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LF Dealmakers Forum Brings Together Legal Funders, Lawyers, Academics and In-House Counsel

This past Wednesday and Thursday saw New York City play host to the 2nd annual LF Dealmakers Forum. Hosted by Wendy Chou, whose popular IP Dealmakers Forum served as a launchpad for a similar conference aimed at the litigation funding market, the sold out two-day event brought together industry experts and novices alike.

Keynote Address

The event kicked off with a keynote address from Stephen Susman, founding partner of Susman Godfrey, and one of most successful plaintiffs lawyers in US. Susman recounted his early days as essentially one of the first litigation funders, having formed his contingency-only plaintiff-side law firm in the late 70s, back when the notion of contingency-only raised more than a few eyebrows.

Susman saw himself filling a need in the marketplace, and indeed by the end of the decade had grown so popular that in 1981 he landed the cover of American Lawyer, which itself founded the legal journalism market. In the process of running his contingency-fee practice, Susman learned how to construct fee agreements that provide the right incentives, how to handle cases efficiently, how to compensate associates and partners properly, and how to teach younger lawyers to be effective at their trade.

These are all ideals that Susman continues to preach. The theme of Susman’s speech was how contingency leads to efficiency. The more skin in the game that attorneys have, the more likely they are to question the efficacy of their discovery motions, and reconsider or reevaluate their overall case strategy with an eye towards efficiency over simply a ‘more is better’ approach. “Lawyers who are paid by the hour have no incentive to be efficient,” Susman said. “Even if they give you a discount. It’s like buying a suit at Barney’s half price. It’s already been marked up four-times.”

To that end, Susman advocates funders adopt a 50/50 fee model with the law firms they partner with. He recommends funders insist that law firms also maintain skin in the game. Susman further encouraged the industry to play an active role in reducing the cost of litigation. He advocates for public jury trials, as opposed to private dispute resolution.

Susman ended his address by suggesting that funders have a role to play in terms of advising their clients on how best to negotiate with their law firms. While acknowledging that this advice goes against his own best interests, Susman stated unequivocally that litigation funders – with their legal expertise, and the fact that they are no longer lawyers and are therefore operating as advisors – can guide clients on how best to negotiate with law firms on fee arrangements. This is an area where funders can provide value to the client, outside of pure financing.

Panel Discussions

Panels ranged from a broad overview of the funding industry, to coverage of specific sector topics. In the first panel of the day, which provided a bird’s eye view on the state of the industry, panelists highlighted the industry’s monumental growth, both in single-case and portfolio funding, and within boutique and AmLaw 200 law firms alike.

Of course, as firms become more knowledgeable, they are becoming more sophisticated. Five years ago many law firms hadn’t even heard of litigation funding, whereas now they are experts; some even holding auction processes for funding, and others entertaining offers from funders as a source of leverage for settlement negotiations. In the latter example, a law firm will receive an offer from a funder with no intention of accepting. They simply approach the counterparty in the claim and ask for a higher settlement figure than what the funder is willing to invest. Clearly, the marketplace is growing more sophisticated.

What’s more, law firms are negotiating better fee splits on their behalf. Years ago, a funder would receive 100-150% of their investment recouped on first-money back. Today, law firms are negotiating a chunk of that first money, and even integrating success fees (usually in the 20% range) to secure their spot at the front of the line.

On a CIO-specific panel, the panelists discussed their preferences for types of cases to fund. Obviously, IP topped the list, given the lengthy time-to-settlements and high upfront costs. International arbitration was also mentioned, yet most funders broaden their scope to include any commercial litigation opportunities. To keynote speaker Susman’s point, panelists did point out that they prefer to get law firms on board with fee sharing, via 50/50 splits, yet they noted how some law firms simply aren’t comfortable with risk. Therefore, if a case is right, the funder will cover 100% of fees if necessary.

When asked about the biggest threats to funding, panelists agreed that all of the overly optimistic or naïve capital coming into the space could lead to some negative outcomes, like funder misbehavior which may incur negative headlines. These could then be seized upon by regulators in a bid to exert broad industry oversight. Allison Chock of Bentham IMF noted that the Chamber of Commerce is now approaching state legislatures, and none of them know what litigation finance is or how it works.  So they are ramming through legislation with people who don’t understand the industry. This is a cause for concern.

And to the point of ‘dumb money’ in the space, Chock illustrated an example of how an influx of capital into a growing sector can lead to extremely bad decision-making. She told of receiving an email from a claimant in a case they had looked at that another funder had heard that Bentham was interested, so they simply threw money at the claimant. Chock’s firm signed an NDA, but that didn’t mean they were interested. They simply wanted to diligence the claim. Chock noted how this was the third such instance she heard about, where another funder jumped into a claim simply because her firm had been looking at it.

“A fool and his money are soon parted,” warned Chock.

A Case Study

Perhaps the most interesting panel of the day centered around a case study of how litigation finance literally saved a business’ life. Business Logic (BL) had a trade secrets misappropriation and breach of contract claim against a subsidiary of Morningstar. At the time, BL was a 20-person firm with annual revenue of $4MM. All of its margin and savings were tied up in the litigation.

The case had been in the works for a few years, and BL was so confident in their claim they committed much time and money to fighting it. Yet they reached a breaking point. The company was going to have to reduce its workforce to continue the claim, unless it found outside financing. They reached out to a trio of funders, and Lake Whillans responded. The funder provided fee coverage and even working capital to BL. Now, as the trial approached, law firm Yetter Coleman could find top experts and formulate a robust case.

