A New Way to Invest Despite an Unpredictable Market

Litigation Financing Offers the Promise of High Returns Even During Economic Downturns

Litigation financing or third-party legal funding is nothing new, but few investors knew it existed until now. Today, the estimated multi-billion-dollar global industry is making headlines for investment opportunities that are uncorrelated to the traditional market and economic conditions.

At Amicus Capital Group, LLC, we have been at the forefront of litigation financing for over 25 years. Our industry experts have been Transforming the Business of Law? for law firms of every size, ensuring unparalleled access to justice. If you want to learn more about how we can help grow your law firm, contact our office at (877) 926-4287.

Old Idea, New Opportunity

For many law firms, litigation financing has proven a critical lifeline enabling them to take on more cases, fully litigate valid claims, and even the playing field against the deep pockets of insurance giants. For many investors, third-party legal funding is something relatively new.

Sophisticated investors looking to diversify their portfolios have sought options that can withstand market conditions, particularly considering the economic instability caused by the COVID-19 pandemic. Litigation financing presents an appealing opportunity with the potential for high returns.

Why Litigation Financing?

Litigation financing is enticing to investors for a number of reasons. As highlighted in Business Day’s recent opinion article “Courting success: litigation funding a fresh alternative to stock market," returns from these investments are not correlated to the stock market or a downturn in the economy.

With litigation funding, rates are based on things such as the merits of the case, precedent, and the jurisdiction where the claim is being heard. Returns are not affected by instability in the market. During the 2008 financial crisis and throughout the Coronavirus pandemic, the industry has proven to be relatively recession-proof, continuing to boom despite an unpredictable economy and volatile market.

When law firms look to reduce operational expenses, litigation financing helps provide access to capital and minimize risks associated with cases requiring lengthy litigation.

What Are the Risks?

As noted in Business Day, investment in litigation financing can be highly profitable for certain investors. Cases with strong legal merits yield returns that may “double, triple, or quadruple” initial investments, but there are risks. While investment in these kinds of alternative assets can help to diversify a portfolio, they are generally not suitable for unsophisticated or unaccredited investors.

Litigation funding deals vary and can be provided with or without recourse to the law firm. Third-party lenders have helped mitigate these risks by providing investment opportunities in a portfolio of cases instead of a single claim. Still, investors should be aware of the potential for capital losses.

Investors should also know that claims may take years to payout. Litigation has always had an extended time horizon and is only taking longer given court backlogs and procedural delays from the Pandemic. While cases will resolve, an investor should not expect to see a quick return.

Final Thoughts

For the investor with the appropriate risk tolerance and portfolio, investment in litigation financing is a win-win. Litigation funders have highly experienced team members who evaluate the merit of each case to determine the probability that it will succeed. Thus far, it seems to be an effective formula since, as reported by Business Day, it is estimated that the industry has an annual growth rate of around 40 percent over the last decade.

If you are interested in learning more, contact Amicus Capital Group, LLC at (877) 926-4287. We offer innovative solutions for law firms nationwide. Call now to see how attorneys, clients, and investors benefit from litigation financing.

This blog post does not contain legal or financial advice. Author and publisher disclaim any and all warranties, liabilities, losses, costs, claims, demands, suits, or actions of any type or nature whatsoever, arising from or any way related to this blog, the use of this blog, and/or any claim that a particular technique or device described in this blog.