Editor Nick Rowles-Davies sat down with regional litigation funding experts Marina Gouveia and Federico Muradass of Loopa to talk the exciting evolution of South America’s legal finance market.

Gouveia and Muradas discusses how litigation funders are assessing opportunities across key jurisdictions including Brazil, Argentina, Chile, Colombia and Peru. 

They explores the distinction between traditional litigation funding and Brazil’s large precatórios market, while highlighting the increasing importance of arbitration across the region. The conversation also examines regulation, enforcement risk, capital formation and where funders are finding the most attractive opportunities as the South American market continues to mature.

Nick Rowles-Davies: Marina, before legal finance you practised as a lawyer in Brazil and qualified in Portugal, with a master’s at Carlos III in Madrid focused on mediation and ADR. How did that path lead you into litigation funding rather than into a disputes seat at a firm?

Marina Gouveia: Before entering litigation funding, I spent over four years as a case manager at CAM-CCBC, the leading arbitration institution in Latin America. I then moved to Spain to complete a master’s degree at Carlos III University, where I collaborated with the Secretariat of CIAM before joining the Swiss-Italian team at the ICC in Paris. Although I had experience as a lawyer in Brazil, most of my career was spent within arbitral institutions.

While I was at the ICC, Fernando, one of Loopa’s founders, contacted me through LinkedIn. His message immediately caught my attention because my master’s thesis focused on third-party funding, mediation, and settlement dynamics, particularly on how funding can influence negotiations.

The topic originated from a case I administered at CAM-CCBC involving parallel arbitration and mediation proceedings. The claimant disclosed the existence of third-party funding in the arbitration, but not in the mediation – at the time, the Chamber’s mediation rules did not yet require such disclosure, a provision that was only introduced in the 2024 Rules. This created an unusual situation in which the mediator was unaware of the funder’s involvement. The funded party was also represented by two law firms with partially diverging interests, which made particularly clear to me how funding arrangements can influence procedural strategy and settlement negotiations. That experience ultimately became the foundation of my thesis.

When Fernando contacted me, I initially assumed he had come across my thesis and wanted to discuss the topic. Instead, he invited me to interview with the firm. I accepted mainly out of curiosity, as I wanted to better understand how litigation funders evaluate claims and approach investments in practice. Once I gained a deeper understanding of the work itself, I became genuinely fascinated by the industry and ultimately decided to transition into litigation funding.

Nick Rowles-Davies: Loopa describes itself as a technology-leveraged funder built around civil law systems. What does that combination of technology and underwriting actually do that a traditional funder does not historically?

Marina Gouveia: We rely heavily on technology and a significant part of our team is made up of IT professionals who play a central role in streamlining our operations. We have developed proprietary AI-powered tools to assess claims and predict case outcomes within a confidential, closed system. We also compile and analyse data relating to the duration of judicial and arbitral proceedings across different jurisdictions and arbitral institutions, as well as statistics concerning annulment actions and enforcement proceedings. This allows us to assess risk exposure and expected timelines with greater precision.

In addition, we have an integrated platform that allows us to manage leads, communicate with clients, receive and assess documentation using AI, and track cases through every stage of our review process. We have also developed systems capable of analysing publicly available court data, particularly in jurisdictions such as Brazil and Chile, where judicial records are broadly accessible. This enables us to identify potential disputes and introduce our services directly to the lawyers involved in those matters. In practice, however, most of our investments ultimately originate from personal relationships and referrals rather than from these outreach initiatives, which tend to function primarily as a way to increase awareness of the firm and our activities.

Nick Rowles-Davies: So you’re originating cases across jurisdictions with very different court systems, legal frameworks and business cultures. How does your internal underwriting process account for those differences?

Marina Gouveia: The approach is broadly the same, but with different nuances. We sign an NDA, receive the case files, carry out a preliminary assessment and present the matter to the legal committee. If the committee thinks it is a good opportunity, we build what we call the model, which sets out the economics of the case. We predict each phase of the dispute, including duration and probability of success, determine the pricing and then send an offer to the client.

If the client accepts, we negotiate and sign the litigation funding agreement. That agreement includes a condition that requires us to obtain a positive external legal opinion before confirming the investment.

Although the process itself is fairly consistent regardless of jurisdiction, the most important aspect is the depth of our merits analysis. We are not simply looking for large claims or high-value disputes – we are looking for strong cases. We review the legal and factual merits carefully, assess the counterparty’s solvency and enforceability prospects, and take the time necessary to become genuinely comfortable with the opportunity before moving forward.

Nick Rowles-Davies: One observation often made about Latin American litigation funding is that duration risk is the single biggest variable. How do you price that risk?

Marina Gouveia: At the moment, we operate with a five-year mandate, while many judicial proceedings in Brazil tend to last considerably longer than that. As a result, we generally need cases to be at a more advanced stage before we can assess timing with a reasonable degree of confidence. For example, if a matter is already before an appellate court, we usually have a much clearer sense of the likely timeline than we would in a first-instance proceeding.

