Litigation funders provide non-recourse capital to plaintiffs or law firms, repaid from proceeds if the case succeeds. Arrangements include single-case funding, portfolio facilities, and law firm lending.
Consumer legal funding to individual claimants operates on different terms.
Alternative Names:
Third-Party Litigation Funding, Litigation Finance
Why it Matters?
Funding affects settlement dynamics by removing the financial pressure that would otherwise motivate a plaintiff to accept an early offer, which lengthens cases and raises resolution values. Disclosure is the contested issue: several federal districts and a growing number of states now require disclosure of funding arrangements, and discovery into funder communications is litigated on work product and relevance grounds. The industry is frequently cited as a driver of social inflation.
Frequently Confused with
Related terms
Frequently asked questions
How does funding affect settlement?
Is funding disclosure required?
