Litigation Funding Investment Market Set to Surpass Valuation of US$ 24,709.1 Million By 2032 | Astute Analytica

The litigation funding investment market has continued to evolve, reflecting a complex interplay of growth trends, regional dynamics, and regulatory changes. Businesses are projected to remain at the forefront.

New Delhi, June 03, 2024 (GLOBE NEWSWIRE) — The global litigation funding investment market is projected to surpass valuation of US$ 24,709.1 million by 2032 from US$ 13,679.9 million in 2023 at a CAGR of 6.79% during the forecast period 2024–2032.

Over the past few years, the legal and regulatory environment has seen significant developments, with the European Parliament recommending legislation to regulate third-party funding, including a cap on funder returns at 40% of any damages awarded. New legislative requirements, such as the EU Directive on Representative Actions and statutes in places like Montana, are also influencing the market by mandating the disclosure of funding relationships in civil cases.

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The litigation funding investment market dynamics are largely driven by an uptick in litigation fund providers and a rise in high-value legal cases that span multiple jurisdictions. The market is also shaped by the growing need for non-debt financial solutions, corporate insolvencies, and the increasing sophistication of companies and law firms in seeking legal finance partners. Some of the prominent players in the space include Parabellum Capital, Bentham Capital, Juridica Investments, Burford Capital LLC, and Woodsford Litigation Funding Ltd.

Regionally, North America, and particularly the United States, has maintained its stronghold on the market, significantly influencing its overall direction. Europe is not far behind, with projections indicating a robust CAGR through to 2032. Investment trends have shown some fluctuations, with new commitments to lawsuits decreasing to $2.7 billion in the year ending June 30, 2023, down from $3.2 billion in the previous fiscal year. Despite this, total assets under management have seen a slight increase, reaching $15.2 billion.

Capital Available for Claims to Surpass US$50 Billion by 2035 But Not Without Challenge

Looking ahead, senior in-house lawyers anticipate an increase in dispute volumes and a greater offering of cost-and risk-sharing solutions by law firms in the next two years. The capital available for claims in the global litigation funding investment market, currently estimated at USD 13 billion, is expected to surge past USD 50 billion by 2035. However, the market has not been immune to external shocks, with the COVID-19 pandemic having a notable impact, disrupting global supply chains and reducing demand for products and services, including those related to litigation funding investment.

Despite the positive growth outlook, the sector faces challenges related to market conditions and risks specific to major vendors. Nevertheless, there are significant opportunities within the industry for those who can navigate its complexities. The role of technology, particularly AI, is becoming increasingly prominent, enhancing new business efforts and aiding in early-stage issue-spotting and assessment of underlying causes of action. However, AI has not reached the stage where it can make investment decisions independently, indicating that human expertise remains at the core of litigation funding investment strategies.

Key Findings in Litigation Funding Investment Market

Market Forecast (2032) US$ 24,709.1 million
CAGR 6.79%
Largest Region (2023) North America (42.7%)
By Type Commercial Litigation (46.2%)
By End User Business (72.1%)
Top Trends
  • Maturation of the Industry and Evolving Market Dynamics
  • Expansion into Emerging Economies, Tapping into New Markets and Legal Systems
  • Growing International Arbitration and Bankruptcy Claims
Top Drivers
  • Increasing Legal Costs and Complexity
  • Rising Number of Legal Disputes
Top Challenges
  • High Investment Risks
  • Growing Integrity and Ethical Concerns
  • Market Saturation and High Competition

Explosive Growth in Commercial Litigation Funding: Driven by Rising Legal Costs and Complex Disputes, Contributes US$ 6,328.8 Million

The litigation funding investment market is experiencing substantial growth, particularly within the commercial segment. As of 2023, the segment generated a revenue of over US$ 6,328.8 million and is projected to exceed US$ 11,852.3 million by 2032, growing at a robust CAGR of over 7.22%. Commercial litigation, driven by disputes such as partnership disputes, breach of contract, business torts, and class actions, is anticipated to hold the largest share globally. As per Astute Analytica, rising legal costs compel businesses to seek external funding, driving demand for litigation financing. The surge in complex legal cases, including class actions and commercial disputes, attracts institutional investors to this market.

Today, large enterprises use litigation funding to mitigate the monetary impact, allowing them to pursue legal disputes without affecting their financial resources. The increasing number of disputes among firms in the same business vertical is predicted to generate new growth opportunities for the litigation funding market. Litigation funding provides investors with an extended range of a new asset class not covered under traditional market instruments like property, equities, bonds, or commodities. According to Bloomberg Law’s survey, 54% of funders’ investments were in direct-to-claimholder single-case financing, while 37% was directed to law firm single-case financing. This strategic focus underscores the dominance of high-demand litigation funding investment in the commercial segment, driven by economic, legal, and market factors.

Business are Leading Consumers of Litigation Funding Investment Market, Contribute Over US$ 9,371.1 Million to Market Revenue

Businesses invest around US$ 9,371.1 million annually in advanced legal strategies supported by litigation funding. These investments in expertise and innovation further reinforce their leading role in the litigation funding market. Nearly 95% of businesses involved in litigation funding consult with ethics experts to ensure compliance with ethical standards. Long-term litigation funding investments by businesses are estimated to be over $20 billion. This commitment to ethical compliance and long-term investment showcases the reliability and stability of businesses in this sector.

