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Key Takeaways from LFJs Digital Event: Litigation Finance: What to Expect in 2024

February 12, 2024

Key Takeaways from LFJs Digital Event: Litigation Finance: What to Expect in 2024

On February 8th, 2024, Litigation Finance Journal hosted a special digital event titled ‘Litigation Finance: What to Expect in 2024.’  The event featured Gian Kull, Senior Portfolio Manager at Omni Bridgeway, David Gallagher, Co-Founder of LitFund, Justin Brass, Co-CEO and Managing Director of JBSL, and Michael German, Co-Founder and CIO at Lex Ferenda. The event was moderated by Peter Petyt, founder of 4 Rivers. The discussion covered a range of topics pertinent to the litigation funding space. Below are some key takeaways from the event: Which areas are you particularly interested in investing in over this coming year?  MG: There is a supposition that this industry will continue to grow in 2024. All of the indicators suggest that the industry will continue to grow–nearly all of the funders are funding bankruptcy-related cases, and three quarters are funding patent cases. Those are areas of interest to us, and I think that will continue to make sense, given the types of commercial cases they are – complex cases that require significant amounts of attorney time and defendant time,  and yield significant costs to the litigaiton. JB: We’re going to see a continued expansion into the mass arbitration space. That is something that has been coming up with more frequency. Mass torts has been staying quite busy. And where we see a lot of potential is with the evolution of the secondary market. There are a lot of funders coming up with maturing cases, and it makes sense for those funders to redeploy that capital into other opportunities – not necessarily exit that case – but just sell a minority stake or a portion of it. We that in traditional fixed income classes, so we think that is going to continue in the funding market as well. Are you seeing any kind of appetite to invest in jurisdictions you haven’t previously invest in? Have some jurisdictions matured to the point where you now will give them a serious look?  GK: That’s a hard question to ask Omni Bridgeway as a whole, because we try to be in a lot of places. But from my own experience in Europe, we’ve gotten quite comfortable in the Netherlands, we have a very large investment in Portugal. Spain is next on the list. Italy is after that. The jurisdiction I’ve been most disappointed in – aside from the UK with the regulatory issues there – is Germany. For such a large economy, from a commercial collective redress perspective that is a dead end. As we move through Europe, I’ll be watching the regulatory regimes and how those are tested over the coming years. Are you seeing many requests for monetization of judgements or awards, or is that not an area that you are particularly interested in?  DG: We’re especially interested in that, largely because my partners have spent a lot of their careers making those types of investments. And just speaking from my own experience, that has always been an important part of the market, and continues to be an important part of the market. I think the availability of judgement preservation insurance makes funding more available and appropriate both on the funder’s side and the client’s side. In my view, it’s very interesting to see the number of people in the market moving into the insurance space. In my view quite a surprising number – it’s certainly indicative of a trend. LFJ just announced today that Ignite has launched a capital protection insurance resource. So there are a lot of interesting things happening here. Is it still early days for this space, because there are a lot of people moving into it with interest?  MG: I share the sentiment of having a general level of surprise with how many folks from the litigation finance industry insurance has drawn. From the Lex Ferenda perspective, insurance has proven to be a very expensive option, that ultimately my clients and I don’t feel is worth the cost. But the vast majority of our investments – from an insurer’s perspective – are probably the least good fit, so that’s probably why it’s reflecting in the price. JB: I think the insurance aspect of litigation finance is here to stay. There will be growing pains along the way. I think even as recently as last week, there were disclosures in the Affordable Care Act fee dispute where the law firm got an insurance policy related to its fee award. What was interesting there, was the law firm was seeking disclosure about the policy, and in essence how it worked. So not only is it new and here to stay, we’re seeing it become public. The risk to early-stage cases is the pricing can be expensive, but what will happen over time, is like anything else, the insurers will be tracking the progress on those cases, and as funders come back as repeat customers, they’ll be looking at you and factoring that relationship into their pricing, just like how a bank factors that into a credit score. I think the best path forward is figuring out how to work together and create a level of transparency and trust, because it’s not going away. For the full recording of the event, click here.

