The Rising Appeal of Litigation Funding Investments for Investors in 2025
Litigation funding is experiencing a surge in investor interest, becoming a compelling alternative within private debt portfolios. Recent headline cases, such as the Post Office scandal, have increased awareness of litigation funding and positioned it more firmly as an investable asset class.
Understanding Litigation Funding
Litigation funding, also known as litigation finance or third-party litigation funding, provides financial support to claimants pursuing legal disputes. This typically covers legal fees, court costs, and other litigation-related expenses, enabling claimants to pursue their legal claims without the burden of upfront costs.
There are two main models in the market:
- Large-ticket funding: Focused on high-value, single-case disputes or major class actions. This model is usually non-recourse, meaning funders are only repaid if the case is successful. It carries a higher risk and the potential for higher returns.
- Small-ticket funding: A volume-based model used by funders like Fenchurch Legal, where capital is lent across thousands of lower-value claims, such as housing disrepair or financial mis-selling. This structure provides more predictable, fixed-income-style returns with lower risk through diversification.
The Growth of the Litigation Funding Market
Traditionally seen as a cost centre, litigation is now increasingly recognised for its potential to generate attractive returns.
According to Research and Markets, the global litigation funding market was valued at $18.2 billion in 2023 and is projected to reach $37.5 billion by 2028, growing at a CAGR of 13.2%.
The UK remains one of the most mature jurisdictions. A 2023 Lexology report estimates the UK market to be worth between £1.5 billion and £4.5 billion, reflecting a growing institutional appetite and regulatory familiarity.
As the sector evolves, more capital has entered the market, offering investors a wider range of sub-sectors to invest in, from traditional single-case funding to litigation funding loan notes.
Key Drivers of Market Momentum
Success Stories and Case Studies
Litigation funding has proven its value through numerous high-profile and small consumer cases, delivering significant returns for investors. Below are two notable examples:
High-Profile Case: The Post Office Scandal
One of the UK’s most publicised miscarriages of justice, this case saw over 500 sub-postmasters wrongly accused due to IT system failures. Litigation funding enabled these individuals to challenge the Post Office, resulting in a £58 million settlement and a national inquiry. It showcased the power of funding in facilitating large-scale justice.
Small Consumer Claims: PPI Mis-selling
The Payment Protection Insurance (PPI) scandal is another example of successful litigation funding in small consumer claims. Litigation funding enabled claimants to pursue their cases, leading to compensation payouts exceeding £38 billion. This demonstrates how litigation funding supports access to justice for everyday consumers and can yield stable returns from a high volume of smaller cases.
Looking Ahead
Litigation funding is increasingly recognised by institutional investors and family offices as a credible private debt strategy. Its resilience during economic cycles, potential alignment with ESG priorities, and technological maturity make it a compelling segment within private debt.
In 2025, litigation funding is no longer a niche—it is a strategic allocation for investors seeking stable, scalable, and socially impactful returns.
For those seeking more information about how litigation funding investments can complement private debt portfolios, please get in touch.
