New technology is likely to be one of the most significant factors driving the rise of the litigation funding market over the next five years, industry experts say.

The increasing prominence of third-party funding has been accompanied by a rise in the technology and data tools that have the ability to predict, or at least indicate, the outcome of cases.

In May this year a machine learning study led by Daniel Katz, a law professor at the Illinois Institute of Technology in Chicago, confirmed that it is possible to use historic data to predict, with a high degree of accuracy, the future decisions of the US Supreme Court.

Katz’ study used the Supreme Court Database, which has case data stretching back to 1791, to create an algorithm designed to predict any justice’s vote. The model predicted more than 240,000 justice votes and 28,000 cases outcomes over nearly two centuries (1816-2015) with 70.2 per cent accuracy at the case outcome level and 71.9 per cent at the justice vote level.

A growing number of litigation funders say they are confident that new technology such as this will ultimately help them mitigate the gamble that is litigation and increase the likelihood that they will back future cases.

John Byrne, co-founder of Therium Capital Management, which has helped launch legal proceedings against Volkswagen and Bosch in the Nertherlands, said he believed the use of external funding would become much more widespread as funders learn to minimise uncertainty through the use of technology.

Craig Arnott at Burford Capital added that the key benefit of artificial intelligence (AI) is that it augments what remains a fundamentally judgement-based business. However, he stressed that the days when a robot could replace a lawyer remain far off in the future.

“At the scale of commercial litigation at which Burford invests, the business of litigation finance depends on specialised expertise and human judgement, not algorithms, and indeed this insight and experience are highly valued by our clients and the firms with which we work,” Arnott added.

“Prediction is fantastic but we are not there yet,” echoed Byrne. “It is a least five years away, but what we do have now is probability.”

This year’s The Lawyer’s Global Litigation 50 report, produced in association with FTI Consulting and published next week, focuses on the inexorable rise of technology across all stages of the litigation process.

It analyses in detail how the world’s leading law firms are utilising new technology to deliver services to clients. It also reveals how several firms are already exploring ways of using historic data to predict the outcomes of cases or provide clarity and predictability of bills.

Additional reporting by Alexandra Rogers

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