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High-Volume Claims Funding: Strategies for Efficiency and Risk Management

By Louisa Klouda |
May 13, 2024

High-Volume Claims Funding: Strategies for Efficiency and Risk Management

The following is a contributed piece by Louisa Klouda, CEO at Fenchurch Legal.

Litigation funding is a well-established concept that provides essential financial support for legal claims. While financing for high-value lawsuits is commonplace, small-ticket funding, especially at high volumes, remains a niche area.

This article explores the challenges and opportunities of funding high volumes of small-ticket claims. It outlines the strategies employed by some small-ticket litigation funders to efficiently manage these claims while ensuring investor confidence.

The Challenge of High-Volume Claims

While a single small claim might seem manageable, the sheer volume of “no win, no fee” cases can overwhelm a law firm’s financial and operational resources. Each claim demands substantial time and effort for investigation, evidence gathering, and legal representation.

Without additional funding, managing multiple cases simultaneously becomes a significant financial burden. This can limit a firm’s ability to take on new clients or dedicate sufficient resources to each claim.

Litigation funding bridges this gap by providing the resources law firms need to handle a high volume of claims effectively. Securing funding to cover the costs of these claims allows law firms to build strong processes and procedures, ultimately benefiting from economies of scale.

Strategies for Success

Firms specialising in high-volume claim funding can achieve success through a combination of technology, experienced teams, and robust processes.

  • Technology: State-of-the-art software isn’t just an advantage – it’s an imperative. It can streamline every aspect of the operations, automating repetitive tasks and facilitating efficient case vetting through rigorous risk management, ensuring efficient and reliable funding solutions.
  • Experienced Team: A knowledgeable team plays a crucial role in assessing claims, managing risk, and ensuring compliance with regulations. A team must go beyond just general experience – they should possess deep market knowledge and a nuanced understanding of the specific claim types.
  • Robust Processes: Clearly defined processes for loan approval, monitoring, and repayments are essential for maintaining transparency and accountability.

The Importance of Software

Limitations of manual processes can hinder efficiency. Software solutions can streamline the loan process, enhance risk management, and provide robust audit trails. This software should:

  • Facilitate Efficient Case Vetting: Streamline the process of assessing claims for eligibility.
  • Enhance Risk Management: Built-in safety measures can prevent errors like double-funding and identify potential risks.
  • Ensure Transparency and Accountability: Robust audit trails provide a clear picture of the funding process.

Funders like Fenchurch Legal have gone further. Recognising the limitations of off-the-shelf loan management software, they have built their own bespoke software, which serves as the backbone of their operations and enables them to manage a high volume of claims efficiently. It eliminates manual errors and incorporates built-in safety measures, such as preventing double-funded cases and cross-referencing duplicate data across the platform. This seamless approach is essential for managing drawdowns and repayments and ensuring the integrity of their funding processes.

A Streamlined Funding Process

An efficient funding process benefits both law firms and funders.  Here’s a simplified example of how it might work:

  1. Clear Eligibility Criteria: Law firms understand the types of cases that qualify for funding based on pre-agreed criteria (i.e., success rate thresholds).
  2. Batch Uploads: Law firms can easily request funding by uploading batches of cases to a secure online platform.
  3. Auditing and Approval: A sample of cases is audited to ensure they meet agreed upon terms. If approved, funding is released in a single lump sum.
  4. Monitoring and Repayment: Software facilitates seamless monitoring of the loans and the repayment status, ensuring efficient management of repayment schedules.

Managing Risk in High-Volume Funding

Risk management is vital in high-volume funding. Here are some strategies that can be employed to mitigate risk effectively:

  • Diversification: Spreading funding across different law firms and case types is a crucial strategy for mitigating risk in high-volume claim funding. It minimises overexposure and creates a well-balanced portfolio.
  • After the Event (ATE) Insurance: Provides an extra layer of protection for investments in high-volume claim funding. It specifically covers the legal costs if a funded claim is unsuccessful.
  • Rigorous Due Diligence: Thorough assessment of cases and the law firm’s capacity to handle them ensures informed decision-making.
  • Continuous Monitoring: Proactive risk identification and mitigation safeguard investments. This includes requesting regular updates and performance data from law firms.

Conclusion

By leveraging technology, team expertise, and robust processes, funders can efficiently manage high-volume small claims, presenting a compelling investment opportunity. This approach can minimise risk and ensure transparency throughout the funding process.

Fenchurch Legal specialises in this niche area, efficiently managing and supporting a high volume of small-ticket consumer claims with an average loan value of £3,000 each. They handle diverse areas such as housing disrepair and personal contract payment claims. Their proven track record of funding over 12,000 cases is driven by their bespoke software, knowledgeable team, and robust processes.

