Large-scale litigation – group claims, mass torts, collective actions, and multi-party commercial disputes – is expensive to finance for a structural reason: nearly every cost in a lawsuit scales with the size of the case, while the outcome stays binary. A claim either succeeds or it does not. Understanding why financing a large case is harder than financing a small one means looking at where money is actually spent, how legal costs are recovered across jurisdictions, and how funding arrangements are built to carry that burden over time.
Why scale changes the economics of a case
In a two-party dispute over a single contract, many costs are fixed: a filing fee, a few hearings, one round of witness statements. In a group claim with thousands of claimants, those same cost categories become variable. Each additional claimant can bring additional administrative work, additional evidence, and additional arguments about whether that person belongs in the group at all.
The number of contested issues also tends to grow. Courts frequently split large cases into stages – preliminary issues, common issues, and individual issues – so the litigation can be decided in manageable pieces. That structure is designed to make cases tractable, but it also means more hearings, more interim applications, and more time before anyone knows the answer.
Because litigation funding is usually advanced against an eventual recovery rather than billed month by month to a client, the funder carries this uncertainty. That is one reason financing large cases is a specialist activity rather than a routine one.
Where the money actually goes
The cost profile of a large case is dominated by a handful of expense categories, and each behaves differently as a case grows.
Disclosure and document review. In complex litigation, disclosure can involve millions of documents spread across many custodians. Reviewing, coding, and producing that material is labour-intensive, and the cost generally rises faster than the number of parties because the interactions between documents multiply as well.
Expert evidence. Large cases often require experts in several disciplines – accounting, engineering, medicine, economics, or industry-specific fields. Each expert needs to review the record, produce a report, and be prepared for cross-examination. Where damages must be modelled across a whole claimant group, that modelling can be a substantial project in its own right.
Case administration. Large claimant groups need systems for gathering claims, verifying eligibility, and communicating updates. If a case settles, a separate administration process typically handles the distribution of any compensation, which itself carries costs.
Duration and the cost of capital. Big cases can run for years, and money committed to them cannot be used elsewhere in the meantime. That opportunity cost is a real part of financing, even when it does not appear on a legal bill.
Adverse costs exposure. In jurisdictions that follow the “loser pays” principle, an unsuccessful claimant may be ordered to pay part of the winning side’s legal costs. That risk has to be priced into any funding decision.
| Cost category | What drives it | How it tends to scale |
|---|---|---|
| Disclosure and e-disclosure | Volume of documents and number of custodians | Grows with data volume, often faster than headcount |
| Expert evidence | Number of disciplines and complexity of damages modelling | Multiple experts per contested issue |
| Claim administration | Size of the claimant group and eligibility checks | Broadly per-claimant, plus fixed setup cost |
| Duration | Interlocutory appeals and staged trials | Accumulates through cost of capital |
| Adverse costs | Cost-shifting rules in the relevant jurisdiction | Exposure depends on the opponent’s costs |
Figures and proportions vary widely between cases, so the table describes categories rather than fixed amounts. The Civil Justice Council’s 2025 review of litigation funding (Review of Litigation Funding – Final Report) examined how these pressures interact with the funding arrangements used to carry them.
The financing toolkit for large claims
Because the costs are front-loaded and the recovery is uncertain, large claims are usually financed through one or more of several mechanisms.
Contingency arrangements. In some jurisdictions, lawyers may agree to be paid only on success, or to charge a success fee on top of standard fees. Conditional fee agreements and damages-based agreements are common examples, and their availability and permitted structures are set by local regulation.
Third-party litigation funding. A funder that is not a party to the dispute provides money to cover legal costs in exchange for a return if the case succeeds. If the case fails, the funder typically receives nothing, which is why funders screen cases carefully.
Portfolio funding. Rather than backing one case, a funder may finance a group of cases, spreading risk across them. Portfolio structures are often used to support law firms running several related claims.
After-the-event insurance. Insurance can protect against adverse costs exposure, which is particularly relevant in “loser pays” jurisdictions.
These mechanisms can be combined. A single large case might involve a conditional fee element, external funding, and insurance against the risk of an adverse costs order.
