Litigation funding companies financed $2.8 billion in new deals in 2021, spurring an 11% increase in portfolio litigation funding compared to the year prior. The 47 active funders contributed 46% more to Big Law firms than they did in 2020, according to a survey by Westfleet Advisors, a litigation finance advisory firm. The 200 largest law firms in the United States received 53% of portfolio funding commitments, up 9% from 2020.
In portfolio litigation deals, funders provide capital to support many cases as opposed to one specific case. The increase in portfolio deals in 2021 seems to have been due to the fact that fewer than five larger deals ($50 million or greater) took place in 2021, according to Charles Agee, founder of Westfleet Advisors. The average size of deals has declined 20% to $6.5 million since 2020, according to Bloomberg Law.
Historically, litigation funding went to smaller firms, according to Agee. However, he states that the increase in funding to larger firms “feels more like a trend than some kind of aberration,” according to Reuters. Agee also claims that larger firms have become more comfortable with litigation finance.
Litigation funders currently manage $12.4 billion in assets, up 10% from 2020 and 32% from 2019, according to Bloomberg Law. Burford Capital, a publicly traded litigation financer, recently struck portfolio deals with values as high as $100 million. In 2021, Willkie Farr & Gallagher announced a $50 million partnership with Longford Capital, the first major law firm to publicly share that it funds litigation.
One of Longford’s co-founders, William Farrell Jr., stated that once news of Longford’s deal with Willkie spread, Longford received many calls from Big Law firms interested in portfolio funding. Farrell Jr. echoed Agee’s sentiment that the spike in litigation funding commitments is more than just an aberration; it is a trend. Farrell Jr. stated that the demand for litigation financing “has always increased year over year and it continues to do so,” according to Bloomberg Law.