Suddenly, Morningstar got nervous. No longer could they threaten the small Business Logic by bleeding them dry pre-trial. The trial was approaching, and BL had a strong case, and was well-capitalized. The damages claim was for $65MM, and Morningstar was so concerned about a multiple of that number being rewarded, they settled for nearly the full value of the claim – $61MM. It was the 9th largest trade secrets settlement at the time, and to this day remains the largest in the state of Illinois.

BL has since grown its business to 150 employees, and changed its name to NextCapital. The story illustrates the quintessential David v. Goliath dynamic that litigation funding facilitates, and highlights how funding can not only save a company from going under, but help it thrive well into the future.

Final Thoughts

Given the packed house, it’s safe to say there will likely be a third annual conference next year. The growing popularity of conferences like LF Dealmakers underscores the mainstream acceptance of litigation finance. I personally noticed the diversity of attendees at this conference compared to the initial installment. There were more lawyers, in-house counsel and academics this time around, and I expect that will continue into next year and beyond.

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Case Developments Commercial

Sony and Apple Challenge Enforceability of Litigation Funding Models

By John Freund |

A pivotal UK court case could reshape the future of litigation finance agreements, as Sony and Apple reignite legal challenges to widely used third-party funding models in large-scale commercial disputes.

An article in Law360 reports that the two tech giants are questioning the validity of litigation funding arrangements tied to multibillion-pound cartel claims brought against them. Their core argument: that certain litigation funding agreements may run afoul of UK laws governing damages-based agreements (DBAs), which restrict the share of damages a representative may take as remuneration. A previous Court of Appeal decision in PACCAR Inc. v. Competition Appeal Tribunal held that some funding models might qualify as DBAs, rendering them unenforceable if they fail to comply with statutory rules.

This resurrected dispute centers on claims brought by class representatives against Apple and Sony over alleged anti-competitive behavior. The companies argue that if the funding arrangements breach DBA regulations, the entire claims may be invalidated. For the litigation funding industry, the outcome could severely curtail access to justice mechanisms in the UK—especially for collective actions in competition law, where third-party financing is often essential.

The UK’s Competition Appeal Tribunal previously stayed the proceedings pending clarity on the legal standing of such funding arrangements. With the dispute now heading back to court, all eyes will be on whether the judiciary draws a clear line around the enforceability of funder agreements under current law.

The decision could force funders to rework deal structures or risk losing enforceability altogether. As UK courts revisit the DBA implications for litigation finance, the sector faces heightened uncertainty over regulatory compliance, enforceability, and long-term viability in complex group litigation. Will this lead to a redefinition of permissible funding models—or to a call for legislative reform to protect access to collective redress?

Case Developments Commercial

Funder’s Interference in Texas Fee Dispute Rejected by Appeals Court

By Harry Moran |

A Texas appeals court has ruled that a litigation funder cannot block attorneys from pursuing a fee dispute following a remand order, reinforcing the limited standing of funders in fee-shifting battles. In a 2-1 decision, the First Court of Appeals found that the funder’s interest in the outcome, while financial, did not confer the legal authority necessary to participate in the dispute or enforce a side agreement aimed at halting the proceedings.

An article in Law360 details the underlying case, which stems from a contentious attorney fee battle following a remand to state court. The litigation funder, asserting contractual rights tied to a funding agreement, attempted to intervene and stop the fee litigation between plaintiffs' and defense counsel. But the appellate court sided with the trial court’s decision to proceed, emphasizing that only parties directly involved in the underlying legal work—and not third-party financiers—are entitled to challenge or control post-remand fee determinations. The majority opinion concluded that the funder’s contract could not supersede procedural law governing who may participate in such disputes.

In dissent, one justice argued that the funder’s financial interest merited consideration, suggesting that a more expansive view of standing could be warranted. But the majority held firm, stating that expanding standing would invite unwanted complexity and undermine judicial efficiency.

This decision sends a strong signal to funders operating in Texas: fee rights must be contractually precise and procedurally valid. As more funders build fee recovery provisions into their agreements, questions linger about how far those rights can extend—especially in jurisdictions hesitant to allow funders a seat at the litigation table.

Commercial Regulatory Issues

Oklahoma Moves to Restrict Foreign Litigation Funding, Cap Damages

By John Freund |

In a significant policy shift, Oklahoma has enacted legislation targeting foreign influence in its judicial system through third-party litigation funding. Signed into law by Governor Kevin Stitt, the two-pronged legislation not only prohibits foreign entities from funding lawsuits in the state but also imposes a $500,000 cap on non-economic damages in civil cases—excluding exceptions such as wrongful death. The new laws take effect November 1, 2025.

An article in The Journal Record notes that proponents of the legislation, including the Oklahoma Civil Justice Council and key Republican lawmakers, argue these measures are necessary to preserve the integrity of the state's courts and protect domestic businesses from what they view as undue interference. The foreign funding restriction applies to entities from countries identified as foreign adversaries by federal standards, including China and Russia.

Critics, however, contend that the laws may undermine access to justice, especially in complex or high-cost litigation where third-party funding can serve as a vital resource. The cap on non-economic damages, in particular, has drawn concern from trial lawyers who argue it may disproportionately impact vulnerable plaintiffs without sufficient financial means.

Oklahoma’s move aligns with a broader national trend of state-level scrutiny over third-party litigation funding. Lawmakers in several states have introduced or passed legislation to increase transparency, impose registration requirements, or limit funding sources.

For the legal funding industry, the Oklahoma law raises pressing questions about how funders will adapt to an increasingly fragmented regulatory landscape. It also underscores the growing political sensitivity around foreign capital in civil litigation—a trend that could prompt further regulatory action across other jurisdictions.