Republican lawmakers have renewed their push to rein in third-party litigation funding, with a House Judiciary Committee debate highlighting how politically charged the issue has become.

An article in The Daily Signal reports that members of the House Judiciary Committee clashed this week over legislation that would require disclosure of third-party litigation funding arrangements in federal courts. Supporters of the bill framed it as a transparency measure aimed at exposing the financial interests behind major lawsuits, while opponents warned that the proposal risks limiting access to justice and unfairly targeting a growing segment of the legal finance market.

During the committee debate, Republican lawmakers argued that outside investors are increasingly influencing litigation in ways that can distort outcomes and inflate settlement values. Several speakers characterized litigation funders as profit-driven actors operating in the shadows, asserting that judges and defendants deserve to know who stands to benefit financially from a case. Proponents also linked litigation funding to broader concerns about rising legal costs and what they describe as abusive litigation practices.

Democratic members pushed back, questioning whether the bill was designed to solve an actual problem or simply to deter plaintiffs from bringing legitimate claims. Critics of the proposal argued that disclosure requirements could chill funding for complex and expensive cases, particularly those involving individual plaintiffs or smaller businesses facing well-capitalized defendants. They also raised concerns about confidentiality and whether revealing funding arrangements could give defendants a tactical advantage.

The debate reflects a broader national conversation about the role of litigation finance in the civil justice system. While disclosure requirements have already been adopted in certain courts and jurisdictions, the proposed legislation would impose a uniform federal standard. Supporters say this consistency is overdue, while opponents argue it could undermine carefully negotiated funding structures that allow cases to proceed at all.

The insurance industry has intensified its campaign for greater scrutiny of third-party litigation funding, with one of its most influential trade groups backing new federal legislation aimed squarely at disclosure.

An article in Insurance Journal reports that the American Property Casualty Insurance Association has thrown its support behind a proposed federal bill that would require parties in civil litigation to disclose the existence of litigation funding agreements. The legislation, which is currently being considered by the House Judiciary Committee, would mandate that courts be informed when a third party has a financial stake in the outcome of a lawsuit. Proponents argue that this information is essential for judges to understand who stands behind a claim and whether outside financial interests may be influencing litigation strategy.

APCIA framed its endorsement around long-standing concerns about rising litigation costs and what insurers describe as “social inflation.” According to the group, undisclosed litigation funding arrangements can drive up claim severity, prolong disputes, and ultimately increase costs for insurers and policyholders alike. By requiring transparency, APCIA believes courts would be better positioned to manage conflicts of interest, assess discovery disputes, and evaluate settlement dynamics.

The association has been an active voice in the national debate over litigation finance for several years, often aligning with other insurance and business groups calling for disclosure regimes at both the state and federal level. APCIA leadership emphasized that the proposed legislation is not intended to ban or restrict litigation funding outright, but rather to ensure that judges and opposing parties have visibility into financial relationships that could bear on a case.

The bill would apply broadly in federal courts and could have significant implications for how funded cases are litigated, particularly in complex commercial disputes and class actions where third-party capital is more common. Insurers view federal action as a way to establish consistency across jurisdictions, rather than relying on a patchwork of state rules and local practices.

Elite global law firms are increasingly declining to pursue massive claims against sovereign states, even when potential recoveries run into the billions. The trend reflects a reassessment inside Big Law of the risk, cost, and strategic value of investor state and public law disputes that can take years to resolve and often carry significant political and reputational complications.

An article in Law.com International reports that top-tier firms which once dominated investor state arbitration and other government facing disputes are now far more selective about taking on such matters. Lawyers interviewed for the piece point to a combination of commercial pressure, client demands, and internal firm dynamics that make these cases less attractive than they once were. Although headline damages can be enormous, the cases typically require years of work, large multidisciplinary teams, and significant upfront investment with no guarantee of recovery.

Another key factor is reputational risk. Firms are increasingly cautious about being seen as adversaries of governments, particularly in sensitive jurisdictions or disputes involving public policy, natural resources, or infrastructure. Partners noted that political backlash, enforcement uncertainty, and the potential impact on other client relationships all weigh heavily when firms decide whether to proceed.

The article also highlights that many corporate clients are less willing to bankroll these disputes directly. Budget scrutiny has intensified, and companies facing disputes with states are often reluctant to commit tens of millions in legal fees over a long time horizon. This dynamic has contributed to a rise in alternative fee arrangements and third party litigation funding, though even those tools do not fully offset the burden for law firms carrying significant work in progress.

As a result, specialist boutiques and arbitration focused firms are increasingly stepping into the space once dominated by global giants. These smaller players often have lower overhead, deeper niche expertise, and a greater tolerance for the long timelines associated with sovereign disputes.

Litigation funding in the Middle East and North Africa is expected to move decisively into the mainstream by 2026, as regulatory clarity, arbitration reform, and growing commercial awareness reshape how disputes are financed across the region. What was once viewed as a niche or unfamiliar concept is increasingly being recognized as a practical tool for managing risk, unlocking claims value, and improving access to justice in complex commercial matters.

