A review of the past six months has aptly demonstrated the effects of increased competition within the funding market for commercial litigation and arbitration. As the largest broker in the market we’ve seen a 28% increase in the volume of cases receiving at least three offers of funding compared to the same period in 2012. With ATE insurance the competition appears even more intense with an increase of 34% in the number of applications receiving more than 3 offers. In a number of recent examples for commercial clients requiring not just adverse cost insurance but also insurance for their own legal fees, we’ve seen instances where 6 insurers having been competitively tendering to write the case.
The deal flow from litigation boutiques has also helped fuel the market. With new litigation and arbitration boutiques being established by various esteemed names transferring from a number of Global 100 firms, the surge in competition is unlikely to slow down any time soon. The funding market has been stifled to a degree by the same conflict issues facing an increasingly frustrated pool of litigators. Cases can be rejected not on merit but by a lack of confidence in the legal team. This no doubt explains why the conversion rate of applications from a number of boutiques with highly experienced litigators with subject matter expertise is strong.
Branding alone, it appears, is not sufficient to get a deal over the line. Faith in the litigators can be the deciding factor, particularly for trickier cases with complex issues that ordinarily a funder might shy away from, are now being funded due to the confidence in the legal team. More litigation boutiques start-ups are on the horizon, and with their focus on capitalising on available alternative fee arrangements (retainers, insurance, funding, etc.) in their tenders, the question is how aggressively will other practices respond?
If you have a case in need of litigation funding or insurance please contact Katherine Hemsley or James Delaney to discuss further.