Litigation funding is capital provided to support the costs of a legal claim. A professional funder's return is set by agreement and may depend on a successful recovery. The structure, applicable law and allocation of risk need to be considered together.
This guide covers litigation finance generally. JusFund focuses on arbitration and also welcomes litigation funding enquiries.
What is litigation funding?
Litigation funding, also called litigation finance or third-party funding, helps pay for a legal claim under an agreement with a funder. It can cover legal work, expert evidence and other agreed expenses. Funding for a single claim and funding for a portfolio of cases are different arrangements.
Many single-claim arrangements are non-recourse: the funder receives its agreed return from a recovery and bears its funded loss if the claim fails. Other structures involve repayment obligations regardless of the outcome. The terms of the particular arrangement determine the position.
- 01Funding agreed
The claimant and funder agree the budget, return and conditions.
- 02Case costs paid
The funder provides capital for the costs covered by the agreement.
- 03Recovery distributed
If money is recovered, it is shared under the agreed terms.
For non-recourse funding, no recovery generally means the funder loses the agreed funded amount. Other liabilities and contractual conditions may still apply.
Who uses litigation finance?
Claimants may seek funding because the cost of proceedings is beyond their means, or because committing the budget would place too much pressure on the business. Insolvency estates and groups bringing claims can also face a gap between a potential recovery and the money available to pursue it.
A well-resourced business may consider funding to manage legal expenditure and share the financial risk of a dispute. Whether it makes sense depends on the cost of funding, the alternatives and the amount the claimant would retain after a recovery.
What does a litigation funder look for?
The review typically covers the legal merits, the evidence, the realistic value of the claim, the cost and duration of proceedings, and the prospect of collecting a judgment. Funders also assess the legal team's plan and the effect of counterclaims or procedural objections.
A supported loss calculation is more useful than a headline claim value. So are a realistic budget, a chronology and an explanation of the difficult parts of the case. Organised documents make it easier to identify the questions that still need investigation.
Funding criteria vary. Geography, claim type, investment size, expected duration and portfolio concentration can all affect a funder's interest. Meeting a set of assessment criteria does not establish that funding will be available.
How much does litigation funding cost?
The funding agreement sets the return and the order in which proceeds are distributed. A proposal may refer to a multiple, a percentage or a combination. Compare the claimant's net recovery across different settlement amounts and durations, including the effect of legal costs and any other deductions.
A non-recourse arrangement can transfer the risk of losing the agreed funded amount. It does not automatically cover an opponent's costs, a budget overrun or every consequence of termination. Those points need to be considered in the funding and any insurance agreements.
- Capital returned to funder
- £1m
- Additional funder return
- £1m
- Remaining for claimant
- £3m
Assumes £1m previously funded and a further £1m agreed return, with no other deductions. Actual agreements may include other costs, fees, priorities and tax consequences. These invented figures explain the arithmetic; they are not a quote or typical terms.
How does funding differ in arbitration?
Court litigation and arbitration involve similar funding questions, but the forum changes the procedural and enforcement analysis. A court claim follows the relevant court system. Arbitration also requires attention to the agreement to arbitrate, the seat and any institutional rules.
Neither confidentiality nor cross-border collection should be assumed. Court judgment enforcement depends on the applicable local law and treaty arrangements. Foreign arbitral awards may benefit from the New York Convention, subject to its conditions and grounds for refusal. Funding-disclosure duties depend on the applicable regime.
Court rules and the law of the relevant jurisdiction.
Arbitration agreement, law of the seat and applicable rules.
Local law and any applicable judgment-enforcement arrangements.
The New York Convention may apply to a foreign award; conditions and defences remain.
Check court rules, privilege and any funding-disclosure duties.
Check the applicable rules and law; privacy does not remove disclosure duties.
What should be checked before sharing a case?
Agree how confidential documents may be used and who may receive them. Consider legal professional privilege separately with counsel: it is not the same protection as a confidentiality undertaking.
Before proceeding, understand the proposed budget, return, termination provisions, settlement arrangements and any disclosure duties. The legal position depends on the jurisdiction and the agreement. This guide provides an introduction rather than advice on a particular arrangement.
Discussing a claim with JusFund
JusFund focuses on arbitration and also welcomes litigation funding enquiries. The online assessment follows an arbitration framework: a fund seeker can submit documents, review the findings and decide whether to list the case for approved professional funders. For a court claim, contact us to discuss the next step.
The assessment identifies supporting evidence, risks and information gaps. It does not replace the funder's diligence. JusFund does not supply capital or give legal, financial or investment advice; any funding agreement is made directly between the parties.
How JusFund works for fund seekers · For professional funders
How the assessment is made
JusFund reads the case record, researches the relevant context, assesses eight areas and checks the result using a second AI model. The report goes to the fund seeker for review before any listing decision.
Read the assessment methodology or view a sample assessment to see the findings, evidence and limitations in context.
Sources and further reading
- SRA guidance on third-party litigation funding (opens in a new tab)Funding arrangements, confidentiality and privilege. Guidance for SRA-regulated legal professionals in England and Wales.
- UNCITRAL guide to the New York Convention (opens in a new tab)Recognition, enforcement and the grounds for refusal; 2016 Secretariat Guide.
Review your arbitration claim
Your first assessment is free. Read the findings before deciding whether to list your case for funders.
Start your assessment