The importance of litigation funding

28 April 2021

This morning’s FT article is a good reminder of the importance of the UK’s litigation funding industry.

The rapid evolution of the sector over recent years shows no sign of slowing and, whilst many funded cases are in all senses commercial in nature, there is an interesting social justice angle which is gaining momentum.

At its core, litigation funding allows an “impecunious claimant” (someone who has a genuine claim, but cannot afford to pursue it) to seek justice in a way which would otherwise be unavailable to them. Litigation in the UK can be extremely expensive, and the provision of third party funding can allow those with good claims to achieve results in a way which would otherwise be impossible. Funders are also able to bring their deep experience to bear on behalf of clients, and can provide support far beyond the funding. Indeed, some have grant-making teams which focus on the provision of support to charities, NFP organisations and others who struggle otherwise to raise funds.

There is of course an economic cost, but sharing in the proceeds of a successful claim is a reasonable compromise when you consider that funders take all of the risk of an unsuccessful outcome (a funder will typically lose its investment if the claim that it funds is unsuccessful).

Litigation funding, and the financing of legal assets generally, is a fast moving sector which is endlessly fascinating.