Funding market readies itself for a spike in litigation

As our soon-to-be-released litigation funding survey has found, there is one aspect of the funding market on which almost everyone agrees; funders are here to stay. 

Increasingly, there is a consensus in the disputes marketplace that significant growth in the use of funding is on the horizon fuelled by claimants’ desire to (i) reduce their financial commitment to a case and (ii) manage risk. In fact, recent reports from law firm RPC suggest that the funding market has now reached an asset balance of around £2 billion, demonstrating not only the recent growth in funders’ financial firepower but also their ability to fund the largest and most complex cases as we look ahead.

Given the recent verdict in the Merricks-Mastercard case in the competition space, class actions, and specifically collective proceeding orders (CPOs), are expected to gain momentum. A similar uptick is expected in the insolvency space. As Government support is withdrawn in the coming months there will almost certainly be a rise in the volume of corporate insolvencies and the types of litigation which typically follow.

While more conciliatory solutions may be a more fruitful way for parties to go than long-running litigation, it is inevitable that the Courts (and indeed arbitral tribunals) are in for busy times. All good news if you’re a funder with investment funds looking for a home….