In 2023, businesses around the litigation funding investment market gained over $2 billion from successful litigation funding cases, with an average return on investment (ROI) of around 30%. This high ROI is a significant factor attracting businesses to this investment. The financial support provided by litigation funding enables businesses to pursue strong legal cases without bearing the full burden of legal expenses, increasing their access to justice. By leveraging their financial strength, strategic partnerships, and innovative approaches, businesses maximize returns and minimize risks, showcasing their leading position in the litigation funding investment market.

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North America Contributes Over US$ 5,843.1 Million to Litigation Fundings Investment Market and is Mainly Concentrated in the US

The US litigation funding market is a powerhouse in North America, growing at a CAGR of 6.8%. This dominance is bolstered by a favorable regulatory environment that enhances investor confidence and market stability. As traditional investments face uncertainties, investors are increasingly turning to non-traditional avenues like litigation funding, driven by the need for businesses to mitigate the financial impact of legal disputes. Technological innovation and strategic partnerships further strengthen the US market. New entrants like LexShares and Legalist leverage advanced technology and data analytics to streamline case evaluations and risk assessments. These innovations attract more investors and improve market efficiency.

Additionally, strategic partnerships between law firms and litigation funders foster innovation, expand litigation funding investment market reach, and enhance the credibility of litigation funding. Large enterprises dominate the market, using litigation funding to minimize the financial strain of legal disputes, while the SME segment is also expected to grow, driven by litigations related to partnership disputes, breach of contract, business torts, and class actions.

The competitive landscape of the US litigation funding investment market is marked by key players such as Burford Capital and Omni Bridgeway, who maintain market leadership through strategic investments and continuous innovation. The market is highly concentrated, with the top 14 players holding over 60% of the regional market share. On average, 54% of funding is invested in direct to claimholder single-case financing, while 37% goes to law firm single-case financing. The remaining 9% is allocated to portfolio financing and other forms. Ethical considerations, such as potential conflicts of interest and the influence of funders on litigation outcomes, are ongoing debates, but addressing these concerns is crucial for maintaining the integrity and transparency of the market. Additionally, the average return on investment for litigation funders in the US ranges between 20-30%, making it a lucrative market for investors.

Top 5 Players Control More than 47% Market Share of Global Litigation Funding Investment Market

Apex Litigation Finance, Woodsford Litigation Funding Ltd, IMF Bentham, Therium Group Holdings Limited, Burford Capital LLC are top 5 players in the market.

Apex Litigation Finance is a prominent player in the litigation funding industry with over 12.10% market share. Since its inception, Apex has funded over 500 cases, with the average case size being around $400,000. The company boasts a success rate of approximately 70% in the cases they fund, reflecting their effective risk assessment and decision-making processes. The average return on investment (ROI) for Apex stands at around 30%, making it a lucrative proposition for investors.

A key strength of Apex in the litigation funding investment market is their quick turnaround time; they typically make funding decisions within 14 days, which is crucial for litigants who need timely financial support. Apex’s operations span primarily the UK and the US, serving a diverse client base that includes individuals, small businesses, and law firms. The company leverages AI-driven analytics for risk assessment and decision-making, enhancing their efficiency and accuracy. All of Apex’s investments are non-recourse, meaning that if the case is lost, the client owes nothing, reducing their financial risk and making litigation funding more accessible.

Woodsford Litigation Funding Ltd is another top player in the litigation funding investment market. Woodsford operates in multiple jurisdictions, including the US, UK, Australia, and Europe, serving a wide range of clients from individuals to large corporations. A key differentiator for Woodsford is their deep commitment to Environmental, Social, and Governance (ESG) principles, which aligns with their mission to improve access to justice and hold businesses accountable. Their investment portfolio is diverse, encompassing commercial claims, intellectual property disputes, and law-firm finance facilities, allowing them to spread risk and capitalize on various opportunities within the litigation finance market.

Global Litigation Funding Investment Market Key Players

  • Apex Litigation Finance
  • Augusta Ventures Limited
  • Balance Legal Capital LLP
  • Burford Capital LLC
  • Deminor
  • Harbour Litigation Funding Limited
  • IMF Bentham
  • Legalist Inc.
  • Longford Capital Management, LP
  • Pravati Capital
  • Therium Group Holdings Limited
  • Validity Finance, LLC
  • Woodsford Litigation Funding Ltd
  • Other Prominent Players

Key Segmentation:

By Type

  • Commercial Litigation Funding
  • Consumer Disputes
  • International Arbitration
  • Class Action Lawsuit Funding
  • Others

By End User

  • Business
  • Law Firm and Attorney
  • Others

By Region

  • North America
  • Europe
  • Asia Pacific
  • Middle East & Africa
  • South America

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About Astute Analytica

Astute Analytica is a global analytics and advisory company which has built a solid reputation in a short period, thanks to the tangible outcomes we have delivered to our clients. We pride ourselves in generating unparalleled, in depth and uncannily accurate estimates and projections for our very demanding clients spread across different verticals. We have a long list of satisfied and repeat clients from a wide spectrum including technology, healthcare, chemicals, semiconductors, FMCG, and many more. These happy customers come to us from all across the Globe. They are able to make well calibrated decisions and leverage highly lucrative opportunities while surmounting the fierce challenges all because we analyze for them the complex business environment, segment wise existing and emerging possibilities, technology formations, growth estimates, and even the strategic choices available. In short, a complete package. All this is possible because we have a highly qualified, competent, and experienced team of professionals comprising of business analysts, economists, consultants, and technology experts. In our list of priorities, you-our patron-come at the top. You can be sure of best cost-effective, value-added package from us, should you decide to engage with us.

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