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Report Highlights ‘Substantial Benefits’ of Litigation Funding for Consumer Justice

By Tom Webster |

Report Highlights ‘Substantial Benefits’ of Litigation Funding for Consumer Justice

The following was contributed by Tom Webster, Chief Commercial Officer for Sentry Funding.

Litigation funding provides ‘substantial benefits’ to claimant organisations, and robust funding mechanisms are ‘essential’ to secure justice for consumers, an authoritative report found last month.

The report, Justice Unchained, by European consumer organisation BEUC, also found many of the common criticisms of litigation funding were not backed up by evidence.

The study found that consumer organisations across Europe face significant financial challenges to starting collective redress actions. It noted that initiating a collective action is ‘complex, risky, and expensive’, often involving lengthy proceedings that need significant resources.

The report said: ‘Without sufficient funding, important cases will remain unaddressed and risk making the Representative Actions Directive (RAD)2 an empty shell’.

BEUC said that as public funding, membership fees and donations were often insufficient or unavailable, litigation funding had emerged ‘as a solution to bridge a funding gap’. Benefits for the claimant included access to necessary resources, risk transfer, and ‘a more equal playing field between consumer organisations and powerful defendants’, it said.

The report added that frequent criticisms of litigation funding, such as ‘the risk of frivolous litigation, undue influence by funders, or targeting competitors’ were ‘not well-substantiated’, and ‘insufficiently evidenced by specific cases’.

According to the report, the potential risks of litigation funding in the context of collective redress are already addressed by the Representative Actions Directive, which requires member states to establish a framework that includes procedures to prevent conflicts of interest and undue influence, with judicial oversight to ensure compliance.

The report found that additional regulation of litigation funding at EU level should therefore only be considered if it is necessary. It said: ‘Two-thirds of EU Member States have opted not to regulate [litigation funding] beyond the RAD’s requirements, finding these safeguards sufficient to govern [litigation funding] effectively for collective redress actions. Besides, [litigation funding] can be managed through judicial oversight, as is the case in several Member States with a longer history of using [it]’.

The BEUC report suggested that a set of ‘best practices’, jointly established and agreed by funders, claimant organisations and others, may provide for ‘a balanced solution, ensuring [litigation funding] remains viable while promoting fairness and transparency.’

It said such best practice could encompass transparency over the funder’s sources of capital; full decision-making autonomy for the consumer organisation and its legal counsel; clear agreements on all expenses covered by the funder; clearly defined funder’s remuneration; assurance of the funder’s financial adequacy to meet obligations; strict compliance with transparency requirements set by the law; effective detection and disclosure of any conflicts of interest; well-defined conditions for termination of the funding; and a robust dispute resolution mechanism.

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Tom Webster

Tom Webster

Tom is the Chief Commercial Officer for Sentry Funding

Commercial

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Burford’s Q2 Profits Surge on New Capital

By John Freund |

Burford Capital has delivered its strongest quarterly performance in two years, buoyed by a swelling pipeline of high-value disputes and a fresh infusion of investor cash.

A press release in PR Newswire reveals that the New York- and London-listed funder more than doubled revenue and profitability in the three months to 30 June 2025. CEO Christopher Bogart credited “very substantial levels of new business” for the uptick, noting that demand for non-recourse financing remains “as strong as we’ve ever seen.”

The stellar quarter follows a lightning-quick, two-day debt offering in July that raised $500 million—capital Burford says will be deployed across a growing roster of commercial litigations, international arbitrations, and asset-recovery campaigns. Management also highlighted significant progress in portfolio rotations, underscoring the firm’s ability to monetise older positions while writing new ones at scale. Investors will get a deeper dive when Burford hosts its earnings call today at 9 a.m. EDT.

Burford’s results arrive amid heightened regulatory chatter in Washington and Westminster, yet the numbers suggest the industry’s largest player is unfazed—for now—by talk of disclosure mandates and tax levies. The firm emphasised that its legal-finance, risk-management and asset-recovery businesses remain uncorrelated to broader markets, a pitch that continues to resonate with pension funds and endowments hunting for alternative yield.

For litigation-finance insiders, Burford’s capital-raising prowess and improving margins could have ripple effects: rival funders may face stiffer competition for marquee cases, while law-firm partners might leverage the firm’s deeper pockets to negotiate richer portfolio deals.

Australian High Court Ruling Strengthens Class-Action Funders

By John Freund |

Australia’s litigation-funding industry just received the judicial certainty it has craved.

Clayton Utz reports that the High Court, in Kain v R&B Investments [2025] HCA 26, unanimously held that the Federal Court may impose common-fund orders (CFOs) or funding-equalisation orders at settlement or judgment—ensuring all class members, not just those who signed funding agreements, contribute to a funder’s commission.

The Court reaffirmed Brewster’s bar on early-stage CFOs but found late-stage CFOs fall within the “just” powers of ss 33V(2) and 33Z(1)(g) of the Federal Court Act. Crucially, the bench rejected “solicitor common-fund orders,” ruling that any CFO benefiting plaintiff firms would contravene the national ban on contingency fees outside Victoria.

For funders, the decision cements the enforceability of commissions in nationwide class actions and removes a major pricing risk that had lingered since Brewster. For plaintiff firms, however, the ruling slams the door on a hoped-for new revenue channel.

The Court’s reasoning—tying funding commissions to equitable cost-sharing rather than contingency returns—will likely embolden funders to back larger opt-out claims, knowing a CFO safety-net is available at settlement. Meanwhile, plaintiff firms may redouble lobbying efforts for contingency-fee reform, particularly in New South Wales and Queensland, to reclaim ground lost in today’s judgment. Whether lawmakers move on that front will shape Australia’s funding market in the years ahead.

Locke Capital Backs Sarama in US $120 Million ICSID Claim Against Burkina Faso

By John Freund |

A junior gold explorer is turning to third-party capital to fight what it calls the expropriation of a multi-million-ounce deposit.

According to a press release on ACCESS Newswire, ASX- and TSX-listed Sarama Resources has drawn down a four-year, US $4.4 million non-recourse facility from specialist funder Locke Capital II LLC. The proceeds will pay Boies Schiller Flexner’s fees and expert costs in Sarama’s arbitration against Burkina Faso at the International Centre for Settlement of Investment Disputes (ICSID).

Sarama alleges the government retroactively revoked its Tankoro 2 exploration permit in 2023, halting development of the flagship Sanutura project. An arbitral tribunal chaired by Prof. Albert Jan van den Berg held its first procedural hearing on 25 July; Sarama’s memorial is due 31 October, and the company is seeking no less than US $120 million in damages.

Under the Litigation Funding Agreement, Locke’s recourse is limited to arbitration proceeds and the ownership chain of Sanutura; Sarama’s other assets remain ring-fenced. Repayment occurs only on a successful award or settlement, with Locke’s return calculated on a multiple-of-invested-capital basis and adjusted for timing.

The deal underscores the continued appetite of specialist funders for investor-state claims, particularly in the mining sector where treaty protections offer a clear legal framework and potential nine-figure payouts.