Most forms of litigation funding were historically banned in common law jurisdictions, under the torts of “maintenance” and “champerty.” These torts are now more narrowly enforced in many jurisdictions, creating an opportunity for carefully drawn litigation funding arrangements. As a result, the sector of litigation finance has grown dramatically, and especially in the past two decades where it has become a global industry worth billions.
The need for third-party funding is rooted in the increasing size and complexity of litigation. As contingency fee agreements become less sustainable for law firms, and as proceedings take longer to resolve, clients with legitimate claims are often faced with an immediate need for resources to support their suits. An influx of capital from a litigation finance provider can make the difference and allow a party to continue to pursue its case.