An article in WinJustice Knowledge Hub outlines how litigation funding is evolving into a recognized asset class within the MENA legal ecosystem. The piece highlights how improved regulatory environments and more sophisticated arbitration frameworks are helping normalize third-party funding, particularly in international arbitration and cross-border disputes. Claims are increasingly assessed not simply as legal battles, but as financial assets that can be monetized and strategically managed. This shift is especially relevant for businesses facing capital constraints or seeking to preserve cash while pursuing high-value disputes.

The article also emphasizes the role of localized expertise in accelerating adoption. WinJustice positions itself as a regional player focused on aligning international funding practices with local legal cultures, court systems, and arbitration centers. By working closely with regional law firms and dispute resolution institutions, funders are helping bridge the gap between global capital and local claimants. Insolvency-related disputes and asset recovery cases are identified as particular areas of growth, reflecting broader economic and restructuring trends across the region.

As litigation funding becomes more familiar to courts, counsel, and corporate clients, the MENA market appears poised for accelerated growth. Increased competition among funders and greater sophistication among claimants may also lead to more standardized pricing and structures.

The debate over whether consumer legal funding should be classified as a loan continues to surface in regulatory and policy circles, but legal doctrine and economic analysis consistently point in the opposite direction. Consumer legal funding is a non-recourse financial transaction tied to the outcome of a legal claim. If the consumer does not recover in their case, they owe nothing. This defining feature alone places the product outside the traditional boundaries of consumer lending, which requires repayment regardless of outcome and typically involves credit underwriting, collateral, and enforceable debt obligations.

An article in the National Law Review explains that courts and legislatures across the United States have repeatedly recognized this distinction. Rather than viewing consumer legal funding as borrowed money, courts have treated these arrangements as the purchase of a contingent interest in a future settlement or judgment. Because repayment is entirely dependent on case success, judges have found that the economic substance of the transaction does not resemble a loan, nor does it fit neatly within existing consumer credit frameworks.

Judicial decisions from multiple jurisdictions underscore this point. Courts have emphasized that consumers face no personal liability, no collection efforts, and no obligation to repay from their own assets. These factors are incompatible with the legal definition of a loan, which presumes a fixed obligation to repay principal and interest. As a result, attempts to recharacterize consumer legal funding as lending have largely failed when scrutinized under established legal standards.

From an economic perspective, consumer legal funding plays a distinct role in the civil justice system. It provides liquidity to plaintiffs who may be facing prolonged litigation and financial pressure, often helping them avoid accepting premature or undervalued settlements. Treating these transactions as loans could impose regulatory requirements that are poorly suited to non-recourse funding and risk limiting consumer access to a product designed to mitigate imbalance between individual plaintiffs and well-resourced defendants.

Pogust Goodhead, the high-profile claimant law firm behind a number of major group actions, has warned of material uncertainty over its ability to continue as a going concern after publishing long-overdue financial accounts. The disclosure adds another layer of scrutiny to a firm that has been at the centre of some of the largest and most complex funded claims currently working their way through the courts.

An article in City A.M. reports that Pogust Goodhead filed its accounts for the year ending December 31, 2022 well past the statutory deadline, with the documents including a statement from directors acknowledging significant financial uncertainty. According to the filing, the firm remains dependent on securing additional funding and successfully progressing large-scale litigation in order to meet its obligations as they fall due.

The accounts show that Pogust Goodhead continues to operate at a loss, reflecting the capital-intensive nature of large group actions that can take years to reach resolution. The firm has been involved in headline cases, including environmental and consumer claims, where substantial upfront legal costs are incurred long before any recovery is realised. Directors noted that delays, adverse rulings, or difficulties in accessing external capital could materially affect the firm’s financial position.

Despite these warnings, the firm stated that it is actively engaged with funders and other stakeholders and believes there is a reasonable prospect of obtaining sufficient support to continue operations. The accounts were prepared on a going concern basis, although auditors highlighted the uncertainty as a key area of emphasis rather than issuing a qualification.

The disclosure comes at a time when claimant firms and their funders are facing heightened scrutiny from regulators, politicians, and critics of litigation finance. Financial transparency, funding arrangements, and risk allocation between law firms and third-party capital providers are increasingly under the spotlight, particularly in the context of large, cross-border group actions.

A new trade association has launched with the goal of giving the litigation finance industry a stronger and more coordinated voice in Washington as lawmakers renew scrutiny of third-party funding. The American Civil Accountability Alliance has been formed to push back against what its founders describe as growing political and legislative hostility toward litigation finance, particularly on Capitol Hill.

An article in Bloomberg Law reports that the alliance was announced in early January by lawyers Erick Robinson and Charles Silver, who say the organization will focus on educating lawmakers and policymakers about the role litigation funding plays in promoting access to justice. According to the founders, third-party capital allows plaintiffs to pursue complex and costly claims that would otherwise be financially out of reach, helping to balance disparities between individual or corporate claimants and well-resourced defendants.

The group is launching at a time when litigation finance has faced an uptick in proposed regulation. In 2024, Senate legislation nearly imposed a steep tax on litigation funding profits, a proposal that funders warned would have severely damaged the industry had it passed. Although that measure was ultimately removed from a broader legislative package, additional proposals continue to circulate in Congress, including bills aimed at mandating disclosure of funding arrangements and restricting foreign investment in U.S. litigation.

