Litigation Finance in the United Kingdom: Framework, ATE Insurance, and PACCAR

How third-party funding operates in England and Wales, including the costs regime and the PACCAR ruling.

The United Kingdom is one of the most mature litigation finance markets in the world, with a well-developed body of practice in England and Wales and a recognized industry body, the Association of Litigation Funders, which maintains a voluntary code of conduct. Members commit to maintaining capital adequacy and to non-interference with the conduct of the litigation. For funders and claimants, the English market offers a sophisticated, broadly hospitable environment for commercial litigation finance.

A defining feature of English litigation is the costs regime. England follows the loser-pays principle, under which an unsuccessful party is generally ordered to pay a substantial portion of the winner's legal costs. This adverse costs exposure is a material risk for any claimant, and it is typically managed through After the Event (ATE) insurance, which covers the claimant's liability for the opponent's costs if the case is lost. ATE premiums can themselves be financed, producing a combined funding and insurance package that addresses both the cost of pursuing the claim and the risk of an adverse costs order.

The Supreme Court's 2023 decision in PACCAR reshaped how funding agreements must be structured. The court held that litigation funding agreements whose return is calculated as a percentage of damages can constitute Damages-Based Agreements, which are subject to specific statutory requirements under the Courts and Legal Services Act and are unenforceable if non-compliant. In response, funders have restructured agreements so that the return is expressed as a multiple of capital deployed rather than a share of damages, preserving enforceability while maintaining the economics.

The English market supports a broad range of funded matters: commercial disputes, shareholder and securities claims, competition follow-on claims in the Competition Appeal Tribunal, professional negligence, and arbitration seated in London. The combination of a respected judiciary, a developed funding ecosystem, ATE insurance, and London's status as a global arbitration center makes England a central jurisdiction for international litigation finance.

Criterica Capital funds matters in England, Wales, and Scotland, structuring agreements to comply with the post-PACCAR framework and coordinating with established ATE underwriters where adverse costs cover is appropriate. Our underwriting draws on outcome data spanning UK court records. Claimants and firms pursuing significant UK matters can contact our international team to discuss funding.

Discuss your matter with our institutional team.