Commercial litigation is searching for private capital to bring more punch to cases brought against companies over their climate records. Litigation finance – whereby investors share in the proceeds of any successful cases – has been growing since 2008, and funds that finance ESG litigation have entered the market.
An ESG litigation fund highlighted in our report is similar in concept to a private equity fund.
By 2020, there were 46 litigation finance fund managers. The US litigation funding market is about four times that of Europe, but interest here is increasing, and the topic is taking up a greater share of legal professionals’ time. Germany is the largest market, but assets held by the top 15 UK litigation funders rose by 46% between 2018 and 2020.
Investors stand to gain not only returns of more than 20% but also a positive reputation from making positive ESG impacts.
However, returns are volatile. More than 34% gain negative returns, and a failed case can mean losses of 85%.
Nick Fitzpatrick, Group Editor, Funds Europe
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