Worldwide: Third-Party Litigation Funding Revolutionizing Commercial Litigation, Despite Some Challenges In Common Law

One of the most critical developments in civil – and potentially, commercial – litigation in recent years has been the growth of third-party financing of legal costs for cases that might not otherwise have their day in court. Originating in Australia and the UK more than a decade ago, third-party litigation funding agreements (LFAs), in which institutions offer financing for a percentage of any monetary recovery in the case, are enabling plaintiffs to seek justice through court actions that otherwise would be cost-prohibitive. This includes fraud, environmental, and corporate cases worldwide.

Several recent news events illustrate the dramatic paradigm shift that third-party funding can bring even to complex commercial litigation, where the parties typically bear preemptive upfront costs just to determine the merits of mounting a case.

  • On May 3, Burford Capital reported  that 28 percent of law firms used litigation financing in 2016, four times the number that used it in 2013.
  • On May 15, the Wall Street Journal reported that Los Angeles trial lawyer Raymond Boucher, architect of a $660 million settlement for California clergy-abuse victims, has taken out several million dollars in funding from publicly-traded litigation financer IMF Bentham, Ltd.
  • In February, Burford Capital, Ltd. announced it was providing $45 million in litigation financing to British Telecom. This was a watershed event, demonstrating that outside investors using financial analysis can assess the underlying value of a company's pending portfolio of litigation and invest in that litigation's outcome. It also demonstrates that household-name corporations accustomed to using financing to maximize the value or minimize the risk associated with other forms of property can now do the same with their litigation portfolios.
  • Particularly crucial for commercial litigation, Augusta Ventures recently announced that it would fund pre-proceedings costs so often required to determine the merits of making a complex business claim.
  • The Wall Street Journal also reported that pension funds, university endowments, and private offices "have collectively pumped more than a billion dollars" into litigation finance vehicles in recent years.

In the realm of commercial litigation, contingency retainers are less common than in class actions or personal injury litigation. Thus, the associated risks and expenses fall primarily and preemptively on clients, particularly at the complex and document-heavy stages of initial pleading and discovery. It's easy to see how access to third-party funding at this pre-proceedings stage of complex litigation improves access to the judicial system and removes a significant barrier to justice.

The Persona Ruling

However, a recent ruling in a high-stakes case in Ireland shows how third-party finance can still face barriers in common law jurisdictions. In Persona Digital Telephony Ltd & Anor v. The Minister for Public Enterprise, [2016] IEHC 187, Persona claimed it lost out on a mobile phone license to a rival company, Esat Digifone, in 1996, due to a bribe paid by Esat to Irish minister for communications Michael Lowry. Persona's owner, Tony Boyle, sought a declaration from the High Court of Ireland that it was not violating Irish prohibitions against maintenance and champerty by using €10m from Harbour Litigation Funding to mount and pursue its claims against Esat, Lowry, and the Irish government.

On one hand, concerns arise whenever third-party funders are permitted to interfere with lawsuits in which they have no legitimate interest. Intermeddling in a dispute in which a third-party has no interest without justification or excuse is a legal impropriety known as maintenance and, if carried out with a view to sharing in the profits of the action, will amount to champerty. In Ireland, both maintenance and champerty are still considered to be torts, as well as criminal, offenses. And historically, these common law prohibitions have deterred the use of LFAs.

In many jurisdictions, there need not be an assignment of either the cause of action being funded by a third party, or the fruits of the action, in order for the funding to avoid falling foul of the rules of maintenance and champerty. There can simply be an agreement to fund litigation in return for a contingent percentage of any amounts recovered.

Nevertheless, Persona presented the Irish courts with an opportunity to step away from the enforcement of these ancient offenses and open the door to professional third-party litigation funding. However, the presiding judge decided that the plaintiff's constitutional right to access the court was superseded by a longstanding line of statutory authorities in the common law that she did not have jurisdiction, under the Irish separation of powers, to fundamentally alter.

While noting its lack of jurisdiction, the court also indicated that its position could be amended by a ruling by an appellate court or legislative action. And, on the positive side, the court did underscore the major value of judicial access and left the door open for constitutional challenges to the statutory offenses of maintenance and champerty in the interest of access to the justice system.

It's our opinion that courts must aim to strike a balance in governing the use of professional litigation funding, between LFAs' potential to interfere with the administration of justice and their potential to unlock greater access to justice.

The deck is often stacked against plaintiffs who dare to take on companies with deep pockets. LFAs level the playing field by providing access to the courts for parties who would not otherwise be able to litigate a case. Funders can also balance lopsided financial resources between parties and assist parties who would otherwise accept lower settlements, because they lack the financial resources to continue with the litigation. The more front-end loaded a case, the more quickly critical pre-proceeding finance will make clearer the merits of litigating it, for both plaintiffs and defendants. And any development that gets parties to a quicker determination is positive, both for the parties and for the legal system.

On the business side, professional litigation funding gives corporations and law firms a way to shed risk from their balance sheets. And for investors in such funding, rather than betting on one-off lawsuits, the largescale backing of whole portfolios of cases will allow money to be deployed faster for more consistent returns. As the LF market becomes more mature, litigation finance will become more accessible, common place and transparent.

Originally published by ICC FraudNet

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Ranjan K. Agarwal
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.