Litigation Finance

3 Takeaways From LITFINCON

While litigation finance remains a space full of opportunity, there is also no doubt that 2023 was a year of retrenchment and focus in the industry,

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Intellectual PropertyBack in late January, I teased on these pages the agenda for the third installment of LITFINCON, the perennial world-class litigation finance conference held in Houston. As with last year and the year prior, I am pleased to report that this year’s LITFINCON was another runaway success, with a mix of content and networking that made the trip to Houston well worth it. Like the two prior installments, LITFINCON’s hallmarks remained in place — from the posh venue (where this year’s NBA denizens du jour were the San Antonio Spurs and LA Clippers) to the unique conference diversions (a pre-event Texas Toast and another lunchtime live stand-up comedic performance) to the varied and interesting panels that I discussed in my event preview column of last November. I also heard that the WOLF (Women of Litigation Finance) breakfast was a sold-out start to the first day of the conference. Taken all together, the time flew by, capped by the Casino Night networking event that was full of good cheer and socializing among the attendees, who apparently hailed from over 140 companies or firms.

The camaraderie amongst LITFINCON attendees was, of course, most welcome. At the same time, there was also an air of seriousness to the proceedings, spurred on by the collective experiences of those operating in the litigation finance industry in the past year. While litigation finance remains a space full of opportunity, there is also no doubt that 2023 was a year of retrenchment and focus in the industry, driven by a need to deliver returns to early investors even as the legal system continues to reset post-pandemic. Add in the specter of increased regulation, an election year, and the market-changing potential engendered by the entry of insurance options around litigation finance and LITFINCON’s tone of measured optimism for 2024 and beyond felt on point. And in case IP litigators needed a reminder, once again the importance of the patent litigation ecosystem to the health of the burgeoning litigation funding industry in America was reinforced by various speakers.

For my first takeaway from this year’s conference, I would start — as LITFINCON itself did — with insights from the opening panel of the conference, the Judicial Panel styles as “Deciders: A View from the Bench.” As usual, the insights on offer were as varied as the composition of the panel itself, with a sitting district court judge joined by a Texas Supreme Court justice, an appellate jurist from a Texas appeals court, and a federal magistrate judge from the much-discussed Western District of Texas, home to the USA’s busiest patent litigation docket. Despite sitting in various judicial capacities, the panelists shared some common ground in discussing their views of litigation finance as a tool to advance the worthy cause of increased access to justice for under-resourced litigants with meritorious legal claims, as well as with respect to the fact that they have not had to deal (yet) with much in the way of disclosure fights in funded cases. At the same time, there was an undercurrent of concern expressed around the ethical issues that the presence of litigation finance could create, including with respect to a potential scenario where a large-scale buyside investment group or hedge fund decides to invest in, or even buy, a leading law firm. At bottom, however, there was a sense that litigation finance is something that the judiciary recognizes is here to stay. As a result, helping the monopoly that is the legal profession move forward with additional resources available to countermand the “rich husbands in a divorce dispute” approach to litigation espoused by many commercial defendants was discussed as a benefit to litigation finance, albeit one that required stewardship by the judiciary to avoid abuse. It was also clear that, at least in Texas, there may be some appetite for using existing tools for regulating the legal profession as a primary means of regulating the litigation finance industry as well. What that might look like is an interesting question to monitor.

For our next takeaway, I would like to highlight the considered diversity of viewpoints that was found on many of LITFINCON’s panels. In particular, I want to spotlight for this audience both the IP panel, which addressed at length a variety of hot-button topics of interest to IP litigators, as well as the panel I moderated, which debated the merits of litigation finance’s impact on the legal industry. We can start with the IP panel, which comprised a group of seasoned IP litigators with experience handling funded cases, as well as the head of patent-related investments at one of the industry’s largest pure-play litigation funders. There was plenty of discussion of the risk factors inherent in big-ticket patent litigation, including the fact that many cases take quite a bit of time to resolve in this age of IPRs and crowded court dockets. The panel also recognized that with the extra time to resolution comes increased costs, creating an increased demand cycle for litigation finance to help carry such cases forward. Good news for funders, as well as the law firms and patent owners they are choosing to fund.

As with the IP panel, the panel I moderated had an interesting discussion of various hot-button questions surrounding the litigation finance space. As a group, the panelists shared their diverse viewpoints on questions around whether litigation finance is truly increasing access to justice, or whether litigation finance is leading to the filing of more meritorious cases, or even whether the industry needs additional regulation. The audience benefited from hearing answers to those questions from a practicing litigator, a litigation funding executive, and the head of IP policy at one of America’s most important technology companies, respectively. It is a credit to LITFINCON that such a diverse group of perspectives could share the stage in such a respectful and engaging way — as was true with all the panels throughout the conference.

Lastly, for the final takeaway, I’d like to focus on a leitmotif that played throughout the conference in response to the various calls for, or predictions of, increased regulation of litigation finance as an industry. Over and over again, the need for the litigation finance industry to do a better marketing job in terms of highlighting its successes and potential social benefits was highlighted as an important rejoinder to calls for structural reform. By now, there are surely positive results in cases for worthy clients that can be spotlighted, where, but for the presence of litigation funding, those claims would not have been brought. Yes, public relations matter, even for — or precisely needed most by — an industry that has seen explosive growth in a very short time. Let’s see if we start to hear more vigorous public pushback from industry participants in response to the claims advanced by opponents of the industry.

A lot more can be discussed with respect to this year’s LITFINCON, but I hope the above at least gives a flavor for the level of discourse at this important industry event. As good as this year’s event was, I would continue to expect that future LITFINCONs, whether in Houston or in the  Los Angeles event this September, will continue to exceed expectations as a must-attend event in the litigation finance space.

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Please feel free to send comments or questions to me at [email protected] or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at [email protected] or follow him on Twitter: @gkroub.

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