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A UK-based litigation funder is seeking to reset its strategy and reassure investors after liquidating one of its key funds, underscoring the mounting pressures facing capital providers in an increasingly competitive and scrutinized funding market.

An article in Bloomberg reports that Katch Investment Group wound down a flagship vehicle and returned capital to investors, following a period of underperformance and portfolio challenges. The move marks a significant inflection point for the firm, which is now presenting a revised investment strategy aimed at regaining investor confidence and stabilizing its platform.

According to the report, the funder’s leadership has framed the liquidation as a proactive step designed to preserve value and recalibrate its approach in light of shifting market dynamics. The litigation finance sector has faced headwinds in recent years, including longer case durations, delayed resolutions, and increased regulatory and judicial scrutiny—particularly in collective proceedings. These factors have complicated return profiles and made capital raising more challenging, especially for publicly listed or institutionally backed funders under pressure to demonstrate consistent performance.

The firm is now pitching a refined model that emphasizes disciplined case selection, portfolio diversification, and closer alignment with investor expectations. The reset comes at a time when several UK-based funders are reassessing their exposure to large, high-risk group actions and exploring alternative structures, including co-investment arrangements and bespoke mandates.

A dispute emerging from the long-running talc litigation against Johnson & Johnson has spilled into a new front, as a plaintiffs’ law firm has filed suit against its own litigation funders in a high-stakes funding battle tied to the baby powder cases.

An article in Reuters reports that the firm, which represents claimants alleging that Johnson & Johnson’s baby powder products caused cancer, has sued multiple litigation funders over the terms and enforcement of its funding agreements. The complaint centers on allegations that the funders are seeking repayment amounts the firm contends are excessive or otherwise improper under the governing contracts. The lawsuit underscores the financial strain and complex capital structures underpinning mass tort litigation, particularly in sprawling, multi-year proceedings like the talc cases.

According to the report, the firm argues that the funders’ demands threaten its financial stability and ability to continue representing clients in the ongoing litigation. The case reflects the high-risk, high-reward nature of funding large portfolios of mass tort claims, where returns can hinge on bankruptcy proceedings, global settlements, or appellate outcomes. Johnson & Johnson’s use of bankruptcy maneuvers to resolve talc liabilities has already added further uncertainty and delay, complicating recovery timelines for plaintiffs’ firms and their capital providers.

The dispute highlights the intricate dynamics between law firms and funders in contingency-heavy practices. Funding arrangements in mass torts often involve layered investments, staged drawdowns, and complex priority waterfalls. When case timelines stretch or resolution values shift, tensions over repayment multiples and control rights can quickly surface.

A recent Australian decision has delivered an important reminder on the limits of recoverable damages in funded litigation, ruling that a successful party cannot pass on its litigation funder’s commission to the defendant as part of a costs claim.

An article on McCullough Robertson's website outlines how the court determined that a funder’s commission does not constitute recoverable damages, even where the underlying claim succeeds. The plaintiff had sought to recover not only its legal costs, but also the commission payable to its third-party funder, arguing that this expense flowed directly from the defendant’s wrongdoing and should therefore be compensable.

The court rejected that argument, drawing a clear distinction between traditional heads of damage and the commercial cost of obtaining litigation finance. While acknowledging that funding arrangements are now a well-established feature of the litigation landscape, the court concluded that a funder’s commission is not a loss caused by the defendant’s conduct in the requisite legal sense. Rather, it is a voluntary commercial arrangement entered into by the plaintiff to manage risk and cashflow. As such, it falls outside the scope of damages recoverable from the opposing party.

The decision reinforces a broader judicial trend in Australia of treating litigation funding as legitimate, but carefully delineated. Courts have generally upheld the enforceability of funding agreements and recognised their role in promoting access to justice. However, this ruling makes clear that the economic burden of a funder’s return remains with the funded party, absent specific statutory provision or contractual basis shifting that risk.

Loopa Finance has announced the successful closing of its third litigation finance vehicle, raising USD 70 million and pushing the firm’s total capital commitments past the USD 100 million mark since inception. The milestone underscores the continued maturation of the litigation funding market across continental Europe and Latin America, where Loopa has positioned itself as a tech-driven, cross-border player focused on complex disputes.

A press release issued by Loopa Finance confirms that the new fund builds on two prior vehicles totaling USD 38 million, both of which have been fully deployed into meritorious cases across key jurisdictions in Europe and Latin America. With Fund III, Loopa intends to deepen its investment capacity in judicial litigation and complex arbitrations, while accelerating geographic expansion across strategic markets on both continents.

Co-founder and Managing Partner Fernando Folgueiro described the fundraise as a “turning point” from a legal-business perspective, noting that surpassing USD 100 million in commitments reflects growing market acceptance of litigation finance within the regional legal ecosystem. The firm emphasized its model of assuming litigation risk in exchange for a return only upon successful outcomes, while maintaining non-interference in legal strategy. Loopa invests across a broad range of disputes, including commercial and investment arbitration, corporate and contractual claims, insolvency proceedings, intellectual property matters, environmental disputes, and claims against the State.

Co-founder Yago Zavalia Gahan highlighted the firm’s continued investment in technology and scalable processes, reinforcing Loopa’s positioning as the first tech-focused litigation funder operating across both Latin America and continental Europe. Fund III attracted a mix of institutional and private investors from Europe and the Americas, including returning backers and new strategic participants.

As capital formation in emerging and cross-border markets accelerates, Loopa’s latest raise signals sustained investor confidence in litigation finance as an asset class beyond traditional Anglo-American jurisdictions—raising the question of how quickly regional regulatory frameworks and court practices will evolve alongside that growth.

