Litigation finance as an investment and unique asset class

If you have not heard about litigation finance as an investment then be very careful in the reading of this article. At the end you will love it for sure as I do!

What is litigation finance?

The litigations become very popular due to the Win-Win approach. The core idea to cover the plaintiffs´ costs for the claims made niche investment opportunities and become widely used tool for plaintiffs, legal companies and investors.

The definition of litigation funding is well written by Association of Litigation Funders of England and Wales:
"Litigation funding is where a third party provides the financial resources to enable costly litigation or arbitration cases to proceed. The litigant obtains all or part of the financing to cover its legal costs from a private commercial litigation funder, who has no direct interest in the proceedings. In return, if the case is won, the funder receives an agreed share of the proceeds of the claim.
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This financing tool provides a valuable means of access to justice for claimants who may not have funds available, or may not wish to tie up funds, for costly yet meritorious claims..."

The current litigation investment market size (2023) is approx US$ 17 Billion (source: Future Market Insights) and the market should grow to over US$ 57 Billion in 2035 (source: Research Nester).

What are the benefits of litigation finance as an asset class?

The key benefits of this attractive and unique asset class are:

• Uncorrelated returns to the global financial markets
• High and predictable double digit returns
• Perfect diversification tool to the overall portfolio
• Social impact in the form of participation in the justice and compensation for plaintiffs

How can I invest to the litigations?

There are more ways how to participate on this growing and thriving niche asset class. As for any other investments it depends on the investor´s requirements on expected return, accepted risk and liquidity. The range of investment opportunities and litigation claims is really wide from a conservative ones to more dynamic. Advisory with industry expert is recommended so the investor can fully understand the pros and cons of this asset class.