Inigo: Litigation funders to back 10% of securities class actions in 2025

By Mia MacGregor

Aug 14 - (The Insurer) - Litigation funders are predicted to fund one in 10 securities class actions in 2025, according to London-based specialty insurer Inigo Limited.

The prediction follows Inigo's fourth annual Defense Counsel Survey, which highlighted growing political and economic uncertainty and the expansion of litigation funding as key drivers behind an expected rise in securities class actions.

Half of the survey respondents anticipate greater involvement from third-party funders, which is likely to influence plaintiff lawyers' strategies.

Additionally, nearly 80% of participants noted an increase in the number of plaintiffs’ law firms entering the space, with firms adopting more aggressive litigation tactics, such as higher initial settlement demands and less willingness to negotiate.

The survey revealed that nearly 72% of respondents foresee an increase in new claims over the next year, up from 25% the previous year.

Respondents cited the slowing U.S. economy as a major factor, as it could hinder U.S.-listed companies from meeting earnings guidance, compounded by reduced oversight due to the shrinking of the SEC and DOJ.

However, state attorneys general and plaintiffs’ firms, many staffed by former federal lawyers, are expected to fill the void, with more than 75% of respondents predicting an uptick in antitrust claims against companies perceived to be controlling markets.

Additionally, 73% of respondents expect AI to become central to securities litigation, pointing to risks like AI washing and missed earnings. Inigo noted that nine AI-related cases were filed in H1 2025, compared to 15 in 2024 and seven in 2023.

Inigo predicted a return to pre-pandemic levels of securities class action filings in 2025, driven by increased activity from state attorneys general, despite a decrease in new enforcement actions by the SEC.

The report also highlighted that, for the first time, non-U.S. issues such as tariffs and global tensions are influencing U.S. securities class actions.

“Defense attorneys say directors and officers face two key risks: whether to disclose the impact that tariffs are already having on their businesses and how to caveat earnings guidance amid global uncertainty. Both could trigger more investor lawsuits over alleged misstatements, defense attorneys believe,” the report stated.

Inigo forecasted five or more securities class action filings related to tariffs or geopolitical issues in the next 12 months.