The American Civil Accountability Alliance plans to position itself as an active counterweight to these efforts. The organization intends to hire a Washington-based lobbyist and expand its membership beyond funders to include law firms, litigators, and other stakeholders involved in the civil justice system. In doing so, it joins the International Legal Finance Association as one of the few organized advocacy groups representing the industry’s interests at the federal level.

Legal Bay has praised New York Governor Kathy Hochul for signing the New York Litigation Funding Act into law, describing the legislation as a landmark step that finally provides a clear regulatory framework for consumer litigation funding in the state. The new law represents a significant development for an industry that has operated for years amid legal uncertainty in one of the country’s most active litigation markets.

A Legal Bay press release notes that the legislation establishes a comprehensive set of consumer protections and regulatory standards governing litigation funding transactions in New York. Legal Bay characterized the law as the product of more than two decades of policy development and sustained advocacy efforts by industry participants and consumer access to justice groups. The company emphasized that the statute provides long needed clarity by formally recognizing consumer litigation funding as a non recourse financial transaction rather than a traditional loan.

Under the new framework, funded plaintiffs are only required to repay advances if they obtain a recovery in their legal claims. Supporters of the law argue that this distinction is critical in protecting consumers from additional financial risk while ensuring that individuals with meritorious claims are able to cover basic living expenses during the often lengthy litigation process. Legal Bay highlighted that litigation funding can help plaintiffs avoid accepting early settlements driven by financial pressure rather than the merits of their cases.

Legal Bay also acknowledged the role played by New York lawmakers in advancing the legislation through the state legislature, noting that the law strikes a balance between consumer protection and preserving access to funding. According to the company, the statute promotes transparency, fairness, and stability in a market that continues to grow in both size and sophistication.

Invenio has announced the addition of John J. Hanley as a partner, bolstering the firm’s bench in litigation finance, claim monetization, and structured finance. Hanley joins Invenio with a practice that sits squarely at the intersection of complex commercial litigation and sophisticated financial structuring, advising a wide spectrum of market participants including litigation funders, claimholders, law firms, hedge funds, investment funds, and specialty finance providers.

According to Invenio's website, Hanley brings a particular focus on structuring, negotiating, and executing advanced funding arrangements across the full litigation finance lifecycle. His experience spans single-case funding, portfolio transactions, and bespoke claim monetization structures, with a notable specialization in prepaid forward purchase agreements. In addition, Hanley has advised extensively on secured lending transactions involving banks, commercial lenders, and alternative capital providers—experience that aligns closely with the hybrid legal-financial nature of modern litigation funding deals.

A post on LinkedIn announcing the move highlights that Hanley’s practice is designed to support both the capital side and the legal side of funded disputes, an increasingly important capability as funding arrangements grow more complex and interconnected with broader capital markets. His background enables him to navigate not only the legal risks inherent in funding structures, but also the financial and regulatory considerations that sophisticated investors expect to see addressed at the outset of a transaction.

Malaysia has officially overhauled its legal framework for third-party funding in arbitration, marking a significant development in the country’s dispute finance landscape. Effective 1 January 2026, two key instruments, the Arbitration (Amendment) Act 2024 (Act A1737) and the Code of Practice for Third Party Funding 2026, came into force with the aim of modernising regulation and improving access to justice.

An article in ICLG explains that the amended Arbitration Act introduces a dedicated chapter on third-party funding, creating Malaysia’s first comprehensive statutory foundation for funding arrangements in arbitration. The reforms abolish the long-standing common law doctrines of maintenance and champerty in the arbitration context, removing a historical barrier that could render funding agreements unenforceable on public policy grounds.

The legislation also introduces mandatory disclosure requirements, obliging parties to reveal the existence of funding arrangements and the identity of funders in both domestic and international arbitrations seated in Malaysia. These changes bring Malaysia closer to established regional arbitration hubs that already recognise and regulate third-party funding.

Alongside the legislative amendments, the Code of Practice for Third Party Funding sets out ethical standards and best practices for funders operating in Malaysia. The Code addresses issues such as marketing conduct, the need for funded parties to receive independent legal advice, capital adequacy expectations, the management of conflicts of interest, and rules around termination of funding arrangements. While the Code is not directly enforceable, arbitral tribunals and courts may take a funder’s compliance into account when relevant issues arise during proceedings.

The Legal Affairs Division of the Prime Minister’s Department has indicated that this combined framework is intended to strike a balance between encouraging responsible third-party funding and improving transparency in arbitration. The reforms also respond to concerns raised by high-profile disputes where funding arrangements were not disclosed, highlighting the perceived need for clearer rules.

ProLegal, formerly operating as Pro Legal Funding, has announced a strategic rebrand and expansion that reflects a broader vision for its role in the legal services ecosystem. After nearly a decade in the legal finance market, the company is repositioning itself not simply as a litigation funder, but as a comprehensive legal support platform designed to address persistent structural challenges facing plaintiffs and law firms.

