Litigation funding predicted to double in five years

Experts who specialise in emerging markets anticipate that the litigation finance sector will double in size in the next five years. This type of funding, occurs when a third-party that does not have a direct interest in the claims proceedings, but receives a share of the proceeds in the event that the litigation is successful (having helped to finance the cost of the litigation proceedings). It is considered that litigation will soon become a mainstream asset class in the not so distant future.

Why is anticipated to grow?

One reason that has been explained as to why the sector is expected to expand in the UK is due to the potential the country shows. Whilst the US is considered the world’s largest litigation market as it stands, accounting for over 40% of all litigation funding across the globe, the UK is home to a number of businesses with potentially.

At this moment in time, the UK market is considered to be worth around 5%, however it looks set to grow as it is home to four of the top 10 law firms in the world, as well as being home to over 200 law firms.

Regulatory reforms

Another factor contributing to the litigation funding services increasing in size not only in the UK, but on a global scale is due to more regulatory reforms in a number of global jurisdictions. For example, in India, there is currently a major discussion taking place in terms of the fundamental role that litigation funding can end up playing in domestic cases. It has been shown to not only make these kinds of claims more effiient in their proceedings, but also making the system fairer and more equal. This is because it has helped to provide access to justice for those who may otherwise find it extremely difficult to be able to afford it.

Meanwhile, in Hong Kong and Singapore litigation financing has recently been authorised when it comes to arbitration cases. This means that in these areas, the litigation finance sector is set to grow in the next few years as a result of this new reform.