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When Investors Cut Out the Litigation Funder: Who Underwrites Litigation Risk and Case Duration?
Date:
October 28, 2026
Author:
Roni Dersovitz, Esq.
According to Bloomberg, litigation finance broker Risk Factor Management describes the trend plainly: investors are looking for ways to cut costs and fees, and removing the intermediary is one way to do it. Concrete examples have already surfaced in court filings: HPS Investment Partners, a BlackRock subsidiary, advanced funds on a judgment in a high-profile Florida case, and JPMorgan Asset Management advanced money to two mass tort firms against expected attorneys' fees.
Litigation funders do more than deploy capital — they underwrite two distinct risks simultaneously: whether a case resolves favorably, and how long that resolution takes. Westfleet's own founder, Charles Agee, told Bloomberg that underwriting litigation is fundamentally different from underwriting credit, and considerably harder to do well. That distinction is exactly what a traditional funder's general partner role exists to manage.
Investors going deal-by-deal are, by definition, choosing to evaluate that risk themselves, case by case, without the pattern recognition a dedicated funder builds across hundreds of matters. Investors have grown tired of long durations and prefer deals they can evaluate on their own terms, but preferring to evaluate risk directly isn't the same as being equipped to price it correctly.
Bloomberg reported in May 2026 that distressed-debt specialists including Davidson Kempner and Attestor are now buying litigation finance claims at valuations as low as 10 cents on the dollar, with some buyers taking on assets for free in exchange for a contingent payout alone. That dislocation is the clearest evidence available that outcome and duration risk in litigation finance are genuinely difficult to underwrite — difficult enough that even experienced funders have mispriced them.
It's telling that, per Bloomberg's July report, direct investors are leaning heavily on insurance products to protect against the very outcome and duration risk they've chosen to underwrite themselves — ultimately an added cost layered on top of a strategy meant to reduce costs.
For firms that depend on financing across an active, ongoing portfolio rather than a single deal, this shift matters. Deal-by-deal investors are structured to evaluate one case at a time and therefore not to serve as a durable, working-capital facility across dozens of matters at varying stages. As traditional funders face their own capital constraints, firms relying on financing for pending litigation may find both sources less predictable.
RD Legal Funding provides tailored capital solutions for law firms by accelerating access to post-settlement/judgment and earned fees. We understand that managing a successful legal practice requires more than just winning cases; it requires strategic financial planning and reliable capital partnerships.
To learn more about strategic options for your practice: Phone: (800) 565-5177 Email: info@legalfunding.com Website: www.legalfunding.com
Roni Dersovitz is the founder and CEO of RD Legal Funding, a pioneer in providing innovative liquidity solutions for contingency law firms, settlement claimants, and legal receivables. With over 25 years of experience in litigation finance, Roni has helped transform legal victories into immediate financial results for thousands of clients. To learn more, visit www.legalfunding.com or contact us at info@legalfunding.com or (800) 565-5177.
Sources: Emily R. Siegel, "Investors Cut Out Litigation Funders to Bankroll Cases," Bloomberg (July 20, 2026); Bloomberg, "Hedge Funds Make Their Move as Litigation Finance Assets Slump" (May 11, 2026); Westfleet Advisors, 2025 litigation finance market data as cited in Bloomberg.
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