The Claim Is Only Part of the Investment

Third-party litigation funding now sits at the intersection of legal merits, capital allocation, regulatory scrutiny and enforcement risk. The funder's return depends on a legal asset, but the quality of that asset is affected by facts that may sit outside counsel's merits opinion: the parties behind the claim, the durability of the claimant and legal team, the economics of a long-running case, the defendant's position, and the practical route from judgment to recovery.

The public record is unusually instructive. Major funded disputes show that claim value, legal success, settlement value and recoverability are separate variables. Recent regulatory work also shows that the funding relationship itself is receiving closer scrutiny.

A substantial and increasingly scrutinised market

The Civil Justice Council's 2025 final review described third-party funding as an established feature of civil justice in England and Wales and considered access to justice, regulation, capital adequacy, transparency and funder returns. The review followed the Supreme Court's decision in PACCAR, which disrupted percentage-based litigation funding agreements by treating relevant arrangements as damages-based agreements for statutory purposes. ^{1 2}

Government policy has subsequently moved toward restoring enforceability while considering a proportionate regulatory framework. The significance for the market is not simply technical: funding structure, enforceability and regulatory treatment can affect the economics of an investment independently of the underlying merits. ³

Petersen/YPF: a legal asset can change dramatically in value

Burford Capital financed the Petersen and Eton Park claims arising from Argentina's 2012 nationalisation of YPF. In 2023 the US District Court entered judgments totalling approximately US$16.1 billion. In March 2026, however, a majority of the US Court of Appeals for the Second Circuit reversed the District Court's judgment. Burford publicly acknowledged the significance of the appellate decision while continuing to analyse its implications. ⁴

The case is a clear illustration of duration and appellate risk. A funded claim may acquire an enormous judgment value and still remain exposed to later legal developments. It also demonstrates why a judgment figure should not be treated as cash: sovereign enforcement, settlement dynamics and the location and legal character of assets are distinct questions.

Merricks v Mastercard: headline quantum and realised outcome can diverge

The Mastercard collective proceedings were originally advanced at about £14 billion and concerned tens of millions of consumers. The litigation ran for years through certification proceedings and ultimately settled for £200 million. In approving the settlement, the Competition Appeal Tribunal described the outcome as very far from a success for the class and recorded that Innsworth had incurred more than £41 million in lawyers' and experts' costs. ^{5 6}

For the funding market, the important point is not hindsight criticism. It is that assumptions about class size, recoverable loss, evidential proof, procedure, duration and settlement can evolve materially over the life of a case. Portfolio economics exist precisely because individual cases can produce outcomes far removed from their starting valuation.

UK Trucks and PACCAR: funding terms can become part of the litigation risk

The competing Road Haulage Association and UK Trucks collective proceedings arose from the European Commission's trucks cartel decision. The Supreme Court recorded Therium funding of £27 million for the RHA claim and £24 million for UK Trucks Claim Limited. The same proceedings produced the PACCAR decision on the statutory treatment of certain LFAs. ^{2 7}

This matters beyond competition litigation. The funding agreement is not merely an administrative wrapper around the claim. Its enforceability, termination rights, economics, control provisions and interaction with professional duties can become material to the viability of the funded proposition.

The SRA has made funder due diligence a live professional issue

In July 2026 the Solicitors Regulation Authority published guidance on using or arranging third-party litigation funding. It emphasises client interests, solicitor independence, financial resilience, conflicts, confidentiality, privilege and financial-crime risk. The guidance specifically notes that due diligence on funders may provide insight into funding sources, financial status and funding history. ⁸

The SRA's high-volume consumer claims review provides useful market evidence. Thirty firms reported around £200 million of litigation funding. Those firms had arrangements with approximately 42 different funders; seven appeared to be members of the Association of Litigation Funders. The review also identified weaknesses at some firms in checks concerning funder source of funds, sanctions and anti-money-laundering risk. ⁹

Distinct variables in funding analysis

Several propositions can be true at the same time: a claim may have strong merits but weak recoverability; a defendant may appear asset-rich while relevant value is legally insulated; a claimant may be credible while its corporate or insolvency history introduces execution or standing issues; and a high headline quantum may still support a much lower commercial settlement.

That is why factual intelligence is most useful when treated as a distinct input alongside legal, quantum and financial analysis. It can test material assumptions about parties, ownership and control, commercial relationships, corporate events, litigation history, asset context and jurisdictional exposure without purporting to decide legal merits.

Recoverability is an investment question, not an afterthought

The economics of funding ultimately depend on realised proceeds. Asset ownership, security interests, insolvency ranking, sovereign immunity, competing creditors, corporate separateness and cross-border enforcement can all affect the distance between judgment and recovery. Public litigation repeatedly demonstrates that identifying apparent wealth is not the same as establishing assets available to satisfy a particular claim.

For an investment committee, the relevant issue is therefore not simply whether value appears to exist, but how much uncertainty surrounds the path to it. That distinction becomes more important as claim size, duration and jurisdictional complexity increase.

A defined place for independent factual assurance

Litigation funding has matured into a specialist capital market with its own legal, regulatory and portfolio disciplines. Counsel's merits analysis, expert quantum evidence and financial modelling answer essential questions; none necessarily resolves factual uncertainty about the people, entities and economic circumstances surrounding the dispute.

Carratu International supports litigation funders, law firms and claimants where independent investigation or intelligence is required in relation to those factual uncertainties. The scope is determined by the matter and the decision to be supported.

Sources and further reading

1. Civil Justice Council, Review of Litigation Funding - Final Report (June 2025).
2. UK Supreme Court, R (PACCAR Inc and others) v Competition Appeal Tribunal [2023] UKSC 28.
3. Ministry of Justice, litigation funding policy announcement (17 December 2025).
4. Burford Capital, statement on YPF appeal decision (27 March 2026).
5. UK Supreme Court, Mastercard v Merricks [2020] UKSC 51.
6. Competition Appeal Tribunal, Merricks v Mastercard - CSAO judgment (20 May 2025).
7. UK Supreme Court judgment recording RHA and UKTC funding arrangements.
8. Solicitors Regulation Authority, Using or arranging Third-Party Litigation Funding (9 July 2026).
9. Solicitors Regulation Authority, High-volume consumer claims thematic review (2025).
10. Association of Litigation Funders, Code of Conduct (accessed 23 August 2026).
11. Solicitors Regulation Authority, Consultation: protecting consumers when solicitors use or arrange third-party litigation funding (9 July 2026).
12. Civil Justice Council, Review of Litigation Funding - Final Report (2 June 2025).