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Maximizing Claimant Success: Harnessing the Synergy of Litigation Funding and Litigation Insurance

June 8, 2023

Maximizing Claimant Success: Harnessing the Synergy of Litigation Funding and Litigation Insurance

“The emergence of legal insurance products has been a game changer in allowing both clients and law firms to lock in judgments, ring fence potentially deleterious outcomes, and provide for certainty where uncertainty used to be the rule.” – Ross Weiner, Legal Director at Certum Group  Uncertainties abound in today’s complex legal landscape, leaving individuals and businesses vulnerable to the high costs associated with legal disputes. A pair of innovative solutions–litigation funding and litigation insurance–have emerged as powerful tools that, when utilized in tandem, can offer peace of mind to those involved in legal proceedings. In this article, we delve into the benefits inherent in synergizing these two forms of financial assistance, exploring the various types of litigation insurance, the individuals and entities that benefit from these products, and the numerous advantages they bring to the table.  Types of Litigation Insurance Products Below are popular forms of litigation insurance: 
  • After-the-Event (ATE) Insurance: ATE insurance policies are designed to protect litigants against the opposing side’s costs and expenses, should the claimants fail to win their case. It is typically purchased by plaintiffs, though some insurers do issue ATE insurance to defendants. These policies typically cover adverse costs, including the opponent’s legal fees and disbursements. ATE insurance is purchased after the event which prompts the claim, but before the legal proceeding initiates (the closer to the start of the proceeding, typically the more expensive ATE insurance becomes). As ATE insurance protects against an adverse costs award, it is not applicable in the United States, which does not have a cost-shifting regime in place (except in extremely rare circumstances). 
  • Before-the-Event (BTE) Insurance: BTE insurance, also known as legal expense insurance, offers coverage for potential legal costs before a dispute arises. This product provides coverage for legal expenses in various scenarios, such as personal injury claims or contract disputes. 
  • Judgement Preservation Insurance (JPI): JPI is exactly as it sounds–insurance that protects a claim or group of claims which have already received judgements. JPI is very straightforward, and essentially meant to be a math problem: If your judgment is X, and you receive Y, the insurer will cover the difference or a portion thereof. As such, documentation is minimal, with fraudulent activity being the primary exclusion inserted into the agreement.  According to Stephen Kyriacou, Jr., Managing Director and Senior Lawyer at Aon: “Judgment preservation insurance can be used for more than simply mitigating appellate risk. Judgment holders have used it to accelerate the recognition of judgment-related gains in their earnings, to monetize judgments while appeals are still pending, and even to convert more expensive unsecured debt into less expensive debt secured by the policy, since the policy effectively guarantees a minimum recovery so long as there is no collection or enforcement risk associated with the judgment.”
  • Litigation Funding Insurance: Litigation funding insurance is a specialized form of coverage designed to protect litigation funders, who provide financial support to claimants in exchange for a share of the proceeds, if the case is successful. This insurance safeguards funders against the risk of losing their investment in the event of an unsuccessful outcome. It provides critical protection against adverse cost orders and helps to minimize the financial risks associated with funding litigation. Stephen Kyriacou explains: “It has been a years-long challenge persuading certain insurers to consider insuring litigation finance-related risks, but we’ve seen recently that insurers have become much more willing to consider high-quality risks from funders when all parties work together to creatively structure coverage and properly align interests and incentives. As more insurers continue to come around to the idea of insuring funders over the coming years, the litigation and contingent risk insurance market will continue to grow, and even more value-creating solutions will become available to litigation finance firms.”
  • Portfolio Insurance: Portfolio insurance, also known as litigation risk portfolio insurance, is a comprehensive solution that covers multiple litigation cases within a portfolio. This type of insurance allows law firms, corporations, or litigation finance companies to spread the risk across a range of cases, reducing their exposure to any individual matter. Portfolio insurance offers cost predictability and stability, enabling stakeholders to manage their litigation risks more effectively and allocate resources strategically.
There have been other ancillary uses of insurance, such as when one firm looks to purchase the docket of another firm’s cases, or to insure a portfolio of IPs that have an associated value. As the Insurance and Litigation Funding industries continue to become intertwined, expect more bespoke products to emerge.   Users of Litigation Insurance Products There are three typical users of litigation insurance products: 
