On June 30, 2025, Judge Loretta Preska of the Southern District of New York ordered the Republic of Argentina to hand over its 51 percent controlling stake in YPF, the state oil company, to satisfy a judgment that had already crossed sixteen billion dollars with interest. Fourteen days, she said. A sovereign nation’s crown jewel asset, to be transferred to satisfy a claim that a British-American litigation funder had bankrolled a decade earlier. The Second Circuit stayed the turnover order not long after, which surprised nobody who has watched sovereign enforcement grind through appellate courts. But the number and the mechanics stayed in the room.<\/p>\n
I spend my days advising firms and legal departments on how work actually gets done: intake criteria, matter budgets, resource allocation, the unglamorous plumbing. And I will tell you that the YPF matter is not interesting to me because of Argentina. It is interesting because of the balance sheet behind the plaintiffs.<\/p>\n
That balance sheet belongs to Burford Capital. The case is the clearest single illustration I can point to when a general counsel asks me whether litigation finance is a real line of business or a passing fashion. It is a line of business. It has been for a while. The rest of us are only now updating our operating assumptions to match.<\/p>\n
The underlying facts go back to 2012, when Argentina renationalized YPF and, according to the plaintiffs, skipped the tender offer that its own bylaws required for minority shareholders. Two of those shareholders, Petersen Energia and Eton Park, had gone bankrupt. Their claims were assets in insolvency estates, and Burford acquired the right to pursue them and to collect a share of any recovery.<\/p>\n
In September 2023, Judge Preska entered judgment for the plaintiffs in Petersen Energia Inversora v. Argentine Republic<\/em> (S.D.N.Y. 2023) totaling roughly 16.1 billion dollars across the two claimants. Burford disclosed that its entitlement to the Petersen recovery ran to something like 35 percent, with a smaller cut of Eton Park. Do the arithmetic and Burford’s theoretical share sat in the billions. The company’s own reporting reflected large unrealized gains once the judgment landed, and its stock moved on the news.<\/p>\n Now, an unrealized gain against a sovereign that is fighting enforcement on two continents is not money in a bank account. Argentina appealed to the Second Circuit. The turnover fight over the YPF shares is its own multi-year saga. Burford has said publicly and repeatedly that collection will take time and that the ultimate recovery could be far smaller than the headline. Anyone who has tried to enforce a judgment against a reluctant government understands the discount.<\/p>\n Set the collection risk aside for a second, because the operational lesson survives it. A single case produced a claimed asset larger than the market capitalization of most law firms that will ever exist. It was assembled, financed, and prosecuted by an entity whose entire reason for being is to convert legal claims into portfolio returns. That is not a stunt. That is an asset class behaving like an asset class.<\/p>\n Westfleet Advisors, which publishes the closest thing the industry has to a census, has been tracking the shape of the market for years. Its reporting has put commercial litigation finance assets under management in the neighborhood of fifteen billion dollars and annual new capital commitments in the low billions. Those figures wobble year to year and the definitions are contestable, but the direction of travel has not been ambiguous. The money showed up, then it stayed, then it built infrastructure.<\/p>\n What I want the operations people reading this to sit with is a boring point. When a category of counterparty can write a nine-figure check against the expected value of a lawsuit, the lawsuit stops being purely a legal event. It becomes a financed transaction with a return profile, a duration, and an owner who is not the named plaintiff. Everything downstream of that, from discovery to disclosure to settlement authority, has to account for the owner.<\/p>\n Chief Judge Colm Connolly of the District of Delaware is the reason a lot of firms suddenly care where their funding comes from. In April 2022 he issued a standing order requiring parties in cases before him to disclose third-party litigation funding: the identity of the funder, its address, and whether the funder’s approval was needed for litigation or settlement decisions. He paired it with a separate order pushing on real party in interest disclosures. Two short documents. Enormous downstream effect.<\/p>\n What made Connolly’s orders bite was that he actually enforced them, and he did it in a corner of the docket where the ownership questions had gone soft for years. Delaware is a magnet for patent litigation, and a chunk of that litigation was being filed by limited liability companies with no employees, no operations, and no discernible purpose beyond holding a patent and suing on it.