First-instance cases involve a much higher degree of uncertainty. In Brazil, each city has its own courts and judges, and procedural timing and outcomes can vary significantly depending on the jurisdiction. That is one of the reasons why we often prefer disputes that are already more developed procedurally.

We rely heavily on statistical analysis. In Brazil, for instance, the Conselho Nacional de Justiça publishes extensive annual data on courts throughout the country. We use that information to estimate the expected duration of each procedural phase and to model possible timelines for the dispute. It is not an exact science, but the data is extremely valuable in helping us assess duration risk more objectively.

At the same time, statistics alone are not sufficient. Local knowledge is equally important. When analysing a case in a specific region, I will often speak with practitioners who know the local courts well in order to gain practical insight into how particular judges and courts tend to operate in practice.

Nick Rowles-Davies: You have said publicly that Brazil offers attractive risk-adjusted returns and lower market saturation. How long do you think that opportunity will last?

Marina Gouveia: We already have many players in Brazil, particularly domestic players. However, those players have very different mandates. One important factor is the strength of the precatórios market.

Precatórios are somewhat like fixed-income investments within litigation finance. They involve claims against government entities where liability has already been established. From an investor’s perspective, the appeal is obvious. The government pays, it pays interest and there are many sellers of those assets.

Because of that, I would say that around 90% of Brazilian participants focus on precatórios. Only a relatively small group is willing to take genuine merits risk.

That is why I do not see Brazil as a saturated market. The same opportunities may be reviewed by the small number of funders willing to underwrite litigation risk, but there are still relatively few participants engaged in true litigation finance. Most are focused on precatórios rather than merit-based claims.

Nick Rowles-Davies: How does Loopa and other funders generally, distinguish between acquiring late-stage assets and underwriting earlier-stage claims in Brazil?

Marina Gouveia: The economics are completely different. Once a claim becomes a precatório, major banks such as Itaú or BTG are often willing to buy it. The discounts they accept are very low compared with the returns expected by litigation funders.

We cannot compete with banks at those levels and still meet our return requirements. As a result, we have to invest earlier in the lifecycle of a dispute.

There is also always the possibility of a rescisória, which is similar to an annulment proceeding. Even after a judgment, there can still be legal risk. That means we generally focus on matters where there is genuine litigation and enforcement risk rather than simply waiting for payment.

Nick Rowles-Davies: The São Paulo appellate court has affirmed the legality of third-party funding, but there is still no statutory framework. Would you prefer regulation?

Marina Gouveia: I believe strongly in auto-regulation. The UK and Europe provide useful examples through organisations such as the Association of Litigation Funders and ELFA. Creating a code of conduct and encouraging adherence to best practices can be very effective.

One of the challenges in Brazil is that the market can sometimes become inward-looking. It is geographically distant from Europe and the United States, and participants are not always exposed to international standards. That can create situations where people assume certain behaviours are normal simply because they have not seen how things are done elsewhere. There was a bill proposed last year, but it was relatively limited in scope and left many of the key issues to be addressed by future regulation, which creates considerable uncertainty. At this stage, I think it is still too early to know what a future framework might ultimately look like.

Nick Rowles-Davies: Brazil ranked among the leading ICC jurisdictions and continues to build arbitration infrastructure. Does that translate into a deeper pipeline of fundable cases?

Marina Gouveia: Given our mandate and investment profile, we naturally tend to prefer arbitration over court litigation. Arbitration in Brazil has been developing very rapidly, and the data published annually on the Brazilian arbitration market consistently shows an increase in the number of proceedings.

When I left CAM-CCBC in 2022, the institution was administering approximately 120 to 130 cases per year. More recent figures already indicate further growth, reflecting the broader expansion and consolidation of the Brazilian arbitration market.

Another important development is the ability to conduct ICC proceedings and pay costs locally in Brazilian reais rather than in dollars. This makes arbitration considerably more accessible for Brazilian parties when compared to proceedings administered directly through the Paris headquarters or the New York office. Although it is still early to fully measure the impact of some of these more recent institutional developments, like the opening of a PCA office in Brazil, I do believe they will gradually contribute to an even larger pipeline of fundable disputes in the coming years.

Nick Rowles-Davies: Let’s move beyond Brazil. Fedirico, how do you assess Argentina today?

Federico Muradas: Argentina remains a complex market, but the underwriting picture is different from what it was two or three years ago. Historically, sovereign credit concerns, capital controls, exchange-rate volatility and enforcement uncertainty caused many funders to view Argentina as inherently high risk.

Today we take a more differentiated approach. The key questions are where the assets are located, what the enforcement path looks like, how politically sensitive the dispute is and whether there are treaty protections or hard-currency revenue streams available.

The market has matured institutionally. Practitioners are more sophisticated, arbitration is more common and counterparties are increasingly familiar with funding. We still price duration and enforcement risk more conservatively than we would in Chile or Spain, but the outlook has improved.

