Legal Funding Journal is dedicated to informing and engaging the global legal funding community through daily news, insight, analysis and original content.

Two competition law academics have published a point-by-point examination of the German Chamber of Commerce and Industry's position on collective redress and litigation funding, concluding that several of the central claims advanced in support of tighter restrictions are false, misleading or unsupported.

As set out in a Kluwer Competition Law Blog analysis by Eduardo Silva de Freitas of the Asser Institute and Lena Hornkohl of the University of Vienna, the DIHK statement calls for litigation funders to be brought under supervision comparable to financial market regulation and for funding agreements to be disclosed in full. The authors test five of its underlying assertions.

The DIHK's claim that transparency requirements are lacking is assessed as false: Article 10 of the Representative Actions Directive already establishes disclosure obligations for litigation funding arrangements. The assertion that funders operate in a "nearly unregulated space" is described as misleading, the authors pointing to a European Commission study finding that third-party funding legislation exists in the vast majority of EU member states.

The claim of a widespread consensus that the Directive requires significant improvement is treated as unsupported, with the authors finding no sufficient body of independent studies behind it. The criticism that no minimum registration period applies to qualified entities is called misleading, since Article 4(3)(a) requires 12 months of actual public activity before designation.

The analysis reserves particular attention for the DIHK's figure that funders typically take 20% to 50% of damages. The authors describe this as misleading, noting that German law caps funder remuneration at 10% and that differentiated models operate below that level.

Management services organisations have become a leading route for outside investors to participate in the economics of US law firms without breaching the prohibition on non-lawyer ownership, and the structure is drawing sustained interest from private capital.

As explained in a Nixon Peabody analysis by Allan H. Cohen and Samantha R. Barbere, an MSO is a non-professional entity that provides administrative and support services to a professional practice. The arrangement separates professional ownership from administrative infrastructure: non-licensed investors may own the MSO, while licensed attorneys retain exclusive control of the law firm and all legal work.

The authors identify two principal motivations driving adoption. The first is access to capital, giving firms resources to invest in technology such as artificial intelligence and cybersecurity at a time of escalating client demands for efficiency. The second is partner liquidity — the bifurcated structure allows partners to monetise the value of their ownership through a sale to non-professional investors, expanding options beyond traditional buyouts and transactions between lawyers.

Execution requires care. Firms must transfer non-professional assets to the MSO and enter into an administrative services agreement governing the relationship. Critically, fees paid to the MSO must reflect fair market value for the services provided, rather than a percentage of revenue, in order to comply with the fee-splitting prohibition in ABA Model Rule 5.4(a).

For the litigation finance market, the structure matters because it represents a parallel channel for outside capital to reach the legal services sector — one that competes with, and in some cases complements, case-level and portfolio funding as a means of financing law firm growth.

A long-running opt-out collective action against Govia Thameslink Railway has come to an end after the claim failed to secure a replacement class representative backed by adequate funding and insurance, marking one of the more consequential funding-driven failures in the Competition Appeal Tribunal's collective proceedings regime.

As reported by Global Competition Review, the claim has collapsed as a result of funding problems. The proceedings, certified in October 2022, alleged pricing discrimination in the operator's fare structure on behalf of rail passengers.

The claim was left without a class representative following the death of David Boyle, who had brought the action. Walter Merricks, best known for leading the Mastercard collective action, applied to take over the role but withdrew in January 2026 after being unable to obtain after-the-event insurance for the proceedings.

That withdrawal carried its own consequences. As reported by the Law Society Gazette, the Tribunal ordered interim payments totalling £70,000 — £45,000 to the defendants and £25,000 to the estate — finding it "beyond argument" that reasonable costs incurred should be borne by Merricks and his funder, Litigation Capital Management. The Tribunal considered the £337,695 originally claimed to be excessive.

With the proceedings stayed, the Tribunal set a deadline of 4pm on 24 July for an application to approve a suitable replacement class representative, failing which the collective proceedings order would be revoked and the claim decertified.

The outcome underscores how tightly the viability of UK collective proceedings is bound to the availability of funding and ATE cover, and how quickly a certified claim can unravel when either becomes unobtainable.

