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Invenio Partner Warns Automation Bias Is the Real AI Risk in Funding Underwriting

August 24, 2026

Invenio Partner Warns Automation Bias Is the Real AI Risk in Funding Underwriting

An Invenio LLP partner has published a detailed argument that the principal danger of artificial intelligence in litigation finance underwriting is not fabricated citations but the quiet erosion of the human judgment that underwriting depends on.

According to Real Talk About AI in Litigation Finance Underwriting, written by Brenna Legaard, large language models perform reliably on well-defined, data-rich tasks such as analyzing prior art and preparing claim charts, and they work without fatigue or anchoring bias. What they cannot do is predict case outcomes, because the training data does not contain them. Models learn from published opinions, while the vast majority of disputes end in confidential settlements that are never mapped. Legaard writes that models “have known knowns, perhaps known unknowns, and no unknown unknowns whatsoever.”

The piece cites a 2024 study finding hallucination rates between 58% and 88% on factual legal questions, with the weakest performance on less prominent cases, and notes that model accuracy degrades as input length grows. Its sharper concern is automation bias: decision-makers deferring to polished output under time pressure, so that “the model’s confident framing then becomes an unwary underwriter’s confident framing.”

Legaard draws a parallel to McKinsey research on insurance underwriting, where firms that mandated black-box models over human judgment found that staff lost faith in the models and underwriting skills atrophied. The recommended response is cultural rather than technical: open discussion of where AI use introduces confirmation bias, and hiring underwriters who interrogate outputs rather than merely producing them faster.

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Commercial

Indemnity Costs Order Turns Prince Harry Claimants’ ATE Shortfall Into a Live Liability

The seven celebrity claimants in the failed privacy action against the Daily Mail have been ordered to pay costs on the indemnity basis and to make a payment on account of £9.54m by 28 August, crystallising a gap between their after-the-event insurance cover and the publisher's claimed costs.

As reported by the Law Society Gazette, Mr Justice Nicklin found that the case went "well outside the norm" and that its "conduct was unreasonable to a high degree." The judge described the action as "litigation conceived and pleaded on an unjustifiably wide canvas," which was "speculative at origin and depended substantially on inference," with serious allegations maintained over a prolonged period on an inadequate evidential foundation.

The claims of unlawful information-gathering, brought by claimants including the Duke of Sussex, Baroness Lawrence and Sir Elton John, were dismissed last month following an 11-week trial. Associated Newspapers had exceeded its approved budget by more than £18.6m, with total costs amounting to what claimant lawyers called an "eye-watering" £34,481,622.54. The claimants hold legal expenses insurance covering £16.2m.

Nicklin J declined to impose a cap on recoverable costs, though he described the publisher's costs as "striking." The payment on account was set at £9,544,355, close to the £9,950,624.37 sought by Associated, which represented 65% of incurred pre-budgeted costs and 90% of budgeted costs.

The order converts a previously theoretical insurance shortfall into an immediate obligation, and stands as a reminder of how far ATE limits can fall short of defendants' actual costs in heavily contested, long-running litigation.

Commercial

Rugby Head Injury Claimants Appoint Independent Counsel Over Funder and Law Firm Group Ties

Hundreds of struck-out rugby head injury claims have been granted relief from sanctions in principle after the players switched solicitors, in a ruling that also records the appointment of independent counsel to advise the claimants on their position relative to their new law firm and their litigation funder, which sit in the same corporate group.

As reported by Legal Futures, Senior Master Cook allowed the claims to proceed despite non-compliance with unless orders on disclosure of medical records, taking "comfort" from the change of solicitor. The litigation involves around 1,000 claimants across rugby union and rugby league who allege serious head injuries from collision forces in matchplay and training, and that the governing bodies did not do enough to protect them. Between the two groups, 530 claimants stood struck out.

The players moved from Rylands Garth, described by the judge as "a relatively new firm with one qualified solicitor," to class action specialists KP Law, with Leigh Day assisting. Master Cook said that had the original solicitor continued to conduct the litigation, "I could not have had any confidence that future court orders would be complied with timeously or at all."

A witness statement from former Wales international Alix Popham, on behalf of the union players committee, said the players have appointed James Oldnall, managing partner of Milberg London, as independent counsel to advise them on their position "vis-à-vis KP Law and [litigation funder] Asertis (as Asertis and KP are part of the same corporate group)."

Relief will be subject to conditions to be decided at a further hearing, with minimum terms including payment of the defendants' costs of securing compliance and production of the missing documents.

Commercial

Calunius Chairman Warns CAT’s Approach to Funder Returns Risks Driving Capital Away

Leslie Perrin, chairman of Calunius Capital, has argued that the Competition Appeal Tribunal's developing approach to litigation funding agreements poses a more immediate threat to the UK's opt-out collective actions regime than either the unimplemented Civil Justice Council recommendations or the still-awaited PACCAR reversal.

As reported by City AM, Perrin welcomed the government's recent light-touch proposals on the opt-out regime, which followed a Department for Business consultation and cover faster distributions in successful class actions, better management of legal costs and procedural reforms. But he wrote that funders still await implementation of key CJC recommendations on returns made a year ago, as well as the legislation promised to reverse the 2023 Supreme Court judgment in PACCAR.

His central concern is retrospective reassessment. Perrin wrote that the Tribunal "appears increasingly willing to revisit funding arrangements and priority agreements when determining distributions, effectively reassessing returns after a case has concluded," and that the concept of success being applied "remains uncertain and may depend on factors that were impossible to predict when funding was first committed."

Perrin framed the consequence in market terms: "Capital is mobile. Investors will only deploy funds into litigation if the potential return reflects the risks undertaken." He argued that no investment market can function if agreements are liable to be substantially redrawn after the event, and that if returns can be recalculated years later, funding becomes more expensive and some claims may never be brought at all.

Ten years after the first UK opt-out collective action was filed at the CAT, Perrin said scrutiny of funder returns is appropriate but must involve a level playing field, describing the issue as a test of whether Britain remains committed to a predictable and investment-friendly legal framework.