Litigation funding: what claimants should know

Third-party funding allows a claimant to pursue a claim without carrying the full cost of the proceedings. In return the funder takes a share of any recovery, usually calculated as a multiple of its outlay, a percentage of the proceeds, or the greater of the two.

The terms that matter most are often not the headline return. Claimants should look closely at who controls decisions on settlement, when the funder may withdraw, how adverse costs are covered and what happens if the budget is exceeded. Whether the arrangement must be disclosed to the court or tribunal, and to the other side, also needs early thought.

Funding works best for well-documented claims against solvent opponents. A funder’s diligence can be a useful test of a case, and a claimant who approaches funders with a clear budget and an enforcement plan will usually secure better terms.