The landscape of litigation finance is undergoing a notable shift as new funding deals have reached their lowest point in over five years. A recent report by Westfleet Advisors highlights a downturn in new litigation finance commitments, which declined by 16% from 2023 and 30% from 2022, with total funding standing at $2.3 billion last year. This trend underscores the increasing challenges within the fundraising environment, exacerbated by funders’ heightened caution regarding risk management.
Despite the decrease in new deal commitments, the total assets under management for funders have remained stable at $16.1 billion. This suggests that existing investments continue to sustain the sector even as new inflows falter. According to the report, the constrained availability of capital has led funders to be more selective, thereby escalating the difficulty of acquiring litigation financing compared to prior years.
The report further reveals a consistent trend with patent litigation, which constitutes the largest share of capital commitments at 32%. This highlights the ongoing demand for financial resources in legal areas perceived as offering relatively high returns.
For further insight into this evolving sector and to view the full report by Westfleet Advisors, interested readers can access the article on Bloomberg Law.