The litigation finance industry is experiencing a significant downturn after previously anticipating substantial growth in early 2024. Hedge funds and other capital sources are reportedly reducing their investments, leading some firms to halt fundraising efforts and explore alternative strategies for generating cash. The industry, valued at $US20 billion, connects investors with lawyers pursuing cases of corporate malfeasance. Harbour Litigation Funding is one of the world’s largest privately-owned litigation finance firms, channeling capital from investors to lawyers chasing corporate malfeasance.
According to Bloomberg interviews, the sector is grappling with regulatory changes, decreased payouts, and extended trial durations. Ellora MacPherson, managing director and chief investment officer at Harbour Litigation Funding, noted the increasing difficulty in raising private capital across markets. She stated that there is less traditional capital generally available.
MacPherson also noted that investors are seeking more predictable outcomes. They now want alternative deal structures such as insurance-backed arrangements, which can reduce risk. Industry representatives warn that a contraction in litigation finance could diminish the ability of consumers and workers to defend themselves against large corporations involved in environmentally and socially damaging activities.
