Covid-19 is beginning to keep litigators busy – employment breaches, chasing debtors etc. In UK and and Co Germany governments are looking to change the law. So it will not longer be illegal for a director to carry on trading if their firm is not solvent which means that a director cannot be pursued personally.
What is Litigation Financing? – a third party entity often a commercial litigation fund pays the costs to take a case to court for a plaintiff?
In 1400 Champerty- otherwise known as Litigation funding was made illegal. In UK 1967 Criminal Law Act allowed Litigation financing and the size of the market in UK alone has quadrupled since 2013 to approximately £1billion
In Australia started litigation financing in 1990’s The % of litigation cases that were funded 1997-2002 1.7% 1992-1993 15%, 2017-2018 78%
Litigation funding now in USA Brazil and Singapore as well.
It is thought litigation is Binary i.e. win or lose a case but 90% of litigation settled before going to court, indeed many go to arbitration and a case may never be prove wrong or right but a compromise is made and claims are settled.
The focus historically has been on larger complex cases.
However, a combination of Blockchain, Machine Learning and AI companies are now able to start focusing on creating a scalable portfolio of smaller cases where investors have exposure to many cases thus removing the risk of being exposed to just a small number of specific risks.
Potentially the litigation financing market is set to expand and is a market one may want to keep an eye on as litigation financing returns have proved to be uncorrelated to other asset classes
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