The announcement outlines ProLegal’s evolution beyond traditional pre-settlement funding into a suite of integrated services intended to support cases from intake through resolution. Company leadership points to longstanding industry issues such as opaque pricing, misaligned incentives, and overly transactional relationships between funders, attorneys, and clients. ProLegal’s response has been to rethink its operating model with a focus on collaboration, transparency, and practical support that extends beyond capital alone.

Under the new structure, ProLegal now offers a range of complementary services. These include ProLegal AI, which provides attorneys with artificial intelligence tools for document preparation and case support, and ProLegal Live, a virtual staffing solution designed to assist law firms with intake, onboarding, and administrative workflows.

The company has also launched ProLegal Rides, a transportation coordination service aimed at helping plaintiffs attend medical appointments that are critical to both recovery and case valuation. Additional offerings include a law firm design studio, a healthcare provider network focused on ethical referrals, and a centralized funding dashboard that allows for real-time case visibility.

Central to the rebrand is what ProLegal describes as an “Integrity Trifecta,” an internal framework requiring that funding advances meet standards of necessity, merit, and alignment with litigation strategy. The company emphasizes deeper engagement with attorneys, positioning them as strategic partners rather than intermediaries.

A Croton-on-Hudson-based litigation financier has filed suit against a former client following a roughly $1 million settlement, alleging the funded party failed to honor the repayment terms of their litigation funding agreement. The dispute highlights the contractual and enforcement challenges that can arise once a funded matter reaches resolution.

According to Westfair Online, the financier provided capital to support a plaintiff’s legal claim in exchange for a defined share of any recovery. After the underlying litigation concluded with a significant settlement, the funder alleges that the plaintiff refused to authorize payment of the agreed-upon amount. The lawsuit claims breach of contract and seeks to recover the funder’s share of the settlement proceeds, along with any additional relief available under the agreement.

The case underscores a recurring tension within the litigation funding ecosystem. While funders assume substantial risk by advancing capital on a non-recourse basis, they remain dependent on clear contractual rights and post-settlement cooperation from funded parties. When those relationships break down, enforcement actions against clients, though relatively uncommon, become a necessary tool to protect funders’ investments.

For industry participants, the lawsuit serves as a reminder that even straightforward single-case funding arrangements can result in contentious disputes after a successful outcome. It also illustrates why funders increasingly emphasize robust contractual language, transparency around settlement mechanics, and direct involvement in distribution processes to reduce the risk of non-payment.

New state laws taking effect across the Southeast at the start of 2026 include significant changes for insurers and litigation finance, with Georgia’s new restrictions on third-party funding standing out as particularly consequential for the legal funding industry.

Insurance Journal reports that in Georgia, newly effective legislation imposes a formal regulatory framework on litigation funders operating in the state. Funders are now required to register with the Georgia Department of Banking and Finance and disclose ownership information, including details related to foreign affiliations. The law also restricts funders from exercising control over litigation strategy, barring involvement in decisions such as attorney selection, settlement authority, or expert witness engagement. In addition, litigation funding agreements must be disclosed during discovery in civil cases, increasing transparency around third-party capital in litigation.

Beyond litigation finance, the Georgia law package includes changes affecting insurers, including provisions preventing auto insurers from canceling coverage or increasing premiums solely due to a failure to wear a seat belt. Other updates require certain home warranties, including heating and air-conditioning systems, to transfer automatically to new homeowners.

Elsewhere in the region, Florida enacted new requirements for pet insurers to provide clearer explanations of coverage terms and claim denials. Florida also implemented a law creating a public registry of individuals convicted of animal cruelty, which could influence liability and insurance disputes. South Carolina revised its liquor liability framework by reducing coverage requirements and limiting exposure for businesses found less than 50 percent at fault.

Slater and Gordon has announced the renewal of its committed financing facility with Harbour, securing an enhanced £30 million loan agreement that strengthens the firm’s financial position and supports its ongoing strategic plans.

According to Slater and Gordon, the facility replaces the previous arrangement and will run for at least three years, underscoring the depth of the relationship between the firm and Harbour, a long-standing provider of capital to law firms.

The renewed financing follows a £30 million equity raise earlier in 2025 and is intended to provide financing certainty as Slater and Gordon continues to invest across its core practice areas and enhance its client service offering. Chief executive Nils Stoesser highlighted the progress the business has made in recent years and said the renewed facility provides confidence as the firm pursues its longer-term strategic priorities.

Ellora MacPherson, Harbour’s managing director and chief investment officer, described the commitment as the next stage in a constructive and established partnership. She noted Harbour’s support for Slater and Gordon’s ambitions, particularly around improving service delivery and outcomes for clients.

Over the past two years, Slater and Gordon has focused on strengthening its family law, employment, and personal injury practices, while also expanding its capacity to handle large-scale group actions. The firm has also continued to invest in technology and operational improvements aimed at improving the overall client experience.

New York has enacted a new Consumer Litigation Funding Act, establishing a formal regulatory framework for third party litigation funding transactions involving consumers. The law, signed by Governor Kathy Hochul in December, introduces new registration requirements, disclosure obligations, and pricing restrictions aimed at increasing transparency and limiting costs for funded claimants.

