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How Our Top-5 Articles of 2021 Foretell What’s Coming in 2022

January 6, 2022

How Our Top-5 Articles of 2021 Foretell What’s Coming in 2022

Litigation Finance has enjoyed another year of growth and innovation, as we enter a shocking third year of the COVID pandemic. New funds have arisen, affording more potential claimants an opportunity to experience their day in court. New entrants are emerging in the funding space, innovative investment opportunities are popping up in the form of ILOs on the blockchain, and prominent examples of the benefits of legal funding are arising with increasing frequency. Each of our top-5 most popular articles in the last year illustrate an industry trend we think is worth keeping an eye on. These trends also offer clues as to what we can expect in the coming year. Below are the top-5 articles from 2021:  #5) Litigation Finance and Patent Litigation—Fast Friends 2021 Trend: One thing we’ve learned about third-party litigation funding is that once clients and plaintiffs get a taste of it, they recommend it highly. This leads to explosive growth in specific sectors. In this contributed post, Slingshot Capital founder Ed Truant explains that in 2021, Patent and IP litigation went from a relatively uncommon investment to one that is highly sought out. Some of this can be attributed to the pandemic and the investor rush toward uncorrelated assets. But some of the popularity of IP litigation investment stems from the possibility of awards in the multi-millions. As funders sharpen their due diligence skills and use new tech to predict case outcomes, the likelihood of sourcing meritorious patent cases grows. From the article: “It used to be the case that patent litigation was viewed negatively by the litigation funding community…Then about two years ago, I noticed an increase in the number of patent cases being brought to the attention of funders, and in the number of funders marketing that they are interested in providing financing to patent cases.” What does this mean for 2022? If/when COVID restrictions are lifted and life slowly returns to normal, we’ll likely see similar growth in other sectors. We know that when law firms and clients have a good experience with funders, word gets around. The expectation is that Litigation Finance will improve in recognition and accessibility. As a largely self-regulating industry, third-party legal funding continues to position itself as a public good. We have every reason to believe that will continue in 2022 #4) Litigation Finance Basics 2021 Trend: The popularity of this article, originally published in 2017, reveals interesting things about the business of legal funding. Legal professionals and many types of investors are taking an increased interest in litigation funding. It also underscores that this widespread curiosity about the industry is leading people to investigate it from its humble beginnings to its current role as a public good. From the article: “We don’t all have the same access to the legal system. Those with money have more access than those without. Litigation finance allows claimants without money to have the kind of access to justice that those with money currently enjoy. Obviously, that threatens some, but for the rest of us, litigation finance should be celebrated as a means of achieving equality of opportunity when it comes to preserving our legal rights.” What does this mean for 2022? We predict more of the same, probably on an even grander scale. As regulations become more welcoming to funders, investors are taking greater notice of the practice. Now that regulations are relaxing around non-lawyer ownership of legal firms, the potential for lawyer/funder co-ownership of firms has earned the interest of many prominent investment firms. Jurisdictions around the world are relaxing champerty and maintenance restrictions and creating an environment more welcoming to third-party funding for an array of legal matters. This includes arbitration, patent and IP litigation, and claims enforcement. The popularity of a back-to-basics piece like this one, demonstrates that more people in more industries are curious about what litigation funding can do for them. #3) The Impressive Growth of Commercial Litigation Finance 2021 Trend: Our third entry is another Ed Truant piece illustrating an interest in Litigation Finance from people outside the legal field. In this piece, however, emphasis is placed on the addressable market for litigation funding. This tells us that financial experts are looking toward third-party funding as a future investment. From the article: “I think it is important for all stakeholders to understand the size of an industry, so investors can determine whether it has the scale and growth attributes necessary to justify a long-term approach to investing in the sector.” What does this mean for 2022? We predict that hedge funds and private equity firms will continue to flock to the litigation funding sector. This may happen at an even faster clip, as certain types of litigation rise to prominence in the coming year. Breach of contract, insurance litigation, and issues of employer responsibility as related to COVID precautions are expected to flood court dockets in 2022. This amid an effort to catch up on the backlog of cases caused by court delays and closures.  More litigation means more opportunity for investors to avail themselves of the benefits of TPLF as an uncorrelated asset. #2) Investor Caveats in the Commercial LitFin Asset Class 2021 Trend: As an increasing number of investors seek out litigation funding, the pitfalls associated with this type of investment aren’t as well known. Ed Truant of Slingshot Capital, shows up again on our list, as he explains how investors can better understand this asset class. Matters of tail risk, gross vs net returns, portfolio valuation, and deployment risks are all areas investors will want to be familiar with. After all, just because an asset is uncorrelated, does not mean it is free from risk. From the article: “The asset class presents a unique opportunity to add an asset that has true non-correlation, along with inherent ESG attributes. This makes litigation finance a very attractive asset class. However, an investor needs to do their homework prior to executing an investment.”  What does this mean for 2022? The emphasis on ESG investing bodes well for the future. Litigation Finance’s commitment to investing in environmental, social justice, and governance litigation shines a light on the fact that LitFin investments can be simultaneously lucrative, and a net gain for society. #1) Bank Cartel Claims Europe Announces $12 Million Funding Round 2021 Trend: The popularity of this article is an affirmation of the growth and expansion of Litigation Finance in the EU market. The piece details three antitrust cases in which the fund will deploy cash. The banks are accused of engaging in cartel behavior—one of the most serious types of antitrust charges. This type of piece serves to illustrate how litigation funding helps fight corruption and works toward the public good. It also shows us that fundraising capital is out there for experienced funders with proven track records. From the article: “In these three cases, for example, the pension and hedge funds that lost millions of dollars…can effectively claim their damages through actions before a national court. …in most cases, the remaining question to be decided is the amount of damages. This makes antitrust litigation very attractive for investors.” What does this mean for 2022? We think this means even greater global expansion for Litigation Finance. While funding still has its naysayers, the global mood toward third-party legal funding is largely positive. As the practice casts a progressively wider net—most of those who have used litigation funding to pursue their litigation report being satisfied with the results. Legal funding is already growing in India, Singapore, Germany, South Africa, and China. There’s no reason to think expansion of the industry will not continue in 2022.

