The Future of Litigation Finance
Litigation finance is rapidly expanding beyond single cases and offering comprehensive financial support to law firms. Maurice MacSweeney's article explores the reasons behind this growth, such as the increasing acceptance of outside financing as a valuable tool for legal professionals. He also notes that shifting regulations may expand access to non-legal entities.
Litigation Finance is Changing Rapidly
In his article, “Litigation Finance Spurs Innovation by Moving Past Single Cases,” Maurice MacSweeney discusses the rising popularity of litigation finance and the various factors that seem to contribute to the sector’s recent growth. In addition to exploring several timely themes, such as the evolution of litigation funders into funders of legal businesses, the monetization of ongoing litigation, and the benefits of legal finance in reducing the cost of capital, MacSweeney’s article serves to highlight the increasing importance of litigation finance to the industry more broadly, and what this could as it relates to the future of legal work.
We need to have this conversation more regularly in the legal space. The litigation finance sector has been booming, expanding its traditional model into providing comprehensive financial support to entire law firms, corporate legal departments, alternative service providers, and entrepreneur-founded legal businesses. It’s a rapid evolution that signifies the emergent mainstream acceptance of outside financing as a valuable tool for legal professionals and leaves little doubt that the future of litigation funding is on an undeniable trajectory of growth.
Join our community and be part of the future of law.
This is an example CTA within a Blog.
But what, more specifically, is driving this growth, and why are so many investors suddenly turning to the legal industry for investment opportunities?
The answer is pretty straightforward. For investors, problems equal opportunities, and the legal industry has more than enough. As more and more cases flood the courts, each with unique challenges and financial requirements, legal professionals find themselves overwhelmed and in desperate need of resources and operational innovations. And if litigation funders can help provide those things in a way that genuinely drives positive change for the industry, we would be foolish not to embrace them with open arms.
Moreover, as funds shift from investing in individual cases to funding, and even acquiring, entire law firms, it’s clear that today’s litigation finance industry is nothing like the one of the past. Being well aware of the potential for shifting regulations to expand access to non-legal entities, investors are increasingly eager to cash in on the endless opportunities that come with owning a legal firm, particularly the ability to establish a steady stream of revenue based not only on the outcome of cases but on the working fees associated with a firm’s daily operations.
But the advantages expand far beyond the investors. Law firms are also becoming increasingly interested in partnering with litigation funds and leveraging their involvement as a cost-effective way to finance their cases. Because the investment comes at the outset of a case rather than upon its conclusion, every party can benefit in their own way, from the funder and the firm right down to the individual plaintiff. More specifically, funders get to earn their share of revenue even if a case fails, firms reduce their exposure to financial risk, and plaintiffs get the confidence that comes with additional working capital dedicated to securing a positive outcome. Additionally, when utilized as an alternative financing option, the money law firms save on capital can be reinvested into the business.
To reiterate, the litigation finance sector is growing rapidly for a straightforward reason: because it works. Between its unique blend of legal and financial expertise, and the broader ability to create diverse value for law firms, attorneys, and their clients, it’s clear that litigation funding will not only continue on its trajectory of growth but may, in fact, secure itself as an absolutely vital aspect of legal work as the industry evolves into the future.
Article Reviewed: https://news.bloomberglaw.com/us-law-week/litigation-finance-spurs-innovation-by-moving-past-single-cases
