A litigation funding agreement typically defines four things in detail: what the funder will pay for (solicitor and counsel fees, expert witnesses, court costs, ATE insurance premiums, and sometimes adverse costs exposure); the total funding commitment; how capital is released, usually in staged tranches tied to litigation milestones such as the close of disclosure or trial preparation, sometimes disbursed as incurred in what practitioners call "drip funding"; and how the funder's return is calculated.
Return structures generally take one of two forms: a fixed percentage share of recovery (commonly 30-50%, though in some jurisdictions a straight percentage share risks classification as a damages-based agreement subject to separate regulation), or a multiple of capital deployed, commonly in the region of three to four times. Experienced negotiators typically push for an overall cap on the funder's total take as a share of recovery, regardless of which calculation produces a larger number.
Control provisions matter as much as economics: well-drafted agreements confirm the claimant and their lawyers retain full control over litigation strategy and settlement decisions, with the funder holding consultation rights only, not veto power. Termination rights are the other major negotiating battleground, claimants generally want clear, objective triggers for any funder termination (rather than broad subjective discretion), defined cure periods, and continued funding obligations during any notice period, often paired with a built-in budget contingency of 15-20% to avoid disputes over cost overruns.