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Move Over Carnival: Litigation Funding in Brazil is Heating Up!

Move Over Carnival: Litigation Funding in Brazil is Heating Up!

Writing for Vannin’s Funding in Focus series, Carolina Ramirez, Managing Director in Vannin’s newly-formed New York office, describes the litigation funding climate in South America’s largest and most populous nation. Ramirez highlights both the perceptions and practical applications of litigation finance in Brazil, as well as the regulatory climate and challenges facing industry growth in the region.
Although third party funding arrived on the Brazilian scene only recently, the practice has been warmly embraced relative to other Latin American markets. That has to do with Brazil’s liquidity crisis following the Great Recession, in addition to fallout in the aftermath of Operation Car Wash, or Operação Lava Jato, and the subsequent reliance on arbitration as a result. According to Ramirez, Brazilians maintain a perception that litigation funding is utilized solely by impecunious claimants, or those facing liquidity constraints. Although perceptions are gradually changing, she points to one local practitioner who claims that “case law on the matter is scarce and major Brazilian arbitration chambers do not publish their precedents, so parties (be it funders, funded parties or adversaries to a funded party) still have to deal with a reasonable (and potentially damaging) degree of uncertainty.” Yet despite the uncertainty, the benefits of litigation funding are widely being recognized, with one practitioner going so far as to state that the practice “will evolve to [allow] major companies seeking reasonable financing that allows them to pursue their core business objectives while conducting high level litigation.” Such is the reality of litigation funding in other major jurisdictions, so why not Brazil? Major obstacles to the adoption of litigation funding have to do with costs and time constraints — the former containing too few, and the latter containing far too many. The cost of filing a claim (appeal included) in Brazil is extraordinarily low, which of course precludes firms from seeking external funding. Additionally, cases can go through many layers of appeal before reaching conclusion, which means that funders can’t accurately predict the timing of their expected recovery. Essentially, the barriers to justice that exist in Brazil work against litigation funders, whereas the barriers that exist in the United States, for example (those being high upfront costs and balance sheet exposure), directly play into a litigation funder’s hands. According to Ramirez, by and large, third party funding is unregulated in Brazil. “Only recently did the Brazil-Canada Chamber of Commerce (“CAM/CCBC”) – one of the most renowned institutions in Brazil – issue a resolution specifically recommending that parties disclose the use of funding at the outset of an arbitration (Administrative Resolution 18/2016).” Practitioners on the ground believe in the likelihood that other arbitral institutions will at some point promulgate further regulations on third party funding in Brazil, though at present, the industry remains unregulated. So is Brazil on the precipice of future growth in the area of litigation funding? Ramirez seems to think so. “The resounding message,” she writes, “is that Brazil is ripe for third party funding and that the time to enter the market is now. It is also clear that practitioners are enthusiastic about the prospect of having foreign third party funders with significant experience enter the market and level the playing field which has thus far been dominated by a single local Brazilian third party funder.” To read Ramirez’s article in its entirety, please visit this link
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YPF Dispute Under Consideration in US Court

By John Freund |

A three‑judge panel of the U.S. Court of Appeals for the Second Circuit is weighing whether the case involving the Argentine nationalisation of oil company YPF should have been litigated in the U.S. in the first place. The original ruling awarded approximately $16.1 billion to minority shareholders.

An article in Finance News highlights that Burford Capital—which provided substantial litigation finance support for the plaintiffs—is now under scrutiny, and the uncertainty has already knocked more than 10 % off Burford’s share price.

According to the report, two of the appellate judges expressed scepticism about whether U.S. jurisdiction was appropriate, signalling a possible shift in the case’s trajectory. The funding provided by Burford makes this more than a corporate dispute—it's a pivotal moment for litigation funders backing claims of this magnitude. The article underscores that if the award is overturned or diminished on jurisdictional grounds, the returns to Burford and similar funders could shrink dramatically.

Looking ahead, this case raises critical questions: Will funders rethink backing multi‑billion‑dollar sovereign claims? Will lawyers and funders factor in jurisdictional risk more aggressively? And how will capital providers price that risk? The outcome could influence how global litigation finance portfolios are structured—and the appetite for large‑ticket sovereign cases.

FIO Flags Rising “Tort Tax” Driven by Third‑Party Litigation Financing

By John Freund |

A recent industry move sees the Federal Insurance Office (FIO) of the U.S. Department of the Treasury warning that the growth of third‑party litigation funding is putting fresh stress on the U.S. property‑casualty insurance sector. The FIO’s 2025 Annual Report on the Insurance Industry highlights the so‑called “tort tax” as a new burden, with insurers and consumers increasingly feeling the cost.

An article in Insurance Business explains that third‑party litigation funding—in which outside investors finance lawsuits in exchange for a share of potential settlements—is now viewed by federal regulators as a significant factor driving up claims costs for insurers.

The report quantifies the burden, pointing to an average annual cost exceeding $5,000 per household. In response, insurance trade groups like the American Property Casualty Insurance Association (APCIA) are throwing their weight behind federal bills such as the Litigation Transparency Act of 2025 and the Protecting Our Courts from Foreign Manipulation Act of 2025, both of which aim to bring greater scrutiny and disclosure to litigation funding practices.

The report also draws on lessons from state-level reforms. In Florida, new legislation that slashed legal filings by over 30% has already helped insurers reduce premiums and issue customer refunds—offering a case study in how tort reform can yield near-term results. While the report also examines the insurance industry’s evolving role in climate resilience and loss mitigation, it makes clear that rising legal system costs remain an urgent and unresolved challenge.

For the legal funding sector, the report underscores a shifting regulatory landscape. With calls for federal oversight gaining traction, funders may soon face new transparency requirements, rate limitations, or reporting obligations. The FIO’s framing of litigation finance as a systemic cost driver is likely to spark renewed debate over how to balance consumer protection, insurer stability, and access to justice.

ClaimAngel Hits 18,000 Fundings, Sets New Transparency Benchmark in Litigation Finance

By John Freund |

The plaintiff‑funding marketplace ClaimAngel announced it has surpassed 18,000 individual fundings—a milestone signaling its growing influence in the legal funding arena. The platform, founded in 2022 and headquartered in Boca Raton, Florida, positions itself as a disruptor to traditional litigation finance models.

An release in PR Newswire outlines how ClaimAngel offers a single standardized rate of 27.8% simple annual interest and caps repayment at two‑times the amount funded after 46 months—significantly lower and more predictable than many legacy funders. The platform also claims to bring efficiency and transparency to the market by hosting a marketplace of over 25 vetted funders, allowing competing offers, and integrating directly into law‑firm workflows.

How claimants benefit: The core value proposition is to give plaintiffs “breathing room” when insurers use time as a weapon, enabling lawyers and clients to press for better settlement outcomes rather than settling prematurely under financial pressure. With over 500 plaintiff‑side law firms now using the platform, ClaimAngel is positioning itself as a credible alternative to more opaque “Wild West” funding practices—where a $5,000 advance could balloon into a $30,000 repayment by settlement.

ClaimAngel is striking at the heart of two key pain points: (1) lack of standardized pricing and (2) lack of transparency in funding terms. By offering a fixed rate and capped repayment in a marketplace format, it may prompt other players to rethink fee structures and disclosure practices. The milestone of 18,000 fundings also signals broader acceptance of tech‑driven innovation in a space often slow to modernize.