A gap of nearly £18.3 million has opened between the after-the-event insurance held by the Duke of Sussex and his six fellow claimants and the costs now being claimed against them, in a case that illustrates the consequences of adverse-costs cover falling short of a defendant's actual spend.

As reported by Insurance Business, the seven claimants held a combined £16.2 million in insurance cover against adverse costs. Associated Newspapers Limited, publisher of the Daily Mail, has reported legal spend across the four-year case and 11-week trial of £34.5 million — more than £18.6 million above its approved budget.

The claimants, who include Baroness Doreen Lawrence and Sir Elton John, brought a privacy claim against ANL alleging unlawful information gathering. Mr Justice Nicklin dismissed the claim in its entirety on 7 July 2026, and a two-day costs hearing has since been held to determine how the losing side should pay.

Both sides accept that the claimants must cover ANL's costs. The central dispute is whether those costs fall to be assessed on the standard or the indemnity basis. An indemnity order would remove the proportionality constraint on recoverable costs and expose the claimants to a substantially larger bill, with the shortfall beyond the ATE limit falling on the claimants personally.

The dispute is a pointed reminder of a structural risk in funded and insured litigation: ATE policies are written against an estimate of the opponent's costs, and where a defendant's actual expenditure materially overruns its approved budget, the cover purchased at the outset may prove insufficient at the end.

Omni Bridgeway has closed its 2026 financial year with record figures on both sides of the ledger, reporting the largest annual commitment total in the group's history alongside a sharp increase in cash returned from concluded investments.

According to the funder's 4Q26 portfolio update, new conditional and unconditional commitments reached A$712.2 million across 43 new investments in FY26, approximately 38% above FY25 and a record for the group. A$343.0 million of that total was committed in the June quarter alone, as the pipeline flagged at 3Q26 converted into contracted investments.

Cash investment proceeds totalled A$350.5 million for the year, a 49% increase over FY25 excluding secondary sales and also a record. The group reported 80 completions delivering a 2.3x multiple on invested capital, with a further A$45.3 million in proceeds received after the June balance date at an estimated 5.7x MOIC.

Cost discipline featured prominently in the update. FY26 cash operating expenses came in at A$67.1 million, materially below the A$80 million budget, while management fees of A$35.4 million exceeded the upgraded FY26 target of A$35 million.

On capital formation, Omni Bridgeway said the full and final close of its US$1 billion Funds 4/5 Series II raise is anticipated in August. The group raised A$72.5 million in fee-paying sidecar capital during FY26, with roughly A$175 million of further sidecar capital currently in diligence, and reported 43 exclusive term sheets representing A$407.8 million in potential commitments.

Chief executive Raymond van Hulst said FY26 "was a year of disciplined execution," adding that the group "set records in both new commitments and investment proceeds while holding costs materially below budget."

The legal and economic foundations of opt-out competition claims in the United Kingdom are being tested with increasing rigour, as the Competition Appeal Tribunal and the appellate courts sharpen their examination of whether proceedings are proportionate, workable and genuinely beneficial to class members rather than to their advisers and funders.

As reported by Pinsent Masons, a series of recent decisions has established a markedly more demanding posture at the certification stage and beyond. In Mowi, the Tribunal declined to grant a collective proceedings order after concluding that the costs and benefits of the proposed proceedings did not support certification, expressing concern that any recovery might principally benefit legal advisers and funders rather than the represented class.

Other rulings have pressed on funder economics directly. The Tribunal approved a "drop hands" settlement in the Qualcomm proceedings — delivering no damages to an estimated 29 million consumers — only after close scrutiny and a finding that the claim had minimal prospects of success. In Innsworth, the High Court upheld limits on funder returns, confirming that a funder's profit must be assessed against the outcome actually delivered to the class and must represent a just and reasonable return.

Governance failures have also drawn consequences, with one case producing cost sanctions described as "unreasonable to a high degree" where funders withdrew without disclosure. Courts have separately warned that class representatives self-authorising fees at scale is undesirable and risks blurring the distinction between representative and funder interests.

