Litigation funding
Litigation Funding in the UK
How third-party funding works in England and Wales, what funders charge, how it is regulated and where insurance fits.
A teaching shape, not pricing. Funding pays for the case and takes a share of the upside; insurance caps the downside for a premium. Many matters use both.
How does litigation funding work in the UK?
A third-party funder pays some or all of the costs of a claim in exchange for a return from any recovery, usually on a non-recourse basis. In England and Wales funding is widely used for commercial claims and group actions, is not subject to statutory regulation, and is usually paired with ATE insurance because costs follow the event.
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Key points
4 to know
- Funding is usually non-recourse: if the claim fails, the funder loses its money.
- Funders' returns are commonly a multiple of capital or a share of damages.
- Many funders follow the Association of Litigation Funders' code.
- ATE is usually needed alongside funding because the loser pays costs.
What UK funders look for
Strong merits supported by counsel, damages that are large relative to the budget, a defendant able to pay, an experienced legal team and a claimant committed to the case.
What funding costs
Returns are typically a multiple of the capital deployed, a percentage of recoveries, or the greater of the two, often increasing with time.
The cost reflects the non-recourse risk.
Regulation
Litigation funding in England and Wales is not subject to statutory regulation.
Many funders are members of the Association of Litigation Funders and follow its voluntary code of conduct. The 2023 PACCAR decision affected how returns can be calculated; see our PACCAR guide.
Where insurance fits
Because costs follow the event, funders commonly require ATE to cover adverse costs, and funders may protect their own capital with capital protection insurance.
Frequently asked
5 questions · answered in plain terms
Is litigation funding legal in the UK?
Yes. Third-party funding is lawful and widely used in England and Wales for commercial claims, arbitrations and group actions.
How much do UK litigation funders charge?
Commonly a multiple of the capital they deploy, a percentage of damages, or the greater of the two, payable only on success.
Are UK litigation funders regulated?
There is no statutory regulation. Many funders follow the Association of Litigation Funders' voluntary code of conduct.
Can a funder be ordered to pay the other side's costs?
In some circumstances, yes. English courts can order non-parties, including funders, to pay costs; the extent is decided case by case.
What is the minimum claim size for litigation funding?
There is no fixed minimum, but funders generally need damages that are several times the budget to make the risk worthwhile.
General information only. This page is not legal, financial, investment or insurance advice. Any insurance is subject to underwriting and to the terms of the policy wording issued.