Funding agreements are almost always secret. While funders are supposed to finance lawsuits rather than direct them, rare disclosures have fueled concerns that some play a far more active role. In one revealed agreement, Therium required the claimants' lawyers to treat the funder as if it were a client alongside the claimants themselves, raising questions about whose interests lawyers are ultimately expected to prioritize and where control of the litigation truly resides. Image Source: iStock

But the reality is very different.

The giant disputes that attract litigation funders—whether claims linked to the Sulu arbitration, battles involving sovereign-backed entities such as Argentina's YPF, or massive group actions like the Post Office Horizon and Mastercard cases—create costs that rarely stay confined to the courtroom. Businesses, insurers, and governments all factor litigation risk into their spending, and those costs eventually flow through to everyday consumers.

The litigation finance industry and its impact has grown rapidly. According to Insurance Business Magazine, around $13 billion in capital is currently committed to litigation finance worldwide, with projections suggesting the figure could surpass $50 billion by the mid-2030s.

Warnings about the economic impact are already emerging. The American Property Casualty Insurance Association (APCIA) estimated that the U.S. tort system now adds nearly $6,000 annually to the costs faced by a typical household through higher prices and reduced consumer choice.

At the same time, jury awards continue to climb. Recent analyses indicate that the median "nuclear verdict" in U.S. liability cases reached roughly $44 million in 2023, almost double the median recorded just three years earlier. Commercial auto and premises liability cases have seen particularly sharp increases.

“The U.S. tort system now adds nearly $6,000 annually to the costs faced by a typical household.”

Critics argue litigation funding is helping fuel the trend. Reports have increasingly pointed to situations in which funders or attorneys resisted settlements because the proposed payouts were too small to generate their desired returns, even when claimants themselves may have been prepared to accept the deal.

One example emerged in Chicago, where restaurant entrepreneur David Pisor sued King & Spalding and several of its lawyers. He alleges the firm inflated fees, mishandled his representation, and directed him into expensive litigation financing arrangements that primarily benefited the law firm and the funder.

Another dispute surfaced in the long-running Mastercard consumer claim in the United Kingdom. After almost nine years of litigation, the parties agreed to a £200 million settlement. Innsworth, the funder backing the case, challenged the deal because it believed the settlement did not deliver the return it expected. Innsworth argued it was entitled to a significantly larger payout despite the proposed award already covering costs and generating a substantial profit. Their clients, who fought hard for a settlement, were left in a brief limbo before courts threw out Innsworth’s challenge.

“Innsworth argued it was entitled to a significantly larger payout despite the proposed award already covering costs and generating a substantial profit.”

Questions about funder influence have also followed Therium. In Gbarabe v. Chevron Corp., a funding agreement disclosed to the public reportedly showed Therium reserving rights over lawyer selection and settlement decisions. The U.S. Chamber of Commerce highlighted the case as a rare glimpse into arrangements that are normally hidden from public view, raising concerns about the degree of control funders can exercise over litigation strategy in order to push for larger settlements.

Those concerns become even more significant when governments are involved.

In the Sulu arbitration, Therium backed years of litigation targeting Malaysian sovereign assets and state-linked entities. The campaign stretched on for more than half a decade before ultimately collapsing. Therium then pursued Spain for an additional $18 billion in related proceedings, which also failed. Yet the legal costs generated by these efforts did not simply disappear. Taxpayers ultimately absorb the burden, while public finances remain connected to broader economic costs such as insurance and borrowing. The obvious question is what would have happened if claims of this scale had succeeded and billions had actually been extracted from governments.

“Taxpayers ultimately absorb the burden, while public finances remain connected to broader economic costs such as insurance and borrowing.”

Critics warn that the number of weak or speculative lawsuits could continue to rise if litigation becomes increasingly viewed as an investment opportunity. Businesses facing costly legal battles may conclude that settling—even when they believe the claims lack merit—is cheaper than fighting. That, in turn, risks encouraging more claims and creating a cycle that rewards the pursuit of settlements rather than the pursuit of justice.

As William Large, President of the Florida Justice Reform Institute, sums it up to Legal Newsline: "Third-party litigation funding increases the probability that meritless claims will be brought, inserts questions about who is actually controlling the litigation, results in inevitable conflicts of interest among the lawyer, client and litigation funder and makes settling lawsuits far more difficult and expensive."

The APCIA has voiced a similar concern, recently arguing that when the civil justice system is used for profit rather than fairness, the costs do not stop at court awards. They spread throughout the economy—showing up in insurance premiums, business expenses, and ultimately in the bills paid by everyone else.

REFERENCES

Hancock, B. (2020, October 27). Funding agreement. DocumentCloud. https://www.documentcloud.org

Dickerson, C. (2026, January 21). Report: Third-party litigation funding affects affordability. Florida Justice Reform Institute. https://www.fljustice.org

Recamara, J. (2026, May 13). Insurers warn legal system abuse is adding to US cost-of-living squeeze. Insurance Business America. https://www.insurancebusinessmag.com

KnowSulu. (2025, December 16). Chicago lawsuit highlights dangers of lawyer-funder relationships. https://know-sulu.ph

Know-Sulu. (2025, November 12). Sulu Claimants’ desperate $18 Billion Claim against Spain Thrown Out. https://know-sulu.ph

Knowsulu. (2025, November 18). When funders fight justice: Innsworth to pay costs of obstructing £200 million settlement. https://know-sulu.ph

Therium. (n.d.). Therium Capital Advisors. Therium. https://www.therium.com

Therium. (2025, October 6). Therium Capital Advisors launched to provide litigation finance advisory services. Therium (News, Insights & Events).

https://www.therium.com

U.S. Chamber of Commerce Institute for Legal Reform. (2022, November). ILR Briefly: A new threat: The national security risk of third-party litigation funding. Retrieved from https://instituteforlegalreform.com