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Maximizing Claimant Success: Harnessing the Synergy of Litigation Funding and Litigation Insurance

June 8, 2023

Maximizing Claimant Success: Harnessing the Synergy of Litigation Funding and Litigation Insurance

“The emergence of legal insurance products has been a game changer in allowing both clients and law firms to lock in judgments, ring fence potentially deleterious outcomes, and provide for certainty where uncertainty used to be the rule.” – Ross Weiner, Legal Director at Certum Group  Uncertainties abound in today’s complex legal landscape, leaving individuals and businesses vulnerable to the high costs associated with legal disputes. A pair of innovative solutions–litigation funding and litigation insurance–have emerged as powerful tools that, when utilized in tandem, can offer peace of mind to those involved in legal proceedings. In this article, we delve into the benefits inherent in synergizing these two forms of financial assistance, exploring the various types of litigation insurance, the individuals and entities that benefit from these products, and the numerous advantages they bring to the table.  Types of Litigation Insurance Products Below are popular forms of litigation insurance: 
  • After-the-Event (ATE) Insurance: ATE insurance policies are designed to protect litigants against the opposing side’s costs and expenses, should the claimants fail to win their case. It is typically purchased by plaintiffs, though some insurers do issue ATE insurance to defendants. These policies typically cover adverse costs, including the opponent’s legal fees and disbursements. ATE insurance is purchased after the event which prompts the claim, but before the legal proceeding initiates (the closer to the start of the proceeding, typically the more expensive ATE insurance becomes). As ATE insurance protects against an adverse costs award, it is not applicable in the United States, which does not have a cost-shifting regime in place (except in extremely rare circumstances). 
  • Before-the-Event (BTE) Insurance: BTE insurance, also known as legal expense insurance, offers coverage for potential legal costs before a dispute arises. This product provides coverage for legal expenses in various scenarios, such as personal injury claims or contract disputes. 
  • Judgement Preservation Insurance (JPI): JPI is exactly as it sounds–insurance that protects a claim or group of claims which have already received judgements. JPI is very straightforward, and essentially meant to be a math problem: If your judgment is X, and you receive Y, the insurer will cover the difference or a portion thereof. As such, documentation is minimal, with fraudulent activity being the primary exclusion inserted into the agreement.  According to Stephen Kyriacou, Jr., Managing Director and Senior Lawyer at Aon: “Judgment preservation insurance can be used for more than simply mitigating appellate risk. Judgment holders have used it to accelerate the recognition of judgment-related gains in their earnings, to monetize judgments while appeals are still pending, and even to convert more expensive unsecured debt into less expensive debt secured by the policy, since the policy effectively guarantees a minimum recovery so long as there is no collection or enforcement risk associated with the judgment.”
  • Litigation Funding Insurance: Litigation funding insurance is a specialized form of coverage designed to protect litigation funders, who provide financial support to claimants in exchange for a share of the proceeds, if the case is successful. This insurance safeguards funders against the risk of losing their investment in the event of an unsuccessful outcome. It provides critical protection against adverse cost orders and helps to minimize the financial risks associated with funding litigation. Stephen Kyriacou explains: “It has been a years-long challenge persuading certain insurers to consider insuring litigation finance-related risks, but we’ve seen recently that insurers have become much more willing to consider high-quality risks from funders when all parties work together to creatively structure coverage and properly align interests and incentives. As more insurers continue to come around to the idea of insuring funders over the coming years, the litigation and contingent risk insurance market will continue to grow, and even more value-creating solutions will become available to litigation finance firms.”
  • Portfolio Insurance: Portfolio insurance, also known as litigation risk portfolio insurance, is a comprehensive solution that covers multiple litigation cases within a portfolio. This type of insurance allows law firms, corporations, or litigation finance companies to spread the risk across a range of cases, reducing their exposure to any individual matter. Portfolio insurance offers cost predictability and stability, enabling stakeholders to manage their litigation risks more effectively and allocate resources strategically.
There have been other ancillary uses of insurance, such as when one firm looks to purchase the docket of another firm’s cases, or to insure a portfolio of IPs that have an associated value. As the Insurance and Litigation Funding industries continue to become intertwined, expect more bespoke products to emerge.   Users of Litigation Insurance Products There are three typical users of litigation insurance products: 
