ENGLAND & WALES Law and Practice Contributed by: Damian Taylor, Olga Ladrowska, Christy Conlon and Nathan Barrow, Slaughter and May
2. Litigation Funding 2.1 Third-Party Litigation Funding
of the claim, the proportionality of legal costs and the likelihood of successful enforcement. Litigation funding is becoming increasingly common in areas such as large class actions, particularly for claims involving competition or environmental law, where claimants may either be unable to afford litiga- tion costs or wish to share the financial risk. 2.3 Third-Party Funding for Plaintiff and Defendant Third-party funding is, in principle, available to both claimants and defendants. However, in practice it tends to be offered primarily to claimants (or defend- ants with a counterclaim), as the funder’s return will be taken from any award of damages or settlement amount in the claimant’s favour. 2.4 Minimum and Maximum Amounts of Third-Party Funding There are no set maximum and minimum amounts that a third-party funder will fund. Each funder will make its own assessment of a case’s merits, the potential quantum of damages, the potential costs of litigat- ing the case and the potential adverse costs liability. The funder will typically consider these questions in the context of its own portfolio, cost of funding, risk appetite and target rate of return. It will then formulate a funding proposal accordingly. 2.5 Types of Costs Considered Under Third- Party Funding A third-party funder will usually fund all legal expenses associated with the claim and its enforcement that are incurred from the date of the funding agreement, including the costs of lawyers’ fees (including both the solicitor and barrister teams), any disbursements and any tribunal or court fees. Any liability on a funded party to pay its opponent’s costs in the event the claim fails will usually be the subject of a specialised insurance policy. That insur- ance policy will usually be acceptable as security for an opponent’s costs. 2.6 Contingency Fees Two types of contingent or conditional fee arrange- ment (ie, agreements between a litigant and their law-
Until the 1990s, the funding of litigation by a third party was generally prohibited for reasons of public policy, particularly when done in expectation of a profit. A series of judgments and statutory reforms mean that it is now permitted in civil litigation and has become an important feature of the legal landscape. Litigation funding is not currently subject to manda- tory, statutory regulation, but a system of self-regu- lation has been in place since 2011. Members of the Association of Litigation Funders, an independent body, agree to abide by a code of conduct that obliges funders to, among other things, maintain adequate levels of capital, maintain confidentiality and take reasonable steps to ensure that claimants receive independent legal advice on the terms of proposed funding agreements. To the extent funders engage in conduct that is contrary to the code of conduct or oth- erwise undermines the integrity of the justice system, their arrangements may be held to be unenforceable. Litigation funding has grown significantly in the last decade, fuelled in large part by the establishment of new rules that facilitate the bringing of class actions by those affected by breaches of competition law. Mindful of consumer protection, the government com- missioned a review into third-party litigation funding, which reported in June 2025. The report recommend- ed greater regulation of the sector, including that the current voluntary self-regulatory regime for funders be replaced by a mandatory statutory framework super- vised by the government. The government has yet to Third-party funding can be used across a variety of different types of claims, including breach of contract claims, professional liability claims, intellectual prop- erty claims, tax disputes and shareholder disputes, although claims generally need to be of a certain value to make funding profitable. Before agreeing to fund a claim, litigation funders will typically assess the claim’s viability, which will involve considering factors such as the skill and experience of the legal team, the value publish its formal response to the report. 2.2 Third-Party Funding: Lawsuits
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