As reported in Be Insure, litigation funders must register with the state and comply with detailed consumer protection rules. Funding agreements are required to clearly disclose the amount advanced, all fees and charges, and the total amount that may be owed if the case is successful.

Consumers must initial each page of the agreement and are granted a ten day cooling off period during which they may cancel the transaction without penalty. The law also prohibits funders from directing litigation strategy or interfering with the professional judgment of attorneys, preserving claimant and counsel independence.

One of the most significant provisions is a cap on the total charges a funder may collect, which is limited to 25 percent of the gross recovery. Prepayment penalties are unenforceable, and attorneys representing funded plaintiffs are prohibited from holding a financial interest in a litigation funding company. For the first time, consumer litigation funding in New York is brought under the state’s General Business Law, replacing years of relatively limited oversight with a comprehensive statutory regime.

Supporters of the legislation argue that the law addresses concerns about excessive costs and abusive practices while providing clarity for an industry that has operated in a regulatory gray area. Industry critics, however, have raised questions about whether pricing caps could restrict access to funding for higher risk claims.

The litigation finance industry, now estimated at roughly $16.1 billion, is heading into 2026 amid growing uncertainty over regulation, capital structures, and its relationship with adjacent industries. After several years of rapid growth and heightened scrutiny, market participants are increasingly focused on how these pressures may reshape the sector.

Bloomberg Law identifies four central questions likely to define the industry’s near-term future. One of the most closely watched issues is whether federal regulation will finally materialize in a meaningful way. Legislative proposals have ranged from restricting foreign sovereign capital in U.S. litigation to taxing litigation finance returns. While several initiatives surfaced in 2025, political gridlock and election year dynamics raise doubts about whether comprehensive federal action will advance in the near term, leaving the industry operating within a patchwork of existing rules.

Another major development is the expansion of alternative investment structures, particularly the growing use of management services organizations. MSOs allow third party investors to own or finance non legal aspects of law firm operations, offering a potential pathway for deeper capital integration without directly violating attorney ownership rules. Interest in these models has increased among both litigation funders and large law firms, signaling a broader shift in how legal services may be financed and managed.

The industry is also watching the outcome of several high profile disputes that could have outsized implications for funders. Long running, multibillion dollar cases involving sovereign defendants continue to test assumptions about risk, duration, and appellate exposure in funded matters.

Finally, tensions with the insurance industry remain unresolved. Insurers have intensified efforts to link litigation funding to rising claim costs and are exploring policy mechanisms that would require disclosure of third party funding arrangements.

Taken together, these dynamics suggest that 2026 could be a defining year for litigation finance, as evolving regulation, new capital models, and external pushback shape the industry’s next phase of development.

Commercial liability insurers are escalating their long-running dispute with the litigation funding industry by introducing policy language that could require insured companies to disclose third-party funding arrangements. The move reflects mounting concern among insurers that litigation finance is contributing to rising claim costs and reshaping litigation dynamics in ways carriers struggle to underwrite or control.

An article in Bloomberg Law reports that the Insurance Services Office, a Verisk Analytics unit that develops standard insurance policy language, has drafted an optional provision that would compel policyholders to reveal whether litigation funders or law firms with a financial stake are backing claims against insured defendants. While adoption of the provision would be voluntary, insurers could begin incorporating it into commercial liability policies as early as 2026.

The proposed disclosure requirement is part of a broader push by insurers to gain greater visibility into litigation funding arrangements, which they argue can encourage more aggressive claims strategies and higher settlement demands, particularly in mass tort and complex commercial litigation. Insurers have increasingly linked these trends to what they describe as social inflation, a term used to capture rising jury awards and litigation costs that outpace economic inflation.

For policyholders, the new language could introduce additional compliance obligations and strategic considerations. Companies that rely on litigation funding, whether directly or through counterparties, may be forced to weigh the benefits of financing against potential coverage implications.

Litigation funders and law firms are watching developments closely. Funding agreements are typically treated as confidential, and mandatory disclosure to insurers could raise concerns about privilege, work product protections, and competitive sensitivity. At the same time, insurers have been criticized for opposing litigation finance while also exploring their own litigation-related investment products, highlighting tensions within the market.

If widely adopted, insurer-driven disclosure requirements could represent a meaningful shift in how litigation funding intersects with insurance. The development underscores the growing influence of insurers in shaping transparency expectations and suggests that litigation funders may increasingly find themselves drawn into coverage debates that extend well beyond the courtroom.

US-based litigation funder Diamond McCarthy has agreed to back a high-stakes investment treaty claim brought by Lansdowne Oil and Gas against the Irish state, with the claim reportedly valued at up to $100 million. The dispute arises from Ireland’s policy shift away from offshore oil and gas development, which Lansdowne argues has effectively wiped out the value of its investment in the Barryroe offshore oil field.

