UK / Australia Structures vs. US Structures

UK and Australian funding structures suit claimants and funds operating in loser-pays jurisdictions where adverse-costs exposure is a central consideration alongside the capital need itself, and where funding is frequently paired with after-the-event insurance and, in Australia, with class action regimes that have driven much of the market's early development. A fund allocating capital across both jurisdictions must underwrite each country's procedural and regulatory framework separately rather than treating them as interchangeable.

US structures suit claimants and funds operating under the American Rule, where each side generally bears its own costs regardless of outcome, removing adverse-costs exposure as a factor and shifting the underwriting focus entirely to the claim's own merits, damages, and collectability. This simpler risk profile is one reason the US market has grown to be the largest in the world by capital deployed.

In the UK, funding arrangements developed alongside conditional fee agreements and are subject to voluntary self-regulation through the Association of Litigation Funders' code of conduct, while Australia's market matured substantially through class action funding, where funders often take a direct commission from the represented group's recovery, subject to court approval of the fee in many proceedings. Both markets integrate ATE insurance as a standard companion product addressing adverse-costs risk, and both have seen periodic legislative and judicial scrutiny of funder returns in representative proceedings.

In the US, funding is structured almost universally as non-recourse capital against a claim's expected recovery, with no equivalent national self-regulatory body, though the International Legal Finance Association has emerged as a leading standards organization, and oversight instead comes through a patchwork of state ethics opinions, a growing number of state disclosure and licensing statutes, and evolving federal court local rules and standing orders. This fragmented oversight model is itself a defining feature of how the US market operates relative to the more centralized frameworks abroad.

Pricing in the UK and Australia accounts for the interplay with cost-shifting rules — a funder's return calculation must consider that a losing claimant risks owing the defendant's costs, which is precisely the risk ATE insurance is priced to cover separately, layering two distinct cost considerations into the claimant's overall economics.

Pricing in the US reflects only the claim's own merits-based risk, since the American Rule removes adverse-costs exposure from the calculation entirely, generally simplifying the cost analysis to the funder's return against the claim's expected recovery alone.

Claimants in loser-pays jurisdictions face a risk category — adverse costs — that does not exist in the same way for a US claimant, meaning risk management in these markets typically requires coordinating litigation funding with a separate insurance product to be complete.

US claimants do not face the same adverse-costs exposure, so the funder's and claimant's risk is more narrowly confined to whether the claim itself succeeds and produces a collectible recovery, without a parallel insurance layer required to address opposing-party costs.

UK and Australian structures are simply the operative framework whenever a claim sits in one of those jurisdictions, given the cost-shifting rules and regulatory environment that apply regardless of a claimant's preference, making ATE coordination a practical necessity rather than an optional add-on. A claimant or fund entering either market for the first time should expect to work with counsel and brokers familiar with that jurisdiction's specific conventions.

US structures apply by default to claims filed in US courts, where the absence of routine cost-shifting means claimants can typically evaluate litigation funding without needing to separately underwrite adverse-costs exposure at all. This relative simplicity is one reason the US structure is often used as the reference model when explaining litigation finance to a party unfamiliar with the asset class.