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Key Takeaways from LFJ’s Special Digital Event: ESG in Litigation Funding

October 6, 2022

Key Takeaways from LFJ’s Special Digital Event: ESG in Litigation Funding

On Wednesday October 5th, LFJ hosted a panel discussion and audience Q&A covering various aspects of ESG within a litigation funding framework, including how funders consider ESG claims, how serious LPs are when it comes to ESG-related criteria, and the backlash swirling around the topic itself. Panelists included Andrew Saker (AS), CEO of Omni Bridgeway, Neil Purslow (NP), CEO of Therium Capital Management, and Alex Garnier (AG), Founding Partner and Portfolio Manager of North Wall Capital. The event was moderated by Ana Carolina Salomao, Partner at Pogust Goodhead. Below are some key takeaways from the digital event: How do you consider ESG being relevant to litigation funding? AS: It’s a truism that litigation funding provides access to justice. By definition it’s a social benefit. Litigation acts as a deterrent, and leads to environmental, social and governance improvement. So financing that through litigation funding assists with the achievement of various ESG goals. ESG can both be a goal to be achieved through litigation funding, and also internally to be used to identify risks internally, and to inform decision-making. How do your LPs consider ESG? Is ESG part of their mandates? Is it truly something that benefits your fundraising? AG: We at North Wall are launching the third vintage of our legal assets fund, having deployed the first two vintages. There is strong investor demand for ESG-compliant and ESG-focused litigation financing. The questions asked on ESG are the same as with litigation financing – we’re asked how we screen deals, how we incentivize counter-parties to continually improve on ESG. In our partnership with Pogust Goodhead, you have given us an undertaking to pursue only ESG-compliant cases (not that that was required, because that is the whole philosophy of the firm). But we have put that in place in documents in a non-litigation financing context. For example, when investing in e-commerce businesses, we have put in place interest rate ratchets linked to measurable goals such as environmental and social factors—achieving carbon neutrality, etc. And then actively seeking cases that meet ESG criteria as well. Cases around recompense for exploited workers is an example. I think investors are also concerned about people going too far the other way—about greenwashing, tokenism, at taking positions at the expense of returns and downside protection. Do you see that because you have an ESG awareness, you are able to access different investment pools than you otherwise would? Can you use it as leverage when fundraising? NP: From Therium’s perspective, we see that some of our LPs are very focused on ESG-compliant criteria. We’ve been reporting to them for years on ESG compliance in different ways and how we think about that in our asset class. But you have to be careful here about what ESG means in the context of this particular asset class. What we’re doing is very different vs. a private equity fund or something like that. So you have to answer investor concerns very specifically for our asset class. And you also have to be careful about making ESG claims in a way that makes sure they are properly understood to our audience (particularly if you are addressing a retail audience). There is a danger there, that we all need to be very cognizant of. How do managers and investors think about supporting a case that has strong ESG components to it, but doing so for a plaintiff that is non-ESG (for example, an Oil & Gas claimant)? AS: The perception of what ESG is, needs to be taken in context of that particular case. Supporting a coal company would not be considered an ESG strategy. But if that coal is being used to provide power and heat and electricity in the middle of winter to Ukraine, then yes it could be considered a socially important strategy. So it is a challenge. In some of our funds, that decision is taken away from us – our LPs have very strict no-go zones. That does assist us in identifying those claimants we’re able to support. In other funds, we have a great degree of discretion. Generally, we try to balance what we consider to be competing ESG requirements and objectives.   Will the International Legal Finance Association look to establish ESG criteria or metrics for the industry? NP: That’s a very interesting question. I am not aware of any discussion to do that yet. I think it’s extremely important how the industry engages with this topic. There is also another side to this—the greenwashing aspect. We need to be very careful that our industry is not representing itself to be something it is not. So there is a very strong case for a strong ESG narrative here. How ILFA engages with that in best practices has not yet been discussed. What are the particular challenges or hurdles which funders, law firms or claimants might face in environmental suits specifically, in addition to the usual financing criteria? AG: You tend to have very deep-pocketed defendants, which requires a level of stamina. You also tend to have a very wide group of claimants, because so many people have been affected by the environmental disasters in question. The flipside of that of course, is that the public relations impact of a defendant digging its heels in when they’ve done something of that sort means that a settlement is much more likely, as the liability and causation is much clearer than it is in other cases.