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Commercial Regulatory Issues

Congress Debates Litigation Funding Bill

By John Freund |

Republican lawmakers have renewed their push to rein in third-party litigation funding, with a House Judiciary Committee debate highlighting how politically charged the issue has become.

An article in The Daily Signal reports that members of the House Judiciary Committee clashed this week over legislation that would require disclosure of third-party litigation funding arrangements in federal courts. Supporters of the bill framed it as a transparency measure aimed at exposing the financial interests behind major lawsuits, while opponents warned that the proposal risks limiting access to justice and unfairly targeting a growing segment of the legal finance market.

During the committee debate, Republican lawmakers argued that outside investors are increasingly influencing litigation in ways that can distort outcomes and inflate settlement values. Several speakers characterized litigation funders as profit-driven actors operating in the shadows, asserting that judges and defendants deserve to know who stands to benefit financially from a case. Proponents also linked litigation funding to broader concerns about rising legal costs and what they describe as abusive litigation practices.

Democratic members pushed back, questioning whether the bill was designed to solve an actual problem or simply to deter plaintiffs from bringing legitimate claims. Critics of the proposal argued that disclosure requirements could chill funding for complex and expensive cases, particularly those involving individual plaintiffs or smaller businesses facing well-capitalized defendants. They also raised concerns about confidentiality and whether revealing funding arrangements could give defendants a tactical advantage.

The debate reflects a broader national conversation about the role of litigation finance in the civil justice system. While disclosure requirements have already been adopted in certain courts and jurisdictions, the proposed legislation would impose a uniform federal standard. Supporters say this consistency is overdue, while opponents argue it could undermine carefully negotiated funding structures that allow cases to proceed at all.

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APCIA Supports Federal Litigation Funding Disclosure Bill

By John Freund |

The insurance industry has intensified its campaign for greater scrutiny of third-party litigation funding, with one of its most influential trade groups backing new federal legislation aimed squarely at disclosure.

An article in Insurance Journal reports that the American Property Casualty Insurance Association has thrown its support behind a proposed federal bill that would require parties in civil litigation to disclose the existence of litigation funding agreements. The legislation, which is currently being considered by the House Judiciary Committee, would mandate that courts be informed when a third party has a financial stake in the outcome of a lawsuit. Proponents argue that this information is essential for judges to understand who stands behind a claim and whether outside financial interests may be influencing litigation strategy.

APCIA framed its endorsement around long-standing concerns about rising litigation costs and what insurers describe as “social inflation.” According to the group, undisclosed litigation funding arrangements can drive up claim severity, prolong disputes, and ultimately increase costs for insurers and policyholders alike. By requiring transparency, APCIA believes courts would be better positioned to manage conflicts of interest, assess discovery disputes, and evaluate settlement dynamics.

The association has been an active voice in the national debate over litigation finance for several years, often aligning with other insurance and business groups calling for disclosure regimes at both the state and federal level. APCIA leadership emphasized that the proposed legislation is not intended to ban or restrict litigation funding outright, but rather to ensure that judges and opposing parties have visibility into financial relationships that could bear on a case.

The bill would apply broadly in federal courts and could have significant implications for how funded cases are litigated, particularly in complex commercial disputes and class actions where third-party capital is more common. Insurers view federal action as a way to establish consistency across jurisdictions, rather than relying on a patchwork of state rules and local practices.

Commercial Regulatory Issues

Why Big Law Is Walking Away From Suits Against Governments

Elite global law firms are increasingly declining to pursue massive claims against sovereign states, even when potential recoveries run into the billions. The trend reflects a reassessment inside Big Law of the risk, cost, and strategic value of investor state and public law disputes that can take years to resolve and often carry significant political and reputational complications.

An article in Law.com International reports that top-tier firms which once dominated investor state arbitration and other government facing disputes are now far more selective about taking on such matters. Lawyers interviewed for the piece point to a combination of commercial pressure, client demands, and internal firm dynamics that make these cases less attractive than they once were. Although headline damages can be enormous, the cases typically require years of work, large multidisciplinary teams, and significant upfront investment with no guarantee of recovery.

Another key factor is reputational risk. Firms are increasingly cautious about being seen as adversaries of governments, particularly in sensitive jurisdictions or disputes involving public policy, natural resources, or infrastructure. Partners noted that political backlash, enforcement uncertainty, and the potential impact on other client relationships all weigh heavily when firms decide whether to proceed.

The article also highlights that many corporate clients are less willing to bankroll these disputes directly. Budget scrutiny has intensified, and companies facing disputes with states are often reluctant to commit tens of millions in legal fees over a long time horizon. This dynamic has contributed to a rise in alternative fee arrangements and third party litigation funding, though even those tools do not fully offset the burden for law firms carrying significant work in progress.

As a result, specialist boutiques and arbitration focused firms are increasingly stepping into the space once dominated by global giants. These smaller players often have lower overhead, deeper niche expertise, and a greater tolerance for the long timelines associated with sovereign disputes.