<\/p>\n Connolly pulled the thread on a cluster of these shells: Nimitz Technologies, Mellaconic IP, Lamplight Licensing, and others. He wanted to know who really owned the claims and who was directing them. The name that kept surfacing was Mavexar, an entity connected to the patent monetization operation IP Edge. In a series of hearings in late 2022, the judge asked the nominal owners of these LLCs, sometimes people with no legal background who had been recruited into the role, to explain their control over the litigation. The testimony was, to put it gently, illuminating about how little the named plaintiffs actually knew or decided.<\/p>\n One of the shells sought to shut the inquiry down through the appellate court. In In re Nimitz Technologies LLC<\/em> (Fed. Cir. 2022), the Federal Circuit declined to issue a writ of mandamus stopping Connolly’s questioning, letting the district court proceed with its investigation into who was pulling the strings. The judge ultimately referred conduct for further scrutiny and wrote at length about attorneys and monetization firms structuring cases to obscure control and to insulate the real parties from discovery and from fee exposure.<\/p>\n Here is what I told clients at the time and still believe. The Connolly episode was not fundamentally about litigation funding as a financial product. It was about opacity. A funder that takes a passive economic interest and lets counsel run the case is a different animal from a monetization outfit that manufactures a nominal plaintiff to dodge accountability. The standing order swept both into the same disclosure bucket, and that is fine, because from an operations standpoint the question a court and an opposing party need answered is identical in both cases: who benefits, and who decides.<\/p>\n The practical consequence for my world was immediate. Any firm with a Delaware filing strategy had to build a funding disclosure checkpoint into intake. Not because every case had a funder, but because you cannot certify what you have not documented, and you do not want to discover the ownership chain of your own client’s claim during a hearing in front of a judge who has already demonstrated he will chase it into the ground.<\/p>\n While the federal rulemakers deliberated, the states moved. They moved in two different directions, and if you are managing a national practice you need to keep the two straight because they impose different obligations.<\/p>\n The first direction is consumer protection. Consumer litigation funding is the world of the plaintiff who takes a few thousand dollars against a personal injury case to pay rent while the claim is pending. That market has always attracted regulatory attention because of the fee structures. West Virginia acted years ago. Indiana enacted consumer funding rules that took effect in 2024. A number of states have layered on rate disclosure, cooling-off periods, and formatting requirements for these agreements. That is retail regulation, and it mostly does not touch the commercial funding that finances big-ticket litigation.<\/p>\n The second direction is the one that changed my advice. States started reaching into commercial funding with disclosure and control provisions, and in 2024 and 2025 they wrapped a national-security framing around it.<\/p>\n Louisiana enacted a law in 2024 that requires disclosure of litigation funding agreements and restricts foreign persons and foreign states from funding or controlling litigation, aimed squarely at the anxiety that a foreign adversary might sit behind a lawsuit against an American company. Montana passed its own litigation financing statute in 2025 with disclosure and consumer provisions. And Georgia, as part of a broader tort package, enacted Senate Bill 69 in 2025, signed by Governor Kemp, which requires litigation funders to register with the state, imposes disclosure obligations, and constrains funder control and foreign involvement.<\/p>\n Georgia is the one I point clients to when they want to understand where this is heading, because it combines registration with disclosure. Registration is an operational fact of a different order than a discovery obligation. A discovery obligation is episodic; you deal with it case by case. A registration regime means a funder either qualifies to do business in the state or it does not, and every case it touches inherits the answer. That pushes the compliance question upstream, out of the individual matter and into the counterparty’s own corporate housekeeping.<\/p>\n The foreign-control theme deserves a flat description rather than alarm. Some of the concern is genuine, because sovereign wealth and opaque cross-border capital can in principle sit behind a claim, and the YPF case is a reminder that sovereigns and litigation finance already intersect in strange ways. Some of the concern is ordinary interest-group politics, with defense-side coalitions using the national-security frame to make disclosure of an opponent’s financing harder to argue against. Both things are true at once. My job is not to adjudicate the motive. My job is to make sure the firm knows, before it files, whether its funder’s structure trips a state restriction.