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WinJustice Sees MENA Litigation Funding Go Mainstream by 2026

By John Freund |

Litigation funding in the Middle East and North Africa is expected to move decisively into the mainstream by 2026, as regulatory clarity, arbitration reform, and growing commercial awareness reshape how disputes are financed across the region. What was once viewed as a niche or unfamiliar concept is increasingly being recognized as a practical tool for managing risk, unlocking claims value, and improving access to justice in complex commercial matters.

An article in WinJustice Knowledge Hub outlines how litigation funding is evolving into a recognized asset class within the MENA legal ecosystem. The piece highlights how improved regulatory environments and more sophisticated arbitration frameworks are helping normalize third-party funding, particularly in international arbitration and cross-border disputes. Claims are increasingly assessed not simply as legal battles, but as financial assets that can be monetized and strategically managed. This shift is especially relevant for businesses facing capital constraints or seeking to preserve cash while pursuing high-value disputes.

The article also emphasizes the role of localized expertise in accelerating adoption. WinJustice positions itself as a regional player focused on aligning international funding practices with local legal cultures, court systems, and arbitration centers. By working closely with regional law firms and dispute resolution institutions, funders are helping bridge the gap between global capital and local claimants. Insolvency-related disputes and asset recovery cases are identified as particular areas of growth, reflecting broader economic and restructuring trends across the region.

As litigation funding becomes more familiar to courts, counsel, and corporate clients, the MENA market appears poised for accelerated growth. Increased competition among funders and greater sophistication among claimants may also lead to more standardized pricing and structures.

Commercial

Legal Firm Pogust Goodhead Flags Financial Uncertainty

By John Freund |

Pogust Goodhead, the high-profile claimant law firm behind a number of major group actions, has warned of material uncertainty over its ability to continue as a going concern after publishing long-overdue financial accounts. The disclosure adds another layer of scrutiny to a firm that has been at the centre of some of the largest and most complex funded claims currently working their way through the courts.

An article in City A.M. reports that Pogust Goodhead filed its accounts for the year ending December 31, 2022 well past the statutory deadline, with the documents including a statement from directors acknowledging significant financial uncertainty. According to the filing, the firm remains dependent on securing additional funding and successfully progressing large-scale litigation in order to meet its obligations as they fall due.

The accounts show that Pogust Goodhead continues to operate at a loss, reflecting the capital-intensive nature of large group actions that can take years to reach resolution. The firm has been involved in headline cases, including environmental and consumer claims, where substantial upfront legal costs are incurred long before any recovery is realised. Directors noted that delays, adverse rulings, or difficulties in accessing external capital could materially affect the firm’s financial position.

Despite these warnings, the firm stated that it is actively engaged with funders and other stakeholders and believes there is a reasonable prospect of obtaining sufficient support to continue operations. The accounts were prepared on a going concern basis, although auditors highlighted the uncertainty as a key area of emphasis rather than issuing a qualification.

The disclosure comes at a time when claimant firms and their funders are facing heightened scrutiny from regulators, politicians, and critics of litigation finance. Financial transparency, funding arrangements, and risk allocation between law firms and third-party capital providers are increasingly under the spotlight, particularly in the context of large, cross-border group actions.

Commercial Regulatory Issues

New Litigation Finance Trade Group Aims to Counter Hill Attacks

By John Freund |

A new trade association has launched with the goal of giving the litigation finance industry a stronger and more coordinated voice in Washington as lawmakers renew scrutiny of third-party funding. The American Civil Accountability Alliance has been formed to push back against what its founders describe as growing political and legislative hostility toward litigation finance, particularly on Capitol Hill.

An article in Bloomberg Law reports that the alliance was announced in early January by lawyers Erick Robinson and Charles Silver, who say the organization will focus on educating lawmakers and policymakers about the role litigation funding plays in promoting access to justice. According to the founders, third-party capital allows plaintiffs to pursue complex and costly claims that would otherwise be financially out of reach, helping to balance disparities between individual or corporate claimants and well-resourced defendants.

The group is launching at a time when litigation finance has faced an uptick in proposed regulation. In 2024, Senate legislation nearly imposed a steep tax on litigation funding profits, a proposal that funders warned would have severely damaged the industry had it passed. Although that measure was ultimately removed from a broader legislative package, additional proposals continue to circulate in Congress, including bills aimed at mandating disclosure of funding arrangements and restricting foreign investment in U.S. litigation.

The American Civil Accountability Alliance plans to position itself as an active counterweight to these efforts. The organization intends to hire a Washington-based lobbyist and expand its membership beyond funders to include law firms, litigators, and other stakeholders involved in the civil justice system. In doing so, it joins the International Legal Finance Association as one of the few organized advocacy groups representing the industry’s interests at the federal level.