What is litigation funding?

Litigation funding, also commonly referred to as litigation finance or third party funding, is where a third party pays all or part of the costs and legal expenses associated with pursuing a claim.

Claimants typically seek funding to cover all their Disbursements and legal expenses in accordance with an agreed budget under a funding agreement.

Funding can, however, also be made available for discrete costs, for example, to cover one or a number of disbursements such as ATE premia, experts, outside counsel, or Arbitration costs.

Most commonly, third party funding is provided on a non-recourse basis, which means that:

1. •

   if the claimant makes no recovery, it will not have to pay anything to the funder and the funder has no recourse to the claimant for its lost investment

2. •

   if the claim is successful, the funder will be entitled to a success fee. This is taken from the damages actually recovered, in accordance with the terms under a funding agreement, see Practice Note: Litigation funding application process

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