<\/p>\n The uncomfortable byproduct of all this state activity is a patchwork. A funder-backed portfolio that spans matters in Delaware, Georgia, Louisiana, Montana, and a dozen states with no statute at all now faces a disclosure map with different rules at each stop. For a legal ops function, patchworks are the natural enemy, because they defeat the whole point of a standard process. You cannot run one intake questionnaire nationwide when the required disclosures fork by jurisdiction. You end up with a matrix, and matrices are where good compliance goes to develop errors.<\/p>\n Strip away the enforcement drama and the regulatory scramble and ask the question that matters most to how legal work gets produced: did funding change which cases enter the system? Yes. Unambiguously. And the mechanism is straightforward once you look at it as a financing problem rather than a legal one.<\/p>\n A meritorious claim that costs four million dollars to prosecute and would return twelve million on a plaintiff’s verdict is, on paper, a good claim. But the plaintiff who cannot spend the four million never gets to find out. Historically that plaintiff had two options: swallow the cost and hope, or hand the case to a contingency firm willing to carry the expense and the risk on its own books. The second option worked, but it limited the universe of cases to what individual firms could self-finance, and it concentrated risk on the firms.<\/p>\n Third-party funding added a third option and, with it, a new set of claims that now clear the filing threshold. The clearest examples fall into a few buckets.<\/p>\n Each of those buckets represents claims that either would not have been filed or would have been filed and abandoned under settlement pressure without outside capital. That is the substantive shift. Funding did not just make existing litigation more comfortable to finance. It expanded the set of viable claims, and it did so specifically at the expensive, long-duration end where the old contingency model strained.<\/p>\n The defense bar frames this as the manufacture of litigation, and there is a real version of that critique, which the Connolly hearings exposed in the patent-troll fact pattern. But the honest version of the story is mixed. Some funded cases are opportunistic and thin. Many are strong claims held by parties who simply lacked the capital to press them against a better-resourced opponent. Capital access is not neutral, and a funding market that closes the gap between a claim’s merit and a claimant’s bank balance is doing something a functioning justice system arguably should want done. The problem was never that the claims got financed. The problem, where there is one, is that nobody could see who was financing them and whether that financier controlled the case.<\/p>\n From an operations chair, the case-selection change has a second-order effect that gets less attention. When a funder underwrites a matter, someone on the funder’s side has already run a hard-nosed diligence process on the merits, the damages model, and the collection prospects. Funders reject the large majority of what they see. So a funded case arrives pre-screened by a party whose money is at risk, which is a very different quality signal than a case filed on hope. I have watched in-house teams start to treat a claimant’s ability to attract institutional funding as itself a data point about the claim’s strength. That is a rational read, and it changes how the other side prices settlement.<\/p>\n All of this state and district activity exists partly because the federal system has not resolved the disclosure question at the national level. The Advisory Committee on Civil Rules has been chewing on whether to amend the Federal Rules of Civil Procedure to require disclosure of third-party litigation funding for years. A subcommittee has studied it. Interested groups have flooded the process with comments in both directions. As of late 2025 there was no adopted federal rule mandating funding disclosure across the board, only the patchwork of local orders like Connolly’s and the growing pile of state statutes.<\/p>\n I have opinions about why the federal process stalls, and they are not about the merits. They are about scope. The funders argue, with some force, that their financing is work-product-adjacent and that routine disclosure would hand opponents a strategic map of a plaintiff’s resources and resolve. The defense side argues, also with some force, that a court and an opposing party are entitled to know who controls a case and who has a financial stake in its outcome, for the same reasons we require corporate disclosure statements and recusal-relevant financial information. Both positions contain a true thing, and a national rule has to draw a line that neither camp loves.