Large law firms tap bigger share of ‘portfolio’ litigation funding - report

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  • Largest law firms saw 53% of total law firm portfolio commitments, new survey says
  • 47 active funders sank $2.8 billion into new deals in 2021

(Reuters) - Large law firms in the U.S. received a much bigger proportion of the total litigation funding commitments going toward "portfolio" deals in 2021 than in past years, according to a report released Wednesday.

Some 53% of total law firm portfolio funding commitments were allocated to the 200 largest U.S. law firms by revenue last year, up from 9% the prior year, litigation finance advisory firm Westfleet Advisors said in the report.

In portfolio deals, litigation funders may provide capital to support several cases, rather than fund a single case.

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"Historically, that had been much heavier weighted toward smaller firms [and] boutiques," said Charles Agee, founder of Westfleet Advisors.

The report noted a caveat, that the portfolio activity increase seems to be due to a "small number of large ($50 million-plus) deals." Agee said there were fewer than five, and the report did not identify them.

While it's hard to know for sure, "the magnitude of the increase, to me, feels more like a trend than some kind of an aberration," Agee said. He cited an increase in demand for such arrangements within large law firms driven in part by an "increasing comfort level" with litigation finance.

Westfleet's report is based on survey participation by "most" major litigation funders active in the U.S. market. The report uses aggregated data on commercial litigation finance transactions collected from July 2020 through June 2021.

The annual report, now in its third year, provides a rare look into the scope of an often opaque industry.

Other figures from the report show continued growth in the litigation finance market.

The 47 funders active in the U.S. market had a combined $12.4 billion in assets under management in 2021, up from $11.3 billion the year before. Funders sank $2.8 billion into new deals, compared to $2.5 billion in 2020.

Among all new deals, capital was allocated 41% of the time to single-matter transactions and 59% of the time to portfolio deals, which the report said was consistent with prior years.

Read more:

Litigation funders sank $2.5 billion into new U.S. investments last year - report

Willkie, Longford ink $50 million litigation finance deal

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Sara Merken reports on privacy and data security, as well as the business of law, including legal innovation and key players in the legal services industry. Reach her at sara.merken@thomsonreuters.com