Legal-Bay has highlighted an $8.5 million jury verdict against Uber in an Arizona bellwether sexual assault trial, a result that may influence settlement postures across similar dockets. The Arizona jury found Uber liable and awarded damages to a plaintiff who alleged assault connected to the rideshare platform.

While case specifics remain limited in the public domain, the outcome provides another data point on potential exposure as claims advance nationwide. For funders and plaintiffs’ counsel, the verdict offers a reference point for damages modeling and negotiation strategy. Bellwether trials often test liability theories and damages presentations ahead of broader resolution, giving parties a benchmark for risk assessment. The Arizona ruling arrives as plaintiffs pursue a range of claims tied to driver misconduct and platform oversight.

An article in PR Newswire states that Legal-Bay characterized the case as a bellwether matter and underscored the significance of the $8.5 million award. The company reiterated that it provides pre settlement funding to claimants pursuing sexual assault lawsuits against rideshare companies, positioning capital to help plaintiffs bridge lengthy litigation timelines.

The report notes that ongoing proceedings involving Uber have drawn heightened attention to driver screening, in-app safety features, and incident response protocols. According to the release, Legal-Bay views the Arizona result as instructive for counsel evaluating case posture and timing of potential resolutions. The release also encourages potential claimants to consult their attorneys and consider non recourse advances where appropriate.

Misconceptions about third party funding continue to surface in policy debates and courtrooms, yet the commercial litigation finance market has become a practical bridge to justice for businesses facing costly disputes.

An article in Mondaq explains that funding enables claimholders to pursue meritorious cases without diverting operating capital, particularly when litigation spend and duration are unpredictable. It also addresses recurring critiques, including allegations of funder control, the risk of frivolous filings, and opaque arrangements. Industry participants point to non recourse structures, rigorous underwriting, and counsel independence as guardrails that align incentives. For corporate legal departments, financing can rebalance negotiating dynamics against well capitalized adversaries, support portfolio based risk management, and preserve budgets for core projects. As interest rates and legal costs rise, the economic rationale for external capital has only strengthened.

Commercial litigation finance remains an important access to justice tool in the United States, countering false narratives that have colored recent commentary. It explains that most agreements are non recourse, so funders recover only from successful outcomes, which moderates risk taking and screens out weak claims. The piece notes that funders contract for information rights and consent on settlement only in limited circumstances, while strategic decisions remain with clients and counsel under ethics rules and court oversight.

It also observes that funding can complement contingency arrangements, after the event insurance, and defense side budgeting, creating optionality for both plaintiffs and defendants. On disclosure, the article surveys a patchwork of rules and argues that blanket mandates could chill capital formation without improving case management, favoring targeted judicial inquiries instead.

Expect continued legislative and rulemaking activity on disclosure and conflicts management, alongside growing adoption of voluntary best practices. As data sets on funded matters mature, stakeholders will seek more empirical analysis of outcomes and impacts on settlement dynamics. Cross border frameworks and portfolio structures are likely to expand as corporate users normalize funding within broader capital planning.

A bipartisan coalition of U.S. Senators introduced sweeping federal legislation on February 12, 2026, that would require mandatory disclosure of third-party litigation funding (TPLF) in class actions and multi-district litigation proceedings. The Litigation Funding Transparency Act of 2026, sponsored by Senators Chuck Grassley (R-IA), Thom Tillis (R-NC), John Kennedy (R-LA), and John Cornyn (R-TX), represents the most significant federal legislative push for TPLF transparency to date.

As reported in the U.S. Chamber Institute for Legal Reform, the legislation would mandate public disclosure of third-party litigation funding arrangements and the underlying funding agreements in federal class actions and MDLs. Critically, the bill would also prohibit funders from controlling decision-making or overall litigation strategy in these cases. The legislation includes specific provisions requiring disclosure of foreign funding sources, addressing growing national security concerns about foreign entities bankrolling American litigation.

"Outside financiers treat our court system like a casino. They drive up costs for consumers and put our national and economic security at risk," said ILR President Stephen Waguespack in response to the bill's introduction. The legislation includes exemptions for domestic nonprofit organizations providing services on a nonprofit basis and certain commercial enterprises expecting loan repayment.

The U.S. Chamber of Commerce and multiple industry groups have endorsed the legislation, emphasizing that transparency will hold litigators accountable and protect consumers from rising costs and delays caused by external financial influences. The bill text is available through the Senate Judiciary Committee, marking a potentially transformative moment in the ongoing debate over litigation finance regulation.

Arizona is moving to tighten oversight of law firms that outsource legal work across state lines, signaling a renewed focus on the ethics and economics of cross-border legal services. The shift reflects broader concerns about client protection, unauthorized practice of law, and the evolving structure of modern law firms that increasingly rely on distributed teams.

An article in Bloomberg Law reports that the Arizona Supreme Court is advancing measures designed to limit the extent to which Arizona-licensed firms can “ship” legal work to lawyers in other jurisdictions. The proposed changes would require clearer disclosure when out-of-state attorneys handle matters for Arizona clients and reinforce rules around supervision and responsibility. Regulators have expressed concern that some firms may be leveraging lower-cost legal labor in other states without ensuring adequate oversight, potentially exposing clients to risk.

While outsourcing and multi-jurisdictional practice are hardly new phenomena, the court’s action underscores mounting scrutiny of how legal services are delivered in an era of remote work and alternative business structures. Arizona has been at the forefront of legal innovation, notably as the first US state to eliminate Rule 5.4’s ban on non-lawyer ownership of law firms. Yet this latest development suggests that innovation will be accompanied by guardrails aimed at preserving ethical standards and accountability.

For law firms operating nationally—or those backed by external capital—the message is clear: regulatory arbitrage may face increasing resistance at the state level. As alternative legal service models continue to expand, courts and regulators are likely to sharpen their focus on supervision, transparency, and client protection.