  • Individual Litigants: Individuals involved in legal disputes, such as personal injury claims or family law matters, can benefit from litigation insurance products. ATE and BTE insurance provide financial protection, enabling individuals who seek justice without the fear of exorbitant legal expenses.
  • Businesses and Corporations: Litigation can pose significant financial risks for businesses and corporations, diverting resources from core operations. Litigation insurance products help shield companies from the potentially crippling costs associated with commercial disputes, professional negligence claims, or intellectual property conflicts.
  • Law Firms: Law firms can also benefit from litigation insurance products. By offering these products to their clients, law firms enhance their value proposition, differentiate themselves in the market, and provide an additional layer of protection to their clients.
Benefits of Litigation Insurance Products The benefits of utilizing litigation insurance are clear-cut: 
  • Cost Mitigation: Litigation insurance products alleviate the financial burden associated with legal disputes. They cover legal costs, including solicitor fees, expert witness expenses, court fees, and opponent’s costs, reducing the financial risks for litigants and providing access to justice for those who might not have the means otherwise.
  • Risk Management: Litigation is inherently uncertain, with outcomes dependent on various factors. Litigation insurance acts as a risk management tool, providing litigants with the confidence to pursue their case knowing that their financial interests are protected. It enables litigants to make informed decisions based on the merits of their case rather than financial constraints. 
  • Enhanced Negotiation Power: Litigation insurance empowers litigants during settlement negotiations. With insurance coverage in place, litigants can approach negotiations from a position of strength, knowing that they have the financial resources to endure protracted litigation. This can lead to more favorable settlement outcomes and increased bargaining power.
  • Access to Justice: Perhaps one of the most significant benefits of litigation insurance is its role in ensuring access to justice for individuals and businesses. By removing financial barriers, these products level the playing field and enable litigants to pursue their legal rights, even against well-funded opponents.
Litigation funders understand the ‘access to justice’ problem quite well. Litigation insurance further contributes to the democratization of our legal system by ensuring that even if the claim is unsuccessful, claimants are protected from the potentially crippling costs of litigation. This assurance encourages claimants who may be otherwise deterred by the financial risks associated with litigation to pursue their claims with confidence. Consequently, the collective impact of litigation funding and insurance is an increased participation of claimants, a broader range of cases being pursued, and a more inclusive legal system. As Rebecca Berrebi, Founder and CEO of Avenue 33 points out, “The increased availability of insurance has enhanced the options available to claimants and law firms when it comes to protecting the downside of litigation. Only time will tell whether or not the litigation-focused products offerings will remain cost-effective additives to litigation finance.” Litigation Funding & Litigation Insurance Litigation insurance products have emerged as valuable tools in the legal landscape, offering financial protection and peace of mind to those navigating the complexities of litigation. Whether individuals seeking justice, businesses guarding against commercial risks, or law firms enhancing their service offerings, litigation insurance provides a range of benefits.  Similarly, litigation funding affords plaintiffs the opportunity to see their case to fruition, when there might otherwise be no avenue for remuneration. By combining litigation funding and litigation insurance, claimants gain access to a tailored financial solution that meets their specific needs. Each claim has unique financial requirements, and the flexibility of these tools allows claimants to structure a financial package that aligns with their case’s dynamics. This synergy offers claimants the freedom to allocate capital as required, covering legal costs, expert fees, and other case-related expenses while safeguarding against the risk of adverse costs. As the demand for these products continues to grow, they will mature into an integral part of the litigation landscape, empowering litigants and transforming the dynamics of legal proceedings for years to come. According to Boris Ziser, Partner and Co-Head of Finance and Derivatives at Schulte Roth and Zabel: “The growth of insurance products for the litigation funding space can be a real game changer, impacting not only the cost of capital, but expanding the universe of investors able to add this sector to their portfolios.” By integrating these two solutions, claimants can significantly enhance their prospects for success while reducing financial risks. This harmonious approach not only levels the playing field between claimants and well-resourced opponents, but also promotes a fairer and more accessible legal system.

