Nobody Knows Litigation Finance Size, but It’s Not $85 Billion

June 11, 2020, 4:51 AM, By Roy Strom, Reporter, Bloomberg Law –  There is no consensus figure for how much money investors plow into U.S. lawsuits each year.

But it is not $85 billion, a number recently put forward as the “addressable market” for litigation finance by a publicly traded litigation financier.

Omni Bridgeway, which merged with IMF Bentham in November, has used that number since at least August, and it was republished in an investor presentation last month. The figure roughly represents the total annual fees estimated to be paid to U.S. plaintiff lawyers.

Paying plaintiff lawyers in exchange for a portion of their case’s rewards is, of course, what litigation funders do with much of their money. But the $85 billion figure may make members of the industry stand up and take notice.

That’s because the industry spent only about 2.7% of $85 billion during a 12-month span that started in mid-2018, according to a Westfleet Advisors survey.

And that raises some nagging questions for the nearly 15-year-old litigation finance industry in the U.S. Does that low penetration rate portend explosive growth ahead? Or is it an indication that litigation finance is a niche product most plaintiffs and lawyers find unnecessary?

Debate around the size of the addressable market is another example of questions surrounding metrics in the litigation finance business. When Westfleet, a broker in the industry, released its $2.3 billion figure, Burford Capital called “obviously self-interested” the survey’s conclusion that the high levels of capital in the industry make it a “buyer’s market” for claim holders.

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