Why most potential cases are never funded
Financing large litigation is not an automatic process. Funders have to assess the legal merits, the likely recovery, the duration, and the risk that the claim cannot be enforced even after a favourable judgment. Because that assessment is demanding, a large share of proposals is declined.
Research published in 2024 by Queen Mary University of London for the Legal Services Board found that litigation funders in England and Wales typically choose to back only a small minority of the cases presented to them – on the order of three to five per cent of potential cases. The same study noted that funding enables individuals, small businesses, and larger companies to pursue claims they could not otherwise afford, while also observing that after a funder’s return is accounted for, the net compensation available to claimants can sometimes be modest relative to the harm alleged.
That combination – useful but selective – is central to why large-scale litigation is hard to finance. The cases that most need funding are often the ones that fall outside a funder’s risk appetite.
Risk, duration, and the price of waiting
Every funding arrangement has to account for time. A claim that takes five years to resolve ties up capital for five years. The return a funder seeks reflects that period, the probability of success, and the chance that recovery is delayed further by appeals or enforcement difficulties.
Returns are usually structured as a multiple of the amount invested, a percentage of the recovery, or a combination of both. Some jurisdictions cap the share of a recovery that a funder may take, while others leave it to negotiation. The precise terms are set case by case, and they depend heavily on the applicable law.
Cost-shifting rules shape who carries the risk
The rules on legal costs differ significantly between legal systems, and those differences change how attractive a large case is to finance.
In England and Wales, the general starting point is that the unsuccessful party pays a proportion of the successful party’s costs, though the court has discretion and the actual amount is often assessed rather than recovered in full. In the United States, the default in most civil litigation is that each side bears its own costs, which changes the risk profile considerably. Many other jurisdictions sit somewhere between these models.
Transparency rules around funding arrangements are also evolving. As part of a broader debate about how litigation funding is disclosed and regulated, proposals for greater disclosure of the parties behind funding agreements have been advanced in the UK – an example of the type of regulatory change discussed in this overview of additional industry context. For claimants and funders alike, the direction of these rules affects how predictable the cost of financing a case will be.
When recovery and cost diverge
A favourable outcome does not always translate into a full recovery. Legal costs, the funder’s return, insurance premiums, and administrative expenses are commonly met from the proceeds of a settlement or judgment before any net amount reaches claimants. In some cases the net result is substantial; in others, particularly where compensation per claimant is small, the gap between the headline figure and what individuals receive can be significant.
This is not a feature of any single jurisdiction or funding model. It reflects the underlying arithmetic of paying for complex litigation out of an uncertain future recovery. Understanding that arithmetic is the first step in deciding whether a large claim is worth pursuing and how best to finance it.
Frequently asked questions
Why is group litigation more expensive than a single claim?
Group claims add costs that a single claim does not have: managing many claimants, verifying eligibility, coordinating evidence, and often building complex damages models. Fixed costs become variable, and the number of contested issues tends to increase.
How do litigation funders choose which cases to back?
They generally assess the strength of the legal claim, the likely size and timing of any recovery, the risk of an adverse costs order, and whether the defendant can actually pay. Research suggests that only a small minority of proposals are accepted.
What is an adverse costs order?
It is a court order requiring the losing party to pay a portion of the winning party’s legal costs. Whether such orders are available, and how much is recovered, depends on the jurisdiction and the court’s discretion.
Does the losing party always pay the winner’s costs?
No. Cost-shifting varies by legal system. Some jurisdictions apply a general “loser pays” principle, while others leave each side to bear its own costs. Even where cost-shifting applies, courts often assess a proportion rather than the full amount.
Can businesses use litigation funding for commercial disputes?
Yes. Third-party funding and portfolio arrangements are used in a range of commercial and collective claims, not only consumer cases. Whether a particular business can obtain funding depends on the merits of the claim and the funder’s assessment of risk.
The bottom line
Large-scale litigation is expensive to finance because its costs accumulate with scale while its returns remain uncertain and delayed. Disclosure, expert evidence, administration, adverse costs risk, and the sheer passage of time all compound the amount that must be carried before any recovery is known. Funding arrangements exist to absorb that burden, but they do so selectively, and the terms always depend on the law, the facts, and the balance of risk in the particular case. For anyone weighing a large claim, the practical question is not simply whether it can be won, but whether the cost of financing it leaves a meaningful outcome on the other side.
