Big LitFi Report Is a Bit Skinnier This Year: Litigation Finance

Happy Friday! We got some new litigation finance numbers this week. Let’s dig in....

On Wednesday, Westfleet Advisors published its annual report analyzing how money is flowing in the commercial litigation finance industry. The financials are self-reported and anonymized and it’s our only look at the scope and scale of the space.

Some big takeaways:

• Big Law participation in the sector dropped to under a quarter
• A small portion of the 39 funders identified in the report are behind most of the $2.8 billion in deal flow last year
• And the report is no longer publishing the industry’s assets under management, a figure typically used to explain market size

Charles Agee, Westfleet’s CEO, said it’s partially because opponents have latched onto the number and used it “in bad faith” to scare the public about the size of the industry.

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IP Edge teaches lessons

I attended a patent financing workshop on Thursday hosted by IP Edge managing members Gautham Bodepudi and Sanjay Pant. If IP Edge sounds familiar, it’s because it was the focus of extensive investigation by Delaware Chief Justice Colm F. Connolly. He sought testimony and evidence to show whether IP Edge-affiliated LLCs had violated his standing order requiring litigants disclose outside funding.

IP Edge is a patent monetization company and works as a facilitator for patent holders. During the workshop, Pant and Bodepudi discussed their work and the overall market.

Here were some takeaways:

• IP Edge hasn’t done a deal with a dedicated litigation funder in about three to five years. It mostly works with private credit, hedge funds and family offices.
• “All of these insurers are just litigation funders,” Pant said during his presentation. Insurance products have become commonplace in litigation funding and Pant said IP Edge wraps a lot of its deals in insurance.
• Pant talked about a case they were involved in, Secure Wi-Fi v. Samsung. The case was scheduled for trial in January but settled for an undisclosed amount a few days before. IP Edge facilitated the patent transaction and Pant cited the case as an example of an unusually fast resolution under 24 months.

What I’m Reading

My colleagues reported that Argentina won an order blocking holders of a $16.1 billion judgment against it from seeking information on seizable assets until a federal court rules on its challenge to the award. The case is backed by Burford Capital, which had been hoping that the lingering judgment would complicate Argentina’s plans to return to international capital markets, forcing the government to reach a settlement.

A group of California trial lawyers are backing a package of bills aimed at regulating the plaintiffs bar, the LA Times reports. One bill would ban private equity firms and hedge funds from dictating case strategy after funding firms.

Burford’s chief development officer Travis Lenkner spoke to Legal Business about its private investment in law firms. He said Burford’s first equity investment in 2020, a 32% stake in PCB Litigation (now PCB Byrne), has performed well.

LISTEN: Mayer Brown Chairman Jon Van Gorp

Outside investors circling law firms may help some shoulder the growing costs of artificial intelligence, according to Mayer Brown’s Jon Van Gorp.

Van Gorp spoke to Bloomberg Law reporter Roy Strom about the “big question that everybody’s talking about” regarding AI. He also discussed his firm’s work with energy markets, the turbulent times for private credit markets, and President Donald Trump’s war on the legal industry. Listen to this week’s episode of On the Merits here or read the transcript.

Subscribe to On the Merits on Apple Podcasts, Spotify, Megaphone, or Audible.

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