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Let’s Get the Definition Right: Litigation Financing is Not Consumer Legal Funding

By Eric Schuller |

The following was contributed by Eric K. Schuller, President, The Alliance for Responsible Consumer Legal Funding (ARC).

Across the country, in both state capitols and Washington, D.C., policymakers and courts are giving increasing attention to the question of “litigation financing” and whether disclosure requirements should apply. At the heart of this debate is a push for transparency, who is funding lawsuits, what contracts exist, and what parties are behind those agreements.

While the intent is understandable, the challenge lies in the lack of a consistent and precise definition of what “litigation financing” actually is. Too often, broad definitions sweep in products and services that were never intended to fall under that category, most notably Consumer Legal Funding. This misclassification has the potential to cause confusion in the law and, more importantly, harm consumers who rely on these funds to stay afloat financially while pursuing justice through the legal system.

As Aristotle observed, “The beginning of wisdom is the definition of terms.” Without careful definitions, good policy becomes impossible.

The Distinction Between Litigation Financing and Consumer Legal Funding

The difference between litigation financing and Consumer Legal Funding is both simple and significant.

Litigation financing, sometimes referred to as third-party litigation funding (TPLF), typically involves an outside party providing monies to attorneys or to plaintiffs’ firms to pay for the costs of bringing or defending lawsuits. These funds are used to pay legal fees, expert witnesses, discovery expenses, and other litigation-related costs. The funders, in turn, often seek a portion of the litigation’s proceeds if the case is successful. In short, this type of financing directly supports the litigation itself.

Consumer Legal Funding, on the other hand, serves an entirely different purpose. In these transactions, monies are provided directly to consumers, not attorneys, for personal use while their legal claim is pending. These funds are not used to pay legal fees or case expenses. Instead, consumers typically use them for necessities such as rent, mortgage payments, groceries, utilities, childcare, or car payments. Funding companies are not influencing the litigation but rather ensuring that individuals have the financial stability to see their case through to its conclusion without being forced into a premature settlement simply because they cannot afford to wait.

This is why treating Consumer Legal Funding as though it were litigation financing is both inaccurate and potentially harmful.

Legislative and Judicial Recognition of the Difference

Several states have already recognized and codified this critical distinction. States including Arizona, Colorado, Louisiana, and Kansas have examined disclosure requirements for litigation financing and have made it clear that Consumer Legal Funding is not subject to those laws. Their statutes expressly define litigation financing in a way that excludes consumer-focused products.

Courts have also weighed in. In Arizona, for example, the state’s rules of civil procedure expressly carve out Consumer Legal Funding, recognizing that these transactions are unrelated to litigation financing and should not be treated as such. Likewise, when the Texas Supreme Court considered proposed rules surrounding litigation financing, the Court ultimately declined to proceed. While no new rule was adopted, the process made clear that Consumer Legal Funding was not intended to be part of the conversation.

These examples demonstrate that policymakers and jurists, when carefully considering the issue, have consistently drawn a line between products that finance lawsuits and those that help consumers meet basic living expenses.

Why the Distinction Matters

The consequences of failing to make this distinction are not abstract, they are very real for consumers. If disclosure statutes or procedural rules are written too broadly, they risk sweeping in Consumer Legal Funding.

Disclosure requirements are aimed at uncovering potential conflicts of interest, undue influence over litigation strategy, or foreign investment in lawsuits. None of these concerns are relevant to Consumer Legal Funding, which provides personal financial support and, by statute in many states, explicitly forbids funders from controlling litigation decisions.

As Albert Einstein noted, “If you can’t explain it simply, you don’t understand it well enough.” When the difference between litigation financing and Consumer Legal Funding is explained simply, the distinction becomes obvious. One finances lawsuits, the other helps consumers survive.

A Clear Request to Policymakers

For these reasons, we respectfully urge legislators and courts, when drafting legislation or procedural rules regarding “litigation financing,” to clearly define the scope of what is being regulated. If the issue is the funding of litigation, then the measures should address the financing of litigation itself, not the consumer who is simply trying to pay everyday bills and keep a roof over their head while awaiting the resolution of a legal claim.

