What Is Litigation Funding?

Litigation funding is the provision of capital to parties in legal disputes — plaintiffs, law firms, or corporations — in exchange for a share of any recovery. It is a broad category spanning consumer advances to institutional portfolio finance.

Litigation funding is the practice of a third party providing capital to support legal proceedings in exchange for a contingent return from any recovery. The funder earns a return only if the case succeeds; if the case fails, the capital is lost. This non-recourse structure means the funder assumes the risk of adverse case outcomes alongside the plaintiff.

Consumer litigation funding — pre-settlement advances to individual injury plaintiffs — is the most widely known form. A plaintiff with a pending personal injury case receives a cash advance secured by their expected settlement proceeds. This form of funding helps plaintiffs cover living expenses and medical costs while their case is pending, and allows them to pursue fair settlements without financial coercion.

Commercial litigation finance covers a broader range of products: law firm working capital and case-cost financing, portfolio-level financing against a law firm's entire docket, corporate litigation funding for companies pursuing affirmative claims, and institutional co-investment in large commercial arbitration and appellate matters. The capital amounts in commercial litigation finance are typically much larger than consumer advances — ranging from hundreds of thousands to hundreds of millions of dollars.

The litigation finance industry has grown substantially over the past decade, driven by increasing attorney acceptance, improving regulatory clarity, and growing institutional investor interest in legal assets as an uncorrelated return stream. Criterica Capital operates across both consumer pre-settlement funding (through its plaintiff advance program) and commercial litigation finance (through law firm capital and portfolio lending).

Source: Burford Capital Annual Litigation Finance Survey. Bloomberg Law Litigation Finance Report 2025. ALFA Consumer Litigation Funding Code of Conduct.

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