  • Individual Litigants: Individuals involved in legal disputes, such as personal injury claims or family law matters, can benefit from litigation insurance products. ATE and BTE insurance provide financial protection, enabling individuals who seek justice without the fear of exorbitant legal expenses.
  • Businesses and Corporations: Litigation can pose significant financial risks for businesses and corporations, diverting resources from core operations. Litigation insurance products help shield companies from the potentially crippling costs associated with commercial disputes, professional negligence claims, or intellectual property conflicts.
  • Law Firms: Law firms can also benefit from litigation insurance products. By offering these products to their clients, law firms enhance their value proposition, differentiate themselves in the market, and provide an additional layer of protection to their clients.
Benefits of Litigation Insurance Products The benefits of utilizing litigation insurance are clear-cut: 
  • Cost Mitigation: Litigation insurance products alleviate the financial burden associated with legal disputes. They cover legal costs, including solicitor fees, expert witness expenses, court fees, and opponent’s costs, reducing the financial risks for litigants and providing access to justice for those who might not have the means otherwise.
  • Risk Management: Litigation is inherently uncertain, with outcomes dependent on various factors. Litigation insurance acts as a risk management tool, providing litigants with the confidence to pursue their case knowing that their financial interests are protected. It enables litigants to make informed decisions based on the merits of their case rather than financial constraints. 
  • Enhanced Negotiation Power: Litigation insurance empowers litigants during settlement negotiations. With insurance coverage in place, litigants can approach negotiations from a position of strength, knowing that they have the financial resources to endure protracted litigation. This can lead to more favorable settlement outcomes and increased bargaining power.
  • Access to Justice: Perhaps one of the most significant benefits of litigation insurance is its role in ensuring access to justice for individuals and businesses. By removing financial barriers, these products level the playing field and enable litigants to pursue their legal rights, even against well-funded opponents.
Litigation funders understand the ‘access to justice’ problem quite well. Litigation insurance further contributes to the democratization of our legal system by ensuring that even if the claim is unsuccessful, claimants are protected from the potentially crippling costs of litigation. This assurance encourages claimants who may be otherwise deterred by the financial risks associated with litigation to pursue their claims with confidence. Consequently, the collective impact of litigation funding and insurance is an increased participation of claimants, a broader range of cases being pursued, and a more inclusive legal system. As Rebecca Berrebi, Founder and CEO of Avenue 33 points out, “The increased availability of insurance has enhanced the options available to claimants and law firms when it comes to protecting the downside of litigation. Only time will tell whether or not the litigation-focused products offerings will remain cost-effective additives to litigation finance.” Litigation Funding & Litigation Insurance Litigation insurance products have emerged as valuable tools in the legal landscape, offering financial protection and peace of mind to those navigating the complexities of litigation. Whether individuals seeking justice, businesses guarding against commercial risks, or law firms enhancing their service offerings, litigation insurance provides a range of benefits.  Similarly, litigation funding affords plaintiffs the opportunity to see their case to fruition, when there might otherwise be no avenue for remuneration. By combining litigation funding and litigation insurance, claimants gain access to a tailored financial solution that meets their specific needs. Each claim has unique financial requirements, and the flexibility of these tools allows claimants to structure a financial package that aligns with their case’s dynamics. This synergy offers claimants the freedom to allocate capital as required, covering legal costs, expert fees, and other case-related expenses while safeguarding against the risk of adverse costs. As the demand for these products continues to grow, they will mature into an integral part of the litigation landscape, empowering litigants and transforming the dynamics of legal proceedings for years to come. According to Boris Ziser, Partner and Co-Head of Finance and Derivatives at Schulte Roth and Zabel: “The growth of insurance products for the litigation funding space can be a real game changer, impacting not only the cost of capital, but expanding the universe of investors able to add this sector to their portfolios.” By integrating these two solutions, claimants can significantly enhance their prospects for success while reducing financial risks. This harmonious approach not only levels the playing field between claimants and well-resourced opponents, but also promotes a fairer and more accessible legal system.
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Commercial Deals