Clarity in definitions is not a minor issue; it is essential to ensure that the right problems are addressed with the right solutions. Broad, vague definitions risk collateral damage, undermining access to justice and harming the very individuals the legal system is meant to protect. By contrast, carefully tailored definitions ensure transparency in litigation financing while preserving critical financial tools for consumers.

Finally

The debate around litigation financing disclosure is an important one, but it must be approached with precision. Litigation financing and Consumer Legal Funding are two fundamentally different products that serve very different purposes. One finances lawsuits, the other helps individuals survive while waiting for justice.

It is important to begin with a clear definition. As Mark Twain wisely noted, “The difference between the almost right word and the right word is really a large matter, ’tis the difference between the lightning bug and the lightning.” If legislators and courts wish to regulate litigation financing, they must do so with precision, ensuring clarity in the law while also preserving the essential role that Consumer Legal Funding plays in supporting individuals and families during some of the most difficult periods of their lives.

Shai Silverman Departs CAC Specialty, Joins Litica as U.S. Head of Underwriting

By John Freund |

After four years helping to build CAC Specialty’s contingent risk insurance practice from the ground up, Shai Silverman is departing the firm to join litigation risk insurer Litica as its Head of Underwriting – U.S.

In a LinkedIn post, Silverman reflected on his time at CAC, where he joined in the early days of the firm’s efforts to turn contingent risk insurance into a mainstream product. Alongside colleagues Andrew Mutter, Michael B. Wakefield, and David Barnes, Silverman helped develop insurance solutions for a wide array of legal risks, crafted bespoke products for hundreds of clients, and played a key role in launching the first-ever contingent risk insurance conference.

Silverman now moves to Litica, a UK-headquartered specialist insurer focused on litigation and contingent risks, to lead its U.S. underwriting function. His move signals not just a personal transition but also the growing transatlantic ambitions of insurers operating in this once-niche corner of legal risk.

Silverman’s departure marks a broader inflection point for contingent risk insurance—a sector now poised for significant expansion. As underwriting talent like Silverman shifts into leadership roles at specialist firms, questions emerge around how traditional insurers will respond, and whether contingent risk insurance will continue its trajectory toward becoming a standard risk-transfer tool for litigation and arbitration.

Therium Capital Advisors Launched to Provide Litigation Finance Advisory Services

By John Freund |

Therium Capital Advisors (TCA) announced today the launch of its independent advisory services business dedicated to helping claimants, law firms and corporates to source, structure and secure litigation finance. TCA offers end-to-end support including funding strategy, investor engagement, financial modelling, deal structuring, ongoing case management and secondary market advisory. Based in London, the firm is advising on deals in the UK, continental Europe and Australia.

Therium Capital Advisors is led by litigation funding pioneer Neil Purslow and co-founded by investment banker Harry Stockdale. Neil has over 16 years of experience in litigation finance, raising capital and investing worldwide across all forms of litigation finance from single cases funding through to portfolio, corporate and law firm funding arrangements. Harry was previously head of UK M&A at investment bank Haitong with twenty years of experience in investment banking, advising law firms and litigation funders on complex financial transactions.  

TCA is the first advisory firm to provide clients with advisory services that are backed by a deep understanding of litigation finance investing coupled with the financial and transactional expertise of investment banking. Therium Capital Advisors bridges the gap between claimants, law firms and corporates on the one side and existing and new sources of institutional capital on the other.  Through the combined expertise of its founders, TCA opens up the investor universe that is available to clients and drives quality in the investment propositions, efficiency in the funding process and competition in the funding market.

TCA exclusively advises claimants, law firms and corporates, ensuring that it remains conflict-free.  The firm advises across the full range of legal assets including single case and portfolio funding, law firm financing, financing options for corporates and existing portfolios of legal assets.   