Nick Rowles-Davies: Chile recently introduced disclosure obligations for funded parties in arbitration. Is that the model you expect others to follow?

Federico Muradas: We think Chile’s approach reflects a broader global trend. The focus is not hostility towards funding but transparency around conflicts and arbitrator independence.

Disclosure of funding is generally sensible, but disclosure alone is not enough. The more important questions concern who must disclose, when disclosure is required and how much information should be revealed.

There is a significant difference between disclosure for conflicts purposes and disclosure that could affect procedural dynamics or expose commercially sensitive information. We support transparency where it addresses genuine independence concerns.

Nick Rowles-Davies: Colombia and Peru are often grouped together. Do you see them differently?

Federico Muradas:  Absolutely. Colombia and Peru have very different institutional dynamics and political risk profiles.

Colombia has a sophisticated arbitration culture and strong legal market. However, political uncertainty and state-related disputes have become more important underwriting considerations in recent years.

Peru has generated a large volume of infrastructure and construction disputes, including major arbitration matters. At the same time, enforcement against state-linked entities can be highly complex.

For both markets, we focus less on broad country assumptions and more on counterparty quality, enforceability and procedural posture.

Nick Rowles-Davies: What about Uruguay and Paraguay?

Federico Muradas: Uruguay and Paraguay are meaningful jurisdictions, but not necessarily because of sheer volume. Uruguay tends to punch above its weight institutionally: it is stable, predictable and often connected to regional holding structures, financial flows and cross-border disputes.

Paraguay is smaller and less developed from a disputes market perspective, but it is increasingly relevant in certain sectors and regional commercial relationships. In practice, however, both jurisdictions often function more as strategic nodes within broader Latin American disputes rather than standalone high-volume origination markets.

Many matters involve parties, assets or enforcement angles spanning Brazil, Argentina or other larger economies. The quality of counsel and the ability to structure enforcement across jurisdictions often matter more there than the raw size of the domestic disputes market itself.

Nick Rowles-Davies: Would you say Marina, that US and European institutions still dominate capital formation in Latin American legal finance?

Marina Gouveia: Not really. International investors remain active, but many continue to approach the region cautiously. Some perceive political or enforcement risk and prefer to limit their exposure.

I receive referrals from European and US funds that like a case but already have exposure to Brazil and do not want to increase it further. Local knowledge remains extremely important.

At the same time, domestic capital is becoming increasingly significant. Brazilian investors are far more active than many people realise. Many operate with their own capital rather than through traditional fund structures.

We are also seeing more cross-border collaboration. Domestic players increasingly approach us with Argentine, Uruguayan or international arbitration opportunities where they want support on underwriting and risk assessment.

Nick Rowles-Davies: Where do you see the most underpriced opportunities in South America?

Marina Gouveia: Judicial cases and arbitrations that have not yet been initiated. Those are the opportunities where merits risk still exists, and many investors are reluctant to take that risk.

Because most participants prefer duration-risk products such as precatórios, claims requiring substantive underwriting can offer attractive pricing opportunities.

Do you expect investors to move increasingly toward traditional litigation finance because of the higher returns?

The returns can certainly be higher, but precatórios remain extremely attractive. They are the fixed-income product of litigation finance. Investors understand them, they have large pipelines of opportunities and the business model is highly scalable.

For that reason, I do not expect a dramatic shift in the near term.

Nick Rowles-Davies: Looking five to ten years ahead, what does a mature South American legal finance market look like?

Marina Gouveia: The first requirement is education. In Brazil, many lawyers still associate legal finance only with the sale of precatórios. Even sophisticated lawyers often do not realise that funding can be used from the beginning of a dispute.

We need to continue explaining how litigation finance works, how funders help parties pursue meritorious claims, and how strong legal claims can be transformed into financeable assets.

I also expect continued development of best practices and ethical standards. There are already efforts underway within Brazil to encourage greater professionalism and establish clearer guidelines for the industry.

In terms of sector concentration, I believe arbitration will continue to grow significantly. When I graduated, arbitration was barely part of the curriculum. Today it is taught formally and lawyers are becoming increasingly familiar with ADR and arbitration clauses.

As that trend continues, I expect a substantial increase in arbitration activity over the next decade.

Nick Rowles-Davies: For a general counsel sitting in São Paulo, Buenos Aires or Bogotá with a substantial claim and uncertainty about whether to fund it, what is the one thing you would tell them?

Marina Gouveia: Understand what a litigation funder is looking for and prepare your case accordingly. One challenge in Latin America is that we often receive huge volumes of documents without a clear summary or framework.

Lawyers would significantly improve their chances of obtaining funding if they clearly explained the merits, expected duration, solvency of the counterparty and enforcement pathway.

Most importantly, they need to understand that our objective is not simply to win the case, but ultimately to recover on it. Lawyers naturally focus on obtaining a favourable judgment or award. Funders are equally concerned with everything that happens between winning and actual recovery. Very often, that becomes the most important part of the analysis.

Thank you both, that was a pleasure.