Funders Court Private Credit Investment

By John Freund |

A sharp pivot is underway in litigation finance as funders increasingly court the private credit market amid waning interest from traditional backers.

An article in Law Gazette details how funders, faced with reduced appetite from pension and endowment funds due to rising interest rates and macroeconomic volatility, are now tapping into the $1.7 trillion private credit sector—comprising non-bank lenders known for backing complex, high-yield opportunities. At Brown Rudnick’s European litigation funding conference last week, executives from Rocade, Therium, and others dissected the sector’s evolving funding landscape.

Brian Roth, CEO of Rocade LLC, emphasized that litigation finance offers the kind of complexity private credit thrives on. “We’re looking for assets that are complex or hard to source… [that offer] a ‘complexity premium,’” Roth said, adding that insurance-wrapped and yield-segmented portfolios could make the space even more appealing to credit investors.

Therium Capital Management co-founder Neil Purslow—whose flagship fund is now in runoff—recently launched Therium Capital Advisors to help bridge the gap between funders and private credit. Purslow noted that while capital is plentiful, accessing it requires sophisticated structuring to meet private lenders’ expectations. “It’s very bespoke,” he said. “This pool of investors… think very specifically about their strategy.”

Not all industry voices are convinced. Soryn IP’s Michael Gulliford warned that litigation finance must deliver returns consistent with private credit norms, or risk being shunned. Meanwhile, Balance Legal Capital’s Robert Rothkopf and Harbour Litigation Funding’s Susan Dunn raised alarms over new players using questionable financial structures and attracting inexperienced investors.

The shift toward private credit could redefine how litigation finance structures deals, raises capital, and manages risk. But the influx of new money—especially if poorly vetted—may also invite instability. As private credit steps into the void, funders must weigh innovation against the risk of diluting industry standards.

Commercial Deals

Yield Bridge Asset Management Launches into Litigation Finance

By John Freund |

The London‑based asset manager Yield Bridge Asset Management (Yield Bridge) has announced its entry into the litigation financing arena, marking a strategic shift into the private‑credit sector of the legal‑funding landscape.

According to a press release in OpenPR, Yield Bridge has entered into several strategic partnerships in the international arbitration space, granting the firm ongoing access to “vetted, insurance‑wrapped Litigation and Private Credit asset programs.”

In detailing the strategy, Yield Bridge highlights litigation finance as a rapidly growing asset class. The release states that high costs in international arbitration often create an uneven battlefield—where financial strength outweighs merits. Litigation funding, the firm argues, offers a counterbalance. It points to “Litigation Finance Bonds” as their preferred investment vehicle—emphasizing 100% capital protection, attractive yields, and short-duration liquidity windows for accredited investors. The firm claims to target structured portfolios of multiple claims (versus single-case investments) to diversify risk and leverage economies of scale. Cases “displaying pre‑determined characteristics and a potential 8–10× multiple” are cited as typical targets.

Yield Bridge positions itself as a “leading international financial services intermediary … bringing together multi‑asset expertise with targeted investment propositions.” While the announcement is light on detailed track record or specific claim‑portfolios, the firm is formally signalling its ambitions in the litigation finance space.

Yield Bridge’s pivot underscores a broader trend: litigation finance moving deeper into structured, institutional‑grade private‑credit models. By packaging multiple claims and targeting returns familiar in alternative‑credit strategies, firms like Yield Bridge are raising the bar—and potentially the competition—for players in the legal‑funding ecosystem. This development raises questions about how deal flow will scale, how returns will be verified, and how risk will be managed in portfolio‑based litigation funding.

Case Developments Commercial

Home Office-Funded Class Action Against Motorola Gets Green Light

By John Freund |

In a significant development for UK collective actions, the Competition Appeal Tribunal (CAT) has granted a Collective Proceedings Order (CPO) in the landmark case Spottiswoode v Airwave Solutions & Motorola. The case—brought by Clare Spottiswoode CBE—accuses Motorola of abusing its dominant position in the UK's emergency services network by charging excessive prices through its Airwave network, which the Home Office claims resulted in £1.1 billion in overcharges to UK taxpayers.

According to iclg, the class action is being funded by the UK Home Office itself, which is also the complainant in an associated CMA enforcement action. In its judgment, the CAT concluded that Spottiswoode is an appropriate class representative, and that the claim—which covers a proposed class of over 100,000 public service bodies—is suitable for collective proceedings. The case will proceed on an opt-out basis for UK entities, with opt-in available for overseas claimants.

The Tribunal emphasized that funding by a government department does not compromise the independence of the class representative, and that the Home Office’s funding arrangement complies with legal and procedural requirements. Notably, the judgment paves the way for governmental entities to play a dual role—as both complainant and funder—in future competition-based collective actions.

This case raises fascinating implications for the legal funding industry. It challenges traditional notions of third-party funders and opens the door to more creative and strategic funding models initiated by government entities themselves, particularly in cases with broad public interest and regulatory overlap.