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Key Takeaways from LFJ’s Podcast with Louise Trayhurn of Legis Finance

March 2, 2021

Key Takeaways from LFJ’s Podcast with Louise Trayhurn of Legis Finance

Louise Trayhurn, Executive Director of Legis Finance, sat down with LFJ to discuss a broad range of industry topics, including Legis’ bespoke approach to managing client relationships, the various funding and insurance products her company offers, the growing trend of GCs and CFOs extracting more value out of their legal assets, and what trends she predicts for the future of the industry. Below are key takeaways from the conversation, which can be found in its entirety here. Q: How does Legis approach the issue of pricing transparency and consistency? A: At Legis, we share with the client, the law firm, and the funder all of the returns listed. It’s very transparent. Every party can see what’s going on. If they don’t like model scenarios…then we can adjust it. ‘Pivot’ is a word that’s used frequently in our office. We’ll constantly amend, adapt, and make changes here and there to try and get everybody comfortable. Q: In the US, contingency fees have long been used by lawyers to share risk with their clients. Can you explain the benefits of DBAs as opposed to conditional fee arrangements and the billable hour model? What has Legis specifically been doing to press for this transition to DBAs? A: We formed a working group for those interested in DBAs. The idea behind it was to…discuss the possibility of a standard damages-based agreement. I, having a background as a litigator, thought this was fairly ambitious. We got a whole group of litigators together, and as well as looking at the broader picture of a standard form document, we had a more urgent task, which was to work together to provide feedback to the team looking at amending the DBA regulations. Q: In the wake of COVID, we’re seeing a mindset shift that’s been talked about for years. What have you been noticing in terms of how GCs and CFOs are considering litigation finance? What do you see happening out there? A: GCs are sitting in their board rooms and they’re acting as cost centers. They take their seat and the first thing they’re asked is ‘okay, how much is legal spend going to be this month?’. There are numerous companies out there committed to spending a certain amount each month on their litigation. It’s just money going out the door, and it’s hard for those GCs to show their value other than reducing the amount of legal spend this month for the same results. Now, you can use litigation finance to generate revenue. Instead of being a drain on the company’s cash, you can in fact add; you can be a profit center, if you use your litigation assets to make money for the company instead of costing them money. You have funders willing to do the due diligence in an independent manner—I mean, we don’t get paid for picking bad cases—and GCs have in their hands a very powerful independent check on their cases, and that can help in all kinds of ways. Q: Broadly speaking, what predictions do you have in terms of the maturation of the Litigation Finance market. What can we expect this year and down the road? A: Certainly I’m going to say increased use of funding. And apart from that, there may well be a consolidation of existing funders, or funders standing behind funding. Increased use of different financial products to back funding—insurance or other entrants to the market. Or a secondary market of products available to funders to manage their own risk, and possibly a secondary market available to investors to package these litigation assets, standardize the documentation, and buy and sell risk. That should help open the marketplace for these institutions that want to create secondary markets.

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Germany’s Federal Court of Justice Imposes New Limits on Funders and Claim Aggregators in $590M Trucks Cartel Ruling

By John Freund |

The Bundesgerichtshof (BGH), Germany's Federal Court of Justice, has issued a closely watched judgment in the long-running Trucks Cartel litigation that upholds the use of collective claims vehicles in principle but sets significant guardrails around third-party litigation funding and claim aggregation.

As reported by Leaders League, the May 12, 2026 ruling addressed claims arising from the European Commission's 2016 cartel decision, brought on behalf of more than 3,000 entities across 21 jurisdictions and seeking approximately US$590 million. The BGH confirmed that cartel damages claims may be collectively aggregated and enforced by registered claims collection entities, reinforcing collective redress mechanisms in German private antitrust litigation.

The court imposed two material limits. First, third-party funders cannot exercise control that compromises the claims vehicle's obligation to act exclusively in the interests of the assignors, a conflict-of-interest standard that goes to funder governance rights. Second, claims aggregation cannot obstruct effective judicial review; excessive volume or complexity that renders proper assessment "impracticable" may violate the German Legal Services Act and result in dismissal for procedural abuse.

The BGH overturned the appellate decision and remanded the matter, directing the lower court to examine whether the funding structure created incompatible conflicts and, if the assignments survive, to divide claims within six months. The decision is expected to shape the architecture of funded collective antitrust actions across Europe, particularly in jurisdictions modelling Germany's claims-collection framework.

Commercial

Michigan House Passes Third-Party Litigation Funding Bill 60–45, Sending Measure to Democratic Senate

By John Freund |

The Michigan House of Representatives has approved House Bill 5281, a Republican-sponsored measure that would impose registration, disclosure, and contracting restrictions on third-party litigation funders operating in the state, advancing the bill to a Senate where Democrats hold a narrow majority.

As reported by The Center Square, the bill cleared the chamber on a 60–45 vote, with four Democrats joining Republicans in support: Tulio Liberati, Peter Herzberg, Angela Witwer, and Will Snyder. Sponsor Rep. Mike Harris framed the legislation in floor remarks by asking, "Who does it benefit to allow outside investors to influence decisions in Michigan courtrooms?"

The bill requires litigation funders to register with the Department of Insurance and Financial Services, pay a $10,000 application fee, and file annual reports on funding activity. It mandates a ten-day consumer cancellation window for funded contracts, prohibits kickbacks and referral fees, prohibits funder influence on case strategy, bans funding by foreign adversaries, and imposes caps on funder spending and recoveries from awards.

Backers cited industry analyses suggesting third-party litigation funding raises household costs through higher prices and lost tax revenue. The measure now heads to a Senate where Democrats hold an 20–18 majority and where the bill's path is uncertain. The House passage adds Michigan to the list of states considered most active on third-party funding regulation, alongside parallel efforts under way in Colorado, Florida, and Pennsylvania.

Commercial

UK FCA Opens Claims Management Study Examining Third-Party and Portfolio Litigation Funding

By John Freund |

The UK Financial Conduct Authority has set the terms of reference for a market study into claims management services, with third-party litigation funding squarely within scope. The review is the first time the regulator has formally examined whether funding structures behind claims firms are driving consumer harm.

As reported by Pinsent Masons, the FCA will explore how "various funding structures," including private equity, private credit, and "third party litigation funding, including portfolio funding," shape claims management firms' operational strategies and growth incentives. The study will also examine how firms find and advertise to consumers, the quality of information provided, value for money, fee arrangements, and financial resilience.

Among the consumer detriments the regulator has flagged are unwanted communications, misleading advertising, unrealistic return promises, unfair cancellation fees, unauthorized sign-ups, and fraudulent signatures. A central inquiry, the FCA said, is whether "volume over outcomes" incentives are driving these harms. The study will also probe regulatory arbitrage between claims management companies, which fall under FCA oversight, and law firms, which are supervised by the Solicitors Regulation Authority.

Stakeholders have until June 19, 2026 to provide input, with a final report due May 18, 2027. The FCA will work with the SRA and other regulators throughout. The inclusion of portfolio litigation funding within scope marks a notable extension of UK regulatory attention from PACCAR-related questions into the broader economics of claims firms and their capital structures.