Neil Purslow, co-founder and Managing Partner of Therium Capital Advisors said: “We are at a pivotal moment in the development of the legal finance industry, given the relative paucity of traditional funding capital available.  However, we are seeing a shift towards new categories of investors in legal assets who want exposure to this uncorrelated asset class. By leveraging our unrivalled experience across both litigation funding and investment banking, we are assisting our clients to navigate this landscape with confidence, speed and understanding, and we provide them with access to a broader set of funding options and to meet their funding needs efficiently and cost effectively.”

Harry Stockdale, co-founder and Partner of Therium Capital Advisors said: “We are bringing an investment banking mind set to the litigation funding world which has developed largely without the benefit of specialist advisors. This professionalisation of the funding process will make the sector more efficient and accessible to a wider audience of investors in addition to the traditional litigation funders. We are already seeing the benefit of this, for both clients and investors alike, and is part of the maturing of litigation finance as an asset class.”

Therium Capital Advisors provides the following services to claimants, law firms and corporates:

  • Deal Preparation: Preparing funding propositions to be investment-ready.
  • Capital Sourcing: Identifying and engaging with suitable funders and capital providers from across the spectrum of legal assets investors.
  • Financial Modelling and Analysis: Providing robust financial modelling and scenario analysis to evaluate deal structures and model returns.
  • Investor Materials and Outreach: Advising on the preparation of investor-facing materials and documentation, inserting rigour and discipline to ensure efficiency in the funding process.
  • Co-Funding: Advising on the identification and engagement of potential co-investors to optimise risk-sharing and capital raising.
  • Negotiating Funding Terms: Leading negotiations with investors to secure terms which balance commercial viability with the interests of the funded party.
  • Deal Structuring and Documentation: Advising on deal structures and overseeing the drafting and execution of all relevant documentation.
  • Post-Funding Case Management: Providing ongoing monitoring, reporting, and servicing support post-funding on behalf of the claimant, to manage risks and support positive case outcomes.
  • Secondary Market Advisory: Advising on secondary transactions of existing legal assets including sub-funding arrangements and exits.

More information can be found at: www.therium.com/theriumcapitaladvisors

Calls Grow for Litigation Funding Disclosure Rules

As third-party litigation finance scales across commercial disputes, courts and policymakers are weighing whether—and how—to require disclosure of funding arrangements.

An article in Bloomberg Law News states that proponents argue that targeted transparency can illuminate potential conflicts, clarify control over litigation decisions, and help judges manage complex dockets without chilling meritorious claims. Opponents warn that blanket disclosure risks revealing strategy, upending privilege, and inviting harassment of funded plaintiffs. The debate, once theoretical, is increasingly practical as capital providers back high-stakes cases, class actions, and MDLs, and as a patchwork of local rules and standing orders nudges the industry toward more consistent practices.

Litigation funding’s growing influence on case dynamics warrants a disclosure rule, emphasizing that transparency can bolster fairness and the integrity of proceedings. The piece notes recurring flashpoints: who controls settlement decisions, whether funders exert improper influence, how agreements intersect with privilege and work product, and what conflicts might arise for counsel or class representatives. It outlines possible frameworks, from limited, court-facing disclosures at filing to in camera review of funding agreements and sworn certifications about control, veto rights, and fee waterfalls. According to the article, calibrated disclosure—rather than broad, party-to-party exposure—could give judges essential visibility while minimizing competitive harm and discouraging fishing expeditions.

If proposals coalesce around narrow, court-directed disclosures, more districts could codify consistent requirements, reducing uncertainty for funders and litigants. Fund managers may respond by standardizing governance, conflict checks, and documentation to support certifications on control and settlement authority.

For complex litigation—especially MDLs and class actions—measured transparency could improve case management and reduce satellite disputes, while preserving confidentiality that enables financing to continue filling access-to-justice gaps.

