Third-Party Litigation Funding and Its Impact on Commercial Auto

According to Bloomberg, as of 2022, the TPLF industry is estimated to be worth approximately $39 billion worldwide.

TPLFs such as Burford Capital are publicly traded, and college endowments have even taken shares in TPLFs. Thus, TPLFs have ‘gone mainstream,’ and there is no indication that the TPLF industry is slowing down.

While there are risks inherent in litigation funding, according to a report by Swiss Re, internal rates of return on litigation funds are up 25% in recent years. Further, despite the negative impacts of the pandemic, roughly $2.5 billion was invested into TPLFs in 2020, and investments grew by 16% in 2021.

TPLFs are so prevalent today that they often advocate in front of legislature and bar organizations and now have their own trade lobby, the American Legal Finance Association (ALFA).

Due to the rapid growth of TPLFs and their increased involvement in litigation, cases often take a year longer to resolve than they would if a TPLF was not involved in the case. But the additional time spent litigating the case is not necessarily producing a benefit to funded parties (i.e., higher recoveries for the plaintiffs).