FUNDED TO FIGHT: THE ECONOMICS AND ETHICS OF TPLF
Litigation can be a lengthy and costly process. Often exorbitant, if not prohibitive, the cost of litigation is frequently cited by claimants when deciding whether to pursue an action in court.
Given the nature of litigation, it is unsurprising that potential litigants seek alternative funding options such as third-party litigation funding (TPLF). The use of TPLF is expanding rapidly, with global investment projected to exceed $67bn by 2037, according to the Legal Funding Journal.
“Both funders and the legal community now regard litigation finance as a legitimate and essential part of modern dispute resolution,” affirms Charles Agee, chief executive of Westfleet Advisors. “Law firms leverage it to expand access to justice and manage cash flow, while corporations use it to monetise legal assets and reduce litigation risk.
“In the US, despite near-term tightening, the TPLF market remains fundamentally strong,” he continues. “Funders are becoming more specialised, focusing on areas such as intellectual property (IP), antitrust, international arbitration and enforcement actions, while law firms are formalising best practices emphasising transparency, conflict avoidance and confidentiality.”
Understanding TPLF
In a TPLF contract, an external investor (the third-party funder) financially supports a litigant to cover the expense of litigation proceedings. If the claim proves successful, a share of the recoveries is awarded to the funder. Conversely, if the plaintiff loses the lawsuit, the funder receives no compensation.
“TPLF removes financial barriers, enabling the pursuit of strong claims without burdensome upfront costs,” says Jeffery Lula, a principal at GLS Capital. “It provides access to top legal talent, preserves working capital and mitigates risk. Many law firms, especially commercial litigation firms, are not structured to take cases on contingency, and litigation funding solves this gap in the market.”
Jan-Mar 2026 issue
Fraser Tennant