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A Snapshot of ESG in Litigation Funding

August 18, 2022

A Snapshot of ESG in Litigation Funding

As the litigation funding market continues to grow and evolve, funders are placing a higher value on environmental, social and governance (ESG) issues. This development raises questions about the connection between ESG and litigation funding, how litigation funders are currently addressing ESG, and what the future of ESG in litigation funding will look like. The following article will offer answers to those questions and act as a general overview of the state of ESG in litigation funding.

What is ESG and Why Does it Matter?

ESG encompasses environmental issues like air or water pollution, social issues such as customer privacy and data security, and governance issues like transparency. ESG pursuits have come to the forefront of many corporate agendas over the last decade. In some cases, this focus may be self-imposed, but it’s often a legal requirement as well. Even as companies champion ESG to satisfy customers and shareholders, they don’t always stay in compliance with those values and/or laws. As the number of ESG-related laws and regulations increases, compliance will become a greater focus for companies and investors alike. Litigation exists as both a deterrent to, and a regulator of, ESG non-compliance. ESG cases in response to corporate non-compliance create the connection between ESG and litigation funding. As Tets Ishikawa, Managing Director at LionFish Litigation Finance stated, litigation funding of ESG cases has a key role to play in helping businesses meet their ESG goals. Corporate executives aren’t the only ones concerned about ESG issues, however; savvy investors also recognize the importance of ESG. Responsible investing in ESG causes is often an obligation for pension fund managers and other asset allocators. Even when that is not the case, investors increasingly see ESG as a priority, with 85 percent of investors interested in sustainable investing.

Litigation Funders Pursuing ESG Cases

Major players in the litigation funding arena are already talking about or pursuing ESG investments. Funders like Therium, Woodsfood, North Wall Capital, and Litigation Lending Services have prioritized ESG cases, and more funders will likely join them in the coming years. One leading litigation funder, Therium, emphasizes the importance of ESG as part of broader responsible investing efforts. Funding ESG legal action, the funder states, makes justice more accessible for those harmed in ESG breaches. Litigation funding helps those claims be brought, even when the claimants don’t have the resources to fund extensive legal battles. Woodsford is another litigation funder touting the value of ESG litigation. Bob Koneck, Director of LitFin and legal counsel at Woodsford, emphasized the potential of ESG litigation as a reputation-enhancing tool for companies. He claims that companies can position themselves as ESG leaders through litigation, while also recovering money to use toward additional ESG initiatives. This is a unique view on the value of ESG litigation that speaks to the potential these cases have for corporations. This past week’s news cycle illustrates how cemented the concept of ESG litigation has become within the litigation funding ecosystem, as both new entrants and entrenched players are making waves on the topic. North Wall Capital recently announced a $100 million investment into law firm Pogust Goodhead, with the aim of funding ESG cases specifically. Fabian Chrobog, Chief Investment Officer of North Wall, argues that ESG investment makes practical sense, as these cases maintain a higher probability of settlement than most other claim types. And Paul Rand, Chief Investment Officer of Omni Bridgeway, recently revealed that the longtime funder is planning the launch of an ESG Finance fund. According to Rand, Omni is currently testing bespoke techniques for valuing and assessing ESG risk management.

ESG Cases Funded by Litigation Funders

Airbus Case Funded by Woodsford One prominent ESG case organized and funded by a litigation funder, is the Airbus case financed by Woodsford. Investigations by international authorities including the US Department of Justice revealed that Airbus SE, a manufacturer of military and civilian aerospace products headquartered in Europe, had participated in a widescale bribery and corruption scheme. In 2020, the company was forced to pay billions of dollars of fines to resolve these bribery charges, causing a major dip in its share price. Airbus investors incurred serious losses due to these violations of ESG principles and Airbus’ failure to inform the public in a timely manner about its conduct. That’s where litigation funder Woodsford got involved. Woodsford organized the affected investors into a special purpose entity, Airbus Investors Recovery Limited (AIRL), which is currently pursuing legal action against Airbus in Amsterdam to recover losses. The ESG team at Woodsford is funding and organizing this action. Without such involvement, the claimants may not have been able to pursue action against a large company with such deep pockets. Being able to hold major corporations like Airbus accountable for their egregious ESG breaches is one of the most significant benefits of litigation funding. Litigation Lending Services’ “Stolen Wages” Claim Litigation Lending Services, an Australian litigation funder, funded another notable ESG case related to stolen wages. This class action began in September of 2016, and was a lawsuit on behalf of Aboriginal and Torres Strait Islander workers in Australia. The workers had been subject to ‘protection’ legislation from the late 1800s up to the 1970s. This wage control legislation led to tens of thousands of indigenous workers across a variety of industries never receiving their full wages, estimated to be millions of Australian dollars in total. Wage violations like these fall under the governance portion of ESG. Litigation Lending Services offered its support to the case, which reached a settlement of $190 million in December, 2019. To date, the case is the largest human rights case in Australian history. The settlement brought resolution to more than ten thousand First Nations people. Both of these cases illustrate the potential of ESG, and the possibilities for more ESG cases and litigation funder involvement in the future. In Conclusion Global legal actions related to ESG issues like climate change are increasing, and the targets of these lawsuits are shifting to include more corporations over time, rather than just governments. It’s worth noting that environmental issues often get the most attention, but ESG litigation goes beyond just environmental claims. Lawsuits involving fraud, disclosure rule breaches, diversity and equity, misrepresentation, and health and safety issues all fall under the category of ESG litigation. Environmental claims have seen the largest growth in the last few years, but we can expect other types of ESG lawsuits to increase as well. Another factor driving additional ESG litigation is the lack of clarity surrounding what exactly constitutes ESG. The intense focus on ESG is fairly new, meaning parties are not in complete agreement on the definition of ESG and how it should be measured and reported. As the number of ESG group claims increases, there’s room for growth in the litigation funding market. This industry is constantly evolving to keep up with broader trends in litigation, including the evolution of ESG claims. For now, it’s clear ESG will have a key role to play in the future of litigation funding.

