For those litigation funders who achieve great success with their investments in meritorious claims, the financial returns can create the foundation for a long-term strategic growth. However, with the inherent risk at play in any legal funding enterprise, there will always be funders who do not survive in the market.

Reporting by The Law Society Gazette provides an update on the status of the collapsed litigation funder, VFS Legal, with administrators having reportedly been able to pay back millions of pounds to the company’s creditors by recovering loans taken out by law firms. 

In the last six months, administrators have reportedly been able to return £3.9m to VFS’ one secured creditor, resulting in a total of £22.2m in payments made to investor OBS. In addition to these sums paid to the creditor, administrators have also fully repaid £74,000 to preferential creditors. Finally, unsecured creditors who were owed a total of £9m have been given a final dividend of 5.34p on the pound.

Alvarez & Marsal Europe LLP, as the firm appointed to handle the administration of VFS, have reportedly accumulated £284,000 in time costs, with their final fees expected to exceed the starting estimate of £1.5 million.

As LFJ covered in August 2023 when VFS Legal had confirmed the appointment of administrators, the funder had reportedly provided £150 million in funding to support over 25,000 cases across the last eight years, with law firms including Slater and Gordon having previously received funding. However, by 30 June 2022, VFS reportedly owed £38.7 million in repayments within the following year, primarily comprised of a bank loan for £35.6 million.

Although commercial disputes and class action claims tend to dominate the headlines around legal funding, the world of international arbitration remains a market that currently presents an equal balance of challenges and opportunities for those funders willing to take on the risk of these complex disputes.

In an interview shared by Erso Capital, investment manager Sarah Breckenridge speaks with Baiju Vasani, barrister and arbitrator at Twenty Essex Counsel, to discuss the current state of the funding market for investment treaty disputes. In the interview, Breckenridge raises the question of whether it has become more difficult to secure litigation funding for these investment treaty cases. 

Vasani explains that whilst in the past this was a stable market, this trend of a “hardened” funding market has emerged in recent years. He goes on to note that there has been a “tightening” on funding availability since the outbreak of Russia’s war with Ukraine, and that “geopolitical volatility has created uncertainty in the market.”  As a result of these factors, Vasani illustrates a situation where “funders are somewhat reticent to invest in cases in a certain region”, with the imposition of sanctions playing a role in this reticence.

Vasani also highlights an issue that is “systemic to the ICSID” as a reason for these difficulties in obtaining funding, that being the simple facts that “cases are taking too long, costing too much” and identifies “some fatigue in the funding market with that situation.” However, Vasani provides an optimistic outlook that we may be at the peak of this cycle of prolonged case durations and exorbitant costs, and expressed hope that the “tightening of the market” is temporary.

As a final note of hope for the funding market, Vasani argues that “there is never a tightening of the market for a fantastic case, so if you’ve got a great case there is money available for it.”

As the legal funding market continues to expand its influence across the globe, with the practice seeing growth across a diverse array of markets, understanding the nuances at play in these different jurisdictions has never been more important.

Chambers and Partners has released its 2025 practice guide for litigation funding, providing a fresh look at the latest information on the legal and regulatory framework around legal funding. The guide’s global overview highlights the most prominent developments and challenges in the last year, noting that the rising demand for legal capital is being driven by emerging markets, whilst growing calls for regulation across the UK, USA and Europe have presented fresh obstacles for the industry to tackle.

The practice also delves into 11 key individual jurisdictions around the globe, offering more detailed information and analysis on the current rules and regulations in those countries. In addition to this outline of the rules in these jurisdictions, Chambers has included an update on the latest trends and developments in the following six jurisdictions: Germany, Italy, Spain, Turkey, UK and USA. In order to compile these useful insights on regional rules and trends, Chambers worked with the following legal professionals in each region:

• Australia: Susanna Taylor, Lina Kolomoitseva, Helen Roins, Justin Ward (Litigation Capital Management)
• Cayman Islands: Harriet Ter-Berg, Ellie Taylor (Appleby)
• Germany: Ulrich Lohmann, Christian T. Stempfle, Stefan Heinrichshofen (Peters, Schönberger & Partner mbB)
• India: Hiroo Advani, Justin M Bharucha, Sneha Jaisingh (Bharucha & Partners)
• Italy: Giorgio Afferni, Lavinia Florimo (Delex Law Firm)
• Japan: Kosuke Tsunashima, Shunsuke Domon, Shigeo Sato (Anderson Mori & Tomotsune)
• Spain: Jesús Rodrigo Lavilla, Alipio Conde Herrero, Silvia Ochoa Pérez (PLA Litigation Funding)
• Türkiye: Jonathan W Blythe, Gül Şengüler, Yasemin Akdeniz, Alp Göktuğ Kalmaz (Şengüler & Partners)
• UAE: Ais Lidzhanova, Michael Neumann, Oliver Ciric (TA Advisory)
• UK: Elena Rey, Tom McDonnell, Tracy Fisher (Brown Rudnick LLP)
• USA: Charles Agee, Wendie Childress, Gretchen Lowe (Westfleet Advisors)

Chambers’ Litigation Funding 2025 practice guide can be read in full here. 

In a series of posts on LinkedIn, The Association of Litigation Funders of Australia (AALF) announced that it has welcomed HKA Global and Vie as its newest Associate Members. With the addition of these two new members, AALF now boasts a total of 20 Associate Members in addition to its eight Funder Members.

