The rise and rise of third party funding

AlixPartners collaborated with The Lawyer to survey over 200 UK based private practice litigators, leading in-house lawyers, and barristers. We also interviewed several leading individuals to ask their views on the market, and on our findings.

Our report provides insights from the survey, and details of what are considered by repondents to be some of key advantages and drawbacks of litigation funding. From the benefits of better risk management and the freeing-up of capital, to the loss of control and costs associated with third party involvement in a dispute, the divergent views and experiences make for interesting reading.  

Despite 85% of in-house and 66% of private practice lawyers having no prior experience of working with litigation funders, litigation funders’ growing influence can already be evidenced by the fact that 70% of the 54 class actions filed in the year ended 30 June 2019 were financed by a third party.

Notwithstanding the absence of class actions, litigation funding is also having an increased influence on dispute resolution in Hong Kong. 

While champerty and maintenance considerations have historically limited the use of third party funding to insolvency-related Court litigation, the extension of such funding to HKIAC arbitration cases since 2019 - bringing Hong Kong in line with England, Singapore and other jurisdictions - has seen an increase in activity mirroring the significant rise in international arbitration cases seated in Hong Kong.

The upward trend is expected to continue, and it will be interesting to follow the continued development and evolution of the third party funding industry in Hong Kong and elsewhere in Asia, where macroeconomic factors, in addition to jurisdiction-specific characteristics such as industries, client type, typical dispute size, risk appetite and others, will inevitably influence both the source and size of demand, as well as the associated decision-making processes.