While each litigation funding agreement (LFA) and its associated documents will vary depending on the funder and the specificities of the funded matter, there exist key issues that need to be addressed in the various negotiation phases. This Practice Note is one in a series of short Practice Notes by Tanya Lansky and Tets Ishikawa, Managing Directors of LionFish Group Ltd, aiming to provide for those involved in negotiating and considering LFAs and their associated documents a better understanding of the factors at play. Investment top-ups One prepares for and hopes that the budget agreed at the inception of an LFA will be sufficient. However, given the uncertainty of litigation there always exists a risk of a shortfall in the original budget causing the need for a top-up of the investment amount. While some may deal with top-up mechanics as and if the situation arises, others believe that the mechanics of a top-up should be agreed from the outset to avoid any risk of paralysis due

While each litigation funding agreement (LFA) and its associated documents will vary depending on the funder and the specificities of the funded matter, there exist key issues that need to be addressed in the various negotiation phases. This Practice Note is one in a series of short Practice Notes by Tanya Lansky and Tets Ishikawa, Managing Directors of LionFish Group Ltd, aiming to provide for those involved in negotiating and considering LFAs and their associated documents a better understanding of the factors at play. Pricing structures In the early days of litigation funding, funder returns were expressed as a percentage of the damages (percentage pricing). This was in line with how risk-taking US law firms run contingent matters, as well as how early investors saw litigation investing in a similar light to series A venture capital investing, which often entails a percentage stake in a company. As the market started to grow, funders increasingly added pricing terms based on multiples of capital (multiples pricing). Some offered

While each litigation funding agreement (LFA) and its associated documents will vary depending on the funder and the specificities of the funded matter, there exist key issues that need to be addressed in the various negotiation phases. This Practice Note is one in a series of short Practice Notes by Tanya Lansky and Tets Ishikawa, Managing Directors of LionFish Group Ltd, aiming to provide for those involved in negotiating and considering LFAs and their associated documents a better understanding of the factors at play. Priorities agreements A priorities agreement (also commonly referred to as the waterfall) is an agreement that clearly sets out the priority in which the proceeds of the funded litigation are to be applied upon a successful outcome. While this only becomes relevant upon a successful outcome, there have been various approaches taken by funders and negotiated by funded parties over the years which can give rise to disputes. Therefore, a clear, coherent and well-negotiated priorities agreement is crucial. Agreement included in

While each litigation funding agreement (LFA) and its associated documents will vary depending on the funder and the specificities of the funded matter, there exist key issues that need to be addressed in the various negotiation phases. This Practice Note is one in a series of short Practice Notes by Tanya Lansky and Tets Ishikawa, Managing Directors of LionFish Group Ltd, aiming to provide for those involved in negotiating and considering LFAs and their associated documents a better understanding of the factors at play. Representations and warranties A lengthy representations and warranties (R&W) clause can often seem onerous. However, its length in any given commercial contract is often correlated to the complexity of the underlying investment and, given that litigation is complex by nature, comprehensive R&W are unavoidable. On the flip side, onerous R&W clauses should also be inversely correlated to the level of ongoing monitoring that an investor undertakes throughout the life of an investment. In setting R&W clearly, the onus falls on the litigant

While each litigation funding agreement (LFA) and its associated documents will vary depending on the funder and the specificities of the funded matter, there exist key issues that need to be addressed in the various negotiation phases. This Practice Note is one in a series of short Practice Notes by Tanya Lansky and Tets Ishikawa, Managing Directors of LionFish Group Ltd, aiming to provide for those involved in negotiating and considering LFAs and their associated documents a better understanding of the factors at play. Termination clauses Termination clauses are draconian by nature but reflect their very essence: a matter of last resort that forces the funder to crystallise losses which immediately hit their performance – whether at a fund level for those who manage funds, or at a P&L level for principal investors. To that end, no funder will seek to enforce a termination clause unless all alternative options have been fully exhausted. There are generally two strands to termination clauses: • the elements that trigger

This Practice Note sets out a common approach that funders typically follow when assessing a case and deciding whether to invest in it. It also provides information on the points that may needed to be taken into account when exploring the availability of funding. Initial enquiry and NDA Having an initial brief scoping call with a funder, without the need to disclose any confidential information, is helpful to ensure that, at least in principle, there is nothing preventing that funder from properly assessing the claim for funding (eg a conflict of interest or other involvement with the parties to the potential claim). Investment mandates will differ from funder to funder, for example, with respect to: a funder’s minimum and maximum amounts it can invest; minimum ratio between the amount of the funder’s investment and the likely damages; the jurisdiction(s) in which it is willing to fund claims; and the types of dispute it is willing to fund. Different funders will also have different funding models (eg direct funding of claimants or funding provided

There have been numerous reviews of different aspects of litigation funding and proposals for its reform. Some, but by no means all of these, have resulted in legislation. This Practice Note provides a guide to the various proposals and the measures enacted to give effect to them. Civil Justice Council—review of third party civil litigation funding In the Spring of 2024 the Lord Chancellor requested that the Civil Justice Council (CJC) should conduct a review of third party civil litigation funding. Final report The CJC published its final report on 2 June 2025. The final report recommended a series of reforms to litigation funding to include: • reversing the effect of the Supreme Court’s decision in PACCAR by legislation—to have both retrospective and prospective effect. Damage based agreements (DBAs) should be permitted in opt-out collective proceedings in the Competition Appeal Tribunal (CAT) on the same basis that litigation funding is permitted • making clear that there is a categorical difference between contingency fee funding, ie funding which is provided to

Law360: The Civil Justice Council has indicated that it is weighing whether the time has come to regulate litigation funding and cap fees, as the industry has exploded and potentially contributed to the collapse of a law firm specialising in consumer claims.

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. While such funding could (and sometimes is) provided on a gratuitous basis (eg through ‘Crowd-Funding’ or by a benefactor), references to ‘litigation funding’ are generally to the market of commercial litigation funding which has developed, for profit. This Practice Note relates to commercial litigation funding. 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 premia for after-the-event insurance (ATE), experts, outside counsel, or arbitration costs. Most commonly, third party funding is provided on a non-recourse basis, which means that: • if the claimant makes no recovery, it will not have to pay anything to the funder and the funder has no recourse

Debt burden or a climatic or external shock in a country might trigger a crisis of magnitude sufficient to force creditors to examine their legal options for recovery. In debt terms, this disruption would likely constitute an event of default, which if not cured will result in an actual default. Upon an event of default, if not done so in the period where the situation was worsening for the situations that are predictable, creditors will assess their options, which in simple terms are reduced to either entering a restructuring or attempting a recovery through a court of law. This Practice Note provides an overview of the latter. As a side note, arbitration is seldom used to resolve the non-payment of sovereign obligations. Where to sue? Upon a default in, for example, bonds, sovereign states usually establish that the situation is a public emergency by passing a law or enacting an executive order or decree. For example, as a result of the crisis in Greece, Parliament enacted the Bondholders Act

The privilege which protects confidential communications between lawyers, clients and third parties, when made for the purposes of or in contemplation of litigation.

Litigation privilege acts to protect communications between (i) a lawyer and their client, or (ii) their client and a third party—see Practice Note: Legal professional privilege for in-house lawyers—Litigation privilege. When establishing and protecting litigation privilege you can avoid the difficulties inherent in retrospectively seeking to identify relevant details, eg dates, grounds, etc, by recording key details on this Precedent Litigation privilege log. This Litigation privilege log is provided in Excel format and therefore cannot be downloaded to Word. To