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FCA Warns Consumers Over Loan Notes and Mini-Bonds, Citing Litigation Funder Collapse

The Financial Conduct Authority has issued a consumer warning on high-risk mini-bonds and loan notes sold by unregulated firms, pointing directly to the collapse of a litigation funder as an illustration of what can go wrong.

As reported by Money Marketing, the regulator told consumers they could lose their entire investment in such products, and highlighted the failure of Woodville Consultants, which raised capital from retail investors through unregulated loan notes before entering administration. The FCA permanently banned the marketing of speculative illiquid securities, including mini-bonds and loan notes, to retail consumers in 2021, yet the products continue to surface in online advertising.

The regulator set out a series of warning signs for investors: pressure to commit quickly, vague explanations of how money could be lost, unsubstantiated claims that an investment is asset-backed, the involvement of unregulated introducers, pressure to self-certify as an experienced or high-net-worth investor, unclear fee structures and conflicts of interest, and attempts to create a false impression of legitimacy through links to regulated firms or overseas listings.

Lucy Castledine, the FCA's director of consumer investments, said: "Big, fixed returns are a warning sign, not a guarantee." The regulator has issued more than 1,200 warnings during 2026 and urged consumers to use its Firm Checker tool before parting with money. Separately, City AM reported that Woodville defaulted owing over £240m to investors. For the funding industry, the episode marks a shift in how regulators frame the sector's retail-facing edge — not as a niche investment product, but as a consumer protection problem.

Commercial

Investigation Traces How Collapsed Funder Woodville Raised More Than £300m From Retail Investors

A new investigation has reconstructed how Woodville Consultants, the Welsh litigation funder that collapsed into administration in July 2026, raised in excess of £300m from individual investors to bankroll law firms pursuing car finance commission claims.

As reported by Car Dealer Magazine, drawing on an investigation by The Times, Woodville continued raising money through unregulated loan notes after the Financial Conduct Authority asked the business in 2022 to cease financial promotions relating to investments or loans. In that same year the regulator placed Integrity Protect No 1 — a company run by directors Ann Marie Bell and Peter Legge — under restrictions over its handling of loan notes, citing evidence of borrowing funds via loan notes using Woodville's bank account.

The fundraising reached well beyond the UK, with the operation expanding to target investors in South America, Europe and Africa. It drew on sales networks connected to failed investment schemes, including the 79th Group, which is the subject of a City of London Police fraud investigation. Promoters are reported to have earned commissions of 10% to 15%, which some investors say were never disclosed to them.

Robert Goodhew of Kroll, appointed as administrator, said: "Based on the information currently available to us, we believe that more than £300 million has been raised from investors." Administrators are now examining how assets were distributed, whether the underlying legal claims were viable, payments made to third parties, and whether the business model was sustainable at all. The case has become the sharpest example yet of the risks created when consumer claims funding is financed from the retail investment market rather than institutional capital.

Commercial

Brazilian Funder Sues Pogust Goodhead for £84m Over Handling of Litigation Proceeds

The law firm at the centre of the largest group claim in English legal history is being sued by one of its own funders, in a dispute that turns on how litigation proceeds are routed once they reach a firm's client account.

As reported by City AM, Brazilian financial services firm Vinci SPS Capital Gestão de Recursos Ltda has issued High Court proceedings against Pogust Goodhead, seeking £84m plus roughly £600,000 in legal costs arising from pre-action correspondence and an earlier injunction application. Vinci SPS originally advanced 90.09m Brazilian Reais, or about £12.8m, to the firm.

The claim centres on an interim costs payment of £42.7m that landed in Pogust Goodhead's client account. Vinci SPS alleges the firm breached its obligations by agreeing to disburse litigation proceeds to barristers and after-the-event insurers without lender consent, and by failing to move the £42.7m into a designated receivables account — an account the funder says took more than four and a half years to open. Pogust Goodhead's position is that it cannot transfer the money until it invoices its claimants, and cannot invoice until it discharges a trust operating in favour of its ATE insurers. Vinci SPS contends its own rights take priority. Fieldfisher acts for the funder; DAC Beachcroft is defending the firm.

The proceedings arrive against a heavily financed backdrop. Gramercy Funds Management, a separate funder, signed a $552.5m facility with Pogust Goodhead in October 2023 and added a further $150m in June 2026. The firm was also sued by Seladore Legal for £2.2m in May 2025. Its flagship matter remains the BHP litigation over the 2015 Brazilian dam disaster that killed 19 people, in which the High Court found BHP liable in November 2025. The next phase of that trial, dealing with causation and loss, begins in April 2027.