entire investment had the case gone to another trial. Merricks accused Innsworth of seeking "to elevate its grab for profits over and above all other considerations," and said distribution to consumers can now begin. Innsworth, which is separately pursuing arbitration against Merricks, warned that inadequate funder returns will drive "a reallocation of capital towards lower-risk claims," and accused the CAT of acting as "a de facto regulator of the litigation funding market" while offering no clear guidance on permissible returns.

Winward Litigation Finance CIO Jeremy Marshall predicted the ruling "will certainly put the brakes on funders' appetites" for CAT claims.

Commercial

North Carolina Senate Approves Litigation Finance Ban, Sending HB 315 to the House

By John Freund |

While most state legislatures have pursued disclosure and registration regimes for litigation finance, North Carolina is advancing something far more drastic: an outright ban.

As reported by Bloomberg Law, North Carolina senators have approved legislation that bans litigation finance in the state, sending the measure to the state House.

The vehicle is House Bill 315, which began life as a "Gift Card Theft & Unlawful Business Entry" bill before being rewritten in the Senate as "an act to prohibit litigation investments in the civil justice system, to prevent the civil justice system from becoming a financial investment market." The amended bill makes it unlawful "to engage in litigation investment" in North Carolina or to furnish litigation investment to a party or counsel of record in a civil proceeding — defining litigation investment broadly as any provision of money for litigation fees, costs, or expenses in exchange for repayment contingent on the outcome.

The bill carves out narrow exceptions for contingency-fee arrangements, insurer obligations, nonprofit legal aid, non-contingent loans, and funding from family members. Its legislative findings lean heavily on national security concerns, citing the risk of undisclosed foreign persons and entities investing in domestic litigation.

The measure stands in sharp contrast to recent state activity elsewhere — Kansas, Michigan, and New Jersey have all advanced transparency-focused frameworks this year that regulate rather than prohibit the industry. If enacted, North Carolina would become one of the most restrictive litigation finance jurisdictions in the country, and industry critics have already characterized the gut-and-replace maneuver as a legislative bait-and-switch.

Commercial

Class Representative Moves to Withdraw UK Instrument-Maker Claims After Funding Falls Through

By John Freund |

A proposed UK collective action against major musical instrument manufacturers is collapsing for want of litigation funding — a concrete illustration of the financing squeeze facing claims in the Competition Appeal Tribunal.

As reported by Law360, consumer rights advocate Elisabetta Sciallis applied on Wednesday to withdraw her proposed class action against Fender, Yamaha, and other musical instrument manufacturers, saying she had been unable to secure litigation funding despite years of effort.

Sciallis, a principal policy adviser at consumer group Which?, filed a series of proposed opt-out collective actions in 2022 on behalf of consumers who purchased musical instruments, following on from Competition and Markets Authority decisions fining several manufacturers for resale price maintenance. The claims had been stalled at the certification stage for years, and the tribunal had grown increasingly impatient: a March 2026 case management order listed a preliminary hearing for after June 5 specifically to determine the adequacy of the proposed class representative's funding and insurance arrangements.

The withdrawal underscores a broader theme in the UK collective actions regime. With the CAT tightening its scrutiny of certification and funder returns — and with the Innsworth-Mastercard distribution fight casting doubt on the economics of opt-out claims — funders have become increasingly selective about which collective proceedings they will back. For proposed class representatives unable to assemble a viable funding package, even claims that follow on from regulatory infringement findings may prove impossible to sustain.