As with any new industry, there is much risk and trepidation with respect to whether (i) the concept will work, (ii) the concept will be profitable, (iii) the concept will be scalable and (iv) the concept will attract investment support. Oh, and in the case of litigation finance, (v) whether the concept is in fact legal.

Slingshot Capital and Litigation Finance Journal recently undertook a survey of commercial litigation finance participants to obtain a deeper understanding of the extent to which demand for financing had changed as a result of the current Covid-related financial crisis.

The recent unprecedented and rapid strengthening in the US dollar, as depicted in the following 6-month graph of the US dollar index (USD as compared to a basket of currencies), created a significant 8% swing in currency rates in a matter of days.

Slingshot Capital and Litigation Finance Journal recently undertook a survey of commercial litigation finance participants to obtain a deeper understanding of the extent to which there is demand for third-party co-investment capital.

As Covid-19 has taken the planet and the legal community by surprise, I think there are some lessons learned from private equity that can be applied to litigation finance. In short, focus on cash – its collection, generation, distribution and availability.

As a result of the prior two articles concerning portfolio theory in the context of litigation finance, which can be found here (part 1) and here (part 2), I received interest from readers asking me to provide numeric examples to illustrate the points in the article with respect to portfolio construction and concentration limits.

In part one of this two part series, which can be found here, I explored a variety of portfolio theories and applied them to the litigation finance asset class. This second article continues the application to commercial litigation finance and discusses implications for portfolio construction.

Portfolio risk is generally influenced by three main factors: volatility of results, correlation (of outcomes within a given portfolio) and the size of the portfolio.  For the purposes of this article, I have assumed that correlation within a portfolio is non-existent, as each case stands on its own and is not influenced by others in the portfolio.

From the first time I was introduced to litigation finance, be it consumer or commercial, I was quite surprised by the case studies.  What surprised me was not the outcome or the quantum of damages or the amount of profit being made by lawyers or litigation funders.

The interesting aspect of Indemnities is in trying to estimate the returns inherent in providing the protection.  Different than most traditional litigation finance which requires the funder to finance hard costs …

I am often asked about the size of the commercial litigation finance market by individual and institutional investors alike, whether relative to the US market or other large global markets. I often hesitate to answer the question …

One of the most significant trends in litigation finance for fund managers over the last few years has to be the strong trend toward “portfolio financings”. Litigation finance can be broadly segmented between …

I was speaking recently with a local litigation finance manager about the concept of value of a piece of litigation in the context of litigation finance. As I thought more about the discussion and the implications for settlements and maximizing outcomes …

There is no other way to express it; the US commercial litigation finance industry is under assault from a variety of different interest groups and the industry lacks a homogenous voice to counter the opposition and to communicate its strong benefits.