What is Litigation Funding?

Litigation funding assumes the financial risk of legal claims in return for a share of the proceeds recovered.

Funders bear all costs incurred by the plaintiff, including fees payable to solicitors, barristers, courts and independent experts. In return, they receive a funding fee based on the recovered amounts, plus reimbursement for the costs outlaid. This allows individuals and institutions to extract value from unresolved litigation claims.

The funder only receives a return if the claim is successfully resolved. If litigation is unsuccessful, the funder still bears the costs. The litigation funder will also bear any adverse cost exposure in the event of an unsuccessful claim.

Litigation funding provides justice for plaintiffs with insufficient resources to pursue high value claims, and for those whose claims may be too small to pursue individually.

Victims of corporate misconduct have received significant compensation through litigation funding. Litigation funding also covers areas such as class actions, general commercial claims, arbitration claims, as well as asset recovery for the benefit of creditors of insolvent companies and individuals.

What is Litigation Finance?

Litigation finance falls outside the general scope of litigation funding, and is designed to aid corporations and law firms in the litigation process.  Litigation finance can cover operating costs associated with funded litigation and legal practice financing.  It can also help law firms to build their practice and offer flexible retainer terms.

Who can benefit from Litigation Funding and Finance?

  • Plaintiffs who are unwilling or unable to pursue claims due to financial or other risk
  • Corporations seeking to minimise risk and release cash flow to focus on core business
  • Insolvency and restructuring practitioners
  • Law firms seeking funding on behalf of plaintiffs
  • Institutional investors seeking to recover losses on behalf of beneficiaries
  • Law firms seeking to monetise work-in-progress balances, leverage balance sheets, fund portfolios of cases, or fund business expansion

Benefits of Litigation Funding

Obtaining funding at commercial market rates can benefit plaintiffs, increase the likelihood of reaching early resolution, and maximise claim values.  Funding is often the only avenue available to plaintiffs to pursue meritorious claims, or to appropriately mitigate risks.  Litigation funding improves access to justice in circumstances where legitimate claims may otherwise fail to proceed.

Experienced funders and litigation managers such as those on the Panel help plaintiffs achieve these objectives by:

  • Bringing the expertise and experience of leading advisors to the claim
  • Leveraging experts with a track record in successful claim resolution
  • Providing appropriate financial backing to level the playing field
  • Offering strategic planning and commercial management of litigation
  • Facilitating early negotiations and settlement of claims

Individual Plaintiffs

Plaintiffs can use litigation funding to pursue their legal rights in circumstances where lack of funding, risk aversion, or other factors may inhibit them from doing so.  Benefits include:

  • Coverage for all legal and associated costs
  • Coverage for adverse costs and security for costs
  • Levelling the playing field against large opponents
  • Funders providing expertise, experience, and strategic direction to the case

Institutional Investors

Institutional investors have a duty to act in the best interest of beneficiaries and shareholders.  These duties can include recovering the lost value of investments in circumstances where an investee company has engaged in misconduct, alleged wrongdoing or even fraud.

If the value of your investment falls due to fraud or misconduct by the investee company, there are established options for restitution, including through group or class actions.  These includes shareholder claims, product liability claims, investment claims and event-based claims.

Litigation funding can assist institutional investors to pursue claims on behalf of beneficiaries and provides an opportunity to hold wrongdoers to account, influence corporate governance, and deter securities fraud.



Litigation funding allows businesses to outsource the cost and risk of commercial disputes.  Funding can be sourced for single cases, portfolios, seed finance, adverse costs/security for costs, operational costs pending dispute resolution, or disbursements/part costs only.  Litigation finance is also available to assist a company to meet operating costs associated with litigation.  This funding enables organisations to:

  • Pursue legal claims while preserving capital
  • Consider legal claims as financial assets akin to stocks or property
  • Unlock potential revenue in claims
  • Finance disputes so they don’t impact profits, financial results, or company valuation
  • Avoid the need to provide security for legal costs
  • Transfer the risk of adverse cost orders
  • Enforce the company’s legal rights and show determination to assert its position
  • Level the playing field against larger opponents
  • Obtain expert legal representation and independent oversight of legal strategy and expenses
  • Incorporate the perspective of independent specialists into the matter
  • Alleviate in-house legal team workload by outsourcing dispute management

Insolvency Practitioners

Insolvency practitioners can use litigation funding to pursue claims arising from personal and corporate insolvency.  Benefits of insolvency funding include:

  • Funding for professional fees, legal fees, related disbursements, and adverse costs/security for costs
  • Quarantine litigation risk for the insolvent estate
  • Confidence that claims will be taken seriously and pursued to resolution
  • Prompt and responsive claim assessment
  • Flexible and bespoke funding arrangements
  • Retention of the best lawyers, barristers and experts
  • Higher prospect of a successful resolution
  • Timely payment of professional fees
  • Control of the claim and legal proceedings
  • Seed funding for the investigation of potential legal claims during the early stages of investigation into the company’s affairs, including liquidator’s examinations, counsel and other expert advice

Law Firms

Benefits of litigation funding and financing to law firms include:

  • Prompt payment of legal fees
  • Provision of cash injections for cases taken on a no-win no-fee basis
  • Securing finance for a portfolio of cases, thereby managing risk and securing revenue streams
  • Securing debt facilities allowing for investment in core business, business development and expansion
  • Enabling clients to pursue legitimate claims, where otherwise they might not due to financial or other reasons
Obtaining Funding and Legal Services

Ceramic Litigation Platform

Ceramic’s Litigation Platform brings together plaintiffs and our panel of registered experienced funders.  One application for funding can be assessed easily by a number of funders, elevating the time, cost and effort required to approach multiple potential funders individually.

By providing evidence of open-market participation in determining the appropriate costs of funding, the Platform has the potential to mitigate many issues faced in funded litigation, such as when seeking common fund orders, settlement approval, competing class actions, and other required court or creditor approvals.

Ceramic’s Litigation Platform allows plaintiffs to upload matters requiring litigation funding. These include:

  • General commercial matters
  • Insolvency claims
  • Potential class actions
  • International arbitrations
  • Undeveloped potential claims requiring seed funding

Matters may be uploaded at any stage, from early claim development to pre-trial and judgement recovery.

Applications can be made for competitive quotes from law firms for the legal services retainers in relation to litigation claims

Given the highly interventionist approach taken by Australian courts, competitive funding and legal rates are critical not only in class actions, but also in insolvency and other general commercial matters where practitioners and directors must convince creditors and shareholders that a decision to litigation and obtain funding is appropriate. As such, the Platform assists the plaintiff in obtaining competitive funding and legal rates.