Irish Minister ‘Very Hesitant’ On Third‑Party Funding

By John Freund |

The Minister for Justice in Ireland has expressed serious reservations about introducing third‑party litigation funding. Speaking at a dispute resolution conference hosted by Mason Hayes & Curran, Jim O’Callaghan emphasized his concern about “commodifying justice” and his reluctance to see lawyers as the principal beneficiaries of funding regimes. He pledged to review the forthcoming report from the Law Reform Commission (LRC) before making any decisions.

An article in Law Society Gazette reports that under current Irish law, third-party litigation funding by parties without a legitimate interest in the dispute is prohibited, though exceptions exist. O’Callaghan acknowledged the potential access‑to‑justice benefits of such funding, but warned that in practice the “big winners” tend to be lawyers. He stated, “I have no interest, in my role as Minister for Justice, in enriching lawyers.”

During the same panel, barrister Emily Egan McGrath SC noted that Irish courts have expressed growing frustration at the absence of legislative reform and have sometimes stretched existing exceptions—for example, in Campbell v O'Doherty, where the High Court rejected a challenge linked to crowdfunding. The panel also discussed evolving developments under EU law—such as the Representative Actions Directive—which may force Ireland’s hand. But speakers cautioned that the high costs of mass actions might discourage parties without funding support.

MHC partner Colin Monaghan observed heightened wariness in the UK about unregulated litigation funders, while Rory Kirrane SC warned of internal conflicts between funders and claimants over litigation proceeds. The panel speculated that any regulatory framework should fall under existing bodies (such as the Central Bank or CCPC) instead of creating a new oversight agency. Former Chief Justice Frank Clarke, president of the LRC, endorsed reform as essential—but insisted it must be accompanied by rigorous regulation.

O’Callaghan’s expressed reluctance signals that any move toward regulated third‑party funding in Ireland will face political and institutional resistance. For the legal funding industry, this cautious posture underscores the importance of demonstrating safeguards, transparency, and proportionality if funding models are to gain traction in conservative jurisdictions.

Funder Bets Big on Kalshi Lawsuit

By John Freund |

A litigation funder is driving lawsuits against prediction market platform Kalshi Inc. in six states, using an 18th‑century gambling law in a bid to claw back losses from predictions gone wrong.

An article in Bloomberg Law describes how Veridis Management LLC and its CEO, Maximillian Amster, are behind entities filing suits in Ohio, Kentucky, Illinois, South Carolina, Massachusetts and Georgia. The lawsuits invoke state versions of the anti‑illegal gambling “Statute of Anne,” which allows losing parties to sue winners for losses plus fees.

The targeted suits allege that Kalshi—which operates as a platform for trading event contracts—is facilitating illegal, unregulated wagering and violating both state and federal law. The complaint includes examples such as bets on NBA championship scores and whether Gavin Newsom becomes the Democratic nominee in 2028.

The plaintiffs also name Robinhood and Webull, platforms that host Kalshi’s contracts, as defendants. While Kalshi declined to comment, the article notes that Kalshi’s status as a designated contract market under the CFTC is central to the legal conflict: that designation shields it from state gambling regulation, but its boundaries are under scrutiny. A U.S. court has already weighed in, ruling that prediction of a political election does not qualify as “gaming” under the Commodity Exchange Act.

Veridis is portrayed as a specialist in complex litigation and regulatory claims, investing in high‑stakes, nonrecourse cases. Amster, formerly in real estate and private equity, steers this strategic litigation play. The article frames the Kalshi suits as a bold frontier for litigation funders—leveraging obscure statutes to attack financial innovation.

These developments may push litigation funders further into regulatory and doctrinal controversy. How courts and regulators respond to this stretch of archaic statutes could reshape strategic boundaries in the litigation finance industry.

Does Mass Litigation Really Harm the Economy?

By John Freund |

Recent commentary in Law Gazette examines claims that the growth of collective litigation poses a damaging drag on economic performance. The article notes that the pressure group Fair Civil Justice estimates that unchecked mass claims could cost the UK up to £18 billion, erode £11 billion in market value from innovative firms, and slow the country's economic expansion. The article traces the evolution of these arguments, arguing that some of the most dire projections hinge on models that may overstate systemic risk or underplay countervailing benefits.