On March 5, AALF welcomed HKA Global as an Associate Member. The global consultancy works across risk mitigation, commercial dispute resolution, expert witness and litigation support services. HKA's multi-disciplinary practice provides services including expert, claims, and advisory services for the capital projects and infrastructure sector, as well as forensic accounting and commercial damages services. With a worldwide presence spanning five continents, HKA’s Australia operations include offices in Brisbane, Melbourne, Perth and Sydney. More information about HKA Global can be found on its website.  

On March 6, AALF then welcomed Vie Legal Insurance as an Associate Member. As a specialist legal insurance broker, Vie Legal provides tailored solutions to a range of clients include funders, law firms, insolvency practitioners, and inhouse counsel. Clients include Holmann Webb Lawyers, Phi Finney McDonald, Litigation Lending and Therium. Based out of Sydney, Vie Legal works across the legal insurance markets in both Australia and New Zealand. More information about Vie Legal can be found on its website. 

A full list of AALF’s funder members and associate members can be found here.

Following the closure of the deadline for the consultation period in the Civil Justice Council’s (CJC) review of litigation funding, we are beginning to gain a clearer picture of where different parts of the country’s legal industry stand on the issue of regulation.

Two articles from Solicitors Journal provide insight into the positions of leading UK legal industry bodies in response to the CJC review, as the ACL (Association of Cost Lawyers) and CILEX (Chartered Institute of Legal Executives) expressed their support for increased regulation governing litigation funding.

The ACL voiced its overall positive view of the funding of meritorious claims, describing it as a “net positive” for the legal system and rejecting the idea that third-party funding increases litigation costs, but equally noted its concern that “the significant volume of funding coming into the market could have a negative impact”. In terms of the extent of independent regulation the ACL would like to see, proposed measures include a cap on funder’s fees, protections from excessive funder control of litigation, and increased transparency around the sources of outside funding.

However, the ACL also recognised legitimate concerns about some of these measures, noting that a funder’s return should reflect the significant risk being taken. If a suitable framework for a cap cannot be found, the ACL suggested that court of approval of funding agreements could provide an acceptable safeguard for clients. Jack Ridgway, chair of the ACL, emphasised that “Even opponents of third-party funding have to agree that it has increased access to justice and that ultimately is the litmus test.”

CILEX put forward its support for an improved regulatory framework for litigation funding, but suggested that the best approach may be through an expansion and improvement of the Association of Litigation Funders’ existing code of conduct. Like the ACL, CILEX advocated for greater transparency around litigation funding, and even went a step further, arguing for the mandatory disclosure of funding agreements. 

Simon Garrod, Director of Policy & Public Affairs at CILEX, acknowledged that litigation funding aims to “improve access to justice and it has achieved that in many cases”, but its impact on the legal system is significant enough to warrant “a more robust regulatory regime” to protect clients. 

The full article detailing the ACL’s position can be read here, and the article on CILEX’s view can be read here.

A decision handed down in the High Court earlier this week has demonstrated the potential value for funders in securing the assignment of a claim, providing the funder with more control over the litigation, and when a claim is successful, a direct return on investment through any eventual damages.

An article in Legal Futures covers the ruling from the High Court, where litigation funder Henderson & Jones has been awarded £2.15 million in damages in the case of Henderson & Jones Ltd v Salica Investments Ltd & Ors. Henderson & Jones took assignment of a claim by Tony Gifford in December 2021, a software inventor who had accused his early-stage investors of misusing confidential information shared in private meetings to develop their own software application. 

As a result of this breach of confidence, Mr Gifford claimed that he had been unable to secure funding from other investors, as Salica Investments and Dominic Perks had created competition through their own business. Mr Justice Calver’s ruling found in favour of Gifford’s claim, stating that it was “clear that Mr Perks stood to benefit personally financially from the misuse of the confidential information.”  Notably, the size of the eventual £2.15m award was made by the judge without any input from expert witnesses for the defendants, as they had failed to deliver expert reports prior to the deadline. 

Henderson & Jones’ managing director, Piers Elliott, provided the following comment on the judgment: “We’re very happy with the outcome and are delighted to have been able to assist Mr Gifford, who has been fighting for justice for many years.”

Hugh Sims KC and Jay Jagasia from Guildhall Chambers represented Henderson & Jones, instructed by Cardium Law Limited.

The full ruling from Mr Justice Calver can be read here.

General awareness and understanding of litigation funding has been on the rise in recent years, however, the prospect of approaching and utilising these services can be a daunting task for those law firms who have never before worked with a third-party funder.

Today, Westfleet Advisors has released the latest edition of their publication, Best Practices in Litigation Finance: Law Firm Guide to Client-Directed Funding. The 27-page whitepaper provides a holistic overview of all aspects of legal funding for law firms, taking the reader from a basic outline of litigation funding all the way through to the important factors that need to be considered when securing a funding arrangement.

Whilst each section of the guide offers specific advice on the different aspects of funding, Westfleet Advisors also offers key takeaways for law firms to be aware of.  One of the most noteworthy is the possibility of conflicts of interest arising when litigation counsel is involved in securing funding for clients, suggesting that independent expert advisors should be brought into the dealmaking process. Of similar importance, the guide emphasizes the value in law firms understanding the individual funders in the market and building relationships within this space, to ensure that they can direct their clients to the most suitable funding partner for any given case.

To download the full whitepaper, visit Westfleet Advisors’ website.