<\/p>\n My process instinct is that the sustainable line is the one Connolly effectively drew: disclose the existence of funding, the funder’s identity, and whether the funder holds control or settlement rights, while protecting the substantive terms and the diligence work-product behind them. That is enough to answer the questions the system actually needs answered, which are about control and conflicts, without turning every funded case into a strip search of the plaintiff’s financing strategy. Existence, identity, control. Not the whole agreement by default.<\/p>\n Until a federal rule lands on something like that, firms are stuck operating to the most demanding standard they might face. If you litigate nationally, you cannot build one process for Delaware and another for everywhere else, because your matter mix moves and your assumptions rot. The rational operational move is to document funding relationships at intake for every matter, structure the file so that identity and control information can be produced quickly, and wall off the substantive terms so they are not casually waived. Build to the ceiling, not the floor. It costs a little more up front and it saves you from improvising in front of a judge who has read the standing order more carefully than you have.<\/p>\n I am impatient with two stories about litigation finance, and they annoy me in equal measure.<\/p>\n The first is the panic story, in which funders are predatory outsiders corrupting a pure adversarial system that never had money problems before they showed up. That is nostalgia dressed as principle. The system always ran on money. Contingency firms have financed plaintiffs for a century, insurers have financed defendants forever, and the biggest defendants have always been able to spend a smaller plaintiff into submission regardless of who was right. Outside capital did not introduce money into litigation. It introduced a new class of lender and made the existing money visible enough to regulate. The visibility is the improvement, and the Connolly hearings are the case study in why visibility matters more than the financing itself.<\/p>\n The second story is the boosters’ version, in which funding is a frictionless democratizing force and any disclosure requirement is an attack on access to justice. That is hype, and the YPF numbers are why it should make you cautious. When a single financed claim can generate a paper asset larger than most law firms will ever be worth, you are looking at an industry with the incentives of an investment fund and the subject matter of the courts. Investment funds optimize for return. Courts are supposed to optimize for something else. Those objectives overlap often and diverge sometimes, and the places where they diverge, control over settlement, the manufacture of nominal plaintiffs, the appetite for cases that maximize expected value regardless of social cost, are exactly the places a mature disclosure regime has to watch.<\/p>\n So here is my actual position, from the operations chair rather than the ideology chair. Litigation finance is now infrastructure. It is not going away, it will keep expanding the set of claims that get filed, and it has already changed how sophisticated parties read the strength of an opponent’s case. Treat it that way. Build the intake checkpoint. Document the funding relationship the way you document a conflict check, because functionally it is one. Keep a jurisdiction matrix that tracks the state statutes and the local standing orders, and update it every quarter, because it will keep changing while the federal rule stalls. Assume that a court can and eventually will ask who owns the claim and who controls the settlement, and structure your files so the answer is a retrieval task and not a fire drill.<\/p>\n The firms that struggle with this will be the ones treating each new disclosure obligation as a surprise, litigating the principle in the abstract while their opponents quietly build the process. The firms that do well will be boring about it. They will have decided, before Judge Connolly or the Georgia registration regime or the next state statute forced their hand, that knowing who is behind the money is simply part of knowing your own case. That is not a concession to the funders and it is not a defeat for them either. It is just competent file management applied to a counterparty that got large enough to matter. The money already arrived. The only open question is whether your process noticed.<\/p>\n","protected":false},"excerpt":{"rendered":" Burford’s YPF judgment, Judge Connolly’s Delaware disclosure orders, and a wave of state statutes moved third-party funding from the margins into ordinary case-selection math.<\/p>\n","protected":false},"author":1,"featured_media":67,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":["post-27","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-law-firm-industry"],"yoast_head":"\nDelaware decided it wanted to see the wiring diagram<\/h2>\n
the states started writing the rules the federal system would not<\/h2>\n
what the money actually changed about which cases get filed<\/h2>\n
\n
the disclosure rule that keeps almost happening<\/h2>\n
where I actually come down on this<\/h2>\n