About the author

Louisa Klouda

Louisa Klouda

Commercial

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Commercial Legal Innovation

LSC Showcases Access-to-Justice Tech at San Antonio ITC

By John Freund |

The Legal Services Corporation (LSC) brought the access-to-justice conversation squarely into the technology arena with its 26th annual Innovations in Technology Conference (ITC), held this week in San Antonio. Drawing nearly 750 registered attendees from across the legal, business, and technology communities, the conference highlighted how thoughtfully deployed technology can expand civil legal assistance for low-income Americans while maintaining ethical and practical guardrails.

Legal Services Corporation reports that this year’s ITC convened attorneys, legal technologists, court staff, pro bono leaders, academics, and students at the Grand Hyatt San Antonio River Walk for three days of programming focused on the future of legal services delivery. The conference featured 56 panels—16 streamed online and freely accessible—covering topics ranging from artificial intelligence and cybersecurity to court technology, data-driven decision-making, and pro bono innovation.

LSC President Ron Flagg framed the event as a collaborative effort to ensure technology serves people rather than replaces human judgment. Emphasizing that technology is “not the answer by itself,” Flagg underscored its role as a critical tool when grounded in the real needs of communities seeking civil legal help. The conference opened with a keynote from journalist and author David Pogue, setting the tone for candid discussions about both the promise and limitations of emerging technologies.

A notable evolution this year was the introduction of five structured programming tracks—AI beginner, AI advanced, IT operations, client intake, and self-help tools—allowing attendees to tailor their experience based on technical familiarity and organizational needs. The event concluded with hands-on workshops addressing cybersecurity incident response, improving AI accuracy and reliability, change management for staff resilience, and user experience evaluation in legal tech.

Beyond the conference itself, ITC reinforced LSC’s broader leadership in access-to-justice technology, including its Technology Initiative Grants, AI Peer Learning Lab, and its recent report, The Next Frontier: Harnessing Technology to Close the Justice Gap. Senior program officer Jane Ribadeneyra emphasized the dual focus on informed leadership decisions and practical tools that directly support frontline legal services staff handling matters like eviction, domestic violence, and disaster recovery.

For the litigation funding and legal finance community, ITC’s themes highlight a growing intersection between technology, access to justice, and capital deployment—raising questions about how funders may increasingly support tech-enabled legal service models alongside traditional case funding.

Commercial

Litigation Financiers Organize on Capitol Hill

By John Freund |

The litigation finance industry is mobilizing its defenses after nearly facing extinction through federal legislation last year. In response to Senator Thom Tillis's surprise attempt to impose a 41% tax on litigation finance profits, two attorneys have launched the American Civil Accountability Alliance—a lobbying group dedicated to fighting back against efforts to restrict third-party funding of lawsuits.

As reported in Bloomberg Law, co-founder Erick Robinson, a Houston patent lawyer, described the industry's collective shock when the Tillis measure came within striking distance of passing as part of a major tax and spending package. The proposal ultimately failed, but the close call exposed the $16 billion industry's vulnerability to legislative ambush tactics. Robinson noted that the measure appeared with only five weeks before the final vote, giving stakeholders little time to respond before the Senate parliamentarian ultimately removed it on procedural grounds.

The new alliance represents a shift toward grassroots advocacy, focusing on bringing forward voices of individuals and small parties whose cases would have been impossible without funding. Robinson emphasized that state-level legislation now poses the greater threat, as these bills receive less media scrutiny than federal proposals while establishing precedents that can spread rapidly across jurisdictions.

The group is still forming its board and hiring lobbyists, but its founders are clear about their mission: ensuring that litigation finance isn't quietly regulated out of existence through misleading rhetoric about foreign influence or frivolous litigation—claims Robinson dismisses as disconnected from how funders actually evaluate cases for investment.

Commercial

ISO’s ‘Litigation Funding Mutual Disclosure’ May Be Unenforceable

By John Freund |

The insurance industry has introduced a new policy condition entitled "Litigation Funding Mutual Disclosure" (ISO Form CG 99 11 01 26) that may be included in liability policies starting this month. The condition allows either party to demand mutual disclosure of third-party litigation funding agreements when disputes arise over whether a claim or suit is covered by the policy. However, the condition faces significant enforceability challenges that make it largely unworkable in practice.

As reported in Omni Bridgeway, the condition is unenforceable for several key reasons. First, when an insurer denies coverage and the policyholder commences coverage litigation, the denial likely relieves the policyholder of compliance with policy conditions. Courts typically hold that insurers must demonstrate actual and substantial prejudice from a policyholder's failure to perform a condition, which would be difficult to establish when coverage has already been denied.

Additionally, the condition's requirement for policyholders to disclose funding agreements would force them to breach confidentiality provisions in those agreements, amounting to intentional interference with contractual relations. The condition is also overly broad, extending to funding agreements between attorneys and funders where the insurer has no privity. Most problematically, the "mutual" disclosure requirement lacks true mutuality since insurers rarely use litigation funding except for subrogation claims, creating a one-sided obligation that borders on bad faith.

The condition appears designed to give insurers a litigation advantage by accessing policyholders' private financial information, despite overwhelming judicial precedent that litigation finance is rarely relevant to case claims and defenses. Policyholders should reject this provision during policy renewals whenever possible.