Litigation Capital Management (LCM) originated as an Australian litigation funder. It now funds cases across the world, but suffered a major setback in an undisclosed case in the UK and another in Australia. Image Source: London Stock Exchange

LCM disclosed it had lost A$112 million (nearly $74 million) in the second half of 2025, driven largely by defeats in two major litigations and a costly adverse ruling in a third that exceeded its insurance protection. The results sent the company’s share price tumbling to a record low, highlighting investor concern over the firm’s exposure to volatile outcomes.

The announcement comes shortly after a separate blow to the industry, when a high-profile lawsuit against Argentina’s state-linked energy company YPF—backed by the world’s largest litigation funder, Burford Capital—was dismissed by a New York appeals court. Together, the cases point to a broader pattern of setbacks that has begun to weigh on the sector’s performance.

LCM’s chief executive, Patrick Moloney, described the period as the most difficult in the company’s history, noting that a review of operations is underway.

He acknowledged that the two major losses, one in England and Wales and the other in Australia, had significantly undermined what had previously been a strong track record. Chief financial officer David Collins added that more than 80% of the reported loss stemmed directly from those cases and the associated cost order.

“Chief financial officer David Collins added that more than 80% of the reported loss stemmed directly from those cases and the associated cost order.”

For years, critics have argued that third-party litigation funders rely heavily on a model that concentrates capital in a small number of high-stakes disputes. These investments can promise extraordinary returns but carry equally significant risks. In the YPF case, Bloomberg reported that Burford committed $16.6 million with expectations of an outsized 37000% return. The case’s collapse not only erased that prospect but also triggered a sharp drop in the firm’s share price, which briefly lost nearly half its value before a minor recovery.

“In the YPF case, Bloomberg reported that Burford committed $16.6 million with expectations of an outsized 37000% return.”

A similar dynamic was evident in the Sulu arbitration, where Therium was said to have invested around $20 million in a claim seeking $15 billion in damages from Malaysia. While the exact funding agreement remains unknown, the scale of the claim relative to the investment suggests an equally outsized anticipated return.

Though such investments often represent a fraction of total assets under management, the “no win, no fee” structure—where funders are paid only if a case succeeds—means prolonged or unsuccessful litigation can have a disproportionate impact on profitability.

The strain is visibly reshaping key players in the industry. After years of involvement in the Sulu case, Therium shifted control of its claims to Fortress Investment Group and repositioned itself as a funding adviser rather than a direct investor. The move has been widely interpreted as a step back from frontline risk-taking and followed a widely reported downsizing of the firm.

LCM’s own experience appears to be following this example, reinforcing concerns about concentration risk. By its own account, the bulk of its losses can be traced to just two cases, an outcome that illustrates the vulnerability of placing too many eggs in one basket. The company also undertook large layoffs in 2025.

“By its own account, the bulk of its losses can be traced to just two cases, an outcome that illustrates the vulnerability of placing too many eggs in one basket. The company also undertook large layoffs in 2025.”

As such, despite ongoing claims that litigation funding as a market is expanding, the difficulties faced by some of its most prominent players suggest a more complicated reality. High-profile defeats, falling valuations, and restructuring efforts all point to an industry grappling with the limits of its model.

At the same time, larger financial institutions with portfolios beyond litigation finance appear to be moving in. Firms such as Fortress Investment, with deeper resources and broader portfolios, may be better positioned to absorb losses and manage risk across a wider range of cases. Their growing presence raises questions about whether the recent turbulence will act as a warning about the inherent dangers of litigation funding—or simply accelerate a shift in control toward bigger, more diversified investors capable of prolonging legal challenges in the interest of profit.

REFERENCES

Burford Capital. (2026, March 30). Burford Capital further statement on YPF appeal decision. https://investors.burfordcapital.com

Knowsulu. (2025, December 12). Jersey Court Greenlights Counterclaims Against Sulu Heirs and Funders. https://know-sulu.ph

Knowsulu. (2025, November 14). Therium’s activity underscores national security risks in litigation funding. https://know-sulu.ph

Stempel, J. (2026, March 27). US appeals court voids $16.1 billion judgment against Argentina over YPF seizure. Reuters. https://www.reuters.com

Rose, N. (2026, April 7). Litigation funder announces huge loss after cases fail. Legal Futures. https://www.legalfutures.co.uk

Van Voris, B., & Siegel, E. (2023, September 12). Burford eyes 37,000% return in $16 billion win over Argentina. Bloomberg. https://www.bloomberg.com