According to recent research by Law.com,  UK lawyers are set to earn more than £1 billion in legal fees from the wave of US-style class actions currently working their way through the Competition Appeal Tribunal (CAT). At the time of the research, nine collective action cases were being heard and a further 19 cases had been lodged. In the UK alone, the top 15 funders wield £2.2bn in assets, according to a report published by RPC in June 2022. This is up 11% from the year before and almost double the £1.3bn reported in 2018.

It’s clear that the litigation funding market is continuing to develop rapidly, with an increasing number of players on both sides of the Atlantic and even with its own dedicated section in the Legal 500.  As a trusted and active recruiter of in-house legal professionals, Marsden is helping to play a key role in establishing a foundation for rapid growth and commercial success in the sector. Marsden’s Megan Williams is fast developing a name for herself as one of the leading recruiters for in-house counsel for litigation funders. Here is her take on the latest trends in the sector:

Secondary funding is becoming more popular

With the number of collective action cases rising, sharing of the risk involved is becoming more and more important. “At the moment, it is generally the case that one litigation funder manages and funds the claim, then if costs become too high, or the case takes too long, a secondary funder might join to help share the risk,” said Megan. Given that funds often manage a portfolio of claims, there is a move towards funders having another coming in at the outset to allow them to share a risk across the board. We’re also seeing a rise in litigation insurance to mitigate the risk when trying to get a new project off the ground.

ESG and crypto cases are on the rise

There has been a huge rise in the number of ESG-related litigations as more and more businesses find themselves facing claims for ‘greenwashing’ or other ESG-related misinformation. For example, one current major high-profile claim is setting out to sue water companies in England for discharging sewage into seas and rivers on behalf of all UK bill-paying households.

“There is an increasing demand for lawyers with ESG experience who can broaden the career options available to them by looking at joining a litigation funder as well as a traditional law firm or in-house legal team. Lawyers with cryptocurrency experience are also in demand as crypto assets have been under increasing scrutiny in the UK,” said Megan.

The landscape of the sector is maturing across Europe

Collective actions are currently keeping the CAT very busy and many of these cases would not exist if it were not for litigation funders being in the position to group them all together, since individuals and companies would be unlikely to afford to bring them otherwise.

In addition, there is current push towards developing unified legislation for the sector as it matures, rather than relying on piecemeal case law. The US law firm Brown Rudnick has recently set up a working group aiming to draft standardised documentation for the UK litigation funding market, in a similar manner to that established for the Loan Market Association.

We will see many legislative changes across Europe this year with EU member states required to implement the Representative Actions Directive and either devise new class action regimes or amend their existing provisions on collective redress.

Corporate and litigation funders would benefit from working more closely together

Historically, corporates are generally very wary of taking on large litigation cases, especially if liquidity is an issue. For example if a corporate wishes to bring a litigation against a supplier it has to farm it out to a law firm for a sufficiently-sized team to manage it, which is very expensive in terms of fees. As Megan notes, “some corporates are now turning to litigation funders directly to manage the due diligence and perform the risk assessments, which means it is more likely that the case will settle relatively quickly and come off the firm’s balance sheet.” Corporates also often have to take out ‘after the event’ insurance and could save this cost by bringing on a funder. Ultimately, corporates could be less wary and build relationships with litigation funders, who in turn need to prove their flexibility and willingness to work in partnership with companies.

As noted in the outset, collective actions will only continue to grow since access to justice by all is viewed as a positive development.  If you are a technical lawyer with an entrepreneurial mindset that wants to be at the cutting edge of new areas such as crypto and ESG then litigation funders can provide the best on-the-job training. “It’s an interesting in-house role with far greater potential for future rewards, since many litigation funders operate on a profit-share basis,” said Megan.

Find out about our work in In-house Recruitment, or contact Megan directly about legal roles in the litigation funding sector. You can also connect with Megan on LinkedIn.