@AmericanLawyer: The #AmLaw 200 Backed Away From #LitigationFunding in 2022

The growth of new capital commitments by U.S. commercial litigation financiers has accelerated every year since 2019. Yet firms in the Am Law 200 received a much smaller portion of this capital last year compared to 2021, with their share dipping from 41% to 28%.

That’s a return to historic norms, according to Charles Agee, CEO of litigation funding broker Westfleet Advisors, who also emphasized that only a small minority of civil cases in the U.S. have any involvement from third-party funders.

New capital commitments for commercial cases amounted to $3.2 billion in 2022, a 16% increase over 2021’s $2.8 billion, according to a newly released report from Westfleet Advisors. The $2.8 billion of capital committed in 2021 marked an 11% increase over 2020’s $2.5 billion, which itself was a 6% increase over the previous year.

And yet, for Big Law, 2021 was likely an aberration.

“Some of the large law firms, maybe as a precautionary measure, decided to put in place large portfolio deals as a de-risk move and liquidity enhancement because they didn’t know what was ahead,” Agee said of the rise in litigation finance utilization in 2021. “Grasping for financial solutions that served to de-risk makes more sense in times like that than in smooth sailing.”

But looking more broadly across the legal industry, more capital continues to be deployed every year, in what Agee said appears to be an “almost boring,” growth trend for the young industry. Nonetheless, he argues that the rate of growth in new capital commitments, almost doubling year after year, is “significant.”

Source: https://www.law.com/