The developments land alongside a government consultation on streamlining opt-out collective actions, open from 17 July to 25 September 2026, which is considering whether certification thresholds should place greater weight on proportionality and cost-benefit analysis.

Legal Bay LLC has extended its commercial litigation funding platform to cover cryptocurrency fraud claims, targeting a category of disputes in which claimants frequently hold substantial value that is illiquid or inaccessible while litigation proceeds.

According to a PR Newswire release, the new program is designed for victims of cyber and crypto-related fraud, allowing digital asset holders to access capital without liquidating holdings that are tied up in ongoing proceedings. The company said funding decisions typically arrive within 24 to 48 hours of documentation being submitted, and that the offering is available nationwide to plaintiffs, attorneys and commercial litigation clients.

Legal Bay chief executive Chris Janish said the firm believes it is "the first and most experienced company to evaluate and fund crypto cases nationwide," positioning the expansion as a first-mover step in a claim type that has grown alongside the broader digital asset market.

The move reflects a wider pattern in the funding industry, where capital providers have increasingly sought exposure to digital asset disputes — from exchange insolvencies and recovery actions to individual fraud claims — as the volume and complexity of such matters has risen. Cryptocurrency claims present a particular funding challenge: recovery can hinge on tracing assets across jurisdictions and counterparties, and claimants often face lengthy timelines with limited liquidity in the interim.

Legal Bay is a national provider of pre-settlement funding, commercial litigation funding and lawsuit funding. The company did not disclose the size of the capital allocation supporting the new program.

The European Commission's first enforcement action under the Digital Markets Act has opened the door to a fresh round of private damages litigation against Google, with third-party funders already positioned behind several of the claims.

As reported by Claims Journal, the $1 billion fine levied against Google for self-preferencing and restricting app developers has prompted price-comparison rivals across Europe to press for compensation, with the aggregate value of pending and prospective claims running into the billions.

Several actions are already well advanced. A Berlin court awarded German platform Idealo €465 million ($528.9 million) in November, and a Stockholm court in July ordered Google to pay roughly $1.97 billion including interest in the case brought by Sweden's PriceRunner. Italy's Moltiply Group, which operates Trovaprezzi.it, is seeking €2.97 billion, while U.K. comparison site Kelkoo is pursuing claims worth billions of pounds. Kelkoo chief executive Richard Stables said the company expects its claims "to be impacted somewhat by the DMA decision because it shows that Google is still self-referencing."

Litigation finance is a visible presence in the wave. LitFin is backing two claimant groups suing Google in Amsterdam over its shopping auctions, seeking more than $1 billion combined. LitFin chief operating officer Matej Pardo said "there are already a lot of these claims being filed, and probably more that are (being) prepared," while cautioning that such cases can take up to eight years to resolve.

Thomas Hoppner of Geradin Partners, which advised Idealo, said he expects the decision "will trigger a new wave of litigation." Google said it strongly disagrees with the lawsuits, describing the claimants as "companies looking for a payout instead of investing in their own products."

A new opinion piece out of Connecticut casts third-party litigation funding as an under-regulated market whose costs ultimately fall on the public, adding to the chorus of consumer- and insurance-side critics pressing for greater transparency.

As argued in a CT Insider op-ed by Lisa Lounsbury, president of Big I Connecticut, the growth of third-party litigation funding (TPLF) has turned lawsuits into an investable asset — with the resulting costs, she contends, showing up in higher insurance premiums borne by ordinary consumers.

Lounsbury acknowledges the access-to-justice case for funding, noting that it can help plaintiffs pursue legitimate claims they could not otherwise afford. But she argues that expanded access does not justify operating without meaningful transparency or consumer protections. In many states, including Connecticut, she writes, consumers who turn to litigation funders have little protection: the industry is largely unregulated, with no caps on fees, no clear disclosure of true costs, and inadequate safeguards against referral arrangements between lawyers and funders.

She reserves particular concern for disclosure in the courtroom, warning that funding deals often need not be revealed to judges — leaving courts unaware of who holds a financial stake, who may be influencing litigation decisions, and whether conflicts of interest exist. The piece adds a Connecticut voice to a national debate over how, and how much, the funding industry should be regulated.