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Ireland’s High Court Affirms Power to Order Disclosure of Third-Party Funding

Ireland's High Court has confirmed that it holds a general power to order the disclosure of third-party litigation funding arrangements, in a ruling that carries particular weight in a jurisdiction where such funding remains largely prohibited.

As reported by the Law Society of Ireland Gazette, the decision came in QPQ Limited v Schute [2026] IEHC 463, an intellectual-property dispute in which the defendant uncovered WhatsApp messages during discovery suggesting that a third party had funded the plaintiff's proceedings and might provide further backing. The defendant sought disclosure of the funding arrangements, arguing it was entitled to know its "true adversary."

Mr Justice Twomey held that the court could order disclosure of third-party funding independent of how that funding came to the court's attention. He drew a distinction between funding provided by parties with an existing interest in the litigation, such as shareholders or creditors, and funding from otherwise unconnected third parties.

"Certain forms of third-party funding of litigation … constitute a tort or crime," the judge observed. "Accordingly, there is a public interest in the exposure of such funding, if it exists."

The ruling underscores the continued restrictiveness of the Irish position, where the torts of maintenance and champerty still limit third-party funding outside a narrow set of exceptions. For non-Irish parties involved in commercial disputes with an Irish dimension, the decision is a reminder that funding arrangements assumed to be confidential elsewhere may be exposed to disclosure, and scrutiny, before the Irish courts.

Commercial

Investors Increasingly Bypass Funds to Back Litigation Directly

Institutional investors that have long fueled litigation finance through dedicated funds are increasingly going direct, putting capital straight into law-firm and case portfolios rather than routing it through intermediary funders. The shift lets them trim fees and exert greater control over the legal assets they hold.

As reported by Bloomberg Law, the trend marks one of the more pronounced changes in the market in recent years. "It's one of the clearest shifts in the market over the last couple of years," said Jim Batson, chief investment officer at Siltstone Capital.

For investors, the appeal is straightforward. Direct exposure removes a layer of management fees and gives allocators a closer view of underwriting, case selection, and portfolio construction. It also reflects a maturing asset class in which sophisticated capital is increasingly comfortable evaluating legal risk on its own terms.

The move is not without trade-offs. Intermediary funders bring specialized diligence, origination networks, and risk-management expertise that direct investors must otherwise build in-house. Litigation outcomes remain idiosyncratic and slow to resolve, and concentrated direct positions can magnify the timing and binary risks that diversified funds are designed to smooth.

The development lands amid broader signs of a market in flux, from large arbitration awards to high-profile funder insolvencies. As more capital seeks direct access to legal assets, the balance between funders and the investors who back them may continue to shift, with implications for pricing, transparency, and how litigation risk is ultimately distributed.

Commercial

Woodville Collapse Deepens as Administrators Probe £249M in Loans and Misapplied Investor Funds

The administration of Woodville Consultants, the litigation funder that helped bankroll the wave of UK motor-finance claims, is proving more consequential than its modest headcount suggested, with administrators now examining hundreds of millions of pounds in outstanding loans and the possible misapplication of investor funds.

As reported by Legal Futures, Woodville had funded more than 300,000 claims since 2019 and carried some £249 million in outstanding loans at the point of collapse — figures that stand in stark contrast to its staff of roughly 10. As many as six law firms are understood to be affected.

The funder's model required fixed quarterly returns and fixed repayment dates without reference to actual case recoveries, an arrangement fundamentally misaligned with the uncertain timelines of litigation. That mismatch became untenable once the Financial Conduct Authority's motor-finance redress scheme was suspended, leaving the underlying claims effectively on hold and cutting off the repayments Woodville expected from partner firms.

Administrators are now investigating how the company funded quarterly returns and redemptions to loan-note holders before its collapse, alongside potential wrongdoing and the misapplication of investor funds by directors and introducers. Joint owners Peter Legge and Ann Marie Bell opposed the administration order.

The failure follows a familiar pattern. Fenchurch Legal entered administration in April 2026 and Katch Fund Solutions in December 2025, both citing the prolonged resolution of motor-finance claims — underscoring the sector-wide strain the FCA's redress delays have placed on funders exposed to those cases.