Global litigation funding thriving but what lies ahead?

The Chambers Global Practice Guide put the value of the global litigation funding market at US$17.5 billion (AUD$26.9 billion) in a March 2025 update, with projections that it will grow annually to be US$67.2 billion (AUD$103 billion) by 2037.

Opinions about the market are often divided between those who see it as profit-focused and lacking transparency, and others who believe it as a means of financing social justice causes in expensive large-scale claims.

Arguably, Australia has been caught on the back foot in imposing regulation on the market, along with New Zealand, which has also been lagging. Third-party litigation funding has taken off since the early 2000s, and regulation has been slow to keep up. The High Court decision in 2006 of Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 broke with the prior doctrine that litigation funding was an abuse of process or contrary to public policy. The High Court found that third-party funding was valid in insolvency matters, and in litigation more broadly, as a means of providing access to justice. Since then, the role of third-party litigation funding remains most common in class actions in Australia.

Globally, the key question is around transparency and potential conflicts of interest.

Chambers Global Practice Guide states that especially in light of changing models of law firm ownership: “Ensuring a balance between providing financial support and respecting claimant autonomy is critical to preserving trust in the system.”

Australia’s environment offers greater clarity in 2025

The High Court’s decision on 6 August 2025 (Kain v R&B Investments Pty Ltd as trustee for the R&B Pension Fund [2025] HCA 26) has clarified certain aspects of Australia’s class action industry. The decision states that the Federal Court has the power to make a common fund order (CFO) or funding equalisation order (FEO) for the benefit of third-party funders at a late stage of a class action, but the Court does not have the power to make a CFO for the benefit of solicitors.

Ultimately, Federal and relevant State Courts can make CFOs at the time of settlement or judgment for the benefit of third-party funders in every state and territory except for Victoria where legislation allows for contingency fees to be available for plaintiff firms.

This is a win for litigation funders, who had faced multiple obstacles prior to 2022.  In 2020, the Australian Government conducted a Parliamentary inquiry into the regulatory framework for class actions, particularly the role of dispute financiers. The Parliamentary Joint Committee on Corporations and Financial Services (PJC) was established to determine the nature and extent of reforms.

Following successive governments and changing requirements – including the requirement for third-party funders to hold an Australian financial services licence (AFSL) or register as a managed investment scheme (MIS) – the Corporations Amendment (Litigation Funding) Regulations 2022 commenced on 16 December of that year as a result of the PJC recommendations.

The Litigation Funding amendment exempted litigation funding schemes from the MIS, AFSL, product disclosure and anti-hawking provisions of the Corporations Act 2001 (Cth). In order to uphold transparency, under Corporations Regulations 2001 (Cth), any conflicts of interest must be mitigated by litigation funders (failure to do so is an offence), a requirement that is echoed in court practice notes.

Though voluntary, the Sydney-based Association of Litigation Funders of Australia (ALFA) provides best practice guidelines (last updated January 2025).

Class actions are fertile ground for global litigation funders

Australia’s market for litigation funding shows no sign of slowing. Litigation Capital Management (LCM) is headquartered in Sydney, with offices in Singapore, London, and Brisbane. It has funded recent class actions relating to consumer electricity over trading strategies aimed at manipulating supply, excessive toll road administrative costs in Queensland, and on behalf of shareholders in Quintis for “misleading conduct”.

Omni Bridgeway is another international litigation funder headquartered in Australia with offices in Europe, the US and UK, Canada, Asia and the Middle East. While LCM is listed on the London Stock Exchange, Omni Bridgeway is ASX listed since 2001, with origins in trading on distressed debt, then specialising in distressed asset recovery and restructuring.

In June this year, Chambers 2025 Litigation Support Guide recognised Omni Bridgeway as the leader in legal finance. The business now offers litigation funding subject to recovery for single-case matters, portfolio matters (multiple cases or arbitrations of a law firm/company), and multi-party financing (action against a defendant on behalf of a group or representative of a group). On its website, Omni Bridgeway states that litigation finance agreements, comprising binding terms and conditions, are determined following due diligence reviews by the investment committee, made up of senior legal professionals.

Recent class actions Omni Bridgeway has funded include the Australian Defence Force sex discrimination class action (October 2025, as covered by LSJ Online), the Glenmore Park class action (January 2025), and the J&J Cold and Flu class action (December 2024).

Elsewhere, Australian litigation funding is led by CASL, Balance Legal Capital, Litigation Capital Management, Court House Capital, Fortress Investment Group, LLC, Harbour, and Woodsford.

ASIC requirements for litigation funding  

On 14 November, ASIC closed submissions on a proposal to extend the operation of two legislative instruments related to litigation funding until 31 March 2030. Initiated in 2013 and presently due to expire on 31 January, ASIC Credit (Litigation Funding-Exclusion) Instrument 2020/37 and ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38 (the Instruments) provide relief for litigation funding arrangements, conditional costs schemes and proof of debt arrangements that are not covered by the exemptions in the Corporations Regulations 2001.

According to ASIC, “ASIC Credit (Litigation Funding-Exclusion) Instrument 2020/37 provides relief from the application of the National Credit Code in Schedule 1 to the National Consumer Credit Protection Act 2009 to litigation funding arrangements and proof of debt arrangements”, and “ASIC Corporations (Conditional Costs Schemes) Instrument 2020/38 provides relief from the requirements in Chapter 5C (managed investment schemes) and Chapter 7 (financial services licensing and disclosure) of the Corporations Act 2001 to litigation funding arrangements where the members wholly or substantially fund their legal costs under a conditional costs agreement.”

An ASIC spokesperson says, “ASIC will make a decision after considering the feedback received on CS 31 Proposed extension of relief for litigation funding arrangements and conditional costs schemes. We will announce our decision as soon as practicable and expect to do so by mid-January 2026.”

The UK Government may wind back restrictions on third-party litigation funders

In the UK, the regulatory framework is also awaiting decisions which could affect funders, lawyers and potential litigants.

The UK has proposed a Bill to limit or deny international funding of litigation (Litigation Funding Agreements (Enforceability) Bill). A judiciary review was finalised earlier this year, but a decision remains in limbo. Two years ago, the United Kingdom Supreme Court issued a decision that put the nature of global litigation funding on unstable ground, particularly regarding damages-based claims.

In a 2023 case, R (on the application of PACCAR Inc) v Competition Appeal Tribunal, raised questions of whether the way litigation funder agreements contravene a ban on damages-based agreements under the Competition Act 1998 (UK). The Supreme Court said that in a damages-based agreement under the Courts and Legal Service Act 1990 (UK) and the Damages-Based Agreements Regulation 2013 (UK), where funding agreements providing for the funder’s fee to be determined as a percentage of the damages award, those agreements fall within the definition of a “damages-based agreement”. These are either banned, or unenforceable in certain proceedings.

This has not prevented litigation funding however, since a different approach to calculating the funder’s fee can work around the limitations in place. The Litigation Funding Agreements (Enforceability) Bill 2024 seeks to exclude litigation funding agreements from the definition of “damages-based agreement” in the Courts and Legal Services Act. In a government statement about the Bill, the explanation is that in reversing PACCAR, enabling global litigation funding without such restrictions on damages-based agreements, would provide for greater access to justice. The statement reads: “Litigation funding agreements have enabled claimants to seek redress over unequal pay, faked diesel emissions and overcharging by mobile phone networks, as well as the sub-postmasters’ heroic fight. The new Bill will restore a vital avenue to justice for all deserving claimants, not just those with the most resources.”