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Commercial Regulatory Issues

Life After PACCAR: What’s Next for Litigation Funding?

By John Freund |

In the wake of the UK Supreme Court’s landmark R (on the application of PACCAR Inc) v Competition Appeal Tribunal decision, which held that many common litigation funding agreements (LFAs) constituted damages-based agreements (DBAs) and were therefore unenforceable without complying with the Damages-Based Agreements Regulations, the litigation funding market has been in flux.

The ruling upended traditional third-party funding models in England & Wales and sparked a wide range of responses from funders, lawyers and policymakers addressing the uncertainty it created for access to justice and commercial claims. This Life After PACCAR piece brings together leading partners from around the industry to reflect on what has changed and where the market is headed.

An article in Law.com highlights how practitioners are navigating this “post-PACCAR” landscape. Contributors emphasise the significant disruption that followed the decision’s classification of LFAs as DBAs — disruption that forced funders and claimants to rethink pricing structures and contractual frameworks. They also explore recent case law that has begun to restore some stability, including appellate decisions affirming alternative fee structures that avoid the DBA label (such as multiple-of-investment returns) and the ongoing uncertainty pending legislative reform.

Discussion also centres on the UK government’s response: following the Civil Justice Council’s 2025 Final Report, momentum has built behind proposals to reverse the PACCAR effect through legislation and to adopt a light-touch regulatory regime for third-party funders.

Commercial

Litigation Funding Founder Reflects on Building a New Platform

By John Freund |

A new interview offers a candid look at how litigation funding startups are being shaped by founders with deep experience inside the legal system. Speaking from the perspective of a former practicing litigator, Lauren Harrison, founder of Signal Peak Partners, describes how time spent in BigLaw provided a practical foundation for launching and operating a litigation finance business.

An article in Above the Law explains that Harrison views litigation funding as a natural extension of legal advocacy, rather than a purely financial exercise. Having worked closely with clients and trial teams, she argues that understanding litigation pressure points, timelines, and decision making dynamics is critical when evaluating cases for investment. This background allows funders to assess risk more realistically and communicate more effectively with law firms and claimholders.

The interview also touches on the operational realities of starting a litigation funding company from the ground up. Harrison discusses early challenges such as building trust in a competitive market, educating lawyers about non-recourse funding structures, and developing underwriting processes that balance speed with diligence. Transparency around pricing and alignment of incentives emerge as recurring themes, with Harrison emphasizing that long-term relationships matter more than short-term returns.

Another key takeaway is the importance of team composition. While legal expertise is essential, Harrison notes that successful platforms also require strong financial, operational, and compliance capabilities. Blending these skill sets, particularly at an early stage, is presented as one of the more difficult but necessary steps in scaling a sustainable funding business.

Commercial Regulatory Issues

Australian High Court Limits Recovery of Litigation Funding Costs

By John Freund |

The High Court of Australia has delivered a significant decision clarifying the limits of recoverable damages in funded litigation, confirming that claimants cannot recover litigation funding commissions or fees as compensable loss, even where those costs materially reduce the net recovery.

Ashurst reports that the High Court rejected arguments that litigation funding costs should be treated as damages flowing from a defendant’s wrongdoing. The ruling arose from a shareholder class action in which claimants sought to recover the funding commission deducted from their settlement proceeds, contending that the costs were a foreseeable consequence of the underlying misconduct. The court disagreed, holding that litigation funding expenses are properly characterised as the price paid to pursue litigation, rather than loss caused by the defendant.

In reaching its decision, the High Court emphasised the distinction between harm suffered as a result of wrongful conduct and the commercial arrangements a claimant enters into to enforce their rights. While acknowledging that litigation funding is now a common and often necessary feature of large-scale litigation, the court concluded that this reality does not convert funding costs into recoverable damages. Allowing such recovery, the court reasoned, would represent an expansion of damages principles beyond established limits.

The decision provides welcome clarity for defendants facing funded claims, while reinforcing long-standing principles of Australian damages law. At the same time, it confirms that litigation funding costs remain a matter to be borne out of recoveries, subject to court approval regimes and regulatory oversight rather than being shifted onto defendants through damages awards.