Litigation Finance and the Pandemic's Long Reach.

The Pandemic’s Long Reach

How Litigation Finance Met the Challenges of the Pandemic and Grew to a Multi-Billion Industry

The pandemic has affected nearly every sector of the economy. No industry was left unmarred during COVID-19's seemingly never-ending reach across the globe. Now, two years after the first cases were reported, the pandemic still has lingering effects.

Litigation financing grew exponentially during the COVID-19 crisis, with an unprecedented number of funders joining the ranks.

Several factors seem to have encouraged the growth over the last two years, including an increase in:

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Other factors such as regulatory changes and increased industry awareness likely also played a significant role.

Increase in Claims

The pandemic gave rise to several kinds of new cases, including those related to business interruption claims, forced return to work, supply chain disruptions, and more. Litigation continues to move forward with no signs of slowing as a result of COVID-19.

Increase in the Need for Funding

As state and federal agencies began to grapple with how to protect people from the virus, many businesses were forced to close their doors. Law firms were no exception; even courts shuttered their rooms for a short time at the beginning of the first wave.

Law firms had to immediately pivot to keep up. Keeping operations running smoothly and payroll on time meant an immediate need for capital. Litigation funders stepped in when other lenders refused or were unable to given the economic uncertainty beginning in March 2020.

Increase in Litigation Costs

Litigation is only getting more expensive. For smaller and mid-size firms to compete, additional funds were required. Projections for 2022 show that costs will only continue to rise, increasing the need for alternative lenders.

Increase Length in Litigation

Even prior to the pandemic, cases were taking longer to close. Most hearings were pushed for months in the middle of 2020, with courts still only handling emergency proceedings. Today, courts are still backlogged, trying to play catchup. Unfortunately, little can be done to speed up the amount of time it takes to fully litigate a serious matter.

Cases, specifically personal injury and medical malpractice claims, take months, if not years, to settle or reach a jury. The increase in the amount of time it takes to close a case can drain a law firm that usually fronts the litigation costs. Third-party funders help to alleviate this burden by providing capital to cover these costs and operating costs in exchange for a portion of the proceeds from the case.

Final Thoughts

As during other times of financial hardship, litigation financing surged during the pandemic. Several factors likely contributed to the growth, but it is unlikely to stop even as the global economy recovers, and the pandemic recedes.

To learn more about litigation funding, contact Amicus Capital Group at (877) 926-4287 to find out how we have been Transforming the Business of Law? for over 25 years.