According to NewsFile, Lansdowne Oil and Gas, a small exploration company listed in London and Dublin, is pursuing arbitration against Ireland under the Energy Charter Treaty. The company alleges that Ireland’s 2021 decision to halt new licences for offshore oil and gas exploration, followed by regulatory actions affecting existing projects, breached treaty protections afforded to foreign investors. Lansdowne contends that these measures frustrated legitimate expectations and amounted to unfair and inequitable treatment under international law.

Diamond McCarthy’s involvement brings significant financial firepower to a claim that would otherwise be difficult for a junior energy company to pursue. The funder will cover legal and arbitration costs in exchange for a share of any recovery, allowing Lansdowne to advance the case without bearing the full financial risk. The arbitration is expected to be conducted under international investment dispute mechanisms, with proceedings likely to take several years.

Ireland has previously defended its policy changes as part of a broader climate strategy aimed at reducing fossil fuel dependence and meeting emissions targets. Government representatives have indicated that the state will robustly contest the claim, arguing that the measures were lawful, proportionate, and applied in the public interest. Ireland is also in the process of withdrawing from the Energy Charter Treaty, although existing investments may remain protected for a period under sunset provisions.

Tata Steel is facing a major legal challenge in Europe after a Dutch environmental foundation launched a large-scale collective action seeking approximately €1.4 billion in damages related to alleged environmental and public health impacts from the company’s steelmaking operations in the Netherlands. The claim targets Tata Steel Nederland and Tata Steel IJmuiden, which operate the sprawling IJmuiden steelworks near Amsterdam.

An article published by MSN reports that the lawsuit has been filed by Stichting Frisse Wind.nu, a nonprofit representing residents living in the vicinity of the IJmuiden plant. The claim alleges that years of harmful emissions, particulate matter, noise, and other pollution from the facility have led to adverse health effects, reduced quality of life, and declining property values for people in surrounding communities. The foundation is seeking compensation on behalf of affected residents under the Netherlands’ collective action regime, which allows representative organizations to pursue mass claims for damages.

According to the report, the lawsuit has been brought under the Dutch Act on the Resolution of Mass Claims in Collective Action, known as WAMCA. This framework requires the court to first assess whether the claim is admissible before any substantive evaluation of liability or damages takes place. If the case proceeds, it could take several years to resolve given the scale of the alleged harm and the number of potential claimants involved.

Tata Steel has strongly rejected the allegations, describing them as speculative and unsupported. The company has stated that it intends to vigorously defend the proceedings and argue that the claims fail to meet the legal standards required under Dutch law. Tata Steel has also pointed to ongoing efforts to reduce emissions and modernize its European operations as part of its broader sustainability strategy.

Pogust Goodhead, the UK law firm leading one of the largest group actions ever brought in the English courts, is seeking an interim costs payment of £113.5 million in the litigation arising from the 2015 Mariana dam collapse in Brazil.

According to an article in Law Gazette, the application forms part of a much larger costs claim that could ultimately reach approximately £189 million. It follows a recent High Court ruling that allowed the claims against BHP to proceed, moving the litigation into its next procedural phase. The case involves allegations connected to the catastrophic failure of the Fundão tailings dam, which resulted in 19 deaths and widespread environmental and economic damage across affected Brazilian communities.

Pogust Goodhead argues that an interim costs award is justified given the scale of the proceedings and the substantial expenditure already incurred. The firm has highlighted the significant resources required to manage a case of this size, including claimant coordination, expert evidence, document review, and litigation infrastructure. With hundreds of thousands of claimants involved, the firm maintains that early recovery of a portion of its costs is both reasonable and proportionate.

BHP has pushed back against the application, disputing both the timing and the magnitude of the costs being sought. The mining company has argued that many of the claimed expenses are excessive and that a full assessment should only take place once the litigation has concluded and overall success can be properly evaluated.

The costs dispute underscores the financial pressures inherent in mega claims litigation, particularly where cases are run on a conditional or funded basis and require sustained upfront investment over many years.

Litigation Capital Management has disclosed a significant adverse costs exposure following the unsuccessful conclusion of a funded Australian class action, underscoring the downside risk that even established funders face in large-scale proceedings.

An article in Sharecast reports that the AIM-listed funder revealed that the Federal Court of Australia has now quantified costs in a Queensland-based class action brought against state-owned energy companies Stanwell Corporation and CS Energy. The court ordered costs of AUD 16.2 million in favour of each respondent, resulting in a total adverse costs award of AUD 32.4 million. The underlying claim was dismissed earlier, and the costs decision represents the next major financial consequence of that loss.

While LCM had after-the-event insurance in place to mitigate adverse costs exposure, that coverage has now been exhausted. After insurance, an uninsured balance of AUD 19.9 million remains. LCM expects to contribute AUD 12.9 million of that amount directly, with the remaining balance to be met by investors in its Fund I vehicle.

The company has emphasized that the costs awarded were standard party-and-party costs, not indemnity costs, and stated that the outcome does not reflect adversely on the merits of the claim or the conduct of the proceedings. Nonetheless, the market reacted sharply, with LCM’s share price falling by more than 14% following the announcement.

