Litigation Funding Investment Market Trends

Growth drivers

• Acceptance by corporate and legal firms: Growing acceptance of third-party litigation financing (TPLF) by both law firms and corporate legal departments is a key driver boosting the global litigation funding investment market. According to a U.S. Government Accountability Office report, litigation funders themselves report increased use by new parties, including major law firms and corporations, with a noticeable shift toward portfolio financing by 2021. About 51% of total capital went into portfolio agreements, up from 28% in 2017. Large law firms are increasingly using external funding to manage the steep upfront costs of complex cases without straining partner capital.  Corporate in-house legal teams are also embracing litigation funding as a way to de-risk litigation spend and monetize legal claims, rather than bearing the full financial risks internally.  This cultural and financial shift has improved investor confidence in litigation assets, helping institutional capital flow into the litigation funding investment market. Moreover, standardized funding agreement structures and increasing regulatory clarity in several key jurisdictions are further legitimizing TPLF, making it more palatable and strategically useful for legal practices and corporate entities alike.
• Rising legal costs and complexity: Rising legal costs and increasing complexity of litigation are compelling more plaintiffs and law firms to turn to third-party funding, significantly fueling the litigation funding investment market. For example, tort litigation costs in the U.S. surged to US$529 billion in 2022, growing at an annual rate of 7.1% since 2016, indicating that litigation is becoming more expensive.  The complexity of modern disputes, especially in commercial and patent litigation, makes funding even more attractive, as cases often require extensive discovery, expert witnesses, and multi-year commitments. In patent litigation alone, the median cost to go through trial can exceed US$3 million, according to a 2023 survey by the American Intellectual Property Law Association.
• Regulatory shifts and transparency: Growing clarity and oversight in litigation-funding frameworks across major jurisdictions is accelerating litigation funding investment market adoption. A U.S. Government Accountability Office (GAO) review notes that while no federal disclosure mandate exists, an increasing number of courts and states are introducing rules requiring parties to reveal third-party funding agreements, strengthening confidence in funded cases. In the U.K., the Civil Justice Council’s 2025 report recommends light-touch regulation and clearer disclosure practices in collective proceedings to improve fairness and reduce information asymmetry. The European Law Institute (ELI) has issued principles urging disclosure of funders’ identity, funding terms, and conflict-of-interest safeguards, supporting transparent and ethically managed funding structures. Together, these shifts create a more predictable legal environment, reduce risks for investors, and promote litigation funding as a trusted financial mechanism worldwide.

Challenges

• Risk from non-settlement of case: The funding is entirely dependent on the successful outcomes of legal cases; however, delays in hearings, unexpected procedural hurdles, and case dismissals heighten the possibility of no returns. Such uncertainties can result in complete capital loss for funders, making the market inherently vulnerable. Variations in legal systems across jurisdictions further complicate risk assessment, discouraging investors from pursuing complex or cross-border cases. These conditions often dampen investor confidence and reduce overall risk appetite, slowing market expansion as funders become more selective. Emerging businesses are particularly exposed, as limited experience and weaker legal evaluation capabilities can lead them to underestimate risks and suffer greater financial setbacks.
• Lengthy case duration: Legal systems vary significantly across countries, creating substantial challenges for law firms handling cross-border disputes and adding complexity to litigation-funding decisions. Prolonged case durations often erode investor confidence and reduce capital efficiency, prompting many funders to withdraw when timelines become uncertain. Smaller and emerging market players are especially affected, as extended proceedings can strain their resources and limit future investment capacity. According to the International Chamber of Commerce, international legal proceedings typically last around 27 months, with most cases falling within the 22–25-month range, underscoring the time-intensive nature of litigation. As investors reassess risks and encounter limited assurance of profitability, overall litigation funding investment market growth can slow, particularly for complex or multi-jurisdictional cases.