As the close of an unparalleled year draws near, the COVID-19 pandemic continues to affect law firms and corporate clients navigating an uncertain economy. Layoffs and pay cuts remain a possibility for firms attempting to stabilize their balance sheets. Even as clients begin to see growth rebound, they may be slower to pay their legal bills, leaving attorneys caught between the need to collect and the desire to preserve strategic relationships. One survey conducted this year found more than half of law firm executives willing to offer discounts in exchange for early payment.

In reality, many law firms are running up against the same liquidity constraints hindering numerous business sectors. A recent report, in which nearly 50% of attorneys claimed they are more likely to seek external capital, shows law firms thinking beyond conventional financial solutions to capitalization problems. As we gradually begin to emerge from the pandemic, we believe third-party litigation funding will help these partners ramp up firm growth and assist clients in securing fair recoveries.

The litigation finance industry remains highly active in terms of demand from funding recipients. Several providers have set ambitious fundraising targets this year, reflecting strong investor interest in the asset class. Meanwhile, courts and bar associations continue to recognize the potential upside of increased access to third-party funding. With an eye toward the pivotal months to come, let us examine how these and other trends may shape the use of litigation finance in 2021.