LCM also confirmed that it has already lodged an appeal against the substantive judgment, with a two-week hearing scheduled to begin in early March. In parallel, the funder is considering whether to challenge the costs quantification itself, alongside an appeal being pursued by the claimant. The company noted that discussions with its principal lender are ongoing and that its previously announced strategic review remains active, with further updates expected in the coming months.

The litigation finance market is poised for significant activity in 2026 after a period of uncertainty in 2025. A recent JD Supra analysis outlines key challenges that can derail deals in this evolving space and offers guidance on how industry participants can navigate them effectively.

The article explains that litigation finance sits at the intersection of law and finance and presents unique deal complexities that differ from other private credit or investment structures. While these transactions can deliver attractive returns for capital providers, they also carry risks that often cause deals to collapse if not properly managed.

A central theme in the analysis is that many deals fail for three primary reasons: a lack of trust between the parties, misunderstandings around deal terms, and the impact of time. Term sheets typically outline economic and non-economic terms but may omit finer details, leading to confusion if not addressed early. As the diligence and documentation process unfolds, delays and surprises can erode confidence and derail negotiations.

To counter these pitfalls, the piece stresses the importance of building trust from the outset. Transparent communication and good-faith behavior by both the financed party and the funder help foster long-term goodwill. The financed party is encouraged to disclose known weaknesses in the claim early, while funders are urged to present clear economic models and highlight potential sticking points so that expectations align.

Another key recommendation is ensuring all parties fully understand deal terms. Because litigation funding recipients may not regularly engage in such transactions, well-developed term sheets and upfront discussions about obligations like reporting, reimbursements, and cooperation in the underlying litigation can prevent later misunderstandings.

The analysis also underscores that time kills deals. Prolonged negotiations or sluggish responses during diligence can sap momentum and lead parties to lose interest. Setting realistic timelines and communicating clearly about responsibilities and deadlines can keep transactions on track.

Litigation funding has become a fixture in modern civil justice systems, designed to open the courts to claimants who lack the means to pursue meritorious claims. But a recent opinion piece by Labour MP Oliver Ryan argues that in the UK, the industry is increasingly drifting from that core purpose and instead serving the financial interests of investors and funders at the expense of real victims.

An article in City A.M. states that while third-party litigation funding has a legitimate role in enabling access to justice, market incentives are now skewing the system. Ryan highlights examples including the UK government’s move to “protect litigation funding” and reverse the Paccar ruling—a Supreme Court decision that had cast doubt on traditional fee structures—arguing that policy solutions must reflect how the market actually operates on the ground, not just how policymakers hope it will.

Ryan points to the handling of the Post Office scandal as a stark case in point. Despite grievous harms suffered by sub-postmasters, he notes that approximately 80 percent of damages paid eventually flowed to funders and lawyers rather than victims—an outcome he says “cannot be right.” He also cites the collapse of a cavity insulation claim and management upheavals in a multi-billion-pound class action against BHP as examples of how funder-centric incentives can undermine claimant outcomes and system integrity.

Rather than calling for an end to litigation funding, Ryan urges reforms centered on capping excessive funder returns, enforcing capital adequacy protections for claimants, tightening marketing oversight, and rebalancing incentives so victims—not investors—are the primary beneficiaries of successful claims.

An investigation reveals that private investors are positioning themselves to profit from the enormous pool of money flowing from Los Angeles County’s historic sex abuse litigation. The county has already agreed to spend nearly $5 billion this year resolving thousands of claims related to alleged sexual abuse in its juvenile detention and foster care systems, including a $4 billion settlement—the largest of its kind in U.S. history.

An article in the Los Angeles Times explains that proponents of this investor involvement argue such financing gives plaintiffs’ attorneys the capital they need to take on deep-pocketed defendants and helps victims who lack resources access justice. Records reviewed by the Times show that several law firms bringing these claims receive financial backing from private investors, often through opaque out-of-state entities and Delaware-based companies.

Backers contend the arrangement can level the legal playing field and expedite case filings and settlements. However, public officials and critics express alarm over the lack of transparency surrounding these investments and the possibility that significant portions of settlement money intended for survivors could instead flow to private financiers. Some county supervisors reported being contacted by investors asking about the potential profitability of the sex abuse suits, raising ethical concerns about treating human trauma as an “evergreen” revenue stream.

The backdrop to this investor interest is a surge in litigation following changes in California law that revived long-dormant abuse claims and spurred widespread advertising by plaintiff firms seeking new clients. Government scrutiny has heightened amid reports of questionable recruitment practices and potential fraud in some claims, and the county’s district attorney has launched an investigation into parts of the settlement process.

Litigation finance is entering a new strategic chapter as innovators seek to bridge legal funding with broader capital markets and institutional investment. At the forefront of this evolution is James Koutoulas, co-founder of JurisTrade, who draws on his unique blend of hedge fund management and securities law experience to rethink how legal claims can be structured as investable assets for large pools of capital.

An article in Lehigh Valley Business explains that JurisTrade has built the first institutional marketplace for litigation finance, where legal claims are converted into structured financial products like insured bonds, litigation index funds, and private credit vehicles—mechanisms designed to attract pension funds, hedge funds, and other institutional investors traditionally absent from the space. Koutoulas, noted for leading pro bono recovery of $6.7 billion for MF Global customers, argues that litigation finance can offer compelling risk-adjusted returns—sometimes in excess of traditional private credit yields—especially when backed by insurance or securitization features that mitigate downside risk.

