“An old concept, third-party litigation funding, has been modernized in a way that has serious implications for professional liability,” Goldberg Segalla’s Andrew P. Carroll writes in Professional Liability Defense Quarterly.
Andrew, a member of the firm’s Management and Professional Liability practice, focuses on modern litigation funding and “what happens when billions of dollars are suddenly injected into the civil litigation system by non-litigant stakeholders.”
Andrew examined publicly traded litigation financer Burford Capital’s confrontation with short attackers in 2019 points to the precipitous downfall of investment company Long-Term Capital Management in 1994 as an indicator of “what will likely occur in litigation finance”—especially in a market featuring historically low Federal Reserve interest rates and generally disrupted by the COVID-19 pandemic.
“With their own investment commitments growing exponentially, and competition from various angles, Burford will surely see a shortage of multimillion-dollar commercial cases and look for new and creative ways to deploy its capital,” Andrew predicts, pointing to the company’s 2019 announcement of intent to explore insolvency and bankruptcy investments, now a “fertile ground” because of COVID-19.
“[W]e have a perfect storm brewing wherein a natural spike of professional malpractice claims from the downturn will now be combined with increased resources to fund such lawsuits through third-party financiers,” Andrew writes. “[E]ven if Burford itself does not drive the gold rush toward middle- and small-market professional malpractice claims, it is almost certain that others will … As this occurs the landscape of professional malpractice litigation will change for all claims, and attorneys and insurers alike must be prepared for the impending shift in underwriting and defense strategy.”
In Part II of his article, Andrew will discuss how litigation finance will increase both the volume and value of claims, as well as the methods available for evening the playing field for malpractice carriers and defense attorneys alike.”
Andrew P. Carroll is a member of Goldberg Segalla’s Management and Professional Liability practice based in Philadelphia. He focuses on handling matters relating to professional liability, real property, and commercial litigation. His professional liability practice includes representing attorneys, accountants, brokers, and directors and officers in civil litigation and investigation matters. Additionally, he handles complex commercial litigation matters stemming from various claims of statutory violations, contractual disputes, and alleged breaches of fiduciary duties.