Litigation finance is the practice of a third party providing capital to a claimant, law firm, or company to pursue or defend litigation or arbitration, in exchange for a portion of the eventual recovery. The arrangement is typically non-recourse: if the case fails, the claimant owes the funder nothing back out of pocket. If it succeeds, the funder is repaid according to a pre-agreed formula, often the greater of a multiple of capital deployed or a percentage of the recovery.
The industry has grown from a handful of specialist shops in the 2000s into a global asset class. Estimates of the global litigation funding investment market for 2026 range from roughly $23 billion to $25.8 billion, growing at a compound rate above 13% annually, with U.S. commitments alone projected to approach $19 billion in 2025 and climb well beyond that by the mid-2030s.
Underwriting is intensive. Before committing capital, a funder typically conducts extensive document review, retains independent legal experts to assess merits, models possible outcomes, and stress-tests the claimant's own assumptions about case strength, diligence that market participants describe as often more thorough than a comparable private equity transaction. Capital is usually released in tranches tied to the case clearing specific procedural milestones, which is the primary structural control funders have over risk once an investment is made.