The piece also highlights how managed service organizations (MSOs) could reshape law firm economics by outsourcing non-core functions—bringing a level of operational efficiency and capital-raising sophistication more typical of private equity into legal practice. Koutoulas emphasizes the impact of regulatory changes in jurisdictions like Arizona and Washington, D.C., where alternative business structures now allow non-lawyers to hold ownership stakes in law firms, further blurring lines between legal services and traditional business models. He also connects the boom in LegalTech to broader FinTech dynamics, pointing to venture capital interest and technological innovations as catalysts in transforming how legal assets are financed.

Koutoulas recognizes transparency and risk management as ongoing industry challenges, advocating for disclosure standards to protect both claimants and investors.

France has taken a significant step in codifying oversight of third-party financed collective actions with the issuance of Decree No. 2025-1191 on December 10, 2025.

An article in Legifrance outlines the new rules, which establish the procedure for approving entities and associations authorized to lead both domestic and cross-border collective actions—referred to in French as “actions de groupe.” The decree brings long-anticipated regulatory clarity following the April 2025 passage of the DDADUE 5 law, which modernized France’s collective redress framework in line with EU Directive 2020/1828.

The decree grants authority to the Director General of Competition, Consumer Affairs and Fraud Control (DGCCRF) to process applications for approval. Final approval is issued by ministerial order and is valid for five years, subject to renewal.

Approved organizations must meet specific governance and financial transparency criteria. A central provision of the new rules is a requirement for qualifying entities to publicly disclose any third-party funding arrangements on their websites. This includes naming the financiers and specifying the amounts received, with the goal of safeguarding the independence of collective actions and protecting the rights of represented parties.

Paul de Servigny, Head of litigation funding at French headquartered IVO Capital said: “As part of the transposition of the EU’s Representative Actions Directive, the French government announced a decree that sets out the disclosure requirements for the litigation funding industry, paving the way for greater access to justice for consumers in France by providing much welcomed clarity to litigation funders, claimants and law firms.

"This is good news for French consumers seeking justice and we look forward to working with government, the courts, claimants and their representatives and putting this decree into practice by supporting meritorious cases whilst ensuring that the interests of consumers are protected.”

By codifying these requirements, the French government aims to bolster public trust in group litigation and ensure funders do not exert improper influence on the course or outcome of legal actions.

The United Kingdom's Judicial Committee of the Privy Council is set to hear a closely watched appeal that could have wide-ranging implications for third-party litigation funding in international arbitration. The case stems from a dispute between OGD Services Holdings, part of the Essar Group, and Norscot Rig Management over the enforcement of a Mauritius-based arbitral award. The Supreme Court of Mauritius had previously upheld the award in favor of Norscot, prompting OGD to seek review from the Privy Council.

An article in Bar & Bench reports that the appeal is scheduled for next year and will feature two prominent Indian senior advocates: Harish Salve KC, representing Norscot, and Nakul Dewan KC, representing OGD. At issue is whether the use of third-party funding in the underlying arbitration renders the enforcement of the award improper under Mauritius law, where third-party litigation funding remains a legally sensitive area.

The case is drawing significant attention because of its potential to shape the international enforceability of funding agreements, particularly in light of the UK Supreme Court's 2023 PACCAR decision. That ruling dramatically altered the legal landscape by classifying many litigation funding agreements as damages-based agreements, thereby subjecting them to stricter statutory controls. The PACCAR decision has already triggered calls for legislative reform in the UK to preserve the viability of litigation funding, especially in the class action and arbitration contexts.

The Privy Council appeal will test the legal boundaries of funder involvement in arbitration and may help clarify whether such arrangements compromise enforceability when judgments cross borders. The outcome could influence how funders structure deals in jurisdictions with differing attitudes toward third-party involvement in legal claims.

Several major global banks, including JPMorgan, UBS, Citigroup, Barclays, MUFG, and NatWest, have successfully blocked a £2.7 billion ($3.6 billion) opt-out collective action in the UK’s Supreme Court. The proposed lawsuit, led by Phillip Evans, aimed to represent thousands of investors, pension funds, and institutions impacted by alleged foreign exchange (forex) market manipulation.

An article in Yahoo Finance reports that the case stemmed from earlier European Commission findings that fined multiple banks over €1 billion for operating cartels in forex trading. Evans’ action, filed under the UK’s collective proceedings regime, sought to recover damages on behalf of a wide investor class. However, the Supreme Court upheld a lower tribunal’s decision that the claim could not proceed on an opt-out basis, requiring instead that individual claimants opt in.

The judgment emphasized the insufficient participation rate among potential class members and found that an opt-out mechanism was not appropriate given the specifics of the case. Justice Vivien Rose, delivering the court’s opinion, noted that while individual claims might have merit, the representative structure lacked the cohesion and commitment necessary to justify a mass claim. As a result, the banks have succeeded in halting what would have been one of the largest collective actions in the UK to date.