An article in Law Gazette highlights critics' concerns that the scale, costs, and complexity of aggregating claims impose administrative burdens, encourage excessive fees, and generate uncertainty—especially for firms facing litigation exposure.

Supporters of collective actions stress the role these mechanisms play in providing access to justice—particularly for dispersed or under-resourced claimants. The commentary suggests the debate often pivots on how to balance deterrence, fairness, cost control, and innovation incentives. Law Gazette ultimately questions whether the worst economic forecasts are empirically grounded or rhetorical excess.

The piece does not settle the question definitively but invites policymakers and industry stakeholders to interrogate the assumptions behind £‑billions‑scale estimates, and to examine whether reforms or guardrails might preserve the virtues of collective redress while limiting speculative or obstructive litigation risk.

If the narrative of mass litigation harming growth gains traction, legal funding and litigation finance will be pushed deeper into regulatory debates. Watching how lawmakers, courts, and economic commentators reconcile access to justice with macroeconomic risk will be critical for the future of third‑party funding.

LCM Share Crash Signals Pressure on Litigation Funders

By John Freund |

Shares of Litigation Capital Management (LCM) plunged about 60% after the firm disclosed that a string of case losses has triggered “a material uncertainty in relation to our going concern status.”

According to its results for the year to 30 June, LCM won six and lost six cases, with three further cases currently under appeal (worth ~£22 million). The firm also disclosed a High Court defeat in a commercial matter where it had invested £16 million (its own funds plus managed funds). While it posted net gains of £11 million and a 1.8× multiple on concluded investments, overall it recorded a £41 million loss because of the adverse outcomes.

With debt levels rising and cash realizations weakening, LCM now finds itself increasingly reliant on its credit facility. The company acknowledges that further case losses could breach debt covenants, prompting a strategic review and consideration of a leaner, run‑off model. LCM’s share closed at an all‑time low of 10.75p—down from ~100p a year earlier.

CEO Patrick Moloney attributed the underperformance to the inherently binary nature of litigation funding—and to perceived drift from a formerly “hands‑on” model toward a more passive, lawyer‑led investment approach. To recover, LCM is cutting costs, trimming underperforming investments, reinstating rigorous quantitative due diligence, reducing staffing, and revamping its approach to expert evidence.

LCM currently has 53 active cases on its books with a total balance sheet exposure of ~£85 million.

LCM’s collapse is a cautionary tale for the litigation funding sector: the binary risk profile of legal finance, combined with leverage and reputation shocks, can quickly tip even seasoned players into crisis. If more funders follow this trajectory, we may see heightened demands for transparency, stronger regulatory oversight, or a shake‑out in the publicly traded tier of legal funders.

Critics Argue Litigation Funding May Lift Malpractice Insurance Premiums

By John Freund |
Healthcare malpractice insurers are re-evaluating how third-party litigation funding could alter claim dynamics, with potential knock‑on effects for premiums paid by physicians, hospitals, and allied providers. An article in South Florida Hospital News and Healthcare Report points out that for providers already facing staffing pressures and inflation in medical costs, even modest premium shifts can ripple through budgets. Patients may also feel indirect effects if coverage affordability influences provider supply, practice patterns, or defensive medicine. While clearly antagonistic towards the industry, the piece outlines how prolonged discovery, additional expert testimony, and higher damages demands can flow through to insurers’ loss ratios and reserving assumptions, which ultimately inform premium filings. It also notes that providers could see higher deductibles or retentions as carriers adjust terms, while some plaintiffs may gain greater access to counsel and case development resources. For litigation funders, med-mal remains a critical niche. Watch for state-level disclosure rules, court practices around admissibility of funding, and evolving ethical guidance—factors that will shape capital flows into healthcare disputes and the trajectory of malpractice premiums over the next few renewal cycles.