A topic that invariably comes up in discussions is the common case of wide dispersion between gross and net returns in commercial litigation finance (this is not typically an issue within consumer litigation finance). It’s a problem that is somewhat unavoidable and somewhat explainable!

In part one of this two-part series, we explored the importance of partnerships and we started to discuss elements of portfolio construction.  In part two, we further delve into portfolio construction issues and then discuss the appropriateness of utilizing debt within the context of commercial litigation finance.

A number of years have passed since the commercial litigation finance industry was established in the UK, USA & Australia (the more mature markets of the global industry), and so I thought it appropriate to reflect on some of the lessons learned within the industry to extract insights both for investors and fund managers.

Over the past few years, I have noticed a distinct change in the appetite of litigation funders when it comes to getting involved in patent litigations. It used to be the case that patent litigation was viewed negatively by the litigation funding community…

In the capital markets industry, there is a concept referred to as “edge”, which can be defined as any legal form of information, insight or proprietary process or knowledge which an investor possesses that allows him or her to outperform peers and generate alpha.

The Covid-19 pandemic is forcing many industries to adapt to new realities. The litigation finance industry is no different. As new realities emerge, so do new opportunities, and as the dust settles, we anticipate certain developments

As with any new industry, there is much risk and trepidation with respect to whether (i) the concept will work, (ii) the concept will be profitable, (iii) the concept will be scalable and (iv) the concept will attract investment support. Oh, and in the case of litigation finance, (v) whether the concept is in fact legal.

The recent unprecedented and rapid strengthening in the US dollar, as depicted in the following 6-month graph of the US dollar index (USD as compared to a basket of currencies), created a significant 8% swing in currency rates in a matter of days.

As Covid-19 has taken the planet and the legal community by surprise, I think there are some lessons learned from private equity that can be applied to litigation finance. In short, focus on cash – its collection, generation, distribution and availability.

Portfolio risk is generally influenced by three main factors: volatility of results, correlation (of outcomes within a given portfolio) and the size of the portfolio.  For the purposes of this article, I have assumed that correlation within a portfolio is non-existent, as each case stands on its own and is not influenced by others in the portfolio.

From the first time I was introduced to litigation finance, be it consumer or commercial, I was quite surprised by the case studies.  What surprised me was not the outcome or the quantum of damages or the amount of profit being made by lawyers or litigation funders.

One of the most significant trends in litigation finance for fund managers over the last few years has to be the strong trend toward “portfolio financings”. Litigation finance can be broadly segmented between …

I was speaking recently with a local litigation finance manager about the concept of value of a piece of litigation in the context of litigation finance. As I thought more about the discussion and the implications for settlements and maximizing outcomes …